<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

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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