The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Bubble

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Guest observation
Everyone is talking about a housing price bubble, particularly in Sydney, but is this really the case?
In my honest opinion, I think probably not at this stage. Although I do predict that we will see an influx of struggle-stories in the press.
It's safe to say that both Melbourne and Sydney markets are continuing with a strong growth pattern. Melbourne, in particular, documented a very strong capital growth rate throughout August at 2.31%. Sydney closely followed this at 1.52%.
The Sydney median house price now sits at a very high $852,500, which is getting closer and closer to that $1 million benchmark. So the question is, when do we expect to see our capitals hitting those million-dollar medians?
Million-dollar cities
Based on the historical data, our predicted growth rate for Sydney has been calculated at 5% for the next five years. This suggests that Sydney houses will hit the million-dollar value mark in three years. However, the predictions indicate that growth rates are going to slow in the short term, before increasing to 6% on average per annum towards the end of the next five years.
If the above scenario is the outcome, this would mean that Sydney would breach a million-dollar median value within five years, most likely during the first half of 2019. In Melbourne, a similar growth trend indicates that it will take ten years to reach a $1 million median, expected to occur during 2024.
Two million-dollar suburbs
Based on these predictions, in turn we expect that the number of suburbs with a median value of $2 million will increase. Today's figures show that there are currently 277 suburbs in Sydney with a median house value of over $1 million, with 41 of these currently breaching a $2 million median.
With this level of growth, we anticipate that by 2019 there will be 91 suburbs in Sydney with a median value in excess of $2 million. This suggests that around 9.5 per cent of the city will fall into this category, while the city portion that will fall under a $1 million house price median will be 43.25%t.
Australia's highest-value suburb, in terms of a median house price, is currently the eastern Sydney neighbourhood of Point Piper, where the current median sits at $8.099 million.
This article continues on the next page. Please click below to continue.
<hr class="system-pagebreak">
Unaffordability
Data shows that the Sydney market is slowing, although not as quickly as we would like it to. The current stance is that the level of unaffordability in the capital is now at historic highs, with loan repayments on a median house equating to approximately 54 per cent of an after-tax median salary.
These figures are extraordinarily high, which would usually send the market into retreat; although the fact that the market continues to display strong growth levels indicates that there is another issue.
I expect that this current level of unaffordability is causing the 'housing bubble' concerns. However, there is another potential explanation, and that is that the Sydney market purchasers have changed, so the affordability ratios are no longer valid simply because median income families are not buying the median income home.
Those who fall into the median income family bracket in Sydney are currently most likely to be renters, with the actual buyers being seasoned property investors with higher than average salaries. Median income families in Sydney are now buying on the city fringes where prices are currently more affordable.
Back to the bubble
Returning to the issue at hand, in my view, a housing bubble exists when there is significant growth in asset values, and the asset value growth is driven by borrowings. In more general terms, a bubble comes about through greed and carelessness from both lenders and borrowers in a situation where there is an oversupply of stock.
Are we in this situation currently? Well, there's nothing to suggest that we are. I believe our banks and financial intermediaries have stable risk management policies in place, despite their aggression in trying to maintain their market share.
In my opinion, the driving growth factor seems to be driven by existing homeowners who have much more reasonable levels of income and assets to support their property purchases. Due to this, the lenders can also be more aggressive due to having to compete in these market conditions.
There will always be a group of people who will ultimately cause lenders problems in an environment where there are high house prices and low interest rates. This is a consequence of some buyers overstretching themselves and getting caught up in a change in personal circumstances. As a word of warning, I would suggest that this is not the time to stretch your capacity and excessively borrow, but to look towards a lower cost investment and avoid the stress and potential pitfalls.
In the days ahead, I expect dwelling price growth rates to slow, with the market stabilising and exhibiting little growth throughout 2015. Those who are looking to make a first investment shouldn't rush into anything, and instead wait until the market moves into this more consolidating phase.
If you are looking for a more in depth analysis of my property research, you can find this in the Investor Centre at <a href="https://www.onthehouse.com.au/" target="_blank">Onthehouse.com.au.</a>
John Edwards is the consulting analyst for onthehouse.com.au.
 
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jedwards-8kHM8GNY6d

Housing prices: Boom or bubble?

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Q: Is there a housing bubble?
A: Nationally no, but if we are talking about Sydney, Melbourne and new inner Brisbane apartments, then yes.  That's a YES, in case you somehow missed it.
Sydney and Melbourne have been distorted by an influx of 'grey' money coming from China. Many don't like to hear this, but it is happening. No hard statistics, but our groundtruthing is looking worthy of a hefty bet.  And of late, some of this grey has shifted north, along with local superannuation funds looking for cheap property &amp; a longish timeframe to settle, in the hope of double digit price growth.
Brisbane always follows Sydney, right?  Property is so cheap in Brisbane, hey! You can buy two in Brisbane for the price of just one in Sydney. Bris Vegas here we come.
Sidebar
I have an internal debate several times each month – it's fun, like talking to an imaginary friend – about whether or not to write on a certain topic. 
Do I let blast about China? Publish my thoughts about smaller apartments?  Call out all those BS artists promising double digit price growth &amp; rental increases?  And this week, it's a yes.  Write something about the Reserve Bank (RBA), Foreign Investment Review Board (FIRB) and how we will all be rooned.
We'll all be rooned
Now, there is nothing wrong with a global property market, nor being in the recovery phase of the property cycle and having closer ties to China – or any of our major trading partners for that matter.
But a housing bubble is a different story.
Property values have almost trebled over the past two decades, while wages have not kept pace. House prices in both Sydney, Melbourne, some parts of Perth and now across inner Brisbane, are often over 10 times household earnings. In many cases, weekly rents also far exceed 30% of a renter's income.
And things can start getting out of hand when the proportion of investors buying accounts for around half of all residential sales – double the 25% of the housing market made up by private renters. This happens every cycle, but its current trajectory is unsustainable.
Got some doubts?
Well this year alone, housing credit and house prices have climbed at, respectively, more than two and three times the rate of household income growth. It isn't the actual rate of credit and price growth that is the problem, but their relationship with our ability to afford this inflation.
It's true that this is mostly a Sydney and Melbourne phenomenon, but we only have a few blunt tools in the back of our ute to temper the times. And besides, we have never been that good at small, fiddly renovations. Slash and burn is more our style.
The good and the bad
Yes, there are reasons for property demand to be improving – we have record low interest rates, relatively low vacancy rates, high population growth and a strong penchant for owning property.
But on the flip side, we have falling commodity prices, an employment baton change which, for the life of me, I cannot see happening smoothly nor correspondingly, little wage growth, ageing demographics, high debt, an increasingly economically wobbly China and a close to epileptic Europe. Not to mention what may or may not happen with the rest of the world.
For those who only hear good news, you might have missed that Australia's federal budget deficit last year (2013/14) was close to $50 billion &amp; yet the Palmer United Party wants to keep the red ink flowing until the early 2020s. 
If that happens, then our prized AAA sovereign credit rating could be at risk, especially if something goes wrong with our economy – or that of a major trading partner.
In short, we might see the vulnerable economic conditions of southern Europe down under.
This article continues on the next page. Please click below to continue.
<hr class="system-pagebreak">
True blue
But in true ocker fashion – it's all "she'll be right mate", "nothing to see here". Those questioning our "property at all costs" mentality need to take a double dose &amp; retire to bed early. Keep on moving on. Bid higher at that auction. Buy something tiny and off-plan. Doesn't property double in value every seven years? You cannot lose.
Too far-fetched?
Well, our real wages are falling. Yes, falling, as average earnings rose just 2.3% over the last 12 months – that's 0.3% lower than inflation. Unemployment is over 6%, without counting the 700,000-plus on disability pensions.
True, the RBA does predict higher economic growth next year, real wage growth in some distant future and lower employment one day, maybe, but this is predicated on the assumption that nothing economic will go bang or that China's economy won't slow down further.
Excuse me for being a skeptic, but trying to predict an economic future, these days, is almost impossible.  I would just love to read or hear one of those talking eco heads say something like, "well, frankly we don't have a bloody clue".
If you ask me what's going to happen, your guess is as good as mine.
But I do like to guess, so here goes.
<ul>
<li>Government will not reign in spending; we (the senate) won't allow it.</li>
<li>No workplace reforms, for fear of a union campaign.</li>
<li>The RBA will continue jawboning and keep interest rates where they are (when looking at the whole of the Australian economy – not just housing in Sydney and Melbourne – they really need to fall).</li>
<li>Plenty of talks about macro-prudential action – like higher investment loan to value ratios; changes to property taxation or minimum product sizes – but nothing done. Maybe that is a good thing?</li>
<li>No enforcement by FIRB regarding illegal overseas buying – and it has almost all been illegal in recent years.</li>
</ul>
And it's the last point that is the most pertinent right now.  If you want to slow down the Sydney, Melbourne and inner Brisbane property markets without stopping the rest of the country, then you must enforce offshore buying laws.
Inert FIRB
An inert FIRB has done nothing to inhibit the grey economy that exists to get money out of China (ironically, helping them deflate their own housing bubble) &amp; into safer overseas havens like Australia.
It's true that the Chinese government imposes a $US50,000 a year limit that can be sent out of the country, but cashed-up Chinese bypass this system via personal relationships rather than transparent bank transfers. Heaps of property – just how much is unknown (but it shouldn't be) – is being bought this way in Sydney &amp; Melbourne, Perth, and now in Brisbane and starting to again on the Gold Coast.
Also, the Significant Investor Visa (SIV) is dominated by mainland Chinese who meet the $5 million requirement. They are paying stupid prices for potential development sites (with site values doubling in the past five years), but property economics do not apply here, as the SIV is really a fast-tracked qualification for a permanent visa. Dual nationality is the want, but sadly, too many Chinese just want an Aussie passport as an insurance policy, not a new way of life.
Lower down the chain – much lower, if you ask me – is another sheltered workshop – property spruikers flogging Chinese investors little high-rise boxes in Sydney, Melbourne and now Brisbane. Entire high-rise buildings are financed, built and sold for the Chinese market, with local buyers and developers rendered irrelevant. Small, one-bedroom dogboxes are the norm. The more the merrier. How divine, indeed!
And all of this should be illegal. If only FIRB would enforce the law!
All of this illicit activity is creating a demand that would not otherwise exist. Well at nowhere near the levels that it is increasing spruiked. Quarterly newspaper lift-outs about Australia's sudden urge to live on top of each other – I mean, come on.
And this, coupled with local superannuation investors – many of whom appear to have been sold a pup – has created valuations that are dangerously detached from average weekly earnings &amp; sustainable owner-resident demand.
But then again, it is Australia mate; stop all this fussing; she'll be right; tyranny of distance and all that stuff.
But seriously folks
But seriously, something has to be done.  We are now entering some serious hot water.
Here's another guess.  Nothing will happen until this gets political; economic sense doesn't seem to cut the mustard around here anymore.  The political wedge, for mine, come next federal election, is overseas buying.
But between now then, I will take Terry's advice – take a couple of aspirin &amp; have a good lie down. 
Michael Matusik is the founder of Matusik Property Insights, which has helped over 550 new residential projects come to fruition.  Read Michael's <a href="https://matusik.com.au/missive/" target="_blank">Blog</a> or follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank">Facebook</a> and <a href="https://twitter.com/michaelmatusik" target="_blank">Twitter</a> or connect via <a href="https://www.linkedin.com/in/michaelmatusik" target="_blank">LinkedIn</a>.
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michaelmatusik-49YzLvdmNv

Is there a housing bubble? Or should we all take a wee lie down?

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In case anyone needed someone to say it, Residex’s John Edwards has noted that Sydney is now more unaffordable than ever before recorded, and that prices are still rising.
Yet despite the headlines, he says there is no bubble.
Edwards noted that an affordability measure, based on median household income, is now at historic highs.
Sydney house growth from August 2012 to August 2013 was 9.43%. From August 2013 to August 2014 it was recorded at 16.93%. Over the last quarter, 3.5% growth was recorded, with 1.52% over the month.
Sydney's unit growth from August 2012 to August 2013 was 2.68%. From August 2013 to August 2014 it was recorded at 14.31%. Over the last quarter, 3.64% growth was recorded, with 0.1% over the month.
“It takes about 54% of after tax income to make loan repayments on the median value home of $852,500; it takes close to eight times the annual median income to buy the median Sydney home. These ratios are extraordinarily high based on historical data,” said John Edwards.
However, he noted that fortunately Sydney is slowing down, albeit not as quickly as had been expected.
“Historically, at these levels our markets would fall in value. It is this high level of un-affordability that probably leads many to suggest that we are in a “housing bubble”.
“However, something has changed: The buyers in our markets. Our measure is likely no longer as valid as it once was, because the current buyers are no longer median income families. Median income families living in the median value areas of Sydney are largely renting,” he said.
He noted that house and land buyers are second and third time purchasers with income levels much higher than the median recorded wage, and that median income families are purchasing in the slightly more affordable city fringe.
He notes that the median price is very high, just $147,500 from reaching the $1 million median value mark.
By the first half of 2019, Edwards forecasts that Sydney can be assumed to reach a median value of this amount.
“It is equally clear that there are going to be large numbers of suburbs with a median above $2 million,” he said.
“By the end of 2019 it is estimated that there will be 91 suburbs with a median value in excess of $2 million. This represents about 9.5% of the city. The percentage of the city with median suburb value over $1 million will be approximately 43.25%.”
However, despite this, he maintains there’s no suggestion of a bubble.
He notes that a bubble exists when significant growth in asset values is driven by borrowings.
“In more general terms it is driven by greed and lack of careful thought by both lenders and borrowers. It is excessive bank lending which allows leverage and preparedness by borrowers to pay unreasonable prices for property,” he said.
Nothing suggests we are in this situation, Edwards explains, noting that banks and financial intermediaries, while becoming more aggressive to maintain market share, have acceptable risk policies.
“The driving force behind the growth in values seems to be existing home owners who have reasonable levels of income and assets to support their property purchases which are likely investments.
“In this situation the lenders can be more aggressive due to the capacity of borrowers to meet their obligations,” he said.
{mijopolls 43}
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jduke-EHk3XBmHkn

Sydney now more unaffordable than ever in recorded history, but no bubble: Residex

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I think we all need to have a cold shower, a few aspirin and a wee lie down.
Then, having calmed down a bit, conduct a rational assessment of our property markets, without the emotion, the self-serving hyperbole and the publicity-seeking rhetoric.
We seem to have arrived at a point where any price rise anywhere in Australia is deemed a crisis. We're also at a point where the argument (it doesn't deserve to be called a debate) about real estate is driven by the people who make the most noise, rather than those with the most knowledge.
And, saddest of all, Australia in 2014 is a place where few people who work in or use the media give a damn about fairness, accuracy or balance. The only thing that matters is the headline or the political points scored or the amount of publicity achieved.
There was a time when journalists performed a worthwhile role. They were the filters through which information and comment had to pass. Claims were challenged, information was checked and alternative views were sought.
No one got to write about a subject unless they had credentials.
Today employees of media organisations are often mere conduits for propaganda. The public is asked to accept that if it's in a press release, it's valid. If someone describing themself as an economist makes a statement, it's likely to be fact. If an offshore "analyst" makes an observation, it's news.
The outcome is a melting pot of extreme views. The missing ingredients are objectivity, scrutiny and balance.
Many journalists no longer feel the need to support their statements with evidence.
A writer from a major media company (not a property specialist but apparently a "personal finance writer") this week stated as fact that Australia has "inflated house prices" and "surging property prices across the country". And that was just the first sentence.
No evidence was presented to back those big statements; we were expected to accept them as truth, despite the writer's lack of expertise and the reality that all the research data contradicts the notion we have "surging property prices across the country". According to the numbers I see every day, it's simply a lie.
On the same day, a writer from a different media company, with even flimsier credentials, sought to justify a pre-conceived attitude that investors exploiting the tax system drive up property prices. He presented graphs which he claimed showed that "whenever investor activity increases, house prices go up".
He saw what he wanted to see but, in reality, the graphs showed nothing of the sort. They showed, in fact, that investors do not lead price rises – they follow them. In every step along the graph line, a change in investor activity came after a change in prices.
My three decades researching real estate has taught me that investors never instigate property booms - they follow them. The biggest force in real estate, always, is the sector comprising home buyers other than first-home buyers, who dominate most markets numerically and have the financial capacity and motivation to pay high prices.
Meanwhile, another columnist with a bee in his bonnet about Asian investors tried to argue that "an influx of murky money from China" had been distorting and inflating our property markets "for years".
There was little in the way of research evidence, just a convoluted set of statements that led to no apparent conclusion.
So there we had, on the same day, three writers, all of them working for major media organisations but none of them with any real estate expertise, all claiming "Australian property prices" were unreasonably high, but each blaming a different bogeyman – one claiming it was foreign investors, another pointing the finger at local investors boosted by negative gearing, and the third blaming slack lending standards.
The one thing they had in common is that they all got it wrong. And probably don't give a damn because the headline is the thing.
So, setting aside all the ego-driven noise, here's a reality check.
Sydney remains the only city to have produced boom growth to date. The figure so many misguided commentators keep quoting – and describing as "the surge in Australian property prices" – is nothing more than the average increase across the capital cities, greatly inflated by Sydney's growth.
The key thing is this: Sydney's upturn follows 10 years of under-performance. Even with the rises of the past year or so, Sydney's average growth over the past decade is still below par. As a number of the more rational observers have commented, Sydney has been playing catch-up. But, despite the recent increases, it still hasn't caught up.
Here are some examples of what I mean. The median house price for <a href="/news">Vaucluse</a> has increased 17% in the past 12 months, according to Australian Property Monitors, but the average annual rise in the past five years is just 1.4%. The 10-year growth average is 3% per year.
The median unit price for <a href="/news">Point Piper</a> is up 17% in 12 months, but the 10-year average is 1.5% per year. In real terms, they've lost value over the past decade.
In <a href="/news">Darling Point</a>, the median unit price today is lower than it was 10 years ago, despite the recent growth. They've lost money, even without allowing for inflation.
Heading out west to a more mainstream and affordable market, the suburb of <a href="/news">Blacktown</a> (Sydney's most popular suburb in terms of sales volumes) has recorded 18% median price growth in the past year, but it's 10-year average is just 3% per year.
You'll find similar numbers right across the Sydney metropolitan area. Even when you examine above-average performers, the numbers are still modest. Balgowlah's five-year growth average is 5% per year; its 10-year performance is 4.1% per year.
All the froth and bubble in the media is being caused almost exclusively by Sydney's growth, but in reality Sydney's long-term performance remains decidedly poor.
Take the recent Sydney growth out of the equation and the average growth in the past year across the other seven capital cities is 4-5%. And that follows several years of price decline.
But, amid the prevailing atmosphere that any price rise is a national disgrace, even that number would be described by some as a bubble.
Terry Ryder is the founder of <a href="https://hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can reach Terry via <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or <a href="https://twitter.com/hotspotting" target="_blank">twitter</a>.
 
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terryryder-YECXbqmri2

Headline obsessed writers need a reality check

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Guest observeration
Recently I read two very different articles about our 'property markets'.
The first was an in depth piece by arguably Australia's most accurate property analyst, Michael Matusik. The <a href="/expert-insights/finance/unprecedented-low-interest-rates-wont-last-forever">second article</a> was attributed to the chairman of Century 21 Real Estate, Charles Tarbey. Both articles rammed home why the average Australian finds it difficult to know (let alone understand) what's really happening in 'the property market'.
Matusik suggested that "caution and common-sense" are the order of the day for owner occupiers and investors alike (along with investing for rental income of course).
Tarbey on the other hand declared that there was no bubble in Australian real estate, and that "we're in a very steady adjustment growth mode driven by the shift to a market where buyers and sellers negotiate a fair price". Caution and common sense?
Neither pundit addressed this point though: your bank has a dirty little secret (weapon) that they can't wait to use on you.
Our current low interest rates and housing shortage issues have lured thousands of people each week into paying 'whatever it takes' to get into a property, especially in Sydney and Melbourne. There's so much evidence of this that it's just plain scary.
Whether you like it or not, Sydney is the undisputed engine of Australia. Melbourne comes in second and not-so-sleepy Brisbane is third in line.
So let's take a close look at Sydney, shall we? With 4.35 million residents, the largest workforce, strongest Gross Domestic Product (GDP) and highest home prices in the nation. House prices (in Sydney and every other overheated market) are poised for a serious downward adjustment, not if, but when interest rates go back up from their current 50 year historical lows.
Most people flocking in to buy a home today don't understand that an interest rate of 6.70% isn't just a "bit more"; it's a whopping 37% extra interest each month.
How will life change for an average Sydney couple with a $400,000 mortgage currently and 4.89% interest rate? Their current monthly repayment is $2121 with an interest component of $1630; and they're paying the principal down by $491 a month. It will take them 30 years to own that home at that rate.
But what happens when their interest rate goes back to 6.70% - still well below the long term average?
Have a look at the 'smoke &amp; mirrors' their bank uses to hide its dirty little secret. Although the monthly repayment for our Sydney couple jumps by $460 to $2581, the interest component jumps by almost $150 more, from $1630 to $2233.
The interest component on their loan is now $112 a month more than their previous principal and interest repayment.
Their interest is now $603 higher, however their monthly repayment only increased by $460. Even though their monthly repayment jumped by almost 22% - the interest component jumped by 37%.
Hello, did you see that: they've gone from paying almost $500 a month off, to now only reducing the debt by just $348 each month.
Kiss that 30 year repayment period goodbye!
Score 1:0 to their bank, who win big time, with each rate rise working in their favour.
 This article continues on the next page. Please click below to continue.
<hr class="system-pagebreak">
 
So I simply cannot agree with Tarbey's view. When people are competing in record numbers, for the few properties available, and prepared to pay above the odds to secure a place to call home, then common sense has gone out the window.
I know we're in a bubble right now, when real estate agents tell me that the house I bought for $680,000 just over five years ago would probably now fetch $1.1m.
I know we're in a bubble right now, when real estate agents tell me that they'll now accept "offers over $280,000" for the two bedroom units I was buying for investor clients 21 months ago for $200,000 - and their rents have either remained static or dropped $10 a week in the process.
I know we're in a bubble right now, because my house hasn't increased in value by over $500,000 or 73%. I know we're in a bubble right now, because those two bedroom units haven't increased in value by $80,000 or 40%.
I also know we're heading for a severe correction in those markets because:
<ul>
<li>This insanity is driven by an abundance of cheap money</li>
<li>The supply component is out of synch to match the demand caused by the abundance of cheap money</li>
<li>Money is the cheapest it's been in over 50 years because our economy is in trouble</li>
<li>Borrowing to the hilt because you can afford to pay whatever it takes for 'that' property based on today's interest rates is maybe the new definition of insanity</li>
</ul>
Michael Matusik, I think you're closer to the truth than even you might know.
What should you do right now? A couple of things, actually:
<ul>
<li>Get rid of all that credit card debt, personal loans, and any other high interest rate facilities</li>
<li>If you can't get rid of that debt, if you've got enough equity in your home consider rolling those debts into your home loan. Better still, roll them into a separate facility and pay it off over say three to five years</li>
<li>Seriously consider switching your home and/or investment property loan to either a three or five year Fixed Rate loan - sooner rather than later</li>
<li>Pay more than the minimum repayment on your home and/or investment property loans; in fact use these ridiculously low interest rates to pay as much extra as you can afford</li>
<li>Right now, the smartest thing you can do - for you - is to reduce debt fast. The lowest interest rates in five decades is your best chance to do this, probably in five decades.</li>
</ul>
 
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klee-LzAEhB2j7n

Your bank has a dirty little secret

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At last, some informed comments about Australian real estate by someone in a position of authority.
Joe Hockey isn’t my favourite politician, but the Federal Treasurer has a better handle on residential property than all of our chattering economists, the overseas analysts who appear obsessed with Australian prices and the twits at the Reserve Bank who speak to the public about real estate as if they were lecturing primary school students.
Hockey has criticised offshore commentators looking at Australian real estate through a very long and out-of-focus telescope. He has<a href="/news/joe-hockey-dubs-housing-bubble-claims-as-lazy-analysis"> accused them of “lazy analysis”</a>. He might have pointed the figure equally at the RBA.
Glenn Stevens continues to fret about “soaring real estate prices” and has pumped out a series of Real Estate #101 lectures to the public; such as this platitude: “People should be aware that real estate prices do not always rise. Sometimes they fall.”
Hockey’s absolutely right about lazy analysis. It’s just too easy to look at a single average figure for one-year price growth across our major cities and rush out a press release claiming a bubble in the hope of some cheap publicity– and media always obliges without ever thinking to ask a question or two.
Hockey has made it clear he’s not interested in taking action on what one newspaper termed “spiraling property prices”. That’s because we don’t have spiraling prices, other than in Sydney, which is playing catch-up after 10 years in which average price growth barely kept pace with inflation.
Hockey pointed out that big growth has been limited to only small parts of the national market. “It's primarily in pockets of Sydney, pockets of Melbourne and, to a lesser degree, in Brisbane," Hockey said.
The Federal Treasurer has done something that 99% of economists haven’t done. He has looked behind the average growth figure for the 12 year (about 10% or 11%, according to most research sources) and discovered that none of our capital cities have had growth that big, other than Sydney.
It’s not rocket science - indeed it’s the most basic of analysis that would take approximately five seconds - but incredibly most economists haven’t done that.
Hockey said this week many parts of Australia had experienced no significant increase in property prices, therefore any action to cool the market must be "very targeted and it needs to have some capacity to be time-limited".
Here’s the bottom line, based on price data from the Australian Bureau of Statistics. Annual growth in prices has been 2% in Canberra, 3% in Darwin, 4% in Perth and in Hobart, 5% in Adelaide, 6% in Brisbane and 9% in Melbourne.
There is no Australian property boom. There has been, so far, a Sydney property boom.
Does that constitute a Sydney price bubble? Well, no. This is the first major growth in Sydney prices in 10 years. ANZ chief executive Phil Chronican commented: “Sydney has been <a href="/news/nsw/sydney-property-price-playing-catchup-anzs-philip-chronican">playing catch-up</a>.”
Despite the growth of the past 18 months, the average annual rise in house prices in most Sydney suburbs has been 3% to 4% in the past decade. Prices have barely kept pace with inflation.
Even with the most vivid imagination, it is impossible to construct a bubble from those facts.
Shakespeare <a href="https://www.goodreads.com/quotes/5926-the-first-thing-we-do-let-s-kill-all-the-lawyers" target="_blank">almost got it right</a>. First thing we do, we get rid of all the economists.
You can contact Terry via  <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://www.twitter.com/hotspotting" target="_blank">Twitter</a>. 
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Joe Hockey is right, 'bubble' chatter is lazy analysis

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The Reserve Bank of Australia’s warning of a housing bubble doesn’t apply to South East Queensland, according to leading house and land developer Ausbuild.
The Reserve Bank's meeting minutes revealed some concern around house prices and said that they were putting them under “close observation”, but Ausbuild's joint managing director Matt Bell said that South East Queensland’s situation is not a replica of Melbourne and Sydney.
“The housing construction sector is moving at a steady, sustainable pace, with land being released at a rate that is meeting demand in a responsible way,” Bell said.
“Prices are still competitive, and will continue to be so, given the steady and continuous rate of supply by developers in the market.”
The last thing Queensland needs, said Bell, is buyers getting the jitters when they’re just getting confidence to enter the marketplace post-GFC.
“Confidence is everything when people are looking to make what is the most significant purchase of their lifetime,” he said.
It appears observer Terry Ryder agrees with the comments that there isn't a bubble, particularly when you take Sydney out of the equation.
"The statistics suggest that all [the markets] are up by 10%, when in fact if you take Sydney out of the equation it's clear that this isn't the case," Ryder said. He notes that Sydney is playing catch up after many years of stagnancy.
While Ryder says that South East Queensland isn't "immune" to the effects of the market, at present it represents some of the strongest growth opportunities in the country with more growth markets in the area than in any other location in Australia.
He doesn't necessarily recommend the Gold Coast, but says that South East Queensland as a whole includes some of the more dynamic markets in the country.
Buyer's agent Todd Hunter, from Sydney-based wHeregroup, noted that there are many markets within South East Queensland, including areas where houses are undervalued at sub-$400,000.
He said that prices are starting to head northbound, and while Sydney and Melbourne have been booming for two years, South East Queensland is only just starting to heat up.
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RBA’s “bubble” warning doesn’t apply to South East Queensland: Ausbuild

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Despite the Reserve Bank of Australia’s concerns about the housing market’s price growth, it appears that not all are changing their predictions of a period of rate stability and macro involvement isn’t on everyone’s radar.
Westpac’s chief economist, Bill Evans, has noted in their latest bulletin that they are not altering their rate forecast – expecting the first hike to be in 2015.
He notes that they expect the rise to be in 2015’s September quarter, driven by a global outlook, modest lift in consumer spending momentum, non-mining investment and a falling unemployment rate.
While house prices and credit growth are also expected to also be rising, he says it will not be at a sufficiently rapid pace to trigger a rate increase.
However, Evans does note that the RBA is likely to either maintain or step up its public warning around housing prices and investor activity.
“A reasonable conclusion is that Australia is unlikely to introduce the New Zealand style of direct macro prudential controls,” he said.
He noted that APRA may lift its intensity of communication to ADI boards and even impose another round of stress testing, though it’s conceded that banks already regularly conduct stress testing.
“It seems unlikely that, at this stage, it would adopt the policies of 2003 where it raised the risk weighting on home loans and increased the capital requirements of mortgage insurers,” he said.
His notes suggest that the current boom is not a replica to that of the early 2000s, despite its similarities.
“The 2000-03 period bears some comparison with the current situation. In that earlier period annual growth in credit to investors peaked at 30% and overall housing credit  growth peaked at 22%,” he said.
The household debt ratio had risen by “26ppts in just two years” and lending standards were seen to have eased.
However, compared to the current environment, clear differences emerge.
“Currently annual credit growth for investors is running at 8.9% with the 6mth annualised pace at 9.5%,” he said.
“Overall housing credit is running at a steady 6.7% annual pace. The household debt to income ratio has risen 4ppts over the last year and remains below its peaks in 2010 and 2007.”
While the debt to income ratio level is higher than it had been in 2003, he notes that they believe this understates the extend of Australian households’ deleveraging since 2007, including accumulating funds in offset accounts.
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RBA’s bubble warning has not changed ‘on hold’ prediction: Westpac

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GUEST OBSERVATION
Federal Treasurer Joe Hockey has dismissed the idea that a property bubble is forming in Australia, citing the lack of supply as a primary reason for our high domestic prices.
This is an analysis that we, Propell National Valuers, agree with, <a href="/expert-insights/does-australia-really-have-the-most-overvalued-property-in-the-world">as set out in an article we published last month</a>.
The statement follows statistics published by the Bank of International Settlements (BIS) and The Economist showing that, as measured against income and rents, Australia had one of the highest relative price levels in the world (Only Belgium had higher prices.)
Joe Hockey called their surveys “lazy analysis”. We would agree that the reports are based on “rules of thumb” that are interesting but only have limited application. The same surveys showed Chinese prices as some of the cheapest in the world, but no-one is expecting Chinese prices to increase.
Anyone who wants to argue that Australia is in a housing bubble should also argue that Chinese real estate is at bargain prices, and no-one believes the latter to be the case.
BIS quoted Australia as having the largest price increase in the past year:
“Year-on-year residential property prices, deflated by CPI, rose by 9.5% in the United States and 6% in the United Kingdom. Real house prices also grew, by 7% in Canada, 7.7% in Australia and 2.2% in Switzerland, three countries that were less affected by the crisis, as well as in some countries that were severely affected by the crisis, such as Ireland (+7.2%) and Iceland (+6.4%).”
The BIS statement matches a recent article in The Economist (30 August 2014 edition):
“Australia has one of the most over priced housing markets in the world.”
However, this is based on a couple of simplistic measures, being price versus rents, and price versus income.
Measured against rents, they assert that Australia as a whole is 55% over valued, the only markets exceeding this being New Zealand, Canada, Belgium and Hong Kong.
Measured against income, they assert that Australia is 33% over valued, the highest figure in the world.
Given the disparity of price growth in our cities, this implies that Sydney and Melbourne are way overvalued, while the other capital cities are a little above fair value.
But is this an accurate way to measure under/over valuation?
Against income, The Economist says that Australia is 33% overvalued. But at the other end of the scale, they also say that China is 38% undervalued.
If we accept the logic that Australian prices are too high, then we would also accept that Chinese prices are too low. Yet the consensus opinion is that the Chinese market is oversupplied and that prices could fall.
Even Chinese buyers are conspicuous in buying Sydney real estate, indicating that they see better value in Australia than in China.
In a blog article last month we highlighted the major driver of prices: supply v demand. Joe Hockey is right to draw attention to the supply/demand equation in justifying the present level of house prices.
China may well be undervalued by comparison with incomes, but another factor is at work. The market is considerably oversupplied, with plenty of reports highlighting the amount of constructed yet empty apartment space in and around the major cities. So the excess of supply over demand has kept prices lower by comparison with incomes.
In Australia, we have the opposite equation: supply has not kept up with demand, and excess demand is driving prices up. To the extent that demand is supporting prices, there is a good argument to say that our prices are not too high.
Rising prices should be a signal to increase supply. Indeed, levels of new home construction are improving, but not at the pace that would reduce prices. Supply is relatively inelastic, with impediments to new supply including lack of available land (where it is wanted) and planning limitations.
This can easily explain why Sydney prices have been increasing at the fastest pace. Simplistically, the demand is for inner city housing, while supply is most elastic on the metro fringes. The lack of sufficient supply in Australia is a result of inelastic availability of land, plus, what land there is, tends to be at the fringe of cities, whereas demand is for residences closer to the CBD. Inner city suburbs are encouraged to increase residential densities but this often comes up against the NIMBY factor, existing owners oppose higher density developments in their neighbourhood.
On the demand side, our high level of immigration has the effect of increasing demand which cannot easily be satisfied. Immigration policy appears to be set without reference to the domestic ability to cater for their housing needs, but policies are unlikely to change in the short term.
So Australia remains in a position of having insufficient supply of residences. Prices may be high relative to rents, but at present interest rate levels the market continues to be supported by buyers and there is no suggestion of it being overpriced. If interest rates rise, then that would change the equation, but we are not there yet.
Linda Phillips is national research manager with <a href="https://www.propell.com.au/" target="_blank">Propell National Valuers</a>.
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LindaPhillips-Aic2YD9SM3

Joe Hockey says bubble talk is "lazy", but is he right?

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The Australian Treasurer Joe Hockey has again dismissed suggestions of an Australian housing bubble. He says prices prices have been substantial.
 “It is just an easy mantra for international commentators and for analysts based overseas to say 'well there's a housing bubble emerging in Australia," he said.
"But I don’t see at the moment, any substantial risk."
Saying rising prices were reacting to a lack of supply, Hockey told the Bloomberg seminar the claim that property buying households and investors were taking on too much debt was wrong.
“I’m not so sure it’s credit-fuelled,” he said.
“There’s a lot of cash going into property now.”
He said the recent surge in new dwelling construction – much of it the result of foreign investment – might go some way to addressing housing shortages in the country, especially in Sydney, Melbourne and Brisbane.
“Australia fundamentally doesn’t produce enough houses to meet demand,” the Treasurer said.
“It is just an easy mantra for international commentators, for analysts based overseas to say ‘well, you know, there’s a bit of a housing bubble emerging in Australia’.
“That is rather a lazy analysis, because fundamentally we don’t have enough supply to meet demand.
“That doesn’t suggest there’s a bubble; there might be a price increase of some substance, but you’d expect the market to react and produce some more housing.”
Hockey also suggested a lower Australian dollar might encourage more investment in new housing.
International investment in Australia’s housing market “may well increase” with a cooling of the Australian dollar, he said.
Hockey urged state governments to do some of the “heavy lifting” in increasing the housing supply.
{module Do you agree with Joe Hockey’s statement that there’s no housing bubble?}
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