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>
Last week I highlighted sales by price point across the capital cities. 
The data showed a shortening supply of homes selling at lower price points, in particular within some of our largest capital cities.  This week, I want to investigate what this means for those who don’t already own a home and in particular those that are on lower incomes.
The latest quarterly average weekly earnings data from the Australian Bureau of Statistics (ABS) to November 2013 shows that the average Australian earned $1,114.20 a week. Remember this is the average so plenty of people earn less than this figure which is the equivalent of almost $58,000 a year.
Compared to many other countries, Australia’s average wage is quite high however, so too is the cost of living in Australia and in particular the cost of housing as highlighted last week. With a combined capital city median house price of $580,000 and median unit price of $482,000 an average income is not going to go a long way.
But why is the capital city median price more relevant than the nationwide median which is $490,000 and $440,000 for houses and units respectively? Well it comes down to the fact that you generally need to be employed to secure a mortgage and work towards owning a home. 
The latest labour force data from the ABS shows that Australia had 11.578 million employed persons as at June 2014.  With a 6.0% unemployment rate the total size of the workforce, or to put it another way the number of people with employment or actively looking for employment, is 12.320 million.  
For myriad reasons a proportion of the population is not actively working or looking for work at any given time.  As at June 2014 the employment participation rate was 64.7% meaning that for whatever reason there are an estimated 4.349 million people over 15 years of age that are not actively working or looking for work.
The 2011 Census reported that at that time there were 21.504 million Australian’s living across the six states and NT and ACT. At that time, 65.6% of Australian’s (or 14.1 million) lived in a capital city.  A slightly higher 67.4% of persons reported as being in the workforce (working or actively looking for work) lived in a capital city.  In fact, 58.2% of people in the workforce lived in Sydney, Melbourne, Brisbane or Perth.
If we think how this impacts lower income earners and their prospects of entering into home ownership it’s not simply a case that they can move to another city where housing is more affordable. 
Unfortunately in Australia, jobs, particularly well-paying jobs, are largely located in a handful of major capital cities or on mining sites in the middle of nowhere.  The reality of moving to another capital city or to a regional area where housing is cheaper is not a realistic prospect for many low income earners.
There are still opportunities to purchase lower priced homes across the capital cities however, these opportunities are becoming fewer. If you look at where these lower priced sales are occurring, for houses they are typically located on the outskirts of the city.  Houses on the outskirts of cities, particularly the major capital cities, are inherently cheaper because they are often less desirable than those in well-established suburbs closer to the city centre (although not always). Although housing is cheaper in these areas the cost of doing day-to-day tasks is more expensive. 
If you work in the city, the cost of public transport is higher and if you choose to drive you lose hours in traffic, not to mention the additional cost of fuel and road tolls. Local amenities such as shops, schools and health care tend to not be as abundant in outer suburbs as they are closer to the city centre so it will take residents of these areas longer to access these amenities too. 
Although housing may be more affordable within the outer suburbs, it won’t necessarily make it easier for some lower income earners to afford a mortgage when they factor in all the additional costs of living in that location.
Lower priced housing stock is also available within the unit market however, this too has its shortcomings.  There are becoming fewer lower priced units available in areas closer to city centres.  Unit prices are still generally much lower than that of houses although, most of the newer stock comes with a relatively high price tag these days.  Of course units are also much smaller than a house and you tend to get less (in terms of area) for your money.  While a unit may be practical when your single, a couple or have young children, they become less practical if/when the situation changes and the size of the family grows.  Units also don’t offer the same level of freedom as a house with limitations generally in place with regard to what you can and can’t do both within and to your unit.  Although when you own a home you have to pay for upkeep, in a unit complex you have to contribute strata levies each quarter the cost of which can at times be exorbitant.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
So what realistic option does the person on a lower income have? 
Of course housing should be cheaper on the outskirts of the city (and it is) but even still a lot of lower income earners are not in a position to purchase.  This is partly because although housing is cheaper a mortgage is still going to swallow up a sizeable chunk of their income not to mention the other costs associated with living on the outskirts of the city. 
The commonly recommended solution is to remove urban growth boundaries and cut fees and charges on new developments which would theoretically increase supply and therefore bring down the cost of housing.  But I wonder by how much would it really reduce the cost and would it be significant enough to allow lower income earners to purchase.
I think possibly not and here’s why.
It’s not simply a case that we can fix housing affordability by building more and more homes, if that was the case, lower income earners could just move to a more affordable city.  The issue is more to do with employment and specifically where the jobs are located. Even on the outskirts of the capital cities the cost of public transport and fuel will still eat up a sizeable chunk of lower income earners salaries.
If residents on the outskirts still have to travel to get to their jobs (which often they will) they will often encounter a number of hurdles.  Firstly public transport is often woefully insufficient in these areas.  Anyone who has travelled overseas will know that public transport in our larger capital cities is not of a particularly high standard. The other thing with public transport is that it caters much better to those people living closer to the city centre and transport upgrades often benefit inner city dwellers much more than it benefits those on the outskirts of the city, the ones that need it the most. 
Secondly, the road network also tends to be insufficient on the outskirts of the cities unable to cope with the growing population.  This is due to the fact that governments tend to put the onus of building the roads on the developers and will often not provide the major roads to a new housing area until such time as it is absolutely critical.  Developing the roads before the housing would make these areas much more attractive and accessible.
If we can’t provide sufficient public transport and roads to the housing areas on the outskirts of the city, the greatest assistance we can provide when developing these areas is to accompany this residential development with local jobs for these workers. Travelling to work does not become such an issue for low income earners on the outskirts of a capital city if they can find employment locally.  Not to mention it is imperative to bring amenities such as shops, schools and health care closer by. 
If this were to occur, public transport and investment in new major roads becomes not as vital as it is currently when there are so few employment opportunities locally.
If lower income earners aren’t lumped with the additional burdens of significant public transport, fuel and road toll costs to get to their employment then the burden of a mortgage whilst still difficult does not become a virtual impossibility.
So yes, affordable housing is becoming harder to find in our capital cities and yes, increasing supply of housing will help to improve the opportunities to purchase homes at a lower price.
However, local employment drivers and amenities I believe are just as important, especially seeing as time and time again we have seen insufficient investment in public transport and road infrastructure on the outskirts of the cities. Not to mention that the cost of utilising public transport is extremely restrictive. 
Alternatively we should forget pie in the sky proposals such as fast trains between Brisbane and Melbourne and improve the rail network locally.  Each of Sydney, Melbourne and Brisbane could use a more expansive rail networks which includes more stations, better linkages to suburbs on the outskirts and faster connections between nearby cities. 
Investing in improving links and train speeds to the Central Coast, Newcastle, Wollongong, the Blue Mountains and Bathurst from Sydney, to Geelong, Ballarat and Bendigo from Melbourne and to the Gold and Sunshine Coasts and Toowoomba from Brisbane would no doubt be a much more worthwhile investment.
</body></html>

ckusher-ujnxiKuFQs

Lower income earners' hopes of owning a home have faded

<html><body>
There is likely to be a continued variance in performances from city to city and region to region.
Much of the growth over the year has occurred in Sydney, Melbourne and Darwin however, more recently the figures being reported for Brisbane suggests that value growth is experiencing a moderate pick up.
Existing property owners and investors are the main drivers of the market currently spurred by the low mortgage rate environment.
From an investor’s perspective the best opportunity to enter the Sydney, Melbourne or Perth markets has likely passed, especially considering the strong value growth over the past year and the now falling rental yields. It will be interesting to see whether investors start to turn their attention away from these cities and towards higher yielding markets that are much earlier in their value growth phase such as Brisbane and Adelaide where value growth is now becoming more evident. They could also potentially start looking at other asset classes.
<img src="/images/2014/07/10/kush-july-11-one.jpg" alt="">
RP Data anticipates that affordability constraints will start to impact on value growth in Sydney and Melbourne throughout 2014 as a proportion of potential buyers continue to be squeezed out of the market as values move higher. We have already seen a slowdown in the rate of value growth across Perth and it seems peak growth has now probably passed in both Sydney and Melbourne as well. Although all price segments of the combined capital city market are shifting higher we are seeing the greatest strength in the broad middle segment and comparatively weaker growth across the more affordable segment.
<img src="/images/2014/07/10/kush-july-11-two.jpg" alt="">
Source: RP Data
Despite the signs that the housing and construction sector is picking up as mining investment slows, it does not mean that the economic changeover will be without its challenges.
Globally, the US economy appears to be picking up and the Chinese economy appears to be experiencing a soft landing in terms of its moderation in economic growth however; there are currently a number of concerns around the Chinese housing market. Even the Eurozone’s prospects appear to be improving.
Federal Treasury is now forecasting that the unemployment rate will peak at 6.5%t and they have cut their economic growth forecast for this year from 2.75% to 2.5%. The anticipated jump in the unemployment rate is a potential risk for the housing market. If home owners start to suffer widespread job losses or potential buyers become concerned about job security this will potentially result in an increase in arrears rates and would likely dampen housing market activity.
Of course, if interest rates were to increase this would likely extinguish some of the current housing market exuberance. The low consumer sentiment reading is also likely to have an impact on the housing market; a more nervous consumer will be less inclined to spend many hundreds of thousands of dollars on a home. Furthermore the high level of investment activity is a further potential pitfall for the market.
If value growth slows or potentially falls there is a risk that many of these investors could look to exit the market at the same time, potentially creating downwards pressure on home values. 
<img src="/images/2014/07/10/kush-july-11-three.jpg" alt="">
Source: RP Data
</body></html>

The best time to buy in Sydney and Melbourne has passed

<html><body>
Not long before the Australian Bureau of Statistics (ABS) released building approvals data for May 2014, the Reserve Bank Governor (RBA) Glenn Stevens completed a presentation in Hobart.
Within that presentation Glenn Stevens stated: “It would in my opinion be good, for a range of reasons, if it did persist for a while. If the next couple of years saw an unremarkable performance on prices, and construction staying at the higher levels that will clearly be reached over the coming year, it would be an outcome that would contribute to a balanced growth path for the economy and to housing more people at manageable cost.”
This was made in the knowledge that home values rose by 10.1% over the 20-13/14 financial year and following three consecutive monthly falls in dwelling approvals between February and April 2014.  Luckily the May data which was released last week showed a 9.9% rise over the month.  Dwelling approvals are now 14.3% higher year on year.
<img class="aligncenter size-full wp-image-3440" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-1.jpg" alt="Chart 1" width="500" height="181">
After three consecutive monthly falls in dwelling approvals it was looking as if the much vaunted rebound in housing construction was running out of puff (approval is the initial step before construction can commence).
Of course, we don’t want to get too carried away with a one month bounce but it was encouraging to see that the fall in dwelling approvals has, at least for the moment, not continued. Total dwelling approvals in May were 14.3% higher than a year ago with house approvals 14.0% higher and unit approvals 14.5% higher.
<img class="aligncenter size-full wp-image-3441" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-2.jpg" alt="Chart 2" width="500" height="180">
The data is inherently volatile on a month to month basis so I like to also note the annual number of dwelling approvals. Over the 12 months to May 2014, there were 191,088 total dwelling approvals, 107,291 of which were for houses and 83,799 which were for units. 
The annual number of dwelling approvals is at their highest level since there were 192,614 dwelling approvals over the 12 months to December 1994.  Let’s not understate this, the rebound in dwelling approvals is strong and much needed after years of ongoing insufficient supply additions. 
The challenge from here will be what proportion of these approvals actually end up moving to construction and then ultimately completion.
<img class="aligncenter size-full wp-image-3443" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-31.jpg" alt="Chart 3" width="500" height="180">
Focussing on the capital cities, it is encouraging that there has been a significant rise in dwelling approvals across these areas where supply issues are generally most dire. 
On a rolling annual basis, there were 141,845 capital city dwelling approvals over the 12 months to May 2014.  Of these approvals, 68,455 were for houses while 73,390 were for units.  Note that at a national level dwelling approvals for houses still outnumber units however units outnumber houses in the capital cities highlighting the direction that new development is heading in most of our capital cities.
The annual number of capital city house approvals as at May 2014 was 19.6% higher than over the corresponding 12 month period in 2013. Capital city house approvals are at their highest level since the 12 months to February 2011 when 69,524 houses were approved.  
Capital city unit approvals are 23.4% higher than they were a year earlier and are only slightly lower than their record high level of 73,835 unit approvals over the 12 months to March 2014.
<img class="aligncenter size-full wp-image-3444" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-4.jpg" alt="Chart 4" width="500" height="183">
Across individual capital cities the annual number of dwelling approvals is higher across each city except for Darwin. The greatest annual lift in dwelling approvals has been recorded in Brisbane and Sydney. Anyone that has visited either of these cities recently would have seen plenty of residential construction taking place and it seems that there is a significant additional pipeline of residential construction to come.
<img class="aligncenter size-full wp-image-3445" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-5.jpg" alt="Chart 5" width="500" height="180">
As you can see from the above chart, across each of the major capital cities there has been an upswing in dwelling approvals.  The most significant upswing has occurred in Sydney and Brisbane however, the number of approvals remains much higher in Sydney and Melbourne than in all other cities. 
The number of dwellings approved for construction is at an all-time high currently in Perth, is very close to its record high in Sydney and at its highest level since the 12 months to June 2004 in Brisbane.
<img class="aligncenter size-full wp-image-3447" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-61.jpg" alt="Chart 6" width="500" height="180">
We mentioned earlier about the shift towards unit approvals as opposed to house approvals which is much more prominent in capital cities than nationwide. 
The above chart highlights the proportion of dwelling approvals which are for units as opposed to houses over time.  As already noted over the 12 months to May 2014, 51.7% of all capital city dwelling approvals were for units.  In Sydney (69.4%), Melbourne (52.4%), Brisbane (57.2%), Darwin (58.6%) and Canberra (62.9%) a majority of approvals are for units rather than houses. 
In the remaining three cities 31.1% of approvals are for units in Adelaide, 23.9% in Perth and 13.6% in Hobart. I have little doubt that particularly in Perth we will see a growing proportion of approvals for units rather than houses over the coming years.
The May dwelling approvals data showed an encouraging rebound following three consecutive monthly falls.  Keep in mind that Glenn Stevens wants to see higher construction levels over the next few years and that will be the real challenge. 
If consumer sentiment continues to languish and if and when home value growth slows there will be much less certainty around the viability of new residential developments.  Maintaining high levels of new residential approvals (and construction) over the next few years will be no easy feat.
</body></html>

Encouraging rebound in dwelling approvals, but how many will end up being constructed?

<html><body>
The recent release of the May 2014 national housing credit data by the Reserve Bank (RBA) confirmed that outstanding housing credit continued to increase at a moderate pace compared with the historic trend.
However, with housing credit aggregates and household debt also starting to rise, it may raise some alarm bells with the Reserve Bank.
The RBA’s financial aggregate statistics details the amount lent by domestic financial institutions. The latest data to May 2014, shows that outstanding credit grew by 0.4% over the month and is 4.7% higher over the year. The annual increase was comprised of a 6.2% rise in housing credit, a 0.3% increase in other personal credit and a 2.7% increase in business credit. Clearly, housing credit continues to be the main driver of the overall expansion in credit.
<img src="/images/2014/07/04/kusher-july-4-one.gif" alt="">
A breakdown of housing credit data over the 12 months to May 2014 shows that owner occupier housing credit increased by 5.2% and investor housing credit increased by a greater 8.3%. This was the greatest annual rise in owner occupier credit since March 2012 and for investor credit, the rise is the largest since August 2010. Historically, the level of credit expansion is quite low where over the past 20 years, the average annual increase in owner occupier housing credit was recorded at 11.3% and investor credit has averaged 16.0%.
The annual change in owner occupier housing credit reached a recent low of 3.9% between January and March of 2013, which indicates that the recent rise has been quite strong.
<img src="/images/2014/07/04/kusher-july-4-two.gif" alt="">
Investment housing credit troughed at an annual increase of 4.8% in January 2012 and has since increased to 8.3% annual growth. Growth in investment lending has been very strong over the past 18 months and in-line with the growth in home values which has been recorded since mid-2012.
The vast majority of outstanding credit to financial institutions is for housing as opposed to other personal or business loans. As at May 2014, the RBA data shows a record high 60.6% of all credit was for housing, a record low 33.2% was to business and 6.2% was for other personal credit provisions.
With only so much money available to be lent by Australian financial institutions, they are showing a clear preference for mortgage lending. In fact, lending for mortgages has been the preferred option for banks consistently since April 2001, right as the housing market started to boom.
<img src="/images/2014/07/04/kusher-july-4-three.gif" alt="">
The preferential treatment by institutions for mortgage lending over businesses is likely due to the ongoing strong performance of mortgages. The confidence around this is based on no recent long-term mass declines in home values and mortgage arrears rates have remained low.
Furthermore, mortgagees have seen equity in their homes increase and used this to fund alternate investment and in some instances, fund the start-up of small businesses.
Each quarter the RBA publishes data on the ratio of household debt to disposable income.The latest data to March 2014 shows that the ratio of total debt is 149.9% which is its highest since September 2010. The ratio of housing debt was recorded at 135.8% which is its highest on record. With home values rising and credit growing households are taking on additional housing debt.
One would think that this is the most problematic development for the RBA. Household debt levels are already high (much higher than public debt) and although household savings has increased over recent years there has been no significant reduction in household debt levels and they are now rising.
<img src="/images/2014/07/04/kusher-july-4-four.gif" alt="">
With a greater number of people looking to purchase homes we are seeing housing credit once again escalating which has now flowed through to a rise in household debt.
We have no doubt that both RBA and APRA will be keeping a close eye on household and housing debt levels as growth in national home values continues. If debt levels continue to rise it is likely to be a potential cause for concern with households becoming more indebted at a time when interest rates are so low. When interest rates inevitably rise in the future, some households may find it harder to repay that debt.
</body></html>

Housing credit continues to expand as housing debt climbs

<html><body>
There are many measures of affordability in the marketplace, sadly I believe that many of these measures fail to accurately depict the affordability or otherwise of housing in Australia.  
The main reason being that housing affordability is an extremely complex issue and many factors drive the affordability of housing. In my future posts I am going to investigate some of these factors and tell you what you should really be asking yourself about affordability when purchasing a home.
Can I start by stating that simplistic means of comparing property prices between countries I believe are ineffective. 
Due to different tax regimes, standards of housing and attitudes to property and wealth accumulation there may be perfectly good reasons why a household is prepared to spend more on housing in Australia for example than they are in the United States.  I think common measures such as the median multiple (ratio of household income to property prices) are not necessarily a good way to measure affordability or otherwise, there are a lot more factors at play.
Interest rates
Interest rates are obviously an important component in determining housing affordability.  When interest rates are lower, interest repayments on home loans are lower and as a result ‘affording’ the repayments on a mortgage should be easier.  Of course, as we are seeing at the moment, lower mortgage rates often encourage higher property values. 
So while it’s true that lower interest rates make housing relatively more affordable, if values are rising and sales increase then it can somewhat off-set the affordability benefit of lower mortgage rates.
Furthermore, the typical home loan in Australia is 25 years and the vast majority of home loans are on a variable rate.  As a result, as the Reserve Bank adjusts monetary policy there is virtually an instant effect on household budgets and balance sheets.  For example, at the moment the standard variable mortgage rate sits at 5.95% however, over the past 10 years the variable mortgage rate has averaged 7.27%, over the last 20 years it has averaged 7.45% and over the past 25 years (the typical home loan length) it has averaged 8.47%. Over the past 25 years, standard variable mortgage rates have been as high as 17.0% and as low as 5.75%.
The point is that interest rates can vary greatly over 25 years and over the life of the loan the current interest rate is not a great means of measuring the cost of a mortgage over its lifetime.
Wages / Income
If you are going to take out a mortgage on a home (as most purchasers do) you are going to need an income and you are going to need some savings.  In Australia there are a number of measures of wages/income and it is difficult to know exactly which one is best to use to measure housing affordability.
The National Accounts measure the ‘Real net national disposable income – chain volume’.  This measure does have a number of shortcomings in that it is not an individual measure and that it includes items that one can’t really spend such as superannuation.  Additionally this data is only available from a national standpoint. 
The Australian Bureau of Statistics (ABS) publishes its wage price index each quarter however, it measures wages only and doesn’t measure income captured from other sources.  The Census is undertaken each five years and does report on the median weekly household income however, the shortcoming here is that it is only updated every five years. 
We also have the Household Income Survey from the ABS however it is only undertaken bi-annually and takes a fairly macro view of household incomes
Unfortunately all of these measures have significant shortcomings which need to be considered when looking at any housing affordability measure.
Article continues on next page. Please click below.
<hr class="system-pagebreak">
Labour force / unemployment
Paying off a mortgage eats up a significant portion of a family’s wage.  Undoubtedly if home values weren’t so high and mortgages weren’t so large disposable incomes would be much greater.  Although labour force data or unemployment statistics need not necessarily be an input into any housing affordability measure they are a key consideration for someone looking to purchase. 
The threat of unemployment means that despite the fact housing may seem affordable it is less likely someone would purchase. Obviously if you are unemployed it is going to be difficult to purchase a home.
Another factor to consider is although measures of income show that over recent years wages and disposable income have increased, what they don’t take into account is how many more women are working nowadays.  Labour force data shows that in May 2014, 54.1% of the workforce was male and 45.9% was female, 30 years ago 62.3% was male and 37.6% was female.  Today, 35.5% of full-time workers are female compared to 28.9% 30 years ago. 
The point here is that although household incomes have increased, a big proportion of the increase is due to the structural change associated with a greater number of women in the workforce.  
The rising prevalence of dual income households means that whereas 20 to 30 years ago couples could afford mortgage repayments on a single wage, today they largely require dual incomes.
Home values / prices
Most measures of housing affordability look at median prices or median values. 
The important thing to remember here is that a median is just the middle value so there are just as many homes worth more and less than that figure.  In fact the median price looks only at the middle value of properties which have sold over a period.
This obviously has significant shortcomings because what is predominately selling could be at the affordable or expensive end of the market and this could bias the median one way or another.  Remember that typically only 5% to 7% of total housing stock transacts in a given year.
Another important consideration here is that a national median measure doesn’t really tell you very much at a localised level.  In Australia, 66% of residents live in a capital city with around 55% in Sydney, Melbourne, Brisbane or Perth. 
Quite simply many residents don’t have a choice but to live in a capital city so if you are trying to determine affordability in Melbourne, the cost of housing in Mildura is of no valuable comparison whatsoever.
Rental rates
If you don’t own a home or pay-off a mortgage you have to live elsewhere, for the most part non-homeowners rent.  The cost of renting is an important consideration when trying to determine housing affordability.  If rents are increasing but home values are flat or falling purchasing a home may start to look a more attractive prospect. 
Once again the challenge with a measure which compares rents to house price (or mortgage repayments) is that it is not a localised analysis.  For example for the cost of renting in Paddington in Sydney you may actually be able to pay off a mortgage in Guildford but to the renter is the opportunity cost of owning their own home and being further away from the city centre, harbour and the beaches worthwhile? 
Who knows but for anyone looking to purchase these are the sorts of questions they need to be asking themselves.
The other key consideration is that the ongoing costs associated with owning a home as opposed to renting are difficult to determine, but they are much more than renting.  As a renter, the ongoing costs generally include: the rent, the bond, electricity, gas (if applicable), cleaning (if you move rentals) and the cost of moving if/when you move. 
As an owner of a home the costs incurred include: the mortgage, electricity, gas, council rates, stamp duty when you purchase, ongoing maintenance of the property, strata fees (if you own a unit) and agent fees if/when you decide to move.  The ongoing costs associated with owning a home are much greater than the ongoing costs of renting.
Who does housing affordability affect most?
Housing affordability affects everyone.  The high cost of housing acts as a disincentive for people to move to more appropriate locations, discourages people from upsizing and downsizing and discourages movement intra or interstate for employment.  The group most affected by housing affordability however is those who don’t as yet own a home.
Again if we think about many of the measures of affordability used they look at typical or median prices values and compare to interest rates and typical wages.  The problem with this approach is that very few people are actually typical.  As a generalisation, most people that rent are younger, starting out their careers. 
There is a high likelihood that their wage is currently lower than the median (although there is a good chance it will increase as they are promoted or move jobs).  If their wage is below the typical wage then they should not be looking to buy the typical (or median house).
Of course there are plenty of renters that earn above average wages but choose not to purchase as well but when trying to tackle the affordability question I think many of the measures that we look at are far too simplistic, but hamstrung by the quality and granularity of income data. 
Housing affordability is an individual thing and none of the measures really tell the true story about how affordable or unaffordable housing in Australia is.  When determining whether you can afford to buy a home I think the most important things to consider are:
<ol>
<li>What are current mortgage rates and at what higher level would I not be able to repay my mortgage?</li>
<li>How secure is my job and what would happen if I was to lose my job for an extended period?</li>
<li>Over the next few years what is the realistic expectations for my wage, will it rise and by how much?</li>
<li>What impact would it have if I found a partner or lost a partner on my ability to repay the mortgage?</li>
<li>If I plan to have children, children cost a lot what impact would that have on my ability to repay the mortgage?</li>
<li>Compared to my current rent and associated costs, how much more is paying off a mortgage and the other day-to day costs of home ownership really going to be and can I afford this?</li>
<li>What am I willing to sacrifice in order to buy a home; lifestyle, location, overseas travel etc?  What is the opportunity cost of buying a home?</li>
</ol>
I am sure there are many more questions to ask when looking to purchase but I think as a start these questions are essential.  I say that the measures of affordability which are readily available should be taken with a grain of sale. 
It’s more important to ask yourself some tough questions about whether or not you can really afford to be a home owner.  If you have any doubt you really need to consider whether it is worth the risk or not.
For what it’s worth, I think that housing affordability is a significant issue for young Australians, particularly those within our capital city markets.  he major problem is that most Australian’s choose to build wealth through property and 23 years of unabated economic growth has on exacerbated this. 
The challenge now is how can you deliver affordable housing for younger Australians without bringing down the cost of existing housing which politically and economically would be detrimental to the overall health of the Australian economy.
</body></html>

Forget affordability measures and ask yourself some tough questions

<html><body>
With property buyer competition intensifying as result of more than 12 months of buoyant property market conditions, on average, houses took 80 days to sell while units were taking 75 days over 12 months to March 2014.
For the same period in 2013, houses took 94 days to sell and units took 88 days. Although the typical selling time for both houses and units has reduced, at a national level it remains quite elevated.
Aacross the individual capital cities the annual average time on market has generally fallen over the year.
<img src="/images/2014/06/12/kusher-june-12-one.jpg" alt="">
The cities to record the shortest time on market for houses were Perth at 54 days and Sydney at 59 days. In contrast, the cities to record the longest days on market were Hobart with 90 days and Darwin with 86 days. For units, Sydney at 49 and Perth 56 recorded the shortest days on market, while Hobart and Darwin shared the longest days on market at 96.
At a broader level, council areas where of the top 25 listed for houses, Bassendean in Perth had the shortest average number of days on the market over the year at 32 days. Across each of the council areas listed there has been a fall in the average number of days on the market over the past year.
Turning the focus to the unit market, the trends are similar to those found across houses. All of the areas with the shortest average days on market are within a capital city and all of them are within Sydney, Melbourne or Perth.
<img src="/images/2014/06/12/kusher-june-12-two.jpg" alt="">
Once again, the Perth council area of Bassendean recorded the shortest average number of days on market for units with 27 days; a significant drop from 74 days at the same time a year ago. Across the capital cities, 18 of the 25 areas listed were in Sydney with one Melbourne region listed and the remaining six regions located within Perth.
The fall in average time on market at a national level is a clear sign that the amount of sales is picking up and sellers are becoming more empowered at the time of negotiation.
If there is less scope for negotiation and discounting, you will typically find that a property sells quicker which is the scenario currently at play.
Today’s time-on-market data release also highlights the geographic dispersion of the stronger housing market conditions where in particular, capital cities are generally experiencing a faster rate of sale. This is reflected in the data which shows that selling conditions have been much stronger in Sydney, Melbourne and Perth.
With mortgage rates tipped to remain low for some time yet it is reasonable to expect that we are likely to see a further lowering of the average days on market. There is evidence which suggests peak capital growth conditions have passed in Sydney, Melbourne and Perth so in 12 months’ time the list of fastest selling council areas could look quite different as buyers broaden their horizons and look for opportunities outside of these centres.
</body></html>

Where are homes selling the quickest?

<html><body>
Housing finance data for April 2014 was <a href="/expert-insights/finance/first-home-buyers-fall-back-to-record-lows">released this week</a> by the Australian Bureau of Statistics (ABS). 
The headline figure for the number of owner occupier housing finance commitments was flat over the month however, dig a little deeper and there are some differing trends emerging.
<img class="aligncenter size-full wp-image-3337" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-1.jpg" alt="Chart 1">
As mentioned, the number of owner occupier housing finance commitments was flat over the month following on from a -0.8% fall in March. This data is split into commitments for refinance purposes and commitments for non-refinances (or new loans). 
Refinance commitments rose by 0.6% compared to a -0.3% fall in non-refinance commitments.  Non-refinance commitments fell over consecutive months and it was the first time this has happened since December 2012. 
Given the number is a count it is important to look at the trend and it is clear from the first chart that the number of owner occupier commitments, whether it be for non-refinances or refinances is beginning to flatten. 
Year-on-year, refinance commitments are 8.6% higher compared to a 5.7% rise in non-refinance commitments.
<img class="aligncenter size-full wp-image-3338" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-2.jpg" alt="Chart 2" width="500" height="179">
The number of owner occupier housing finance commitments for the construction of new dwellings and the purchase of new dwellings have shown a strong rise recently however, as the above chart shows there has been some recent weakness in commitments for the purchase of new dwellings.
The number of commitments for construction of new is almost three times greater than the number for purchase of new nevertheless, the recent weakness is certainly something to keep track of.
<img class="aligncenter size-full wp-image-3339" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-3.jpg" alt="Chart 3" width="500" height="182">
The data on the number of commitments is important however it is narrow in its scope given it does not include investors. 
From a banking perspective, the value of the funds they are lending is arguably more important than the number of loans written. The total value of housing finance commitments (which includes investor commitments) increased by 1.7% in April and increased by the same amount if you remove refinance commitments.
Over the month, owner occupier refinance commitments were 1.6% higher, owner occupier non-refinance commitments were 1.3% higher and investment loan commitments increased by 2.3%.  As the above chart shows, investment and owner occupier lending is at record high levels whereas non-refinance loan commitments are still -5.7% lower than their previous peak. 
In terms of the value of finance commitments all three segments continue to record a rise and are trending higher. 
Article continues on next page. Please click below.
<hr class="system-pagebreak">
Year-on-year the total value of housing finance commitments are 20.4% higher with owner occupier refinances up 19.1%, owner occupier non-refinances up 13.4% and investment loans 29.8% higher.
<img class="aligncenter size-full wp-image-3340" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-4.jpg" alt="Chart 4" width="500" height="179">
It’s also important to look at the make-up of lending across owner occupiers and investment loans. 
Over the month of April, 43.0% of all lending was to owner occupiers for non-refinances, 39.4% was to investors and 17.6% was to owner occupiers for refinances. As the above chart shows the proportion of lending to investors is high on an historical basis. 
In fact investment lending is sitting at levels not seen since late 2003. It is clear from the data that there is significant demand for housing from investment currently. 
The big question of course is how sustainable is that demand given there was a sharp slowdown in this segment of the market shortly thereafter lending last reached similar heights.
<img class="aligncenter size-full wp-image-3342" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-5.jpg" alt="Chart 5" width="500" height="182">
It is interesting to pair this data with recently released quarterly data from the Australian Prudential Regulatory Authority (APRA) about Authorised Deposit-taking Institutions’ (ADIs) exposure to property.  The latest data showed that interest-only loans accounted for 39.4% of all loans over the quarter (a similar proportion to these investor figures). 
However, the data also suggested that loans with a loan to value ratio (LVR) of more than 90% may be getting harder to find with 13.5% of new loans over the quarter with an LVR of more than 90% which was the lowest proportion since September 2011.
<img class="aligncenter size-full wp-image-3341" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-6.jpg" alt="Chart 6" width="500" height="183">
Focussing on lending to first home buyers, there were 6,074 housing finance commitments to first home buyers in April 2014.  This figure was -7.3% lower over the month and -12.7% lower year-on-year. 
As a proportion of all owner occupier housing finance commitments, first home buyers accounted for an equal record low of just 12.3% of the commitments over the month.
<img class="aligncenter size-full wp-image-3343" src="https://blog.rpdata.com/wp-content/uploads/2014/06/Chart-7.jpg" alt="Chart 7" width="500" height="264">
The RP Data Mortgage Index (RMI) which is an index of mortgage events across RP Data’s proprietary platforms has a strong correlation with housing finance data and is a weekly index.  The RMI predicted a softening of activity some six weeks ago and is indicating a sharp rebound in the housing finance data once the May data is released.  Note that the RMI data is correlated strongly to the raw housing finance data not the seasonally adjusted figures which are referred to elsewhere throughout this post.
The data seems to suggest that the growth in the number of new owner occupier housing finance commitments is starting to, or already has, topped out. There is still plenty of activity in the owner occupier refinance and investment segments of the market.  Of course our chief concern remains the high level of investment activity in the market. 
Total returns from residential property have been strong over the past 12 to 18 months however, we believe that the peak level of capital growth has now passed and rental yields continue to fall. 
Although total returns are still strong they are likely to diminish from here and where will that leave these investors especially if they were simply chasing the short-term value appreciation which has been particularly prevalent in Sydney and Melbourne over the past year. 
The good news is that the higher risk, high LVR loans are reducing however, there are still a lot of instances in which mortgagees are only paying back the interest component of the mortgage.
</body></html>

Owner-occupier housing finance commitments topping out

<html><body>
For the first three months of 2014 there were 82,051 house sales and 30,417 unit sales recorded. Sales over the first quarter of this year were much softer than over the last quarter of 2013.
 Regardless, March 2014 managed to record the strongest first quarter for house sales since 2009, and the strongest for units since 2010. House sales were 7.9% higher and unit sales are 4.0% higher than for the same quarter in 2013.
 <img src="/images/2014/06/06/kusher-june-6-one.gif" alt="">
Sales volumes are generally lower over the first quarter of any year compared to the remaining quarters which is largely due to a slowing in housing market activity throughout most of January and often well into February.
Given this, it’s not necessarily best to compare sales between quarters because the housing market acts very differently in each period however, comparing to the same quarter in previous years does provide insight into the comparative performance of the market.
Across individual capital city markets, the annual change in sales is quite varied and dependent upon where each city is within the property cycle.
 <img src="/images/2014/06/06/kusher-june-6-two.gif" alt="">
In the more subdued capital city markets of Brisbane and Adelaide where value growth has been limited, these two cities managed to record the greatest annual rise in sales; up 21.1% and 10.8% respectively. Perth and Canberra on the other hand, have recorded falls in sales over the year, down -8.2% and -4.2% respectively.
By way of the variation between houses and units the pick-up in sales activity year-on-year has been greater for houses (7.9%) than it has been for units (1.2%). Over the first three months of this year, house sales were higher than in the same period last year across each city except for Perth (-5.9%) and Darwin (-6.0%). Focussing on unit sales, sales are lower over the first quarter in Sydney (-1.7%), Perth (-17.6%) and Canberra (-23.9%).
 <img src="/images/2014/06/06/kusher-june-6-thre.gif" alt="">
Historically there has always been a strong correlation between sales volumes and property values. If demand is greater and more homes are selling, the likelihood is that values will rise. Alternatively, if fewer buyers are active in the market selling conditions become tougher and values fall,” he said.
When the number of homes sales across Australia’s capital cities edge below 80,000 on a quarterly basis, values are typically rising by a quarterly rate of less than 2.0%. However, when quarterly sales fall to 70,000, this has generally been a trigger point for values to start falling.
While our March sales volumes data indicates that although sales are higher than they were a year ago, monthly sales activity isn’t as strong as it was at the end of 2013.
With the quarterly rate of home value growth having most recently peaked in September 2013 and quarterly sales having peaked shortly thereafter in November, it will be interesting to watch what happens to sales and values from here.
 <img src="/images/2014/06/06/kusher-june-6-four.gif" alt="">
The May RP Data-Rismark Home Value Index results released earlier this week confirmed that capital city home values fell by -1.9% in May 2014. Although this is likely the result of a seasonal influence on the reading, I question that with quarterly value growth peaking and sales volumes tapering, will volumes continue to ease and value growth continue to moderate? Alternatively, will the second half of the year see a rebound in both sales and values much like occurred over the second half of 2013?
While as yet we don’t know the answer to this question, we do know is that last year values rose by 3.0% over the first six months of 2013 followed by a 6.6% capital gain over the second half. With interest rates set to remain low, it may provide enough stimuli to see values start climbing more rapidly once more. We believe that the strong growth in late 2013 and early 2014 has peaked and although values are likely to keep rising, they will most likely do so at a more moderate pace.
This is largely due to affordability constraints becoming more prevalent in the market and both lower returns and capital growth potential for the investors that have been so active in the market. Adding to this is consumer sentiment, which has been trending lower since September last year.
</body></html>

March quarter strongest for house sales in five years

<html><body>
Growing demand for housing close to inner city areas was the topic of a recent speech by The Reserve Bank’s (RBA) head of financial stability, Luci Ellis.
Entitled ‘Space and Stability: Some Reflections on the Housing-Finance System’, Ellis made some valid points relevant to the housing market in her speech.
Ellis’ speech goes some way to explaining why detached housing closer to the centre of a city is much more expensive than for those suburbs located further away. Put simply, Ellis noted in her speech that housing in these areas is in short supply and with high demand due to its convenience to major working nodes. 
Several key points made on housing within the speech were:
<ul>
<li>Housing prices in the inner-ring are becoming more expensive than those in outer areas of our capital cities;</li>
<li>The availability of jobs is becoming even more centralised, particularly within already established working nodes;</li>
<li>There are minimal jobs outside of city areas; it is becoming increasingly difficult to grow smaller cities and few centres outside of the capital cities have job magnets. Given this, when residents are priced out of capital cities and more affordable regional housing options are not a viable alternative.</li>
</ul>
A rise in the popularity of inner-city unit living is driven by a desire to live closer to the city centre at a lower cost than detached housing. Australia has comparatively low density cities with significant price premiums in the most convenient areas of the city.
Ellis’ speech noted that if housing costs rise beyond people's comfort levels, it is not always feasible or attractive for households to respond by moving to cheaper areas, especially if the more affordable options are further away from their place of employment.
The RBA is hopeful that over time the structure of our cities is such that home owners will have more options as to where they can live, rather than having to live in expensive housing closer to working nodes such as current policies often necessitate.
With plenty of commentary around on some of the best performing areas around the country, it’s important to note that this analysis is typically undertaken over a relatively short-time frame of around 10 years, and where it is often reported that new greenfield areas and regional housing markets are better for capital growth than inner city areas.
The nature of new greenfield developments, both within a capital city and in regional areas, can lift prices in these areas from a very low starting point to a much higher new base as the area sees an influx of new modern housing. While over a shorter time frame this may result in heightened levels of median price increases, this is typically a relatively short-term phenomenon.
It also compares to the shift from a much lower quality initial housing product to a far superior newer housing supply.
Below is a list of suburbs that have recorded the largest rise in median selling prices over a 10 year and a 20 year timeframe. Interestingly, Miles and Chinchilla in regional Queensland are the only regional suburbs listed. Elsewhere, the list is dominated by a collection of the most desirable inner city suburbs in Sydney, Melbourne and Brisbane - all with high median prices, and all relatively close to major working nodes .
<img src="/images/2014/05/29/kusher-may-29-chart-one.gif" alt="">
With the population continuing to grow and housing supply insufficient we would expect that inner-city houses will continue to be the best performed over the long-term with significant demand and a short supply available.
Note: Median prices are not the most appropriate measure of a market change because these don’t continually measure the change across the same collection of properties. Median prices look at those properties that transaction over specific periods (which may be dramatically different each year).
The table above shows a strong bias towards regional areas of the country over a shorter time frame, particularly those linked to the resource sector. The rate of compound growth over the 10 years is much higher than those in the second table which looks at the 20 year period and reflects the boom in the mining sector over recent years.
The table below supports comments from the RBA with the list dominated by inner city suburbs.
<img src="/images/2014/05/29/kusher-may-29-chart-two.gif" alt="">
</body></html>

Reserve Bank’s take on current housing market

<html><body>
Earlier this week the Australian Bureau of Statistics (ABS) released data which revealed that 46.4% of state and local government taxation revenue over the 2012-13 financial year came from property related taxes.
The data showed that over the year, state and local governments collected a record $35.931 billion in taxes from property related sources.  
In comparison, they collected $20.752 million in taxes from employers, $11,089 million in taxes from the provision of goods and services and $9.638 million in taxes on the use of goods and performance of activities.  As this shows, at a state and local government level property taxes are the largest source of revenue.
<img class="aligncenter size-full wp-image-3293" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-13.jpg" alt="Chart 1">
Source: RP Data, ABS.
The total value of property related taxes increased by 7.2% over the most recent financial year.  In comparison, taxes on employer’s payroll and labour force rose by 5.1%, taxes on the provision of goods and services rose 2.4% and taxes on the use of goods and performance of activities rose 8.6%.
With home values nationally beginning to rise in June 2012, it is clear that state and local government are a major benefactor. With higher home values, taxes such as land tax, municipal rates and stamp duty on conveyances all increase.
<img class="aligncenter size-full wp-image-3294" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-23.jpg" alt="Chart 2" width="500" height="501">
Source: RP Data, ABS.
Of the $35.931 billion in property related tax revenue collected in 2012-13, 40% came from municipal rates and 36% came from stamp duties on conveyances.  Land tax was the only other sizeable contributor to property related tax accounting for 17% of revenue.  Over the year the most significant increase in property related taxes came from stamp duty, up by 16.9%.  The amount of tax revenue collected from municipal rates increased by 6.8%, and land taxes increased by 1.5%.
Article continues on next page. Please click below.
<hr class="system-pagebreak">
Property related tax revenue is only collected by those who own properties. Ultimately every property is owned by someone, some as an owner occupier and some as an investor. 
The taxes levied against property are typically only payable by the owner of the property.  Given this, those who choose to rent rather than own property pay no tax on property.  Not to mention the fact that the cost of renting is typically much lower than the cost of owning, it is no surprise more people are choosing to rent rather than own property.
State and local governments have clearly experienced a significant revenue boost via the improvement in the residential housing market over the year.  Stamp duty in particular has seen a significant rise.  With sales volumes and property values rising there have been more sales to receive stamp duty from and at a higher price which also increases the stamp duty collected. 
Of course, the issue with stamp duty is that it is a tax only collected across those properties which sell.  From a residential perspective this is just 5% to 7% of the total housing stock over a given year.  Stamp duty also acts as a disincentive for home owners to transact property on a more regular basis because it is a tax paid on a new purchase.
Many people have called for the removal of stamp duties which would be a positive move to encourage greater mobility of residents.  Of course state and local governments would lose 36% of their property related tax revenue and 17% of their total taxation revenue. 
Many have called for replacing stamp duty with a blanket land tax, another tax would likely be very unpopular and you’d have to consider how equitable that would be particularly for those who have recently paid stamp duty. 
To put a blanket land tax into perspective to cover the $12.841 billion in stamp duty revenue over the 2012-13 financial year, each residential dwelling would have to pay $1,391.69 based on the ABS estimate of 9,226,900 residential dwellings as at June 2013.  Keep in mind that stamp duty isn’t just payable on residential property transactions.
<img class="aligncenter size-full wp-image-3295" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-33.jpg" alt="Chart 3" width="500" height="163">
Source: RP Data, ABS.
Over the year, stamp duty revenue was higher in each state except for Victoria (-1.4%), Queensland (-6.7%) and the Australian Capital Territory (-3.3%).  New South Wales (21.4%), Western Australia (33.0%) and the Northern Territory (35.5%) recorded the greatest rises in stamp duty revenue. 
According to the RP Data-Rismark Home Value Index, Sydney home values rose by 5.6% over the year, Perth values were 6.0% higher and Darwin values were 6.1% higher.  Conversely, Melbourne home values were 3.4% higher, Brisbane values were just 0.6% higher and Canberra value were 1.1% higher.  Clearly home value rises have a positive effect on stamp duty revenues.
The data highlighted shows that property is the most important source of revenue for state and local governments, accounting for 46.4% of their total taxation revenue.  The issue of course is that these levels of government are looking to constantly grow their revenues. 
The two main sources of property related revenue are rates and stamp duty.  Rates can be grown by encouraging a greater number of ratepayers into a region (create more housing) and stamp duty can only be lifted by changing the rates or encouraging higher prices and/or more sales. 
In certain regions increasing the supply of ratepayers is not possible so it is clear that stamp duty is an extremely important source of revenue. With the housing market recording significant value growth and much higher sales volumes throughout the 2013-14 financial year, no doubt stamp duty revenue will be much higher again. 
The question is can governments continue to rely on property being a one-way bet?  Particularly when the Reserve Bank has repeatedly warned of late that it is not.
</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