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.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"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.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

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

<html><body>
Many Australian’s would like to live in the inner city areas of their capital city where the amenities are most abundant, but sadly the cost of housing is generally restrictive.
According to the RP Data Home Value Index results for July 2014, combined capital city home values increased by 10.2% over the 12 month period. The greatest annual increases in values have been recorded in Sydney (14.8%) and Melbourne (11.0%). In all other capital cities the total value growth over the past year has been less than 7%.
A familiar trend we are witnessing across most cities is that demand for housing is particularly strong across the inner city areas of the city. With mortgage rates low, buyers are battling it out to purchase those homes close to the city centre. Of course areas closer to the CBD tend to be much more expensive than those areas further away. Inner city suburbs are also generally better serviced by both essential and desirable amenities such as: schools, medical services, shopping centres, social amenity, roads and public transport infrastructure.
In certain capital cities the cost of housing is restrictive in these areas due to a high level of demand which has pushed housing costs out of the reach of many perspective buyers. Coupled with high demand is inherently low levels of supply; it is much more challenging to release new detached close to the city due to the limited availability of developable land. Of course there remain alternative options such as units however even units in certain cities have restrictive price points.
Looking at those suburbs with the most affordable median value within a 10 kilometre radius of the CBD across the cities we can see a large divergence in results. For example, in Sydney <a href="/news">Wolli Creek</a> has the lowest median house value at $710,303 (not very affordable) and in Melbourne the most affordable suburb is <a href="/news">Bellfield </a>at $533,252. In most other capital cities, except for Darwin the starting point for a house is significantly lower. Of course, in many cities these areas are less desirable than other inner city suburbs however, they remain close to the city and potentially have scope for urban renewal over the coming years.
Turning to the unit markets, home values are typically much more affordable closer to the city centre than they are for houses. Again, this doesn’t mean that they are affordable or practical for everyone. It is also interesting to note that the divergence in results from city-to-city. For example <a href="/news">Kilburn</a> is the fifth most affordable suburb for houses in Adelaide with a median of $349,925. The most affordable suburb for units in Sydney’s inner city is <a href="/news">Eastlakes </a>with a median of $452,776 which is significantly higher than the median house value of Kilburn. Nevertheless, the median value of units is much lower than the median house values across most cities. No wonder we are seeing such a rise in inner city unit construction with so much demand and a lower price point compared to comparable houses.
RP Data anticipates that home values in inner-city areas are likely to continue to increase, particularly as mortgage rates remain at such low levels. As a result more and more potential buyers are likely to be priced out of the inner city housing market. This creates some good opportunities for other areas of the city to see increased demand.
If buyers can’t afford to purchase a home within the inner city, they will most likely look to those locations that tick as many of the inner city boxes, just at a lower price point than the inner city areas. Given this, suburbs with features such as: quality public transport connections, abundant retail and social amenity, quality schools and medical amenity will likely see renewed interest as inner city buyers look to these more affordable alternatives.
<img src="https://image.e.rpdata.com/lib/fe591570776d03757d17/m/7/2014-08-15--most-affordable-inner-suburbs.jpg">
</body></html>

ckusher-ujnxiKuFQs

Australia's most affordable inner city suburbs

<html><body>
Rising home values across most capital city regions has meant that it’s now becoming even more difficult to find capital city homes under $400,000.
Across the combined capital cities, 28% of homes sold over the 12 months to June 2014 were priced below $400,000. In regional areas, the figure was a much higher at 63.9%. Over the past decade, the property market experienced a substantial reduction in housing under $400,000. 10 years ago, 69.3% of capital city home sales and 86.4% of regional home sales were below $400,000.
Over the three months to June 2014, the combined capital city median house price was $550,000 while the median unit price was $475,000. Given the median is the middle sale price over the period, this indicates that over the three month period, an equal number of homes sold above this figure.
<img src="/images/2014/08/28/kusher-aug-28-one.jpg" alt="">
A rise in capital city home values of 10.1% over the 12 months to June 2014 indicates the difficulty being experienced by price-sensitive purchasers looking to enter the housing market - this is most felt in Sydney and Melbourne where home values have increased by 15.4% and 9.4% respectively over the year to June.  
And while properties in Australia’s regional areas may be more affordable, the downside is a lack of employment.  Recent employment data from Australian Bureau of Statistics (ABS) confirmed that across most states, unemployment is lower in the capital cities than in regional markets. The exceptions are Queensland where the unemployment rate is 6.4% in both Brisbane and regional Queensland, and in SA where Adelaide’s unemployment rate is 6.8% compared to 6.4% in regional SA. Although housing might be much more affordable outside of capital cities, job prospects are not as strong.
If we consider the growth in home values and the selling prices of homes, it indicates a shortening supply of more affordable homes.
Looking at the proportion of capital city homes selling below $400,000 over the 12 months to June 1999, in each city the vast majority of homes sold within that price point.  
Five years on, the June 2004 results show a decline in home sales under $400,000. Despite the decline, Sydney houses were the only city and property type with less than half of all sales occurring under $400,000. According to the RP Data Home Value Index, combined capital city home values increased by a total of 87.9% over the five years to June 2004.
Between June 2004 - 2009, combined capital city home values increased by a total of 27.4%.  Although overall value growth was much more moderate than the previous five years, a sharp decline in sales of homes under $400,000 was recorded by June 2009.  Less than half of all house sales in Sydney, Brisbane, Perth, Darwin and Canberra were below $400,000 over the year. In each city a majority of unit sales were under $400,000.
Over the 12 months to June 2014, Hobart was the only city with a majority of house sales under $400,000.  Within the unit market, a majority of sales in Brisbane, Adelaide and Hobart were below $400,000.  According to the RP Data July Home Value Index results, combined capital city home values increased by a total of 22.1% over the five years to June 2014.
Although home value growth has moderated over each of the past two five year periods, the supply of homes selling at lower price points (i.e. less than $400,000) has also fallen.  
Housing is Australia’s single largest asset class and for most people, it’s where they store the majority of their wealth. For those who don’t own their home, it’s a very different story.
In a rising market where home values are increasing, all this is great news for those that own a home but makes entering the housing market more difficult for those that don’t.
Affordable housing is the way that most first time buyers enter the market.  With the supply of affordable homes within capital cities shortening significantly, the prospects for first home buyers entering the market are also diminishing. Based on these conditions, we’re expecting the typical age of first home buyers to increase and first home buyer purchasing to remain at below average levels.
<img src="/images/2014/08/28/kusher-aug-28-two.jpg" alt="">
<img src="/images/2014/08/28/kusher-aug-28-three.jpg" alt="">
</body></html>

The rapidly shrinking pool of affordable housing

<html><body>
The Australian Prudential Regulation Authority (APRA) released their quarterly Authorised Deposit-taking Institution (ADI) Property Exposures data for June 2014 yesterday.
The data always provides a valuable insight into current and historic mortgage lending by ADIs. This quarter’s data showed some very interesting trends.
<img class="aligncenter size-full wp-image-3648" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-11.jpg" alt="Chart 1" width="500" height="181">
Based on the value of all outstanding mortgages by households to Australian ADI’s, there $811.7 billion outstanding to owner occupiers (66.2%) at the end of June 2014 and $413.5 billion to investors (33.8%). Over the 12 months to June 2014, the total value of outstanding mortgages to owner occupiers has increased by 7.5% compared to a 10.9% rise in outstanding credit to investors.
<img class="aligncenter size-full wp-image-3649" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-21.jpg" alt="Chart 2" width="500" height="181">
At the end of June 2014, 36.0% of loans outstanding had an offset facility, up from 34.0% a year earlier. 35.7% of all outstanding mortgages were interest-only which was the highest on record and up from 34.3% a year earlier. 
Just 0.2% of all outstanding mortgages were reverse mortgages and 2.9% were low documentation which was down from 3.9% a year earlier. Other non-standard loans accounted for just 0.1% of all outstanding mortgages.
<img class="aligncenter size-full wp-image-3650" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-31.jpg" alt="Chart 3" width="500" height="180">
The average balance on all outstanding mortgages at the end of June 2014 was $237,200.  The average balance has increased by 3.2% over the past year.  Loans with an offset facility ($282,900) and interest-only mortgages ($299,000) have much higher average outstanding loan balances.  It is interesting to note that the annual growth in average outstanding loan balances has been much more moderate for mortgages with an offset and interest-only mortgages at 1.6% and 1.8% respectively.  Encouragingly, the data also indicates that outstanding balances are reducing for low documentation and other non-standard loans as they become less common.  Over the past year the average balance has fallen by -3.5% for low-documentation loans and by 5.9% for other non-standard loans.
Turning the focus to new loans written over the June quarter, 62.1% of lending was to owner occupiers and a record high 37.9% was to investors.  Compared to the June 2013 quarter, owner occupier lending is up 2.0% and investment lending is 14.4% higher.
<img class="aligncenter size-full wp-image-3651" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-41.jpg" alt="Chart 4" width="500" height="179">
Over the quarter, 0.7% of new loans approved were low-documentation, 43.2% were interest only, 0.2% were other non-standard loans, 43.0% were third party originated loans and 3.7% were loans approved outside of serviceability.  The 43.2% of new loans which were interest only was a record high, interest only loans tend to be (but not always) reflective of lending for investment purposes. 
The ADIs seem to be increasing the usage of their broker channels with the 43.0% of loans originated by third parties the highest proportion since June 2008.  Although only 3.7% of loans were approved outside of serviceability over the June quarter, this was the highest proportion on record. 
This may indicate that there has been some relaxation of lending standards over the quarter, however it is difficult to conclude any firm conclusions.  Nevertheless it is something to keep an eye on over the coming few quarters.
<img class="aligncenter size-full wp-image-3652" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-51.jpg" alt="Chart 5" width="500" height="183">
Looking at the loan to value ratios (LVR) of loans written over the June quarter, 24.0% of new loans had an LVR of less than 60%, 42.2% of loans had an LVR of between 60% and 80%, 21.3% had an LVR of between 80% and 90% and 12.5% had an LVR of 90% or more. The 12.5% of new loans with an LVR of more than 90% is the lowest proportion since June 2011. This suggests there are proportionally less high-risk mortgages being written.
The data has certainly shifted quite significantly over the past quarter and year. There is definitely a significant level of activity by investors and clearly ADIs appear happy to lend to them.  The rise in the proportion of new loans written outside of serviceability is a potential concern. However, it is positive to see that the proportion of loans with an LVR of 90% or more falling.  The high level of interest only lending is also a cause for concern.  Of course interest rates are currently very low but such a high level of interest only lending in light of low interest rates may cause some issues when rates eventually start to rise.
As we have mentioned previously, the high proportion of investment lending is our biggest cause for concern in the current market. The lure of strong capital growth in Sydney and Melbourne is attracting the attention of investors as risk-free investments offer very low returns. 
Of course, that growth in values won’t continue forever and once it slows or values fall our chief concern remains that many investors may look to exit the asset class.  Should this occur, inner city unit markets (where investor activity is most prevalent) could see a more significant drop in values than they otherwise would have as investors exit at a time when demand also falls.  This scenario could have greater repercussions for the overall market, not just the inner city areas.
</body></html>

The high proportion of investment lending remains our biggest cause for concern

<html><body>
Australia’s million dollar property club hit new heights this year in what can only be described as an explosion in the number of suburbs nationally with a median value in excess of $1 million over the past year.
Sales data to June 2014 confirmed that there are now 417 suburbs nationally which boast a median value of $1 million or more, up from a healthy 312 for this time in 2013.
While Sydney claimed majority market share to make it to the million dollar club with 22 suburbs ranked in the top performing list out of 25, while Perth had two suburbs and Melbourne had just one.
<img src="/images/2014/08/21/rp-data-aug-21-one.png" alt="">
RP Data’s July combined capital city home values index shows that values increased by 10.2% over the 12 months to July 2014. As a result of robust growth, the cost of housing has increased and subsequently, there was a significant increase in the number of suburbs with a median value of $1 million or more.
As at June 2014, there were 397 suburbs nationally with a median house value of $1 million or more and 20 suburbs for units. The 417 total suburbs with a median value of $1 million or more is the highest number over the past five years.  
The number of suburbs with a million dollar price tag for houses increased by 104 over the past year while for units; the number is up by five. New South Wales in particular recorded the most substantial increases in million dollar suburbs over the past year.  
The number of New South Wales suburbs with a median value of $1 million or more is up 42% over the year.  Across the other states, there’s been a 24% rise in Victoria, 25% rise in Queensland, 44% rise in South Australia, 22% rise in Western Australia, no change in the Northern Territory and a -11% fall in the Australian Capital Territory. Tasmania has zero suburbs with a median value of $1 million or more.  
The large rise in the number of suburbs with a median value of $1 million or more in New South Wales is reflective of the strong home value growth in the Sydney over the past year.  
Over the 12 months to July 2014, Sydney home values have increased by 14.8%. Proportionately, Sydney suburbs comprise 61% of all $million plus suburbs nationally followed by Melbourne at 14% and Perth at 12%.
Of most significance from today’s million dollar findings, is the rise in the number of suburbs with a median value of more than $2 million. Last year 37 suburbs had a median value of $2 million or more while in June of this year, the number of suburbs had increased to 42.
Clearly, low mortgage rates are creating a surge in market activity. This encourages people to look to upgrading to bigger homes and in more ideal locations. We’re seeing a large slice of this activity taking place within the higher-end of the housing market and as a result, propelling home values higher and into the million dollar realm.
Looking at the suburbs with the highest national median value, Sydney’s <a href="/news">Point Piper</a> remains as the nation’s most expensive housing market.  As at June 2014, houses in Point Piper had a median value of almost $5.7 million. <a href="/news">Woolwich </a>in Sydney was not far behind with a median value of $5.5 million.
Of the 25 suburbs with the highest median value, all suburbs listed were for houses rather than units.  Twenty two of the 25 suburbs listed were in Sydney with one in Melbourne and two in Perth.  
<img src="/images/2014/08/21/rp-data-aug-21-two.png" alt="">
The results show that higher values, particularly in Sydney is becoming more prevalent.  With mortgage rates low and tipped to remain low we would expect that in 12 months’ time we will have even more suburbs with a median value of $1 million or more.  Although we anticipate the rate of value growth is likely to slow over the coming year, we do expect further increases.
A rise in suburbs with a million dollar plus price tag is great for those who own a home in these areas. For those that don’t, it highlights that these buyers have fewer housing options and continue to be pushed further away from the city centre where most of these homes in excess of $1 million are located. 
Photo courtesy of Wikimedia Commons.
</body></html>

Australia's top 25 most expensive suburbs: RP Data

<html><body>
Looking at where the most affordable dwellings are within 10 kilometres of each city’s CBD, RP Data’s research analyst Cameron Kusher paints an intriguing picture of each state and territory’s apartment markets.
The list, which spans from Sydney’s cheapest, <a href="/news">Wolli Creek</a> for a $710,303 median house price, to Hobart’s <a href="/news">Clarendon Vale</a>, for a $159,159 median house price, includes the five most affordable suburbs for houses and units within each capital city.
Kusher notes that investors and owner occupiers may be surprised by the data, which suggests affordable inner city options exist.
“We’re witnessing a familiar trend across most cities where demand for housing is particularly strong across the inner city areas of the city,” said Kusher.
“With low mortgage rates, buyers are battling it out to purchase homes close to the city centres - of course areas closer to the CBD tend to be much more expensive than those areas further away.
“Inner city suburbs are also generally better serviced by both essential and desirable amenities such as schools, medical services, shopping centres, social amenity, roads and public transport infrastructure,” he said.
He explained that in Sydney and Melbourne the cost of housing remains expensive, even on this cheapest list, due to high demand and low supply. While units are an alternative to houses for some to access the market, there are still restrictive price points.
He also noted that the cheaper areas that emerged on the list are often seen as less desirable, but are in urban renewal areas. For this reason, he suggests that home values may increase as mortgage rates remain low and buyers are priced out of houses.
“This scenario creates good opportunity for other city areas - if buyers can’t afford to purchase a home within the inner city, they will most likely look to those locations that tick as many of the inner city boxes, just at a lower price point than the inner city areas,” he said.
“Given this, suburbs featuring quality public transport connections, abundant retail and social amenity, quality schools and medical amenity will likely see renewed interest as inner city buyers look to these more affordable alternatives.”
See over page for the city by city breakdown.
<hr class="system-pagebreak">
<img src="/images/2014/08/19/rp-data-aug-19-one.jpg" alt="">
</body></html>

jduke-EHk3XBmHkn

The most affordable inner city suburbs: RP Data’s city by city reveal

<html><body>
The total value of housing finance commitments increased by 1.0% in June 2014. 
The total value of housing finance commitment is 15.6% higher year-on-year.  Meanwhile the number of housing finance commitments to owner occupiers has increased by 0.2% over the month and has increased by just 2.4% over the 2013/14 financial year.
<img class="aligncenter size-full wp-image-3581" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-1.jpg" alt="Chart 1" width="500" height="179">
The total value of housing finance commitments continues to trend higher however; the strength of the investment segment has waned over recent months. 
Over the month the owner occupier segment fuelled the increase with refinances up 1.6% and non-refinances up 1.9% while investment lending fell by -0.3%.It was the first time investment lending has fallen over consecutive months since December 2012. 
Year on year, the value of housing finance commitments is 15.6% higher with owner occupier refinances up 14.8%, owner occupier non-refinances up 9.4% and investment loans rising 23.8%.
<img class="aligncenter size-full wp-image-3582" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-2.jpg" alt="Chart 2" width="500" height="181">
As a proportion of total lending, the level of lending for investment purposes remains inflated on an historic basis although it has eased slightly. 
Owner occupier non-refinance commitments accounted for 43.4% of total lending in June compared to 18.1% to owner occupiers for refinances and 38.5% for investors. 
Although investment lending has eased it continues to hover at around its highest levels since late 2003. Remember 2003 was the final days of the housing boom in both Sydney and Melbourne which commenced in 2001.
<img class="aligncenter size-full wp-image-3583" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-3.jpg" alt="Chart 3" width="500" height="181">
The number of housing finance commitments to owner occupiers increased by 0.2% over the month and was 2.4% higher year on year. 
The year-on-year increase is the slowest rate of increase since February 2013.  This indicates that although demand for housing demand has increased, the rate of growth in this demand is slowing. 
Looking at the more detailed components, refinance commitments are -0.7% lower over the month and 5.1% higher year on year.  Non-refinance commitments have increased by 0.6% over the month and are 1.2% higher year-on-year.
<img class="aligncenter size-full wp-image-3584" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-4.jpg" alt="Chart 4" width="500" height="182">
The number of owner occupier housing finance commitments can be further broken down in to the type of commitments the finance is for.  The three categories we analyse here are: construction of dwellings, purchase of new dwellings and purchase of established dwellings (excluding refinances). 
Over the month, construction of dwellings rose by 1.1%, purchase of new dwellings was 4.6% higher and purchase of established dwellings edged just 0.1% higher. 
Year on year, the market strength has been associated with construction of new dwellings (+17.0%) rather than purchase of new dwellings (-2.1%) and purchase of established dwellings (-1.7%).  In fact the number of owner occupier finance commitments for construction of new homes is at its highest level since February 2010.
Keep in mind that in June 2014, 17.9% of these non-refinance commitments were for construction of dwellings, 8.2% were for purchase of new dwellings and 73.9% were for purchase of established dwellings.
<img class="aligncenter size-full wp-image-3585" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-5.jpg" alt="Chart 5" width="500" height="179">
The number of owner occupier housing finance commitments for first home buyers fell by -3.6% in June 2014 and are -6.2% lower year-on-year.
First home buyers continue to play little role in the market, accounting for just 13.2% of total owner occupier housing finance commitments in June. 
Interestingly the average loan size for first home buyers is increasing.  As home values rise they need to borrow a greater amount, this is highlighted by the 7.1% year-on-year rise which is the largest since December 2009.
<img class="aligncenter size-full wp-image-3586" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Fianl-chart.jpg" alt="Fianl chart" width="500" height="272">
RP Data’s Mortgage Index (RMI) which provides a lead indicator to the number of owner occupier housing finance commitments indicates that there is likely to be a lift in July.  Activity levels were 6.7% higher in July 2014 compared to June suggesting a likely rise in housing finance commitments over the coming month.
The data shows that while demand for housing finance is holding, we are potentially seeing a slowdown in demand from the investment segment.  Meanwhile demand for owner occupiers is steady, albeit the rate of growth is slowing with the strongest increases arising for those constructing their own home. 
Spring will be the real test for the market from here, investment activity remains elevated, auction volumes and results have been strong throughout winter and we wait to see if this momentum continues for the remainder of the year.  Particularly given that although values are continuing to increase, they are doing so at a more moderate pace than they were throughout late 2013 and early 2014.
Although mortgage demand has picked-up over the past two years, it is important to note that the number of finance commitments remain well below 2009 and much lower than activity levels prior to the financial crisis.
</body></html>

Housing finance data reveals possible slowdown in investment demand

<html><body>
The Australian Bureau of Statistics (ABS) released building approvals data for June 2014 last week.
National dwelling approvals fell by 5.0% over the month with house approvals falling by -2.6% and unit approvals down -8.4%.  Despite the fall in approvals over the month, a significant number of dwelling approvals remain in the pipeline.  Note that dwelling approvals have now fallen over four of the past five months.
<img class="aligncenter size-full wp-image-3549" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-14.jpg" alt="Chart 1" width="500" height="182">
Year on year, dwelling approvals are 16.0% higher in June 2014 than in June 2013. 
House approvals have increased by 12.2% year-on-year while unit approvals have surged by a greater 22.0%. The greater rise in unit approvals compared with house approvals reflects changing lifestyle patterns and greater acceptance of higher density living.  However, a recent analysis we have undertaken indicates units are less likely to be ultimately completed than houses. 
Although the pipeline is strong, it is reasonable to expect that not all of these units will ultimately be constructed.
<img class="aligncenter size-full wp-image-3550" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-24.jpg" alt="Chart 2" width="500" height="179">
The month to month dwelling approvals data is quite volatile, given this it is worthwhile looking at the annual number of approvals. 
Over the 12 months to June 2014 there were 108,598 house approvals and 85,067 unit approvals.  With a total of 193,667 dwelling approvals over the year there has been a 20.7% increase in approvals year on year. 
Total annual dwelling approvals are now at their highest level since October 1994.
<img class="aligncenter size-full wp-image-3551" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-35.jpg" alt="Chart 3" width="500" height="180">
Focussing on dwelling approvals, across the combined capital city housing markets there were 144,278 approvals over the 2013/14 financial year.  This was an increase of 25.5% over the year and the highest number of annual approvals on record. 
Both Sydney and Perth have also recorded their highest ever number of dwelling approvals over the past year. Over the year there were 69,973 houses approved for construction (+21.3% over the year) and 74,305 unit approvals (+29.8%).
Most individual capital cities have recorded an increase in dwelling approvals over the year with the largest increases recorded in Brisbane (47.1%), Sydney (30.6%), Adelaide (30.4%) and Perth (27.6%).  Darwin was the only city where approvals were lower over the year, down -3.7%. 
Comparatively the annual increase in dwelling approvals has been much lower in Hobart (12.9%), Melbourne (13.9%) and Canberra (22.6%).  Sydney and Melbourne alone have accounted for almost 58% of all capital city dwelling approvals over the year.
<img class="aligncenter size-full wp-image-3552" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-43.jpg" alt="Chart 4" width="500" height="180">
As noted earlier, there have been more unit approvals across the combined capital cities than house approvals. 
Over recent years around 98% of house approvals have ended up as completions compared to only 86% of unit approvals.  While units are increasing in popularity there is much less certainty about their ultimate construction than there is for houses. 
Across the cities Sydney had 68.8% of approvals for units and in the remaining cities the figures were: Melbourne (52.9%), Brisbane (56.0%), Adelaide (32.3%), Perth (23.8%), Hobart (11.2%), Darwin (58.7%) and Canberra (61.9%).
Despite the monthly fall, the pipeline of dwellings approved for construction is significant.  It is important to note that over the past five months, dwelling approvals have fallen on four occasions.  This may indicate that the sector has moved through the peak levels of dwelling approvals. 
The strong pipeline of unit approvals, particularly in capital cities, also carries a risk as units are less likely to be ultimately constructed than houses.
Nevertheless, the Reserve Bank stated that with low interest rates they didn’t just want to see higher house prices but also a construction response.  This certainly seems to be how the current conditions are playing out and with population growth recently starting to slow we may start to see an improvement in the alignment between home construction and population growth.
</body></html>

Unit approvals surge, but uncertainty remains over their construction

<html><body>
Since the onset of the global financial crisis, migration between Australia’s states and territories has slowed.  
Demographic data released by the Australian Bureau of Statistics (ABS) shows that overseas migrants arriving in the country’s mining states is easing, with most preferring to settle in New South Wales and Victoria.
Over the 12 months to December 2013, there were 235,797 net overseas migrants to Australia while the rate of natural increase was recorded at 160,357.  At a national level, interstate migration cancels itself however, looking at each state you can see that over recent years there are far fewer people moving between the states and territories.
By way of net migration, New South Wales continues to lose residents at a slower rate, while Victoria is the only state where there is a significant rise in the cross border inflow of residents.  
The mining states of Queensland and Western Australia have each seen a fall in both net interstate and net overseas migration over the year. This is a flow on from the slowdown in mining construction activity where activity on these projects move from construction to production which is resulting in lower worker demand.
New South Wales is still seeing a net outflow of residents from the state with a net 11,219 residents leaving the state in 2013.  Over the past 20 years, the outflow of residents has averaged a much higher 18,391 persons.  While the state is seeing some outflow to other states it is well and truly making up for it via the 71,446 net overseas migrants over the year.
<img src="/images/2014/07/31/kusher-july-31-one.gif" alt=""> 
Victoria has recorded an annual average net loss of citizens to other state and territories of 2,278 residents over the past 20 years. Victoria is now attracting a record number of net interstate migrants, with 7,528 new residents moving from other states last year.  Victoria also attracts a significant 62,337 net overseas migrants.
<img src="/images/2014/07/31/kusher-july-31-two.gif" alt=""> 
In Queensland the net inflow of residents from other states and territories is close to a record low. During 2013, Queensland’s net interstate migration was recorded at 6,897 persons compared to a 20 year average of 22,743 per annum. Although Queensland attracted 37,355 net overseas migrants, it is a sharp fall from the 46,161 at the same time in 2012.
<img src="/images/2014/07/31/kusher-july-31-three.gif" alt="">
South Australia has historically shown a much more stable level of population growth. Over the 2013 calendar year, South Australia lost a net figure of 3,994 residents to other states which was slightly higher than the average net loss of 3,263 residents over the past 20 years. Over the 12 months to December 2013, South Australia recorded net overseas migration of 11,872 residents which was slightly higher than the 11,203 over the same period the previous year.
<img src="/images/2014/07/31/kusher-july-31-four.gif" alt="">
Western Australia has seen a downturn in both net interstate and net overseas migration over the past year. Compared to the 20 year average net interstate migration, WA migration is still above average however; it has fallen by -56% over the year to 4,800 persons in 2013. Net overseas migration has also fallen from 56,580 in December 2012 to 45,401 persons in December 2013. 
<img src="/images/2014/07/31/kusher-july-31-five.gif" alt="">
Historically, residents have migrated from New South Wales and Victoria to Queensland and to a lesser degree Western Australia. Since the onset of the financial crisis the outflow of citizens to Queensland and Western Australia has slowed with fewer residents leaving New South Wales and Victoria.  
The sea change phenomenon was a big driver of this migration before the financial crisis. It now seems that when someone has secure employment, particularly in New South Wales and Victoria, they are less inclined to trade that in and move interstate.
With unemployment rising nationally and demand for workers in the resources sector slowing we would expect this trend to continue over the coming year.  In fact the net loss of residents from New South Wales may reduce further and the net gain of residents in Victoria may increase.
</body></html>

Interstate movements remain low, but Victoria attracting a record number of interstate migrants

<html><body>
According to the RP Data-Rismark Home Value Index, combined capital city home values fell by -0.2% over the second quarter of 2014. 
With the Australian Bureau of Statistics (ABS) releasing their Consumer Price Index (CPI) data last week, we can see that in ‘real’ terms home values across the combined capitals fell by -0.7% over the second quarter of the year.
CPI is important to consider because raw or nominal figures don’t adjust for the impact of inflation. At a headline level, combined capital city home values have increased by 10.1% over the 2013/14 financial year.  The latest CPI data showed that inflation was recorded at 0.5% over the second quarter and at an annual rate of 3.0% throughout the 2013/14 financial year.
<img class="aligncenter size-full wp-image-3530" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-13.jpg" alt="Chart 1" width="500" height="176">
Focusing on the ‘real’ home value growth across individual capital cities we can see some significant variation in value growth, with values actually falling over the year in some cities. 
The above chart details the annual change in capital city home values both in terms of raw change and inflation-adjusted changes.  Although according to the RP Data-Rismark Home Value Index, dwelling values have risen over the year across all cities, when you adjust for inflation values are lower in real terms in Adelaide, Hobart and Canberra.  Not to mention that growth in most other cities starts to look a lot more moderate.
<img class="aligncenter size-full wp-image-3531" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-23.jpg" alt="Chart 2" width="500" height="181">
Home values have been rising across the combined capital cities since June 2012 following falls over most of the previous two years.  Across the individual capital cities the timing and magnitude of the falls has varied greatly however, with values rising across the board, home values generally remain well below their previous peak (in real terms) across the capitals. 
In non-inflation adjusted terms home values are higher than their previous peak in: Sydney, Melbourne, Canberra and Perth.  Once you account for inflation, Sydney is the only city where values are currently higher than their previous peak.
<img class="aligncenter size-full wp-image-3532" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-34.jpg" alt="Chart 3" width="500" height="289">
The above table highlights the previous quarter in which home values peaked in inflation adjusted terms, the maximum falls in values and the difference in values from the previous peak to June 2014. As you can see, the previous peaks vary dramatically across each city.  
As already mentioned, Sydney is the only city where real values are now higher than their previous peak although it’s important to note that Sydney’s previous peak was all the way back in the first quarter of 2004.  Perth’s market peaked in September 2007 and values are still -9.9% lower, Hobart peaked in December 2007 and values are currently -18.8% lower and Brisbane peaked in March 2008 with values currently -14.5% lower than that level. Across all other capital cities values are below their peak however, the real peak in values occurred following the financial crisis.
It is important to consider the impact of inflation because it highlights the real purchasing power. 
In most cities, despite extremely low mortgage rates and value growth throughout the past two years, values still remain well below their peaks.  For home owners this means the real capital gain from residential property have been quite poor in recent years outside of Sydney and Melbourne.  For people who don’t yet own a home it means that you should be able to purchase relatively more for you money now than you could at the market peak.
The data also shows that interest rates are not necessarily the main driver of why values are currently rising.  If that were the case you would probably expect cities where values peaked much longer ago like Brisbane, Perth and Hobart to have recorded stronger levels of growth. 
Mortgage rates are but one consideration for the home buyer and obviously considerations such as employment, cost of living and housing demand driven through population growth are equal as important of a consideration as mortgage rates when considering whether to purchase or not.
</body></html>

Inflation adjusted home values are still lower than their previous peak

<html><body>
The Australian Bureau of Statistics (ABS) released housing finance data for May 2014 recently, with the data showing owner occupier housing finance commitments flat over the month.
The data also showed that the total value of housing finance commitments was -0.8% lower over the month.  Although this may be concerning, the number of housing finance commitments remain high and even if we have reached the summit, the RBA would probably be happy were commitments to remain at these current levels.
<img class="aligncenter size-full wp-image-3485" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-12.jpg" alt="Chart 1" width="500" height="181">
Over the month of May there were 52,092 owner occupier housing finance commitments, 17,463 of which were refinances and 34,630 which were non-refinances or new loans.
Refinance commitments were 2.1% higher over the month and are 10.1% higher year-on-year. New loan commitments were -1.0% lower in May and are only 2.0% higher over the month. 
Refinance commitments are at their highest level since April 2008 while new loan commitments are -2.5% lower than their recent peak in November 2013. Although owner occupier housing finance commitments are higher over the year they do seem to be at or very close to a peak.
<img class="aligncenter size-full wp-image-3486" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-22.jpg" alt="Chart 2" width="500" height="184">
In May, there was $27.5 billion worth of housing finance commitments which was slightly lower than the all-time peak of $27.7 billion the previous month. 
Over the month, owner occupier refinance commitments were up 0.8%, owner occupier new loans were -1.4% lower and investment finance commitments were -0.9% lower. 
Despite weaker results over the month, year on year there have been some significant increases with owner occupier refinances 17.7% higher, owner occupier new loans 8.3% higher and investment loans up 23.8%.  Again the rate of increase has definitely slowed of late potentially pointing to a peak.
<img class="aligncenter size-full wp-image-3487" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-33.jpg" alt="Chart 3" width="500" height="182">
Looking at how much housing lending each component is attracting, the data shows that in May 2014, 42.9% of lending was to owner occupiers for new loans, 18.0% was for refinances by owner occupiers and 39.1% is for investment purposes. 
As a proportion of total lending in May, owner occupier non-refinance commitments are at their lowest level on record while refinances are at their highest level since July 2013 and investment lending remains at around its highest level since late 2003.
The pick-up in investment and refinance lending has caused the proportional fall in owner occupier non-refinance lending.  If we exclude lending for refinances, 52.4% of lending over the month was for owner occupiers while 47.6% was for investors. This was equal to the second highest level of lending for investment purposes, behind the 49.0% of all loans to investors in October 2003.
<img class="aligncenter size-full wp-image-3489" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Housing-investors-by-state.jpg" alt="Housing investors by state" width="500" height="185">
Lending finance data released by the ABS on Monday for May 2014 revealed that investor activity is significantly higher in New South Wales than in all other states. Nevertheless, New South Wales (29.9%), Victoria (22.5%), Queensland (7.8%) and South Australia (2.1%) have each recorded a year-on-year rise in investment lending. 
Investment housing finance commitments account for an historic high 46.9% of all housing finance commitments in New South Wales and elsewhere the proportions are recorded at: Victoria (39.1%), Queensland (34.4%), South Australia (31.5%), Western Australia (31.0%), Tasmania (13.8%), Northern Territory (40.2%) and the Australia Capital Territory (33.9%). 
The data shows that although investment levels are generally rising, it is much more exacerbated in New South Wales and Victoria which are of course proxies for rising investment in Sydney and Melbourne.
<img class="aligncenter size-full wp-image-3488" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-42.jpg" alt="Chart 4" width="500" height="184">
Interestingly when we track the annual change in the value of housing finance commitments, excluding refinances to reflect home sales we can see that it correlates closely with the annual change in combined capital city home values. 
The recent slower rate of growth in capital city home values is happening in concert with a slowdown in the growth in housing finance commitments.
<img class="aligncenter size-full wp-image-3490" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-52.jpg" alt="Chart 5" width="500" height="181">
The housing finance data also shows that first home buyers continue to play only a minor role in the housing market. 
In May, the number of owner occupier first home buyer commitments was up 17.1% over the month however, as a proportion of total owner occupier lending activity it remains quite low at just 12.6%.
<img class="aligncenter size-full wp-image-3491" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-63.jpg" alt="Chart 6" width="500" height="187">
Across the individual states, the level of activity by first home buyers remains very low in the three largest states (New South Wales, Victoria and Queensland).  Elsewhere the percentage of owner occupier housing finance commitments for first home buyers is lower now than at the same time last year except in Tasmania and the Northern Territory.
Looking ahead, the RP Data Mortgage Index (RMI) indicates a slowing of demand for mortgages in June.  With value growth seemingly having peaked and transaction volumes lower than they were late in 2013 we anticipate that demand for housing finance is likely to remain at fairly similar levels to those current over the coming months.  The real test from here will be throughout the spring selling season when housing demand typically escalates.
With affordability factors anticipated to slow the rate of value growth we may also see slightly lower levels of mortgage demand.  As we have noted plenty of times previously, rental yields are generally low which suggests that most investors are seeking capital growth.  This is further highlighted by the high levels of investment activity in New South Wales and Victoria with Sydney and Melbourne having recorded the greatest increases in home values across the capital cities over the past year. 
The test will be once the value growth in the market abates what then happens with all these investor owned properties?  Do they wait it out for the next growth phase or do they exit the market and move to a more liquid asset class? 
Only time will tell but it is certainly something which lenders and regulators should be considering with such a high level of investment lending currently taking place.
</body></html>

Cameron Kusher

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Cameron Kusher

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News