Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Bubble

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There is a "clear risk" of house prices falling in Australia, according to an international asset management company.
In a recent report on Australia's economy, senior economist for Alliance Bernstein, Guy Bruten, noted a "looming housing correction" amid post-commodity-boom conditions.
"Yes, people are still talking about the upswing phase, but we suspect that will change in the coming months," Bruten wrote.
"There's an obvious impact on the Western Australian housing sector. Perth has already been underperforming, relative to Sydney at least, after outperforming dramatically through the commodity-boom phase.
"More of that is likely to come."
<img src="/images/2015/01/21/Picture%202.png" alt="">
Source: Alliance Bernstein
In the report, titled Australia: Still Fundamentally Bearish, Bruten also noted Sydney's 30% price growth over the past two years, referring to the "boom (bubble?) in Sydney's prices".
"Much of that reflect investor activity – in aggregate, lending growth to investors is running at 10% year on year."
"But with signs of oversupply starting to emerge in pockets of the market, and with APRA (the prudential regulator) starting to offer 'guidance' – a weak form of macroprudential policy – one wonders how long this can continue.
"There's a clear risk that falling house prices may be the next phase in the post-commodity-boom adjustment story."
<img src="/images/2015/01/21/Picture%203.png" alt="">
Source: Alliance Bernstein
Despite positive employment figures released last week, Alliance Bernstein is still forecasting an interest rate. Bruten, like many local economists, raised the issue of "noise" in the Australian Bureau of Statistic's labour force figures, writing: "When we dig down into the detail, it's hard to discern a shift in trend."
Of Australia's unemployment rates by region, he noted "not much change", writing that: "mining is still deteriorating; manufacturing is struggling, too; and the more diversified parts of the country are doing better."
He attributed New South Wales' relatively strong economic performance, in part, to its housing market.
Alliance Bernstein is an asset management firm with US$474 billion (A$580 billion) in assets under management. It is listed on the New York stock exchange.
{mijopolls 77}
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jrichardson-uRX5hFdKfN

Bearish housing correction looms while Sydney faces bubble question: Alliance Bernstein

<html><body>
GUEST OBSERVATION
The last two years have been somewhat of a testing ground for making property price forecasts informed by <a href="https://ckmurray.blogspot.com.au/2011/07/murrays-retrospective-indicator-for" target="_blank">my indicator</a>, which has a new name – the Speculation Index.
It is the ratio of housing gross yields to mortgage interest rates and captures the degree of price growth speculation embedded in current prices.
<a href="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" rel="lightbox[335668]"><img class="alignnone wp-image-337022 size-full" src="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" alt="buySellLongTerm" width="700" height="352"></a>
Source: Cameron Murray and Philip Soos.
Above is a new long-term series of this Index using data compiled by Philip Soos. It offers a number of insights into the history of housing credit, the durability of cycles in periods of apparent macroeconomic stability, and offers a warning about the future of residential property markets to those who hold out hope that maybe now is the beginning of that elusive era of stability.
The primary lesson from the long-term Speculative Index is that the easy money era since the late 1960s has been qualitatively similar to the pre-WWII period in terms of cyclical patterns, but far different in terms of scale. Whether this has to do with the openness of credit markets, dual incomes, or the development of private investor markets in Australian housing, it is best to consider this period a unique conflation of institutions that cannot be compared to prior periods.
Or it could just be terrible data. Take your pick.
We can gaze back at the early part of the 20th century, which followed a massive housing boom and slump, particularly in Melbourne, during the 1890s. The first decade, by this measure, was a period of relative stability for property prices in Australia.
After WWI a property boom took hold, peaking around 1921 as yields fell and interest rates crept upwards, and followed by a long slump that continued through the Great Depression. During WWII the market was completely unmoved as resources were sucked out of domestic private markets into the war effort and various administrative controls kept prices and rents steady.
The renowned stability of the 1950s and 1960s is on display in this metric as well, with housing capitalisation rates very stable compared to yields, with almost no price speculation built into prices. Perhaps this was primarily a product of tight credit to households, coordinated construction efforts, and relatively high levels of non-housing investment.
Post 1970 the modern finance era <a href="https://www.econ.mq.edu.au/Econ_docs/research_papers2/2004_research_papers/Abelson_9_04.pdf" target="_blank">kicked off with a Sydney boom</a>, which <a href="https://ckmurray.blogspot.com.au/2011/07/sydney-housing-boom-ripple-effect" target="_blank">rippled</a> across states and was over by about 1974. Then the 1980s saw another round of smaller surges of speculation, ultimately collapsing in 1989 and leading to a recession a few years later. The end of the 1990s recession ended appeared to be the best time to buy property in the past two decades, as this index and a whole host of property-related <a href="https://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/" target="_blank">metrics indicate</a>.
The massive 2000s boom then rippled across the nation, and as interest rates where ratcheted up on falling property yields we see another index peak in 2008, which plunged back in response to substantial stimulatory interest rates cuts.
In essence, housing prices were rescued by the RBA during this period. Historically low mortgage interest rates, the influx of foreign investment into the housing market (and mining) and the Rudd government’s bailout of the banking and financial system saved the day.
As I <a href="https://www.macrobusiness.com.au/2013/05/melting-towards-the-bottom-of-the-housing-cycle/" target="_blank">wrote early last year</a>, my Speculative Index again showed it was an opportune time to buy Australia housing. Prices are up over 10% nationally since, and around 17% in Sydney. Currently this Index suggests there is more to run in the national price cycle. Prices being more likely to rise than fall in the near future.
I add a dashed prediction line to show what might be the next moves in this Index, jointly arising from a number of evolving trends including
<ul>
<li>Rising mortgage interest rates 
</li>
<li>Flat or falling rents 
</li>
<li>Rising prices</li>
</ul>
For example, if prices rise by 10%, mortgage rates rise by 0.75%, while rents are flat, the Index will shift up to 2.1. That’s still a long way off the type of irrational exuberance we normally see, taking us only halfway from the buy line to the sell line.
Unless we see significant credit controls in the housing market, it is likely we will continue the property price cycle we have just started. This cycle itself will compress yields while rents are stable and result in a surge of the index, providing the boom for necessary for the next bust. The RBA, as usual, will be too late to increase interest rates. Governments at all levels will be too uncoordinated to increase public investment to smooth the transition to a higher rates or tighter credit environment.
If the Georgist 18 year average period of asset cycles has merit, then we are now likely living in a period much like mid 1990s – still cautious from recent experience and ignorant of the property cycle about to get under way. Remember though that this Index does not represent prices, but reflects the degree of speculative fervour in the market. The Index can rise without price price increases if rents are flat and mortgage interest rates are rising. Which of these factors we see play out will determine the scale of the price gains likely to be experienced.
Looking at the history of this index, coupled with the recent success of using its cyclical pattern to predict property market movements, suggests it is unlikely that ‘this time is different’.
Cameron Murray is an economist and PhD candidate at University of Queenland. 
Philip Soos is an economist and post graduate candidate at Deakin University. He has recently co-authored <a href="https://www.worldeconomicsassociation.org/files/Bubble_Economics_Egan_Soos.pdf" target="_blank">Bubble Economics: Australian Land Speculation 1830-2013 </a>with Paul D Egan.
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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po-LsXgBTHBmX

Property speculation to continue boom, but will a bust follow?

<html><body>
We’re not in a property bubble, according to CommSec chief economist Craig James, but we are experiencing a “balancing” in Sydney.
With a slowdown in national home prices recorded by CoreLogic RP Data, and mixed results across capital city housing markets, James noted that there is no need for the Reserve Bank to progress with macroprudential controls on property investors.
“In essence, the market is correcting itself with more supply coming on to the market as evidenced by new listings and softer demand for homes in response to the higher prices. There is no bubble – demand ran ahead of supply in some capital cities like Sydney but markets are balancing,” James said.
With house prices down 0.3% in November and apartment prices up 0.1%, it’s not surprising that some are wondering if the growth is now over.
ANZ’s David Cannington has also focused on the easing down from the mid-2014 peak, but notes that positive home buyer sentiment and fundamentals still exist.
“Sydney house price gains are leading the pack, with a pick up in population growth driving strong underlying housing demand and solid capital growth attracting residential property investors,” wrote Cannington.
“Nonetheless, we expect house price momentum will ease heading into 2015 with house price growth in Sydney and Melbourne in particular likely to be weighed down by deteriorating affordability.”
Over 2015, he says that the affordability gap will weigh on price growth in Sydney, Melbourne and Perth.
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jduke-EHk3XBmHkn

No bubble and no need for macroprudential control: Craig James

<html><body>
With double digit annual price growth in Sydney, some wonder whether we risk a spectacular end to this year's stellar price growth. Is Australia's property market caught in a bubble?
Earlier this year, US forecaster Harry Dent predicted the <a href="/news/property-crash-is-like-popping-popcorn-especially-in-melbourne-harry-dent">Melbourne property market</a> would eventually crash, saying: "Melbourne has been, actually, the biggest bubble in recent years and I would expect the biggest burst there." Melbourne wasn't alone – he also took aim at Sydney, Perth and Brisbane, apparently spotting a bubble in each city.
Our big banks are a good deal more skeptical about the presence of a bubble, though earlier this week, <a href="/expert-insights/buying/no-bubble-but-there-is-a-platform-for-one-to-develop-anz-s-warren-hogan">ANZ's Warren Hogan</a> said while we don't currently have a property bubble, "we have the platform to form a bubble in the next few years".
Though many doubt Australia is currently experiencing a bubble, the prospect of a sudden fall in home values have some nervous.
Property Observer took the question to the experts: What are the signs of a bubble?
Shane Oliver - AMP Capital head of investment strategy and chief economist <img src="/images/2014/09/11/shane-oliver-profile.jpg" alt="" style="float: right;">
The first one is the price gains themselves – if they've been rising rapidly for a lengthy period and they've diverged from underlying income levels or rents. In other words, the market's become overvalued. So rapid momentum in price growth and overvalued prices.
Another is a rapid rise in debt financing. Usually that comes with low interest rates, but when credit growth is running at double digit rates it's often a concern.
The last one is popular interest: everyone's talking about housing prices at dinner parties and every show on television is about property.
In Australia, lots of the markets get the tick in terms of overvaluation. That's why a lot of commentators have said a bubble is about to burst and that we should get ready for a 40% price decline, which just hasn't happened.
The issue is complicated by our undersupply of property, which keeps underlying demand going. We've got a bit more supply coming, but that's mostly units in certain capital cities. I would still give the "overvalue" criteria a tick.
Momentum is excessive in Sydney and there's no doubt about that. It might get a half tick in Melbourne. The other capital city markets? There's no sign of a bubble in any of them.
Credit growth has been quite modest in the past. I suppose what bothers me is credit growth at 10% for investors, although it's not near the 30% growth we were seeing a decade ago. So that gets half a tick.
Popular interest gets half a tick. People are certainly talking about property prices in Sydney, but in Hobart nobody's that excited about the market. You find the same thing in Brisbane and Adelaide – people there are bit skeptical of all the bubble talk.
So there are some signs of bubble – overall it's a bit "bubbly". Nationwide, I'm not prepared to say it's a bubble just yet.
Louis Christopher - <a href="https://www.sqmresearch.com.au/" target="_blank">SQM Research </a>managing director <img src="/images/authors/fullbody/Louis-Christopher.png" alt="" style="float: right;">
Massive speculation; sales prices going beyond fundamental valuations. Excessive and accelerated debt levels – so a massive debt boom is usually going on at the same time as well. These are normally the signals of what will be regarded as a bubble.
The problem is that sometimes you can have a recovery in the market, and it's just a normal part of the cycle, and it could be mistaken for a bubble, or vice versa.
So often it's very difficult to make a judgment until after the event.
At the Australian level, we're not seeing a bubble.
Number one, the market's not rapidly accelerating everywhere, just in very few areas – namely Sydney.
So what's going on with the Sydney market? Is it in a bubble? The answer is – we think – no. We can see a market which is still going into overvalued territory – but is it a massively overvalued? Compared to previous cyclical upticks, no.
2003 was a very dangerous time in Sydney and the fundamentals went way out of whack. It's not surprising that for the next few years it underperformed.
This recovery should be seen in the context of the last few years' performance. While we do believe a market has been moving into overvalued territory, we don't think it's enough to cause a massive overcorrection.
Article continues on the next page. Please click below.
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Margaret Lomas - Author, television host and <a href="https://destiny.com.au/dotnetnuke/en-au/home.aspx" target="_blank">Destiny Financial Solutions</a> founder<img src="/images/authors/fullbody/Margaret-Lomas3.png" alt="" style="float: right;"> 
Property is considered to be in a bubble when rapid increases in the price of real property in a local area, country or even globally reaches unsustainable levels relative to incomes and rents, and then decline.  The degree of decline indicates whether the market simply stabilises, or bursts.
A property 'bubble' is not necessarily an indicator that a burst is imminent and many markets boom and then stabilise, rather than boom then crash.
As for the question being asked by everyone at present: "Are we in a property bubble?" Let's remember that this white hot market exists, at present, only in Sydney. Broadly speaking, Sydney came off a 9 year period of stable prices in 2012, making the measurement over the past 10 years (the common period that property price growth is measured) a very different picture indeed.
In addition, this situation of fast moving price growth isn't reflected as noticeably in other Australian markets, which comprise more than 80% of all dwellings.
More importantly, when considering the bubble question, it is to be noted that while housing has increased in price, many other common, every-day items, which comprise the cost of living, have dramatically decreased relative to incomes. 
While it may be true that the average home appears to cost seven times the average income today as opposed to three and four from many years ago, the proportion of disposable income available to the average person to spend on mortgage repayments has considerably increased.
In addition, homes today are larger and more luxurious than they were 30 years ago, providing more home for the additional price paid.
Andrew Wilson - <a href="https://www.domain.com.au/" target="_blank">Domain</a> Group senior economist <img src="/images/authors/fullbody/Andrew-Wilson.png" alt="" style="float: right;">
I do think that a bubble is a little hard to spot, but we do have a few that are operating at the moment.
The classic examples are the markets of Gladstone and Mackay. We spot a property bubble really when we get a strong buyer interest or strong supply in a short period of time. That's what happened in those markets.
It wasn't just small investors that rushed in. It was followed up by developers under projections there would be strong demand in the areas, due to mining.
Prices got so high that optional alternative accommodation was sought by those who were there, the majority of whom were Fly In Fly Out workers. And the bottom hasn't been found in that market yet.
If we look at the cycle, when a bubble bursts we clearly see the market falling below its previous trough.
Gladstone prices went from $300,000 to $700,000 and back down again. When it returns to $350,000 people will start to think it's gone back to its fundamental values.
Classically, a bubble occurs when we see a rapid increase in prices and rents, particularly if there is optional accommodation available, and people will turn to that.
We've never had a bubble burst in this country in the capital city markets.
We may see falling prices in some of those mining towns, but in larger markets where there's diversity in the economy, we tend to just see an orderly correction phase.
Article continues on the next page. Please click below.
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Robert Simeon - <a href="https://www.rwm.com.au/" target="_blank">Richardson Wrench Mosman and Neutral Bay</a> director<img src="/images/authors/fullbody/simeon-new-profile33444.png" alt="" style="float: right;">
The term 'bubble' is without a doubt the most misconstrued term today that clouds the Australian residential real estate markets.
All along I have said (as others too have said) that there is no such thing. What makes up this so called bubble? In short, nobody was able to explain what metrics determine this imaginary term used to paint the real estate markets.
When I go to Wikipedia and search "Real estate bubble": "A real estate bubble or property bubble (or housing bubble)that occurs periodically in local or global real estate markets. It can be identified through rapid increases in valuations of real property such as housing until they reach unsustainable levels and then decline."
The point that needs to be made is that bubbles happen much more frequently than booms and only after a significant boom do we then see property prices in a free-fall, given next we enter a recession.
The last boom Sydney experienced was back in the late 1980's where prices doubled and in some cases even trebled. That was then followed by "the recession we had to have" in the early 1990s.
Of course we have seen many bubbles since then for example: in 2004, 2007 and recently in 2012/13 although the present bubble is being driven by overseas investors and local investors. It also should be noted that this does not include your average households, although it is inferred that they, too, are playing a significant part in this 'bubble'.
They say "if you want to make a mountain out a molehill, add dirt" – and that's exactly what's happening in the Australian residential real estate markets. An over reliance of using median price indexes skews the results to create unrealistic market data interpretations, given top-end sales will always do this to median prices.
Sydney has approximately 700 suburbs and only when you break them down individually one quickly draws the conclusion: nothing happening here, move on.
Booms cause massive economic destruction (as history has shown) the only problem is that the vast majority of commentators were not around when Sydney experienced its last boom. Cue the confusion about bubbles.
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Exclusive: What are the signs of a property bubble? Property Observer asks the experts

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There’s no bubble in Australia’s housing market, but that doesn’t mean you can rest easy, according to ANZ’s chief economist Warren Hogan.
Speaking on ANZ’s BlueNotes, Hogan said that we have the platform to see a bubble develop over the next few years, particularly if more people start purchasing speculative investment properties for short-term growth.
“There’s certainly a risk that we’re moving into [bubble] territory but where we sit now in late-2014 is not a housing bubble,” said Hogan.
“There are some excesses forming around the Sydney market that is a very historically high level of investor activity. But this is not a broad-based bubble; outside of Sydney and Melbourne house price gains are lethargic – we’re talking 3%, 4%, 5% for the other capital cities. And the amount of leverage in the market outside of Sydney and Melbourne is quite modest,” he said.
His view is that a housing bubble must be characterised by a broad-based increase in leverage, rising prices and unsustainable speculative behaviour.
“The issue is that we have the platform to form a bubble in the next few years. We’ve seen a significant increase in prices in Sydney, in Melbourne over a number of years and there is some momentum outside of those major cities and that means that expectations for capital appreciation are starting to form,” he said.
“What we want to watch, and where we think it could become a real problem, is when we get a broader element of the community getting involved in investment property that is on a short-term speculative view. That’s where you get into problems.”
{qtube vid:=_Qt50EYF-2A}
Recently, Mirvac’s chairman John Mulcahy also expressed an opinion that the property market isn’t currently in a bubble. Instead, he pointed to lack of supply.
 “While we agree the level of activity in the sector has increased, and pricing has improved in certain geographies, we believe the primary driver of this is the fundamental undersupply of housing across the country,” said Mulcahy.
“In relation to foreign investors, we continue to see demand from offshore buyers, particularly for apartment projects located in our major cities. For the 2014 financial year, foreign buyers comprised 11% of all settlements.”
Mulcahy noted that the percentage of total investors, both foreign and domestic, versus owner occupiers, is just over half of their apartment business.
“This is at the top end of our historical band, however, we would need to see this reach much higher levels to suggest a bubble,” he said.
“Investor activity is certainly buoyed by low interest rates, a view that property is a safe investment and a more cautious outlook towards general equities. But the key driver of higher pricing is driven primarily by a lack of supply, particularly in Sydney.”
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No bubble, but there is a platform for one to develop: ANZ’s Warren Hogan

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The headline should not to be confused with Fifty Shades of Grey, although many would argue that the audiences are struggling to differentiate between fiction and nonfiction. 
Property is a best seller although it’s becoming quite evident that when some write about property market events you will attract more eyeballs and interest if one uses the stratagem approach – such is the competition today for audiences.
Easily the largest chapter in the 2014 edition of the Fifty Shades of Property has been that ‘bubble’ (although some weeks ago this plot lost credibility when data was released revealing that the majority of states and territories in Australia were reporting price retreats). 
What, no crash? This can’t be happening – we need a monumental property derailment in Australia like the rest of the world.
Of course Sydney has been the stand – out performer thanks wholly and solely to the investors. Although the authors maintain that touché mantra by referring to Sydney data as Sydney house prices – when in fact it’s well documented that the apartment market is the huge performer thanks to investor frenzy. Nonetheless, for the sake of the argument it will read better for the audience when we call this Sydney house prices – despite this really being nothing of the sort – so manipulate the headline to achieve another touché.
<blockquote>
Easily the largest chapter in the property story this year has been that ‘bubble’ (although some weeks ago this plot lost credibility).
</blockquote>
At this time every year we start to see new chapters being added, such as recession and massive unemployment for the year ahead – again fiction coming to the fore. Which takes me to a refreshing piece written by David Bassanese in The Australian Financial Review this week – <a href="https://www.afr.com/p/business/property/we_need_house_price_rises_to_grow_aWxB8rIXMqkj6p9X9o0nzM" target="_blank" title="We need house price rises to grow economy.">We need house price rises to grow economy.</a>
"The Australian economy has had an outstanding run over the past two decades and has admirably dodged a number of global upheavals that might have felled lesser economies. Any economist south of 40 – years – old has no working knowledge of what it feels like to fall into a wrenching recession.”
Now isn’t that the truth. As too, his critique of the Australian housing markets:
“More recently, an increase in commentary about a house price bubble has also been allowed to develop, when all we’ve seen to date is an overdue cyclical upturn in house prices – and in only a limited number of states – on the back of especially low interest rates.
"Surprisingly, even the Reserve Bank has been lulled into expressing concerns that the housing market has become ‘unbalanced’ between investors and first home buyers – so much so it’s threatening to dampen critical investor demand through new macroprudential controls.
“How serious are Australia’s housing problems? Relative to household income house prices are only nearing past cyclical peaks – and mortgage affordability is still better than average due to low interest rates.
“The fact that investors are more prominent in this cycle should be no surprise given the rental yields have remained attractive relative to interest rates, and rental vacancy rates are tighter than normal – helped in part by the fact that foreign students make up an important element of Australia’s rising population.
“To the extent the growing role of self-managed super funds and foreign investors raises concerns, these are best tackled at source by changes to laws.”
That is what I would call a nonfiction critique of what’s actually taken place and yes, Australian Treasury is presently investigating 33 potential foreign ownership breaches – although I can see many, many more chapters on this topic for the 2015 edition.
For the writers who unwisely decided to adopt a blood and thunder approach to Australia’s property markets, one can only hope they have learnt a valuable lesson from their embarrassing forecasting – given it’s very clear they have failed the credibility test.
As Mark Twain once wrote: "Most writers regard the truth as their most valuable possession and therefore are most economical in its use."
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robertsimeon-hRNTwJyXkQ

Fifty Shades of Property: Where fact meets fiction

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The ABS released its <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Products/5204.0~2013-14~Main+Features~Related+National+Accounts+Products?OpenDocument" target="_blank">System of National Accounts for 2014-14</a> a couple of weeks ago which contained some interesting data on aggregate Australian land values. 
While commercial property tends to offer comparatively high yields, this is at least in part due to a comparative lack of capital growth in this asset class.  
While residential land values have boomed over the years, commercial land values have been virtually flat since 2008 and have simply never performed in the same manner. 
Residential land on the other hand...
<img src="https://1.bp.blogspot.com/-mVEzD9wXbkg/VFf0uicyCXI/AAAAAAAAQ8g/EoI7IExhZSw/s1600/LAND4.jpg"> 
This is not surprising, since the entire Australian financial and taxation system is set up for us to strive for home ownership and in many cases, to strive for property investment on top.
I noted the year 2008 above because it was at that time that the Australian property bubble theory really garnered support (to be fair, much of the financial world outside of Australia was imploding at that time), with some big studies eventually being released explaining why the Australian land value bubble must collapse.
<blockquote>
The thesis that land prices would inevitably suffer an epic crash from 2008 levels are looking shaky to say the least.
</blockquote>
The data series produced were never wrong, but they were frequently misinterpreted because users of the data took no account whatsoever of the factors which did not support their theory that land prices must collapse.
For example, disregarded were many of the real world factors which have served or continue to serve to push land values higher, including the deregulation of the financial system, interest rates falling substantially from above 15% to only 2.50% today, massive population growth in Australia, and a string of other factors as often discussed here before.
Six years on, let us now consider on what has happened to land values according this latest ABS data. 
<img src="https://1.bp.blogspot.com/-3FKRxdZ0H40/VFf0s0qtWTI/AAAAAAAAQ8Q/NvcuteYQPas/s1600/LAND1.jpg">
Goodness. As the chart shows the thesis that land prices would inevitably suffer an epic crash from 2008 levels are looking shaky to say the least.
Over the last six years, residential land values have continued to increase by 37% in New South Wales, by 46% in Victoria, 21% in Queensland, by 33% in South Australia and by 11% in Western Australia, having previously already boomed in Perth. 
Land values have taken off dramatically in all of the less populous states too.
Of course, with Australia's population growing at around 1.7% per annum, and thus some new land being rezoned for residential use, we would expect to see some increase in aggregate land values.
In fact, between June 2008 and June 2014 the Australian population increased by 2,051,000 or 9.6% (although apparently, it was further argued, population growth does not impact dwelling prices).
But clearly a population increase of less than 10% in no way accounts for residential land values in Australia increasing by 33% across the same time period. 
For completeness, here is what happened to commercial land values across the states. 
<img src="https://2.bp.blogspot.com/--GAH1Z8AMJ8/VFf0tDOkqSI/AAAAAAAAQ8M/NcKEHSxgQ1I/s1600/LAND2.jpg">
And rural land values, which outside of New South Wales, have done absolutely nowt.
<img src="https://4.bp.blogspot.com/-fqt-4GEw3kQ/VFf0taQHGqI/AAAAAAAAQ8I/JqyR4r7bdAc/s1600/LAND3.jpg">
Overall, the data shows that the demand for residential land, which is so heavily focused on a few key coastal locations, particularly Sydney, Melbourne, Brisbane and Perth, has pushed land prices higher over time.
You can visit <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) or Pete's <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blog</a>.
His latest book is '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' .
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pwargent-M4siyDbqQY

Soaring Australian land values put paid to property bubble theories

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I've always liked the saying "can't see the forest for the trees".
It appropriately sums up so much of the distorted self-indoctrinated bias of opinion pertaining to real estate in Australia.
The debate has never been so fierce – especially when it comes to the definition of that 'bubble'. I am of the firm belief that it is those who are actual historians of the Australian property markets who are the ones with the greatest ability to call the exact path and outcomes.
If you want to end the 'bubble' debate simply ask the question: "So when do you see this bubble bursting?"
It's always the fastest way to draw the debate to a fast halt. History has shown when you closely analyse the property market machinations through the Reserve Bank of Australia (RBA) – Cash Rate Target interest rate changes only then can we see the significant market changes.
That being when the RBA increases the cash rate twice (not once) we are starting to see a new course being charted. Then it takes another two to four years for the affects to be seen given that is when households start to come out of their fixed mortgage periods into the higher mortgage agreements.
Given we are the best part of at least 12 months away from the first cash rate increase – which should send the alarm bells ringing – then depending on the next increase we won't start seeing any noticeable market price corrections until 2016 to 2019.
We also need to bear in mind that when the cash rate increases so does the exchange rate as that goes up in unison, which is the last thing the RBA wants to see given it's presently trying to get the exchange rate down.
We should consider that the RBA is well down the track to introducing its new macroprudential tools as well as waiting to receive (then implement) the findings from the Murray Financial System Inquiry.
No doubt the RBA would be very much looking forward to tinkering the markets with these tools so that (for the very first time) other than increasing the cash rate  it may just be able to manipulate the markets in a way never seen before. For the first time ever (as many would not be aware) we are witnessing history with these new real estate market initiatives.
Again, history will show whether or not they were effective. However, it will be fascinating to watch the outcomes.
So back to those fools on the hill who following this week's RBA decision to leave the cash rate on hold at 2.50% – they even managed to get that wrong. No it was not a record (as some declared). Even though 14 straight months is getting up there, the actual record is 17, not 16 as some would believe. Furthermore, you can only apply consecutive meetings as the RBA doesn't meet in January.
Having said that, when you go back through the history of the cash rate movements at the RBA we start to see fascinating stories evolve.
I have conducted my research on instances where the cash rate remained on hold for 10 or more consecutive meetings:
The first period of RBA cash rate holds started on 30 July 1993 when the cash rate was moved from 5.25% to 4.75%, where it remained until 27 July 1994 – in total 12 holds. Then on 17 August it was bumped up 1.25% to 5.50%.
The next run of holds, which is the equal record 17 holds, happened on 14 December 1994 when the cash rate increased from 6.50% to 7.50%, where it remained until 3 July 1996.
Then it fell to 7.00%. So we are seeing long holds followed by increases and decreases.
On 30 July 1997 we saw another 16 consecutive holds at 5.00%, to then see it drop to 4.75%.
On 5 June 2002 we saw 16 holds at 4.75%, to then see it increased to 5.25% in November 2003.
On 4 February 2004 we saw thirteen holds at 5.25%. When the cash rate was increased to 5.50% in March 2005, that was followed by another twelve holds that was followed by an increase to 5.75%.
Then on 8 December 2011 we had another ten holds at 4.75%, then saw the rate dropped to 4.25%.
We are now in the current hold pattern after fourteen meetings, so based on history it's anyone's guess what or when the next movement might be. I predict the current rate will be set for the longest period in RBA history as it will go well into the twenty something meetings.
So when you see the arguments mounting that many commentators were disappointed that the RBA hardly mentioned that ''bubble" following this week's decision – history clearly shows that the board members may not be that concerned about that "bubble".
Maybe they are more concerned as to why investors have steered clear of the stock market which, by the way, had a few massive corrections this week – although, wait a minute, nothing much was written about that either.
It all depends on what you are looking at – the forest or the trees?
As to be expected stock levels increased significantly this week – so now we finally get to see firsthand just how strong the markets really are.
Watching these numbers will be telling over the period leading up to Christmas, although I don't believe we will see anything that even resembles that imaginary 'bubble'. Time will tell!
 
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Want to know when the market will change? Keep an eye on interest rates

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Guest observation
Property media in Australia can be confusing at the best of times. But in August, it was contradictory madness.
"Jump aboard as prices continue to rise," trumpeted local commentators. "Your crash is coming," overseas experts chimed in.
"Beware Australia's housing bubble," cried the Reserve Bank. Treasurer Joe Hockey then dismissed that idea. Next, the Reserve Bank said prices were "not a crisis" before sending "warnings" of an "inflated market" with potential for, yep, "bubbles".
So our dinner tables are now places of effervescent debate. Property is becoming notorious enough to be off-limits alongside sex, religion and politics. With each contradictory headline, prejudices burn on both sides of the fence. Everyone's an expert.
Yet if we focus more on what's happening in our own "micro markets", we often have all the answers.
Supply and demand drives price, so forget looking at Australia as a whole. We need to see the market in specific price brackets, geographies and lifestyles.
<img src="/images/2014/10/8/mic.jpeg" alt="">
Sydney's art deco coastal belt - a micro market of its own. (Image supplied)
When buying, we don't view Australia as one market. We don't even see Sydney as one. And postcodes don't dictate precise boundaries for residents. People see a certain way of life, delivered by a similar category of home, across a variety of suburbs that cater to a specific lifestyle.
Think student belts from <a href="/news">Kensington</a> to <a href="/news">Camperdown</a>. Think brand new apartments from <a href="/news">Bondi Junction</a> to <a href="/news">Chippendale</a>. Think luxury homes around waterfronts. Think 3-bedroom inner-city terraces around $1.2 million.
They're just 4 different micro markets, moving independently of each other. And there's plenty more, each with their own lifestyle and buyer profile of residents wanting the same home.
As bubble chatter continues, some of these homes have boomed in value, while some prices have dropped. Certain rents have skyrocketed. Other landlords have slashed prices.
Luxury houses in prestige streets of <a href="/news">Woollahra</a> and <a href="/news">Point Piper</a> make another micro market. Prices in these pockets are down from levels seen three years ago. Try telling those owners we're in a "property boom". Yet that's what these stories keep beating up.
<img src="/images/2014/10/8/mic2.jpeg" alt="">
Not booming: This home in Jersey Rd, Woollahra sold in 2008 for $2.2 million. It recently sold for the same money in 2014.
As savvy buyers and sellers, it makes sense to hone in on these mini trends, because each micro market performs differently over time. The wider data doesn’t tell us this.
<img src="/images/2014/10/8/mic3.jpeg" alt="">
Across in Marrickville, this cottage sold in 2005 for $425,000. With some cosmetic updates, it fetched more than $1 million in 2014.
Residents who understand how their own sector of the market is performing can identify periods of dropping price, growth, and steady phases with no movement.
Existing owners can still capitalise on knowledge of micro markets. As sellers or landlords, the trick is to position our property correctly to capture the most demand.
Then, we can strategise and set objectives. We can make changes, renovate to suit the area, market homes differently, or wait. Understanding what's happening around us can be far more valuable than waiting on interest rate changes or following wider data.
When buying, we shouldn't accept reports that all home categories are hot. If Sydney and Australia is booming, we can still pounce on the ups and downs of the micro markets that suit our needs as buyers.
Even within all this "bubble" and "boom", the best buying/selling can find untapped momentum. We just have to become more in tune with our neighbourhoods.
Shannan Whitney is the chief executive of <a href="https://www.bresicwhitney.com.au/buy" target="_blank">BresicWhitney Estate Agents</a>.
 
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Forget one big bubble: we're a nation of micromarkets

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The <a href="https://www.rpdata.com/images/stories/content/pressreleases/2014-10-01--rpdata-rismark-home-value-index.pdf">latest house price index</a> figures released by RP Data earlier this week show a year-on-year increase in property values in Sydney of 14.3%. This has sparked the current hot debate on property prices and <a href="https://www.news.com.au/finance/economy/is-there-a-housing-bubble-thats-about-to-burst-in-australia/story-e6frflo9-1227062516640">speculation</a> of a price bubble. Though, it seems many people have forgotten what house price indices represent.
The All Ordinaries, the index of broad Australian equities market movements, increased by around 9% in the 12 months to the start of September. As investors understand, this doesn’t equate to all stocks on the market increasing in price by 9% over that period.
For example, shareholders in BHP, one of the largest ASX companies by market capitalisation, have suffered a modest loss over that period, even after dividend payments are considered. And as the All Ordinaries Index value has fallen 6% over the past month, there have been some stocks that have fallen more (Myer shares tumbled nearly 20% in the month) and others that have gone against the trend (insurer QBE was up 1.2% in September).
Similarly, a house price index gives a measure of the broad property market movement. In the case of the RP Data-Rismark Index, the change in the index value reflects the average increase or decrease in property prices.
Prices in Australian capital cities, the typical benchmark measure of the Australian residential real estate market, increased by 9.3% in the year to September.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/60563/area14mp/fx9nb9ry-1412182860.jpg"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/60563/width668/fx9nb9ry-1412182860.jpg" alt=""></a> Source: RP Data
In Canberra and Perth, however, the reported growth in real estate prices was significantly lower at 3.2% and 1.7% respectively. Outside of capital cities property price growth was also a modest 3.3%.
Even in Sydney, which has experienced the strongest price growth of any capital city, there are marked differences in the rate of price appreciation between different suburbs. Western Sydney clearly captures this with residents in <a href="https://www.dailytelegraph.com.au/realestate/buying/price-hikes-for-homes-in-popular-western-sydney-suburbs-eclipse-annual-income-of-most-residents/story-fni0cate-1227049569685">South Granville</a> enjoying an increase in median property price of around 17.5%, while reported median prices have shown virtually no annual change in <a href="/news">Auburn</a>.
Blunt policy tools are not the answer
It wasn’t so long ago that the average price of Perth’s houses surpassed Sydney’s on the back of a mining industry-led boom in the West. At the national level, these differences in property price growth are the result of shifting labour and economic factors, and to a lesser extent state-specific regulation.
Within a city, local amenities and employment, as well as the preferences of the potential home buyers are reflected in price growth variation.
This is a key point that needs to be remembered when blunt policy tools are debated. Measures to tighten home loan lending, increase borrowing costs or remove negative gearing affect the market as a whole, whether in Sydney, Perth, or a regional centre.
For policy to be effective it needs to firstly identify what it aims to achieve. Housing policy is a double-edged sword. Rapidly rising house prices can put home ownership beyond the reach of younger and lower-income Australians. But policy designed to lower house prices can put existing homeowners at risk of falling “underwater” - holding negative equity in their property. Again, it is typically lower-income households that are most at risk in this scenario.
Cooling the bubble talk
The growing pressure for a policy response to rising house prices is in part due to fears of a price bubble. The last time the Australian or Sydney house price index increased at more than 10% in a year was 2009. Unsurprisingly, there were calls then too that increased regulation was required to prevent a property bubble burst and housing crisis.
Since 1996, Sydney real estate prices have grown at an average annual rate of 7.26% though, with considerable variation in that time. A growth rate in a single year of 10% in any other asset market with these dynamics would not be cause for alarm. Yet housing has this perception of being low risk, pervading our cultural psyche. Something idiomatically described as “safe as houses” is viewed as guaranteed or risk-free.
When faced with the reality that property prices go up and down, sometimes fast and sometimes slow, we seek ways to explain the conflict with these cultural expectations. Assigning the label or “price bubble” shifts the responsibility for our own irrationalities back on the market.
<img src="https://counter.theconversation.edu.au/content/32366/count.gif" alt="The Conversation" width="1" height="1">
Danika Wright is affiliated with Sirca, as a member of the Sirca-RP Data Advisory Board. She is a lecturer in Finance at the University of Sydney. 
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/rational-talk-on-housing-prices-lost-in-a-bubble-32366">original article</a>.
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