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


Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

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


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

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


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

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


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

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


Elevated amenity anchors daily life at Aeris, Melrose Park

Dwelling Approvals

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<p>There are around 560 Local Government Areas in Australia – broadly local councils. But about 30 of the LGAs account for around half of the dwelling approvals (approvals to build new homes) in Australia.</p>
<p>In 2017 there were around 221,000 dwelling approvals granted by local councils. And the major cities of Sydney, Melbourne and Brisbane were represented in the top eight building regions of 2017.  </p>
<p>While demand for apartments appears to be peaking, building of free-standing houses in regions of high population is lifting with approvals in the last six months of 2017 well up on a year ago.</p>
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<h1><span>What does it all mean?</span></h1>
<p class="x_Bullets">In the past, you would have had to go into the suburbs to find the regions with the most home building activity, and perhaps well outside the city centres. But over recent years the focus has been on urban consolidation rather than urban sprawl. As a result the city regions of Sydney, Melbourne and Brisbane are now amongst the biggest building regions in Australia. And clearly, it has been apartments that have dominated the number of approvals recently given to build new homes.</p>
<p class="x_Bullets">The Australian Bureau of Statistics (ABS) provides regional building data at a local government area (LGA) and Statistical Area Level 2 (SA2). We have focused on the data provided at an LGA level. Reflecting the more consolidated approach to local government, the City of Brisbane covers the CBD and much of the metropolitan area with a population of over 1.1 million people. Dwelling approvals in Brisbane (C) totalled 10,646 in 2017, ahead of the Gold Coast (5,941). Melbourne City accounted for 5,601 dwelling approvals in 2017 despite only have a population of 136,000.</p>
<p class="x_Bullets">Notable in the list of biggest building regions was Camden in NSW. Despite a population well below that of other big building regions at just over 78,000, Camden was the 14<sup>th</sup><span class="Apple-converted-space"> </span>biggest region in Australia for dwelling approvals in 2017.</p>
<p class="x_Bullets">Dwelling approvals eased only 5.6 per cent nationally in 2017 and further declines are likely in 2018. The list of biggest building regions is useful in highlighting those regions that may be at most risk of a slowdown in construction. But population growth, rental vacancy rates, and changes in activity in industry sectors are other factors that need to be included in determining potential risks.</p>
<p class="x_Bullets">For instance, dwelling approvals in Wyndham in Victoria in the last six months of 2017 were 31 per cent higher than a year earlier and in Casey they were up 14 per cent. But in Melbourne City, approvals are down more than 8 per cent on a year ago. The apartment building trend in city centres appears to be peaking but house building is actually lifting rather than slowing.</p>
<p class="x_Bullets">Click here <a href="https://www.propertyobserver.com.au/images/2018/2/9/builders.jpg" target="_blank">to enlarge.</a></p>
<p class="x_Bullets"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/9/builders.jpg" alt=""> </p>
<h1><span>What do the figures show?</span></h1>
<p class="x_Bullets">The City Of Brisbane had the highest number of dwelling approvals in 2017 at 10,646, followed by Gold Coast (5,941), Melbourne (5,601), Wyndham (Vic) (5,464) and Moreton Bay (Qld) (5,208).</p>
<p class="x_Bullets">The 30 regions with the highest number of dwelling approvals accounted for half of all the approvals granted in 2017.</p>
<p class="x_Bullets">There were 59 LGAs with no dwelling approvals in 2017. And there were a further 168 of the 557 LGAs with fewer than 10 dwelling approvals made in the year.</p>
<p class="x_Bullets">Queensland, Victoria and NSW were the most active home building states in 2017. The first Western Australia region in the list of building regions was Wanneroo (1,803) in 32<sup>nd</sup><span class="Apple-converted-space"> </span>spot. The first South Australian region was Charles Sturt (1,253) in 52<sup>nd</sup><span class="Apple-converted-space"> </span>spot. The first region in the Northern Territory was Palmerston (378) in 125<sup>th</sup><span class="Apple-converted-space"> </span>spot. The first region in Tasmania was Clarence (338) in 135<sup>th</sup><span class="Apple-converted-space"> </span>spot.</p>
<p class="x_Bullets">Nationally, dwelling approvals in the last six months of 2017 were only down 0.5 per cent on a year earlier. But while approvals in the ACT were down 35 per cent, and down 22 per cent in the Northern Territory, they were up 40 per cent in Tasmania, up 13 per cent in Victoria and up 12 per cent in South Australia.</p>
<p class="x_Bullets">In the Brisbane LGA, new dwelling approvals in the last six months of 2017 were down over 19 per cent on a year ago. In Sydney, approvals were down 9.5 per cent and in Melbourne, approvals are down by 8 per cent.</p>
<h1><span>What are the implications for investors?</span></h1>
<p class="x_Bullets">Home building trends have implications for regions, building trades, building material suppliers and home products retailers. There is an abundance of apartments being built at present, many close to capital cities. But apartment building is nearing peak levels. In contrast, house building regions are seeing a resurgence on interest.</p>
<p class="x_Bullets">While overall home building is expected to ease over the next few years, there will be sharp divergences across regions and across the types of homes being built.</p>
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jrobinson-rf4aSBido9

Sydney, Melbourne and Brisbane among biggest building regions in Australia: CommSec

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<p><span>Dwelling approvals continued to surprise to the upside in November, increasing by 11.7% compared to market expectations for a 1.0% decline. </span></p>
<p><span>November’s uplift was driven by a jump in Victorian approvals, up 38% on the back of a 21% rise in October. </span></p>
<p><span>The rest of Australia was relatively flat, down 2.0% in the month following October’s 8.3% drop. </span></p>
<p><span>On an annual basis, dwelling approvals are tracking at a 17.1% pace.</span></p>
<p><span><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/10/dwelling%20approvals.jpg" alt=""></span></p>
<p> </p>
<p><span>However, given the series is typically volatile, we prefer to assess the data on a rolling 3 month basis. Under that smoothed measure, approvals were up 3.8% in the month and 11.0% over the year but this is still partly inflated by base effects due to a dip in October 2016. </span></p>
<p><span>Looking at the dwelling type detail, the increase in Victoria was concentrated in private apartment approvals, in particular the high rise component (four or more storey blocks). </span></p>
<p><span>We caution that the high rise series is very volatile, and November’s surge likely reflects a lumpy project pipeline. This raises the risk of a sharp correction lower </span>in apartment approvals in coming months even though Victoria continues to see strong population growth.</p>
<p><span>Nationwide, private apartment approvals rose 30.6%, mainly due to the aforementioned jump in Victoria but also because of gains in Queensland and WA on a much lower scale. On a rolling 3 month basis, Australian apartment approvals rose 8.8% in November and 21.3% over the year.</span></p>
<p><span><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/10/dwelling%20approvals%20type.jpg" alt=""></span></p>
<p> </p>
<p><span>In regards to houses, detached dwellings were down 2% in November and relatively flat in yearly terms, +2.2%. By state, Queensland retraced past gains (-6.7%) but the trend is up over 2017, consistent with a resurgence in population growth. </span></p>
<p><span>Victoria too was down 1.1% though approvals have moved higher through the year. NSW detached dwelling approvals rose 2.6% in the month but are broadly flat over the year. WA continued to trend down, falling 8.7%. </span></p>
<p><span>The value of renovation approvals fell back 3.5% in November after increasing by 24.4% in October to be 17.8% higher in yearly terms. Mining states lifted through the second part of 2017 while Victoria held a high level. </span></p>
<p><span>The value of non-residential building approvals were broadly flat in November and up 35.5% over the year. However, after a choppy previous three months, total monthly approvals are relatively unchanged from April's level. State detail shows that much of the increase from last year is concentrated in Victoria and to a lesser extent NSW. By type, offices have been the main driver but warehouses and 'other' segments have also risen from last year. </span></p>
<p><span>Overall, the jump higher in Victorian high rise approvals raises the risk of a sharp fall in coming months. Yet, the firming trend in Victorian detached dwelling approvals is in line with stronger population growth. Momentum elsewhere in Australia looks to be limited. </span></p>
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Australian dwelling approvals surprise higher in November: Westpac

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<p>The latest housing update from ANZ tips weaker auction results pointing to slower price growth for the rest of 2017 with tighter borrowing conditions and higher interest rates for investors to influence price growth in 2018. </p>
<p>The housing update, authored by Daniel Gradwell, senior economist, ANZ and Joanne Masters, senor economist, ANZ says housing affordability has been steadily worsening in Sydney and Melbourne with first home buyers priced out of the market.</p>
<p>"House price growth has continued to slow down, and it appears that tighter regulation is having the desired impact," it said.</p>
<p>"At the national level, dwelling price growth has slowed over the past three months. Prices are now 9.7% higher than a year ago, down from the peak of 11.4% y/y growth recorded in May this year.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.05.11%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.05.11%20AM.png" alt=""></p>
<p>"Much of this slowdown appears to be caused by a retreating investor presence in the market, in line with recent regulatory changes.</p>
<p>"APRA’s further crackdown aimed at investor borrowing, particularly those with interest-only loans, has seen the investor share of total borrowing steadily decline.</p>
<p>In turn, price growth has slowed across most capital cities and regional areas and across detached houses and the unit/apartment market.</p>
<p>"Having said that, the Melbourne market has recently been more resilient than the Sydney market, perhaps reflecting an element of ‘catch-up’ after Sydney outperformed in previous years.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.06.15%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.06.15%20AM.png" alt=""></p>
<p>"ANZ believe this broad slowdown in price growth will continue.</p>
<p>"Weaker auction results point toward slower price growth through the remainder of 2017, while tighter borrowing conditions, and higher interest rates for investors are likely to weigh on growth through 2018.</p>
<p>"Given Melbourne’s recent resilience, we have nudged our 2017 price forecasts higher, and now expect nationwide prices will finish the year 5.8% higher, followed by growth of 2.2% in 2018.</p>
<p>"Note that while we expect price growth will slow, there is no suggestion that prices will fall outright.</p>
<p>"Melbourne and Sydney will continue to be the main drivers of this growth, in line with their expanding populations.</p>
<p>"Strong additions to supply are expected to keep a lid on Brisbane’s prices, while Perth and Darwin are likely to have another year of weakness, as their mining boom adjustment winds up. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.07.15%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.07.15%20AM.png" alt=""></p>
<p> "Although price growth has slowed, and interest rates for owner-occupiers are at record low levels, housing affordability is still a concern.</p>
<p>"This is especially the case in Sydney and Melbourne, where price growth in recent years has far outweighed only modest income growth.</p>
<p>"The effects of worsening affordability have been most keenly felt by first home buyers (FHBs).</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.08.26%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.08.26%20AM.png" alt=""></p>
<p>"The time taken to save a deposit for an average priced house in Sydney, for someone earning an average income, has sharply increased to over ten years.</p>
<p>"Assuming prices rise no faster than incomes in that time!</p>
<p>"The 2017-18 New South Wales and Victoria budgets have attempted to assist this problem by granting significant stamp duty savings for FHBs.</p>
<p>"As a result, the number of FHB finance commitments in July (the first month of the discounts) leapt 28% and 11% in New South Wales and Victoria respectively.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.09.58%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.09.58%20AM.png" alt=""></p>
<p>"However, as we have noted previously, policies such as these essentially bring more funds into the housing market. We are therefore sceptical that they will address the underlying, long term problem."</p>
<p>"The residential construction cycle appears to have peaked, but recent data suggest that the slowdown may be more moderate than previously feared.</p>
<p>"In fact, we have lifted our near-term profile for residential construction activity and expect investment will flat- line through the second half of 2017, and fall a mild 3.5% y/y in 2018.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.11.05%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/09/18/Screen%20Shot%202017-09-18%20at%2010.11.05%20AM.png" alt=""></p>
<p>"Building approvals have started to stabilise after a period of weakness. Approvals were down 11.4% y/y in trend terms in July but this is the slowest rate of decline since late 2016. Assuming this is the bottom of the cycle, it has been a historically modest downturn, perhaps reflecting the fact that the slowdown has been driven by tighter credit conditions not an RBA tightening cycle."</p>
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Slower housing price growth for the rest of 2017: ANZ

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<p>GUEST OBSERVER</p>
<p>Approvals dipped 1.7% in July, the pull-back from June’s 11.7% jump much milder than expected (market forecast was –5%, Westpac –4%).<br><br>The detail even showed a further small rise in high rise approvals (about 4%) which had been a big driver of the June gain (up about 15%mth).</p>
<p>Non high rise approvals look to have pulled back about 3% from an 8.7% gain in June with private house approvals holding flat showed more Mid-rise approvals look to have pulled back while detached house approvals were flat.</p>
<p>Note that this is broadly consistent with construction related finance approvals which have shown a clear firming in recent months.</p>
<p>By state, a solid gain in NSW was offset by declines elsewhere. <br><span><br>Details</span> <br>Private houses  flat%mth, 2.3%yr<br>Private 'units'    –6.7%mth, –29.5%yr     </p>
<p>NSW     1.5%mth, –15.9%yr<br>Vic       –0.3%mth, –7.8%yr<br>Qld       –2.6%mth, –20.1%yr<br>WA       –11.1%mth, –21%yr<br>SA        0.3%mth, 6.3%yr          </p>
<p>Alteration &amp; additions^   –5.3%mth, 4.3%yr<br>Non-residential^             2.4%mth, 19%yr<br>^ value  </p>
<p> </p>
<p><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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Matthew_Hassan-HHWHptmrw4

Australian dwelling approvals dipped in July: Matthew Hassan

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<p>Dwelling approvals rose in April but remain well below recent peaks, according to CoreLogic’s latest update.</p>
<p>The property data firm says that the number of dwellings approved sits well higher than it was five years ago in 2012 despite the dip.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/06/06/Screen%20Shot%202017-06-06%20at%202.47.50%20pm.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/06/Screen%20Shot%202017-06-06%20at%202.47.50%20pm.jpg" alt=""></p>
<p>However, the number of units approved is lower than houses in 2017 compared to the past two years where it had seen activity above houses.</p>
<p>Houses continue to be at the top of properties approved with an approval rate of 60%.</p>
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j.ballantyne1990-6AQqhLzZaK

Dwelling approvals rise, but remain below peaks: CoreLogic

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<p>The budget changes to negative gearing depreciation claim items will see investor demand for recently completed housing fall or flatline - and result in a cooling in the Sydney and Melbourne markets, according to SQM Research's Louis Christopher. </p>
<p>Investors who own current properties, particularly newly built ones, will especially find it harder to buyers.</p>
<p>The new limits to the way expenses can be deducted against negative geared properties - which need to be legislated - will prove a turning point in the investment property market, he says.</p>
<p>The changes mean owners of any property not bought brand new will no longer be able to depreciate items like air-conditioners, cooktops and dishwashers, or shared equipment such as lifts in apartment complexes. </p>
<p>Quantity surveyors and analysts said these form up to 50 per cent of depreciation deductions for investors.  </p>
<p>"I think there is enough in it here to slow the market down in the second half of the year," SQM Research's Louis Christopher said. </p>
<p>"We will see a significant drop off in [investor demand] in the second half.</p>
<p>"I will be expecting there will be less investors in the market."</p>
<p>Christopher is changing his house price forecast with lower numbers to be released next week.  </p>
<p>The federal Treasurer Scott Morrison has confirmed the deduction benefits would be grandfathered but to prevent "double dipping" in depreciation, only the first investor of each new investment property can claim these deductions.</p>
<p>The federal government has also confirmed to The Australian Financial Review that subsequent investors of residential investment properties would not be able to claim depreciation to existing plant and equipment even if that equipment had not reached the end of its effective life. </p>
<p>Investors could only claim depreciation on plant and equipment they had bought subsequent to their purchase.</p>
<p>Quantity surveyor Washington Brown fears the rules would affect off-the-plan investors who could potentially be unable to depreciate plant and equipment purchased originally by the developer. </p>
<p>"I suspect that the legislation will be worded such that if the plant and equipment was in situ at the time of purchase, you can no longer claim it," director Tyron Hyde said in his note to clients. </p>
<p>Christopher urged the federal government to make a swift clarification otherwise decisions would be made on "wrong information". </p>
<p>"The Liberals have not intended for the policy to be draconian…and while saying they would leave negative gearing alone, have actually done the opposite."</p>
<p>Limiting previously generous plant and equipment depreciation deductions to only those expenses directly incurred by investors will impact on the Quantity Surveyor industry,</p>
<p>The blog of Pete Wargent noted data compiled by MCG Quantity Surveyors showed that their average claim for depreciation deductions was $9,138, up to half of which was typically for plant and equipment deductions. </p>
<p>"For new individual Mum-and Dad investors - which is most of the landlord market - this is a fairly significant change to tax legislation," Wargent noted.<span style="font-size: 12.16px;"> </span></p>
<p>"Overall, it may become more tax-efficient to purchase older style properties in order to renovate them, though for properties built before 1987 the building works component would already be fully depreciated over 40 years. </p>
<p>"Some domestic investors may be inclined to steer clear of new properties for this reason, in turn hurting building approvals and dwelling starts, at least while the dust settles," Wargent advised.</p>
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jchancellor-FAypfDUnLy

Demand and prices of recent new builds to fall after 2017 Budget depreciation negative gearing changes

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<div>Building activity is one of the more complicated data series released by the ABS, so I'll just post the headline figures here. </div>
<div> </div>
<div>Overall the level of residential building activity remained high, increasing quite strongly in 2016 in fact, but nationally it looks as though the peak is now more or less in. </div>
<div> </div>
<div>At the end of the year there was still a historically high number of dwelling units approved and not commenced, but Sydney was beginning to chew its way through the backlog. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A3.jpg" target="_blank">Click to enlarge</a></p>
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<div>Nationally dwelling commencements remained strong in the fourth quarter of 2016 at more than 57,000 in seasonally adjusted terms.</div>
<div> </div>
<div>But in reality the red hot run is now only being held aloft by Sydney, with commencements declining in Melbourne, Brisbane, and Perth. </div>
<div> </div>
<div>New South Wales saw a total of 19,950 dwellings commenced in the fourth quarter, with Victoria sliding to 16,460, and Queensland dropping sharply to 10,150.</div>
<div> </div>
<div>Commencements have been falling in Western Australia for nine consecutive quarters.</div>
<div> </div>
<div>Plotting the figures in trend terms shows how the residential boom is really just a Sydney story now. </div>
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<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/04/13/A4.jpg" target="_blank">Click to enlarge</a></div>
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<p><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Supply coming online</span></strong></p>
<div>At the end of 2016 there were still some 219,384 dwellings under construction, including 152,635 attached dwellings.</div>
<div> </div>
<div>The total is slightly lower than the record peak seen in September 2016, indicating that new apartments were already starting to hit the eastern capital city markets towards the end of last year. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A1.jpg" target="_blank">Click to enlarge</a></p>
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<div>There were a record 82,857 dwellings under construction in NSW at the end of the year, some 62,040 of them being attached dwellings, and so many of them of the 'egg box' variety.</div>
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<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/A2.jpg" target="_blank">Click to enlarge</a></div>
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<div>The actual number of dwellings actually completed in 2016 were high, but themselves hardly alarming, including in NSW (58,730), Victoria (59,977), and Queensland (44,983). </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>While these are big numbers in historical terms, today's largely unnoticed arrivals and departures figures presented some food for thought, with permanent and long term arrivals exploding to 103,570 in February, by some margin the biggest single month on record.</div>
<div> </div>
<div>There was also an unprecedented number of education arrivals in 2016, which may be a coincidence or driven by the lower dollar. </div>
<div> </div>
<div>On the other hand, maybe the government has quietly turned on the immigration taps.</div>
<div> </div>
<div>Remember that most immigrants to Australia head to the two most populous states, which are also home to the two best performing economies and the highest number of job vacancies.   </div>
<div> </div>
<div>Let's hope the new arrivals like egg boxes. </div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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pwargent-M4siyDbqQY

Let's hope the new arrivals like egg boxes: Pete Wargent

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<p>GUEST OBSERVER</p>
<p>Dwelling approvals posted a stronger than expected 8.3 percent rise in Feb.</p>
<p>Westpac and the consensus view had been for a modest 1-1.5 percent decline.</p>
<p>Approvals are still 13.5 percent below their Aug peak in trend terms.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.12.31%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.12.31%20AM.png" alt=""></p>
<p>Notably the latest monthly gain looks to be more than just high rise related volatility with all segments recording robust increases.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.13.41%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.13.41%20AM.png" alt=""></p>
<p>Private detached house approvals rose 5.3 percent/mth. Our estimates suggest high rise approvals were up about 15 percent/mth in seasonally adjusted terms with 'low rise' approvals up about 10 percent/mth.</p>
<p>The high rise/non high rise mix is of particular interest at the moment as it shapes the extent to which the slowdown impacts construction activity in 2017 vs 2018 and beyond.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.14.35%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.14.35%20AM.png" alt=""></p>
<p>The rise in non high rise approvals pares back some of the near term weakness that was showing through in approvals over recent months.</p>
<p>The state breakdown shows particularly strong monthly gains in NSW (+20 percent) and Qld (+34 percent). Both states saw a more pronounced weakening in approvals through the second half of last year. Other states all saw significant declines.</p>
<p>The value of renovation approvals rose 14 percent, a partial rebound from a 19 percent fall in Jan. Approvals remain on a solid uptrend led by strong gains in NSW and Vic with activity flat/weakening elsewhere.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.15.29%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/04/4/Screen%20Shot%202017-04-04%20at%209.15.29%20AM.png" alt=""></p>
<p>The value of non res building approvals jumped 35 percent but are extremely volatile month to month. Trend-wise, approvals are still tracking lower at a modest annual pace.</p>
<p>Overall, the strong rise in dwelling approvals in NSW and Qld this month casts some doubt over the Feb gain, particularly given the more pronounced weakness in these states in preceding months.</p>
<p>Approvals may be being buffetted by 'non market' factors, e.g. council mergers may have impacted approval processing in NSW while recent changes to state government policies targetting construction may have influenced activity in Qld. </p>
<p class="p1"><span class="s1"><em>Matthew Hassan is senior economist with </em><a href="https://www.westpac.com.au/"><span class="s2"><em>Westpac</em></span></a><em>.</em></span></p>
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Dwelling approvals post stronger than expected rise in Feb: Matthew Hassan

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<p>Detached house sales increased in Western Australia and Victoria in February with Victoria posting a monthly gain of 5.1 percent and Western Australia by 11.3 percent, according to the Housing industry Association.</p>
<p>Harley Dale, HIA chief economist said total movement nationwide shows a 0.2 percent increase in February 2017.</p>
<p>“There was also very little movement in the two sub-series with detached house sales ticking down by 0.1 percent in February and the sales of ‘multi-units’ growing by 1.0 percent," he said.</p>
<p>“The profiles for HIA detached house sales and ABS detached house building approvals are very similar. In the case of detached house sales, over the three months to February this year the volume fell by 2.2 percent to a level 5.2 percent lower than achieved over the three months to February last year.</p>
<p>“The updates that we are receiving for these two key leading indicators of new home building activity are consistent with a modest reduction in national new detached house commencements in 2016/17.</p>
<p>"We are forecasting a decline of 2 percent in detached house commencements in Australia in 2016/17 following a similar-sized fall of 1 percent in 2015/16.</p>
<p>“As with all aspects of the current housing cycle there are large differences in conditions for detached housing between states and territories. HIA’s detached house sales series for the five mainland states has been consistently highlighting this point for some years now.</p>
<p>“In 2017 we expect the profile for leading indicators such as detached house sales to slowly improve for Western Australia and South Australia. At the same time the volume of detached house sales on the eastern seaboard is expected to trend lower.”</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/30/Screen%20Shot%202017-03-30%20at%201.16.18%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/30/Screen%20Shot%202017-03-30%20at%201.16.18%20PM.png" alt=""></p>
<p>Detached house sales increased in two out of five mainland states in February 2017 - Western Australia and Victoria. Detached house sales in WA increased by 11.3 per cent in February 2017 following a rise of 12.1 per cent in January. Note that these rates of growth are exaggerated by the extremely low base for detached house sales. Detached house sales in Victoria posted a monthly gain of 5.1 per cent in February. Elsewhere for the mainland states, in February detached house sales fell by 12.6 per cent in New South Wales and were down by 5.7 per cent in Queensland and 0.2 per cent in South Australia. </p>
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Victoria's detached house sales up in February: HIA

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<p><img src="https://counter.theconversation.edu.au/content/73514/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>Politicians and the powerful property lobby continue to argue that building more houses is the solution to Australia’s chronic affordability problems. </p>
<p>But a “supply-side solution” – as propounded by NSW Premier Gladys Berejiklian as well as Prime Minister Malcolm Turnbull and Treasurer Scott Morrison – will only work if affordability is just a supply-side problem. Evidence suggests this is not the case. In fact, our analysis shows that Australia is almost a world leader in rates of new housing production. </p>
<h2>How Australia compares</h2>
<p>One way to assess Australia’s supply performance is to compare it with other developed countries. The graph below compares the number of dwelling completions per 1,000 persons across 13 countries, for the years 2010 and 2015. On this measure, Australia’s new housing production is second only to South Korea’s. </p>
<p>Australia delivers two-thirds more homes per 1,000 persons than the US and four times more than the UK. When we measure supply as a proportion of existing stock, Australia again ranks second with a rate double that of the US. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/08/image-20170307-14934-1kxhows.PNG" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/08/image-20170307-14934-1kxhows.PNG" alt=""></p>
<p><span class="attribution"><span class="source">OECD questionnaire on affordable and social housing; World Bank population growth and total population figures</span>, <span class="license">Author provided</span></span></p>
<p>A slightly different approach takes into account population growth. This involves measuring dwelling completions per head of new population. Here Australia’s performance sits in the middle of the pack. </p>
<p>We are delivering just over 0.5 dwellings per head of new population compared to more than 2 in South Korea. This rate is, however, still ahead of the UK and comparable to the US. Again, that suggests inadequate supply is not the major cause of the affordability crisis.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/08/image-20170307-14973-17a1ooc.PNG" target="_blank"> Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/08/image-20170307-14973-17a1ooc.PNG" alt=""></p>
<p><span class="attribution"><span class="source">OECD questionnaire on affordable and social housing, World Bank population growth and total population figures</span>, <span class="license">Author provided</span></span></p>
<h2>State comparisons of supply</h2>
<p>At a national level, supply seems pretty healthy. But there are significant state variations. This might, on the surface, be used to explain different patterns of price growth.</p>
<p>The table below shows that New South Wales has produced fewer new homes per 1,000 people than Australia overall over a 30-year period. The difference was particularly marked between 2005 and 2015. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/08/image-20170307-14932-1egbg6z.PNG" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/08/image-20170307-14932-1egbg6z.PNG" alt=""></p>
<div class="enlarge_hint"> </div>
<p><span class="caption">State comparisons of new housing supply.</span> <span class="attribution"><span class="source">ABS building activity Australia cat. 8152; ABS Australian Demographic statistics Cat 3101</span>, <span class="license">Author provided</span></span></p>
<p>However, higher supply output in the other states has certainly not created affordable markets. In NSW, the last two years have delivered significant supply growth yet prices have continued to rise just as fast. So why do prices rise with supply growth? </p>
<h2>Demand drives supply</h2>
<p>In a market-driven housing system, price stimulates new housing supply. In Australia new supply has responded relatively quickly to price rises (despite the continuous rhetoric from the property lobby about planning). </p>
<p>But there is always some lag due to the time it takes to secure necessary approvals and physically construct property. There is no such lag with demand meaning there is often a sustained mismatch between the two – positive or negative. </p>
<p>In a rising market, development becomes more profitable and land values rise, meaning greater returns for all concerned. Potential future capital gains stimulate investment activity. Price rises also allow owner-occupiers to trade up as the equity in their own dwelling increases. </p>
<p>In such circumstances, increased levels of housing supply do little to satiate demand created by population growth and the appetite of investors. </p>
<p>Western Australia has had an incredible level of housing completions over the last 30 years, as shown in the table, with 2014 and 2015 particularly strong. In the last 12 months, dwelling commencements have collapsed by more than 25%. Prices have been falling slowly for almost three years driven by the contraction in the resources sector and strong levels of new supply.</p>
<p>However, even under these conditions, WA housing affordability shows little sign of improving for those on low incomes. The market still cannot deliver housing for those at the bottom end of the market.</p>
<p>The housing market is simply unable to deliver housing that is affordable to those on lower (and, increasingly, moderate) incomes because there is a minimum cost of delivering housing that meets minimum community standards. This is made up of the land price, the physical construction costs of the dwelling, and the profit required for taking on the development risk.</p>
<p>This is why market intervention and subsidy are essential to deliver options for those on low incomes.</p>
<h2>Targeted interventions are needed</h2>
<p>Two strategies are needed to deliver affordable housing to the lower end of the market.</p>
<p>First, demand-side measures need to be better targeted to stimulate investment in new supply, particularly affordable rental housing, rather than simply fuelling demand.</p>
<p>Second, any government serious about improving affordability needs to put more resources into the community housing sector. This could be funded in two ways: partly by taxing the windfall gains from development and partly by reallocating existing demand-side subsidies. </p>
<p>The community housing sector can operate counter-cyclically. This means it can maintain housing supply even when house prices stagnate or fall – which is good for the economy.</p>
<p>A bigger community housing sector is the supply solution Australia really needs. The bond aggregator model currently working its way through consultation offers some hope of delivering this expansion.</p>
<p>Targeting supply to deliver housing for those on low incomes and reining in demand-side incentives that fuel prices will make some difference to affordability for those most affected. </p>
<p>There was some encouragement over the weekend. Scott Morrison discussed the rental market and social housing as part of the affordability solution. This was a welcome change from trotting out the tired old supply arguments and threatening to fuel demand through more home ownership incentives. </p>
<p>Let’s hope the treasurer follows through and delivers some much-needed “whole of housing market” thinking in the May budget.</p>
<p><em><span class="fn author-name"><a href="https://theconversation.com/profiles/steven-rowley-201914" target="_blank">Steven Rowley</a> is d</span>irector, Australian Housing and Urban Research Institute, Curtin Research Centre, Curtin University.</em></p>
<p><em><span class="fn author-name"><a href="https://theconversation.com/profiles/nicole-gurran-759" target="_blank">Nicole Gurran</a> is p</span>rofessor - Urban and Regional Planning, University of Sydney.</em></p>
<p><em><a href="https://theconversation.com/profiles/peter-phibbs-27130" target="_blank">Peter Phibbs </a>is chair of Urban Planning and Policy, University of Sydney.</em></p>
<p><em>All are authors for The Conversation.</em></p>
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