Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

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"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Cameron Kusher

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Yesterday the Australian Bureau of Statistics (ABS) released building approvals data for February 2015. 
After a record high monthly number of dwelling approvals in January 2015 approval numbers could not quite be matched in February although they remain at near-record highs.
<img class="aligncenter size-full wp-image-4464" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-1.jpg" alt="Chart 1" width="500" height="159">
Over the month there were 18,768 dwelling approvals, down from 19,397 in January. Although approvals fell by -3.2% over the month, the number of approvals in February was still the second highest monthly figure on record. The number of approvals has increased by 14.3% over the past twelve months highlighting that there is a clear boom in approvals which sit at highs never before seen. 
Given that housing supply has been insufficient for the past decade this is a welcome development, especially considering the strong multiplier effect of higher rates of construction on the Australian economy. Over the past 12 months there have been a record high 205,929 dwellings approved for construction.
<img class="aligncenter size-full wp-image-4465" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-2.jpg" alt="Chart 2" width="500" height="158">
Looking at a breakdown between houses and units, the data shows that over the month there were 9,613 houses and 9,155 units approved for construction. House approvals were 0.2% higher over the month while the more lumpy unit approvals recorded a -6.6% monthly fall. 
Year-on-year, house approvals are unchanged while unit approvals have increased by 34.5%. With such a higher rate of growth in new apartment approvals, is clear that the new unit segment of the market is booming at the moment. Over the 12 months to February 2015 there were 114,747 house approvals and 91,183 unit approvals. 
While house approvals were a long way from their record high annual approvals of 140,832, unit approvals currently sit at an all-time high.
<img class="aligncenter size-full wp-image-4466" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-3.jpg" alt="Chart 3" width="500" height="159">
Looking at the capital city data it becomes further evident that new unit construction is booming, particularly across the east coast capital cities, despite a sharp rise in house approvals in February. Over the month, capital city house approvals increased by 26.6% and capital city unit approvals rose by 11.5%. 
The year-on-year figures show the trend towards unit approvals with house approvals increasing by 3.5% compared to a 43.0% jump in unit approvals.
<img class="aligncenter size-full wp-image-4467" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-4.jpg" alt="Chart 4" width="500" height="159">
Over the 12 months to February 2015 there were a record-high 153,303 capital city dwelling approvals. Dwelling approvals have increased by 13.0% over the year. Over the past year there were a record high number of dwelling approvals in Sydney (39,802), Melbourne (51,037) and Brisbane (23,303).
 Approvals were below their record highs but still hefty in Adelaide (8,990), Perth (26,942), Hobart (981), Darwin (1,820) and Canberra (3,428). Note that despite Sydney being our most populous city and arguably having the greatest under-supply of housing and increases in home values, the number of approvals was much lower compared with Melbourne.
<img class="aligncenter size-full wp-image-4468" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-5.jpg" alt="Chart 5" width="500" height="159">
Focussing on the detached housing market there were 75,597 capital city house approvals over the year to February 2015 which is 14.6% higher than the previous year. Across the individual cities, there were 13,503 approvals in Sydney, 22,530 approvals in Melbourne, 10,671 in Brisbane, 5,755 in Adelaide, 19,891 in Perth, 887 in Hobart, 795 in Darwin and 1,565 in Canberra. Note that Melbourne house approvals were almost double that in Sydney and Perth was also significantly higher. Over the year, the change in house approvals has been recorded at: 17.5% in Sydney, 15.5% in Melbourne, 31.4% in Brisbane, 4.0% in Adelaide, 8.8% in Perth, 50.1% in Hobart, 5.4% in Darwin and -5.1% in Canberra.
<img class="aligncenter size-full wp-image-4469" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-6.jpg" alt="Chart 6" width="500" height="159">
Across the unit market there were 80,706 capital city approvals over the past year accounting for 51.6% of all capital city dwelling approvals and a record-high annual number. Unit approvals in Melbourne (28,507) and Brisbane (12,632) were at historic high levels over the year while Sydney and Perth were also close to a record high with 26,299 and 7,051 unit approvals respectively.
Elsewhere there were 3,235 unit approvals in Adelaide, 94 in Hobart, 1,025 in Darwin and 1,863 in Canberra. Unit approvals were higher over the year in Sydney (1.7%), Melbourne (27.4%), Brisbane (12.3%), Adelaide (25.8%), Perth (21.7%) and Darwin (4.9%) but fell in Hobart (-47.8%) and Canberra (-45.2%).
Unit approvals accounted for more than half of all approvals in Sydney (66.1%), Melbourne (55.9%), Brisbane (54.2%), Darwin (56.3%) and Canberra (54.3%). Sydney, Darwin and Canberra have approved more units than houses for many years however, in Melbourne and Brisbane this is a relatively new phenomena. 
With unit approvals at all-time highs in both Melbourne and Brisbane we have some concerns around exactly who is going to buy all this stock. Of course demand for inner city units is growing however supply can quickly turn to a glut if there is too much development. 
Rental growth is already slow in both cities and given units tend to be favoured by investors there are some concerns about a potential glut of this stock in Melbourne and Brisbane. It should be noted that just because a dwelling is approved doesn’t necessarily mean it will be constructed and there are generally many more hurdles in order to deliver high-rise units. 
Record high unit approvals with record low interest rates are likely to create some risks, most notably a risk of oversupply of inner city units in Melbourne and Brisbane where the level of new construction is unprecedented. 
Further down the track as interest rates rise and capital growth slows there are some concerns that the heightened level of investor activity in the Sydney and Melbourne unit markets may result in value falls if and when these investors exit to asset classes enjoying a superior performance. Particularly considering that rental returns for Sydney and Melbourne units are at near record lows and rental growth is moderate. 
</body></html>

ckusher-ujnxiKuFQs

Dwelling approvals dip (but only slightly) in February: Cameron Kusher

<html><body>
The Reserve Bank (RBA) released its bi-annual Financial Stability Review (FSR) yesterday. The document provides a guide as to the RBA’s thoughts on the overall economy and potential risks.
As you’d expect, the residential housing market features heavily in their assessment of financial stability and I will delve into some of the key take-outs for the housing market from the document.
<ul>
<li>Housing loan performance</li>
</ul>
The report details that the share of non-performing banks housing loans (ie those housing loans which are at least 90 days in arrears on their repayments) was extremely low, recorded at around 0.6% in December 2014 which is down from a peak of 0.9% in 2011.
The lack of repayment distress across Australian bank mortgage portfolios is being supported by low interest rates which make servicing the mortgage debt easier. The document also states that rising housing prices also make it easier for those home owners in arrears to sell rather than remain in arrears should they run into financial difficulty.
It is important to note that while as a general the statement about rising house prices making it easier to sell is true, the housing market performance varies greatly region-to-region.
Although selling a home in Sydney and Melbourne is relatively easy currently thanks to strong value growth and high levels of demand, housing market conditions in Perth, Hobart or Canberra are more challenging and it would probably be more difficult to sell a home in these markets.
<ul>
<li>Competition in the mortgage market</li>
</ul>
According to the Report competition has remained rigorous over the past six months. There is plenty of competition amongst lenders and as a result they are offering attractive fixed rates and significant discounts of up to 100 basis points off their advertised variable rates. The RBA has also noted targeted special rates as an example of short-term rate specials for those refinancing with lower loan to value ratios (LVRs).
Banks have also increased commissions being paid to their brokers. As a result, refinancing activity has increased and around 40% to 50% of new housing loans are sourced from brokers. The RBA does raise some concerns that the rising prevalence of the broker channel potentially creates risks, specifically that misaligned broker incentives could create higher levels of lending outside of their risk tolerance.
While Australian Prudential Regulation Authority (APRA) wrote to Authorised Deposit-taking Institutions (ADIs) highlighting its guidelines for sound residential mortgage lending late last year, the high level of competition across the banking sector may create issues, particularly in the investor space. Given APRA has indicated that growth in investor housing credit should not be materially above 10% per annum, the significant competition in the market means that those who can’t source an investor loan from one ADI may still have plenty of other ADIs to choose from.
<ul>
<li>Lending criteria</li>
</ul>
The RBA is reporting that serviceability and deposit criteria have been relatively unchanged over the past six months. They acknowledge that some banks have recently applied stricter criteria for some inner-city unit markets and regional towns linked to the resources sector. Despite the lending criteria being largely unchanged, the RBA acknowledge that low mortgage rates and the strength in demand from the investment segment have increased the macroeconomic risks from the housing market.
Once again they have acknowledged that investors may amplify housing price cycles and increase the potential for falls in the future. They also note that the rising share of interest-only loans may also increase risks because there is a period over which the principal is not repaid leaving the household with more debt than they would have if they repaid both the principal and interest on the mortgage.
It should be noted that while interest rates are low everywhere and investor activity has increased in most states, the sharp rise in investor participation is most prevalent in Sydney and Melbourne. These two cities have seen the strongest growth in home values over recent years, along with the most significant compression of rental yields which has resulted in these cities exhibiting the lowest rental yields across the capital city housing markets.
The risks of investors amplifying the market are greatest within these two cities, particularly given the strong value growth coupled with very low rental yields and high investor concentrations.
<ul>
<li>Investor lending</li>
</ul>
The FSR notes that investor housing credit has increased at an annualised rate of 10.5% over the past six months however, it is too early to expect a slowdown in investment lending just yet in response to APRA’s guidelines. The reason being that the pipeline of pre-approvals was already in place before APRA wrote to ADIs in December highlighting a guideline of a cap of 10% annual growth in lending to investors.
The RBA notes that investors have contributed to fuelling the rapid growth in home values in Sydney however, the growth has been more moderate outside of Sydney. The FSR states that periods of value growth also increase expectations for further price rises, creating even more demand.
A future fall in housing prices would reduce wealth and dampen spending for the broader household sector, particularly for those households with significant housing debt, not just for the investors who contributed to the upswing.
The RBA has also raised potential concerns that the surge in lending from the investment segment could lead to excessive new housing construction and a potential future glut in certain areas. While the RBA points out there is little risk of this currently at a national levels, there are some areas of local vulnerability, namely inner-city units in Melbourne and Brisbane.
While the RBA has covered off on the risks surrounding heightened levels of investment lending quite well there are a few additional points that need to be made. While investor activity is strongest in Sydney and Melbourne, these two cities already have the lowest gross rental yields. This feeds in to the comment about amplifying the market but is important to understand; investors are chasing capital growth and having little regard for the returns.
Secondly, while there are concerns about too much new housing supply in inner-city Melbourne and Brisbane rental growth is already at its lowest level in more than a decade. Although inner-city Melbourne and Brisbane are areas for concern, there is no mention of the fact that rental rates are already falling in Perth, Darwin and Canberra. Furthermore, while both rents and the rate of population growth are falling in Perth there is simultaneously a record high number of dwelling approvals currently.
<ul>
<li>Mortgage characteristics</li>
</ul>
Although low interest rates and the high level of competition in the mortgage market could create risks, the RBA sees little evidence that lending standards have deteriorated. The share of loan approvals above 90% LVR continued to reduce over 2014. The RBA reports that this shift was led by those lenders that previously reported a higher than average share of these types of loans. The profile of new lending indicates that households remain well placed to service their loans.
The area that the RBA points out as a concern is the increase in interest-only lending. The rising level of interest-only lending to investors is consistent with tax deductibility of investors’ mortgage interest payments which act as a disincentive to pay down the principal.
The banks have suggested that the rise in owner occupier interest-only mortgages has been driven by the borrowers seeking greater flexibility in managing their repayments rather than affordability pressures. Reportedly some of this demand is from owner occupiers who plan to switch their property into a rental property in the future.
The RBA also notes that many of these owner occupiers are building sizeable buffers in their offset and redraw facilities. It should also be noted that in principle, interest-only loans should not increase borrowing capacity because consumer protection regulations imply that lenders should assess a borrower’s ability to service principal and interest payments following the expiry of the interest-only period.
Australian Securities and Investments Commission (ASIC) is currently assessing compliance with this obligation through its review of interest-only lending. Despite these considerations, interest-only loans – especially for owner-occupiers – pose greater risk to the financial system because they enable borrowers to pay down the principal more slowly than a conventional mortgage.
<ul>
<li>Conclusion</li>
</ul>
The RBA have spelled out a number of key areas of risk surrounding the residential mortgage market. It is clear that the RBA along with the APRA and ASIC are closely monitoring the overall market conditions and are on the lookout for risks and an easing of lending standards.
While each organisation has stated publicly their concerns and what they are going to do to allay those concerns, it seems unlikely that any significant changes to policies due to these risks for individual ADIs would be communicated publicly.
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The RBA raises concerns over residential housing market: Cameron Kusher

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Over the second half of 2014 capital city home sales fell, with the decline in-line with a softening in growth in home values. Interest rate cuts in 2015 may result in a rebound in sales activity this year.
Based on CoreLogic RP Data’s estimates of residential sales transactions to December 2014, there were 471,932 dwelling sales nationally. Despite the growing trend to more units being constructed, house sales still account for the overwhelming majority of sales. 
Over the year there were 339,902 house sales (72% of all sales) and 132,030 unit sales. Based on these figures, house sales were 0.2% higher over the year unit sales were -6.4% lower. Keep in mind that although we attempt to estimate for off the plan unit sales, they are likely to be revised higher as they settle. The settlement period for off the plan unit sales can take more than 12 months as the project is constructed. Off the plan sales ultimately get recognised at their contract date upon settlement.
 
Rolling annual dwelling sales, Nationally
<img src="/images/2015/03/23/rp-mar-23-one.jpg" alt=""> 
 
If we take a look at the capital city housing markets we see similar trends. Over the 12 months to December 2014, there were 218,479 house sales and 99,707 unit sales.
Compared to annual sales in 2013, combined capital city house sales were 2.8% higher while units were -7.0% lower resulting in a -0.5% overall fall in capital city sales.While at a national level house sales accounted for 72% of all sales, across the capital cities they accounted for a lower 68.7%. Again, we may see the number of unit sales revise higher as off the plan settlements take place.
 
Rolling annual dwelling sales, Combined capitals
 
<img src="/images/2015/03/23/rp-mar-23-two.jpg" alt="">
The trend both at a national and combined capital city level was that the number of sales fell away over the second half of 2014. The same trend was noted in terms of home value growth. After the annual rate of capital city home value growth peaked at 11.5% in April 2014, the rate of growth slowed to 7.9% annual growth by the end of 2014. Value growth has re-inflated over the first two months of 2015 and the recent interest rate cut may also contribute to faster growth, this is also likely to result in a rebound in sales transactions.
Across the individual capital cities, the number of house sales was higher in 2014 than in 2013 across most cities. The exceptions were the markets where value growth has slowed most markedly in 2014; Perth (-9.4%), Darwin (-4.8%) and Canberra (-2.7%).
Elsewhere, house sales have increased by 3.4% in Sydney, 5.1% in Melbourne, 8.9% in Brisbane, 6.9% in Adelaide and 8.0% in Hobart. Although house sales were generally higher in 2014 than in 2013, most cities have seen an easing in transactions over the second half of 2014 with Melbourne and Hobart the only cities where sales volumes have continued to trend higher.
 
Rolling annual house sales, major capitals
 <img src="/images/2015/03/23/rp-mar-23-three.jpg" alt="">
Turning to the unit market where across the combined capital cities the number of sales has actually fallen over the past year. Across the individual cities, only Melbourne (1.0%), Adelaide (5.7%) and Darwin (24.2%) recorded an increase in transactions over the year. Elsewhere, unit sales fell -13.8% in Sydney, -2.6% in Brisbane, -16.1% in Perth, -1.0% in Hobart and -14.5% in Canberra. 
 
Rolling annual unit sales, major capitals
 <img src="/images/2015/03/23/rp-mar-23-four.jpg" alt="">
It is also interesting to look at the proportion of house sales across each city. It shows that units are much more prevalent across the east coast capital cities as well as Darwin and Canberra. Over the year, the proportion of total sales that were houses across the capitals were recorded at: 60.8% in Sydney, 68.9% in Melbourne, 70.3% in Brisbane, 75.9% in Adelaide, 82.6% in Perth, 77.1% in Hobart, 62.1% in Darwin and 59.9% in Canberra.
The sales volume data also reveals that despite ongoing strong rates of population growth and buoyant housing market conditions over recent years, the number of dwelling sales has not risen by a commensurate amount, with the number of sales well below what was recorded over previous growth periods. 
Across the individual capital cities, the peak in annual sales were recorded at: April 2002 in Sydney (136,925), December 2007 in Melbourne (105,264), September 2003 in Brisbane (74,941), January 2008 in Adelaide, May 2006 in Perth (56,850), October 2003 in Hobart (7,425), July 2006 in Darwin (4,469) and June 1992 in Canberra (13,655).
Across all cities, the number of home sales over the past year has been significantly lower than these peaks. This suggests that for one reason or another, despite a higher population, a smaller proportion of people are buying and selling homes.
The high entry and exit costs of homes in Australia are likely the major reason, the two biggest costs are stamp duty and agent commissions both of which are higher as home values increase as they are levied off the purchase (stamp duty) and sales (commission) prices. Other factors might include less participation from first home buyers and the high rate of savings where more households are focussing on debt reduction.
 
Annual house and unit sales, year to December 2014
 
<img src="/images/2015/03/23/rp-mar-23-five.jpg" alt="">
Sales volumes eased over the second half of 2014 in-line with a slowing of home value growth. With mortgage rates moving lower in February 2015 and expected to reduce further during 2015, there may also be a rebound in sales activity. Despite a potential rebound, transaction volumes are likely to remain below historic peaks.
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Will lower mortgage rates reinvigorate the taper in dwelling turnover? Cameron Kusher

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The Australian Bureau of Statistics (ABS) released housing finance data for January 2015 this week. 
This data represents the first full month of lending-based results after APRA’s recommendation to Australian Authorised Deposit-taking Institutes (ADI’s) reinforcing sound residential mortgage lending benchmarks. <img class="aligncenter size-full wp-image-4377" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-11.jpg" alt="Chart 1" width="500" height="186"> Over the month the total value of housing finance commitments fell by -0.6% across both the owner occupier and investor segments of the market. The value of housing finance commitments has increased by 12.8% year on year. 
Taking a look at the breakdown between the owner occupier and investor segment of the market, it is clear that most of the strength is coming from investors. The value of owner occupier housing finance commitments fell by -1.0% over the month and investor lending recorded a fall of -0.1%. 
Despite the monthly fall in lending, the value of housing finance commitments was 7.1% higher year on year to owner occupiers and 22.1% higher to investors. <img class="aligncenter size-full wp-image-4378" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-21.jpg" alt="Chart 2" width="500" height="182"> The proportion of total lending to investors reached an all-time high in January 2015. Over the month, 41.4% of the value of all housing finance commitments was to investors. 
In comparison, a record low 39.1% of the value of housing lending was to owner occupiers for new loan purposes and 19.5% was to owner occupiers for refinances. If we look solely at the value of new lending (excluding refinances) investor lending hit a record high 51.4% of all new lending in January 2015. <img class="aligncenter size-full wp-image-4379" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-31.jpg" alt="Chart 3" width="500" height="180"> Focussing on the owner occupier segment of lending, $17.7 billion was lent in January down from $17.9 billion in December. Across the segment: $1.8 billion was lent for construction of new homes, $0.9 billion for the purchase of new homes, a record high $5.9 billion for refinances and $9.1 billion for purchase of established homes.
 Month on month, housing finance commitments for owner occupiers fell by -2.6% for construction of new homes, -5.4% for the purchase of new homes, +1.8% for refinances and -2.0% for purchases of established dwellings. year on year, the strength in the owner occupier segment has largely been from refinances which have increased by 28.5%. Across the other segments, construction of new homes were up +1.5%, purchase of new homes are -7.2% and purchase of established homes are -0.9%.
The data indicates that much of the activity across the owner occupier segment of the market is coming from refinances as home owners shop around for a better deal or prepare to withdraw some of their equity which would feed into the strength of the investment segment. <img class="aligncenter size-full wp-image-4380" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-41.jpg" alt="Chart 4" width="500" height="183"> Turning to the investment lending segment, $12.5 billion was lent in January which was slightly lower than investment lending in December. Over the month there was $0.8 billion in commitments for construction of new dwelling and $11.7 billion for commitments to existing homes showing that investor lending is largely going to existing homes with lending to that segment almost 14 times greater than lending for new construction. Over the month, investor commitments for new construction fell -18.8% compared to a 1.6% increase in lending for purchases of existing homes.
year on year, the value of commitments for construction of new dwellings is 85.1% higher while investor lending for established homes has increased by 19.1%. The data shows that despite lending to investors is surging, a relatively small amount of this lending is contributing to new housing stock being constructed. <img class="aligncenter size-full wp-image-4381" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-51.jpg" alt="Chart 5" width="500" height="181"> Turning to the first home buyer segment of the market, the number of owner occupier first home buyer commitments fell sharply in January. It should be noted that this data series is not seasonally adjusted. Over the month there were 5,961 commitments which was -26.4% lower over the month and -14.4% lower year on year. As a proportion of all owner occupier housing finance commitments, investors accounted for 14.2% of commitments in January. 
Based on this data, the level of first home buyer participation in the market remains extremely low, however a weakness of the ABS data set is that it doesn’t identify first home buyers that are purchasing as investors. Anecdotally, it appears that many first time buyers are choosing to purchase an investment property rather than a principal place of residence. <img class="aligncenter size-full wp-image-4382" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Mortgage-Index.jpg" alt="Mortgage Index" width="500" height="181"> The CoreLogic RP Data Mortgage Index measures activity across CoreLogic RP Data’s mortgage platforms each week. The activity is highly correlated with housing finance data and as the above chart shows, activity has surged over recent weeks. Based on this data, it suggests that despite the Christmas / New Year slowdown there has been no sustained slowdown in mortgage demand. Given this we would expect a rebound in housing finance commitment over the coming months.
Following the letter from APRA to Australian ADI’s in December we have seen a slight easing in housing finance commitments however, it is too early to suggest the two are related. Investor activity remains very strong and for the first time on record we have seen six consecutive months in which lending to investors is greater than lending to owner occupiers for new loans. Investors are largely purchasing existing homes which does little to contribute to new housing, although the value of commitments to investors for new construction has risen sharply over the past year. The owner occupier segment is largely being driven by refinance activity as borrowers shop around for better deals on their mortgage and prepare to re-invest some of their equity.
Over the coming months it will be important to monitor if the new guidelines from APRA and the ramping up of their surveillance of mortgage lending has much of an effect on demand. We would suspect that the high level of competition in the mortgage market is likely to result in minimal change across the board. While some individual lenders may have to tinker with their lending policies, borrowers have many other banks to choose from if one borrower cannot provide the type of product they are looking for.
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Housing finance eases but lending to investors soars to an all-time high: Cameron Kusher

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Earlier this week, the Australian Bureau of Statistics released building approvals data for January 2015.
 The data showed that over the month, dwelling approvals surged to an all-time high while the annual number of approvals is also at a record high. <img class="aligncenter size-full wp-image-4347" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-1.jpg" alt="Chart 1" width="500" height="180"> Across the nation, the seasonally adjusted data showed that in January 2015, there were 19,282 dwelling approvals. This was a record high number of monthly approvals, 4.9% higher than the previous peak of 18,389 approvals two months earlier. 
The number of dwelling approvals increased by 7.9% over the month and approvals are 9.1% higher year on year. On an annualised basis, we are also seeing a record high with 203,182 approvals, up 0.8% over the month and 10.8% year on year. This represents a strong pipeline of new dwellings to be constructed. <img class="aligncenter size-full wp-image-4349" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-2.jpg" alt="Chart 2" width="500" height="181"> Looking more closely at the national figures, it shows that the surge in approvals over the month was entirely due to unit approvals as opposed to house approvals. We also saw a rare occurrence whereby there were more units approved for construction than houses.
 The above chart highlights monthly approvals with the thicker lines showing the six month average number of approvals. Over the month there were 9,588 house approvals and 9,694 unit approvals. The monthly number of house approvals has been fairly flat for the past 11 months while unit approvals tend to be much more volatile but trending higher. 
In January 2015, house approvals fell -0.4% while unit approvals increased by 17.5%. Year on year to January 2015, house approvals have fallen by -2.9% while unit approvals were 24.3% higher. <img class="aligncenter size-full wp-image-4350" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-3.jpg" alt="Chart 3" width="500" height="178"> Turning the focus to the capital cities it is firstly important to note that unlike the national data the figures are not seasonally adjusted. 
In January 2014 there were 11,926 capital city dwelling approvals which was -14.1% lower over the month but 8.6% higher year on year. Over the past 12 months, there has been a record high 153,323 dwelling approvals across the combined capital cities. <img class="aligncenter size-full wp-image-4351" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-4.jpg" alt="Chart 4" width="500" height="180"> Once again looking at houses as opposed to units, the data shows that the unit market is the key driver of new housing approvals. 
In January 2015 there were 4,986 capital city house approvals and 6,940 unit approvals. Approvals for both houses (-11.2%) and units (-16.0%) were lower over the month which can largely be attributed to seasonal effect of a weaker January. 
The unit series tends to be more volatile however, house approvals were at their lowest level since December 2013 over the month. 
The chart also shows that unit approvals have generally been outnumbering house approvals since the middle of 2012 (despite some volatility month-to-month). Year-on-year, capital city house approvals are -5.9% lower while unit approvals are 22.1% higher. <img class="aligncenter size-full wp-image-4352" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-5.jpg" alt="Chart 5" width="500" height="181"> Looking at the individual capital cities and utilising annual data to smooth out some of the volatility, it is clear that there has been a surge in approvals over the past few years across the major regions of Australia. 
First looking at house approvals, over the 12 months to January there were 13,337 approvals in Sydney, 22,198 in Melbourne, 10,574 in Brisbane, 5,879 in Adelaide, 20,001 in Perth, 886 in Hobart, 789 in Darwin and 1,621 in Canberra. 
Year on year, the number of house approvals have changed by 18.1% in Sydney, 16.2% in Melbourne, 34.2% in Brisbane, 8.2% in Adelaide, 12.1% in Perth, 59.1% in Hobart, 7.5% in Darwin and -1.0% in Canberra. 
Probably the most interesting point to note from the data is that both Melbourne and Perth approved more houses than Sydney, despite Sydney’s larger overall population. <img class="aligncenter size-full wp-image-4353" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-6.jpg" alt="Chart 6" width="500" height="182"> Turning the focus to the unit market, over the past year the number approvals across the cities have been recorded at: 25,440 in Sydney, 26,712 in Melbourne, 12,012 in Brisbane, 3,241 in Adelaide, 7,432 in Perth, 95 in Hobart, 1,016 in Darwin and 2,090 in Canberra. Only Adelaide, Perth and Hobart have approved more houses than units over the year. 
The annual change in unit approvals across the cities are recorded at: 0.7% in Sydney, 22.8% in Melbourne, 7.6% in Brisbane, 17.8% in Adelaide, 38.0% in Perth, -48.4% in Hobart, -15.4% in Darwin and -38.9% in Canberra.
The supply-side response has generally been quite positive over recent years however, in Sydney, where the dwelling deficiency is greatest, has experienced a much smaller increase in new supply than across other cities. The Perth, Darwin and Canberra housing markets have weakened noticeably over the past year with value growth slowing and rental rates falling. 
New dwelling approvals have eased in Darwin and Canberra however, Perth continues to approve a increasingly larger number of dwellings for construction despite the softening housing market conditions in this city. 
Approvals have surged by a greater amount for units as opposed to houses over the past several years. If we look at how this is now playing out we find some interesting trends:
<ul>
<li>Investors tend to target unit stock rather than detached houses (in particular units in the inner city) and this is where a large amount of unit stock already exists and a high proportion of the new stock is being delivered. </li>
<li>In Melbourne and Brisbane, where the rise in prominence of unit approvals has been greatest over recent years, unit values have recorded an annual increase of 2.8% and 0.5% compared to 8.0% and 6.5% for houses. </li>
<li>Turning to the rental markets, capital city house rents have increased by 1.6% over the past year which is lower than the 2.3% increase in unit rents however, in Melbourne and Brisbane annual growth in rents has been lower for units than houses.</li>
</ul>
The annual rental growth figures for units are 2.2% in Melbourne and 0.5% in Brisbane compared to 2.5% and 2.0% respectively for houses. Keeping in mind that many of these recent unit approvals will take time to be built, it could be the case that value and rental growth for Melbourne and Brisbane units will be minimal due to the higher supply levels coming on line. This may also have an impact for the wider market as the overall composition of unit stock increases it may result in lower overall value growth.
Other cities should be cautious of higher housing stock levels, particularly within the inner city apartment markets. With population growth slowing, particularly from overseas, and a surge in new construction, without careful management an under-supply of dwellings can quite quickly turn to a glut in particular areas if too many new homes are approved.
 Brisbane at least appears to have slowed its rate of approvals growth recently however, it is potentially concerning that Melbourne has seen no such easing of the throttle.
More dwellings are required nationally however, developers and those approving these new homes need to carefully monitor just how many new homes are required at one point in time. 
The RBA has pointed out that they want to extend this period of increased construction for as long as possible. Extending this heightened period of construction will help support jobs, particularly as high rise construction takes much longer than house construction, and will help reduce the housing deficiency. But we must be cautious to ensure that we aren’t just creating oversupplies in inner city areas while maintaining deficiencies in other areas of our cities where cheap and affordable housing options are required.
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We must be careful new dwellings don't create inner city oversupplies: Cameron Kusher

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In late January, I attended the Inman Real Estate Connect Conference in New York.  The conference is targeted at real estate professionals and provides insight into the latest news and trends within the market. 
This week’s I'll share some of the new technology, websites and applications as well as some of the ways US agents are now using social media to communicate with clients.  Most of the websites and applications are US-centric but here I will highlight those which are also relevant to the Australian market.
Social Media
In the US, social media is big for real estate agents and brokers.  Although LinkedIn, Facebook, Youtube and Twitter may immediately spring to mind, real estate professionals are now starting to effectively create leads from Instagram and Pintrest. 
In fact, in the US, agents receive more referral traffic from Pintrest than they do from Google Plus, Linkedin and Youtube combined.  Real estate professionals are effectively using Pintrest by creating pinboards of design ideas and solutions that they like and local area information. 
This can include but is not limited to:
<ul>
<li>Smart home design</li>
<li>Storage solutions</li>
<li>Room designs</li>
<li>Local area landmarks (shops, cafes, bars etc)</li>
<li>Local restaurants</li>
</ul>
Furthermore, US agents are pinning the listings information of homes they have, and have had, available for sale so they can show customers on their inspections. 
Instagram is being used in a similar way whereby agents create a unique hashtags (e.g. #ckusherlistings) and upload photos of all their current and previous listings to have these immediately searchable to show clients.
Websites
<a href="https://buzzsumo.com/" target="_blank">Buzzsumo.com</a>
Buzzsumo is a website that that allows you to analyse how well your social media content is being used.  It shows the total number of shares of your content and then breaks it down by the different social media platforms. 
Social media in real estate certainly isn’t as big in Australia as it is in the US, but this is a good website that allows you to see where both you and your competitors are getting the eyeballs and ultimately the shares.
<a href="https://www.fancyhands.com/" target="_blank">Fancyhands.com</a>
Fancyhands is a US based business which offers a virtual personal assistance service.  As per the website they can do all those tasks that you don’t have the time nor the desire to do, this may include:
<ul>
<li>Managing your appointment schedule</li>
<li>Organising travel</li>
<li>Administrative tasks such as data entry</li>
<li>Reservations</li>
<li>Booking travel</li>
</ul>
<a href="https://www.floored.com" target="_blank">Floored</a>
Floored create 3D videos of properties so potential buyers can walk through a property before they physically see the property.  The models are optimised so you can watch them through an internet browser of through a mobile phone or tablet.  The technology can also be used to create 3D real estate models for homes which aren’t even built as yet.  You can also include furniture to get an even clearer idea of how things will fit in the space.
<a href="https://www.oculus.com" target="_blank">Oculus</a>
Oculus is a virtual reality headset which is being backed by Facebook.  For the real estate industry it can be utilised by allowing customers to literally walk through the home without having to physically do open-for-inspection.
<a href="https://www.homekeepr.com" target="_blank">Homekeepr</a>
Homekeepr is a home maintenance app that can be used by both real estate professionals and anyone that owns a home.  The app asks 10 questions about the characteristics of your home, it then creates a list of maintenance tasks that are required for the home and sets reminders as to when you should do these tasks. 
The application provides a description of what the task is and why it should be done.  It then recommends local service providers to undertake these tasks.  The agent’s app offers customers the opportunity to download the app and it is customised to the clients’ home(s).  The list of local service providers for each task can be customised by the agent. 
When the task is due to be completed they receive both a notification on the app and an email from you as their agent reminding them that the task needs to be completed.  The agent can even put their own recommendations outside of those specifically for the home such as local restaurants, shops, schools and much more.
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How US real estate agents are using social media and new technology to win customers: Cameron Kusher

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The Australian Bureau of Statistics (ABS) recently released housing finance data for December 2014.  
The data showed an end of year surge both in the value and the number of loans.  The surge coincided with the Australian Prudential Regulation Authority (APRA) warning Australian Authorised Deposit-taking Institutions (ADIs) about risky mortgage lending practices during the month.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg"><img class="aligncenter size-full wp-image-4253" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg" alt="Chart 1" width="500" height="182"></a>
Over the month, the value of housing finance commitments increased by a total of 4.7%, the largest monthly increase since September 2013.  
The large increase was comprised of a 4.1% increase in owner occupier refinanced loans, a 3.6% increase in owner occupier new loans and a 6.0% increase in investor loans.  
The surge in investor loans is noteworthy, but so too is the jump in owner occupier new loans which had been flat for the past 12 months.  
Year on year, owner occupier refinances have increased by 27.0%, owner occupier new loans have increased by 4.9% and investor loans have climbed 18.8% higher.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg"><img class="aligncenter size-full wp-image-4254" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg" alt="Chart 2" width="500" height="180"></a>
In December 2014, there were $5.8 billion in housing finance commitments for owner occupier refinances, $12.3 billion for owner occupier new loans and $12.6 billion for investor loans.  Both refinances and investor loan commitments were at a record high.  
Based on this data, the proportion of owner occupier new loans accounted for an all-time low 40.1% of housing finance commitments compared to 18.9% of all commitments for owner occupier refinances and a near record high 41.0% of commitments to investors.  
If we strip out refinances, investors accounted for a record high 50.6% of new housing finance commitments in December 2014.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg"><img class="aligncenter size-full wp-image-4255" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg" alt="Chart 3" width="500" height="182"></a>
Looking specifically at the owner occupier segment of the market, there was $1.9 billion in commitments for construction of dwellings, $1.0 billion in commitments for the purchase of new dwellings, $5.8 billion in refinancing of established dwellings and $9.4 billion in commitments for established dwellings. 
 There has been a surge in finance demand over the year, particularly for newly constructed dwellings and refinances.  
Year on year, the change in owner occupier housing finance commitments has been recorded at: 14.6% for the construction of new dwellings, 1.8% for the purchase of new dwellings, 27.0% for refinances and an increase of 3.5% for purchase of established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg"><img class="aligncenter size-full wp-image-4256" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg" alt="Chart 4" width="500" height="184"></a>
Focusing on the investment segment, in December 2014 there was $1.0 billion lent for the purposes of both construction of new and $11.5 billion borrowed for investment in established homes.  The year on year changes have been recorded at 59.8% for new construction and 16.1% for established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg"><img class="aligncenter size-full wp-image-4257" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg" alt="Chart 5" width="500" height="179"></a>
The other important figure released by the ABS is the owner occupier first home buyer commitments. The ABS has recognized that these figures have been under-reported and have revised these figures this month.  Note that these figures still only include first home buyers that are purchasing homes for owner occupation. 
In December 2014, there were 8,213 owner occupier housing finance commitments to first home buyers, representing 14.5% of all owner occupier commitments.  Despite the revisions, the number of commitments is -1.3% lower over the year.  Furthermore, the 14.5% represents the lowest proportion of commitments to first home buyers since June 2004.
The data indicates first home buyers continue to languish whilst those that already own homes and are upgrading, refinancing or purchasing an investment property continue to dominate the market.  What is less clear is how many first time buyers are doing so for investment purposes (the ABS doesn’t provide a further breakdown of investment loans by buyer type as they do for owner occupiers).
As noted earlier, APRA wrote to Australian ADIs in December reiterating what they determine are prudent measures for lending and potential repercussions for those that don’t follow these guidelines. 
Given the results you would have to say it had little effect on borrowers or lenders in December.  It’s also worth noting that along with an 18.8% year on year increase in the value of investor commitments over 2014, the RBA’s housing credit data showed that total investor credit expanded by 10.1% in 2014. 
APRA noted concerns with lenders growing the investment segment of their loan book above 10% annually.  Based on these results you would have to say there remain some concerns for the regulator and it will be interesting to see if or what their next move is. 
What’s not in doubt is that the ball is now firmly in APRA’s court and we are closely watching what happens next.
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Investors surge after APRA warns about investor housing lending in December 2014

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Escalating dwelling values will see fewer opportunities for budget conscious property buyers, especially if their available spend is around $400,000.
January data released in the latest CoreLogic RP Data Home Value Index showed that home values increased by 7.9% in 2014 with the major focus on two of our most expensive capital cities, Sydney and Melbourne.
Auction clearance rates were also high with auction markets tending to reflect conditions across higher priced housing stock.
<img src="/images/2015/02/13/kush-feb-12-one.png" alt="">
Based on 2014 combined capital city sales, properties that sold for between $400,000 to $600,000 accounted for the greatest proportion of both house and unit sales over the year. However, the biggest difference between houses and units is the proportion of sales below $400,000.
Over 2014, 22.2% of all capital city houses sold under $400,000 compared to 35.3% for units. Similarly, only 6.1% of unit sales were over $1 million over the year compared to 16.2% of house sales.
20 years ago, 95.4% of capital city house sales were below $400,000 compared to 3.0% between $400,000 and $600,000, 1.2% between $600,000 and $1 million, and 0.4% over $1 million. Compared with current results where 22.2% of house sales were below $400,000, 33.4% were between $400,000 and $600,000, 28.1% between $600,000 and $1 million and 16.2% were above $1 million.
<img src="/images/2015/02/13/kush-feb-12-four.png" alt="">While not as extreme as the housing result, the results for units were not dissimilar. In 2014, 35.3% of sales were below $400,000, 34.2% were between $400,000 and $600,000, 24.4% were between $600,000 and $1 million, and 6.1% were more than $1 million.
20 years earlier, 95.9% of sales were below $400,000, 2.4% were between $400,000 and $600,000, 1.0% occurred between $600,000 and $1 million and just 0.6% were above $1 million.
<img src="/images/2015/02/13/kush-feb-12-two.png" alt="">
Although the combined capital city data provides an overview of the trends, when you drill down into the individual capital cities you can see some very different trends. 
Looking at the individual capital cities and across the price brackets, there is a divergence in the price point with the most sales over the year.
For houses, the $200,000 to $400,000 price bracket accounted for the greatest number of sales in Adelaide and Hobart while in Sydney it was the $1 million to $2 million bracket and each remaining city recorded the greatest proportion of house sales between $400,000 and $600,000. For units, most sales occurred between $200,000 and $400,000 in Brisbane, Adelaide and Hobart and in each remaining city most sales occurred between $400,000 and $600,000.
<img src="/images/2015/02/13/kush-feb-12-three.png" alt="">
Some of the more interesting results were that Hobart was the only city in which more than 5% of house sales occurred below $200,000 in 2014. In Sydney almost a third of all house sales in 2014 (31.6%) were over $1 million compared to 15.7% in Melbourne, 5.5% in Brisbane and 10.7% in Perth.
The sharp decline in sales below $400,000 over the past 20 years reflects the overall growth in household debt which is attributable to housing. 
It also highlights that a large proportion of Australian’s choose to build their wealth by investing in residential property. Of course, this is a good thing if you own a home but many Australian’s don’t. The sharp rise in home values leading to a decline in more affordable homes available for sale makes it more difficult for those renting to save up necessary deposits to enter in to home ownership.
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Sharp drop in home sales under $400,000: Cameron Kusher 

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The November 2014 housing finance data from the Australian Bureau of Statistics (ABS) indicates that demand for mortgages is starting to wane. 
We would expect that this trend will continue over the coming year as APRA crack down on higher risk mortgage lending and focus on curtailing growth to the investment segment of the market.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-11.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4160" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-11.jpg" alt="Chart 1" width="500" height="184"></a>
 
Source: CoreLogic RP Data, ABS
In November 2014, the total value of housing finance commitments fell by -1.0%.  The total value of owner occupier housing finance commitments fell by -0.2% with owner occupier refinance commitments 0.1% higher while owner occupier new loan commitments fell by -0.3%. 
The investor segment of the market recorded a sharp fall in lending over the month down -2.2% following rises over the previous six months.  Year-on-year housing finance commitments have increased by 7.3% which is their slowest rate of year-on-year growth since January 2013. 
The year on year increase in the value of housing finance commitments has decelerated from a peak of 26.6% in December 2013.  Owner occupier refinance commitments rose 18.2%, owner occupier new loan commitments fell -1.8% and investment finance commitments rose 13.0%. 
Although lending to the housing investment segment is up 13.0% over the year, this represents the lowest year-on-year growth rate since December 2012.
The first chart above shows the total value of housing finance commitments over time broken down by owner occupier refinances, owner occupier new loans and investors. 
While lending for home refinance and investment purposes have continued to trend higher over the past year there has been clear weakness in the new loans to owner occupiers segment.  Investor commitments fell -2.2% in November and with APRA trying to slow the growth in lending to investors we would expect the investment segment will follow the lead of the owner occupier new loan segment over the coming year with growth continuing to slow.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-21.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4161" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-21.jpg" alt="Chart 2" width="500" height="182"></a>
Source: CoreLogic RP Data, ABS
The total value of housing finance commitments in November 2014 was recorded at $29.0 billion.  Over the month there was $11.8 billion in commitments to owner occupier new loans (40.5%), $5.5 billion in owner occupier refinances (19.1%) and $11.7 billion in investment loans (40.4%).
The proportion of lending to investors eased over the month however, if refinances are excluded the proportion of lending to this segment is still extremely high, accounting for 49.9% of lending commitments for housing.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-31.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4162" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-31.jpg" alt="Chart 3" width="500" height="183"></a>
Source: CoreLogic RP Data, ABS
The third chart shows the rolling annual change in housing finance commitments (excluding refinances) versus the rolling annual change in combined capital city home values. 
Refinances are excluded because the data is used as a proxy for demand for new borrowings to purchase a home.  As you can see there is a correlation between growth in housing finance commitments slowing and growth in home values slowing. 
Currently we are seeing growth in both housing finance commitments and home values trending lower and we expect that this trend will continue over the coming year.
Demand for mortgages remains strong despite the fact that it has started to ease over recent months.  With APRA writing to Australian banks, building societies and credit unions late last year reinforcing sound residential mortgage practices we would expect a further slowdown in mortgage demand in 2015. 
Consequently we would also anticipate that this will result in a slowdown in the rate of growth in home values as demand eases.  We have already seen demand from the owner occupier market segment slow over the past year.  
With APRA advising Australia’s banking sector that they will be watching closely those that grow their investor mortgage book by materially more than 10% year on year, the investor segment may well follow suit in 2015.
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Demand for mortgages waning - home value growth will not be far behind

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The November 2014 dwelling approvals data has been released and it makes for very positive reading. 
In November there were 18,245 dwelling approvals across the nation, according to the Australian Bureau of Statistics (ABS). The dwelling approvals data is published from July 1983 and from that month until November 2014 there has never been more approvals over a one month period.  Dwelling approvals increased by 7.6% over the month and year-on-year they have increased by 10.1%.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-1.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4147" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-1.jpg" alt="Chart 1" width="500" height="181"></a>
Source: CoreLogic, ABS
Looking at the approvals data, the 18,245 monthly approvals were comprised of 9,404 house and 8,841 unit approvals. 
House approvals were actually -0.2% lower over the month while unit approvals increased by 17.2%.  As the chart above shows, unit approvals tend to be much more volatile than house approvals. 
Unit approvals are trending higher once again while house approvals are flat.  Year on year, house approvals have increased by 3.6% compared to a much larger 18.0% increase in unit approvals.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-2.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4148" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-2.jpg" alt="Chart 2" width="500" height="181"></a>
Source: CoreLogic, ABS
There is now a substantial pipeline of dwellings approved for construction.  Over the 12 months to November 2014 there were 199,174 new dwellings approved for construction. 
The annual number of dwelling approvals is approaching 200,000 and is also at an all-time high.  Over the past year there were 113,734 houses and 85,439 unit approvals.  House approvals have increased by 15.5% and unit approvals have risen by 11.3%. 
To further highlight the significant number of approvals of late, over the past two years there have been 374,401 new dwellings approved for construction.  If we assume the Census figure of 2.6 persons per household, that is enough housing approvals for 973,443 persons.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-3.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4149" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-3.jpg" alt="Chart 3" width="500" height="182"></a>
Source: CoreLogic, ABS
Looking at the relationship between dwelling approvals and population growth we see there has been a significant improvement over the past year or so. 
Population growth is now trending lower while dwelling approvals are at record high levels.  There still remains a significant gap between population growth and dwelling approvals, as has been the case for the past decade, but the gap between housing demand and housing supply is improving. 
Importantly, net overseas migration which creates more housing demand than natural increase is trending much lower.  The population data is only currently published up until June 2014 however, if population growth continues to trend lower (and overseas arrivals and departures data indicates that it will) this bodes well for a better balance between population growth and approvals.  It should also go some way to easing pressure on housing both from a purchase and rental perspective.
The capital cities have also had a record month in November with an all-time high 14,816 dwelling approvals over the month.  Capital city dwelling approvals were 1.4% higher over the month and have increased by 13.4% year-on-year.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-4.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4150" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-4.jpg" alt="Chart 4" width="500" height="180"></a>
Source: CoreLogic, ABS
In November there were 6,207 capital city house approvals and 8,609 unit approvals.  Unit approvals reached an all-time high and were 14.9% higher over the month while house approvals fell by -12.8% and were at their lowest level in five months. 
Year on year capital city house approvals have increased by 5.9% compared to a 19.5% rise in unit approvals.  Similar to the national figures, the chart shows that unit approvals across the capital cities tend to be much more volatile than house approvals. 
The other trend to note is that how over recent years the number of unit approvals has regularly outnumbered house approvals.  This reflects the growing appetite for unit product, particularly within inner city areas of the capital cities.
Given some earlier concerns that dwelling approvals were starting to fall, this month’s result is quite encouraging.  Of course, the rebound was driven by the volatile unit market which could just as easily reverse next month. 
Nevertheless, when you see a record number of monthly dwelling approvals and annual approvals are at an all-time high it is a positive result.  Furthermore, with population growth slowing, if approvals can hold at or close to current levels, a better balance between population growth can be achieved.  In-turn this would likely ease some of the value and rental growth pressures in the market. 
Overall it is a very good result and it would be economically beneficial to see approvals remain at these elevated levels over the next 12 months.  Of course, with value growth already slowing across the capital cities and sales volumes trending lower it may start to become more difficult for some of these developers, particularly those of unit product, to achieve sufficient presales to commence construction. 
While the pipeline of approvals is very strong, it will be important to monitor just how many of these approvals ultimately make it to completion.  Particularly given the number of unit approvals is at an unprecedented level.
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Cameron Kusher

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