The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Dwelling Values

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Residential property prices have had four consecutive quarters of growth according to the ABS who report property prices rose 2.2 percent in the March quarter. 
 
Price rose 3 percent in Sydney, 3.1 percent in Melbourne and fell 1 percent in Perth and Darwin 0.9 percent in Darwin.  Marcel van Kints, Program Manager for the ABS Prices Branch said while residential property prices rose in most capital cities this quarter, Sydney and Melbourne continue to drive the national result.
 
Yearly growth in residential property prices reached 10.2 percent in the March quarter 2017, according to the ABS. Sydney recorded the largest through the year growth of all capital cities at 14.4 percent and by Melbourne at 13.4 percent. The total value of Australia's 9.9 million residential dwellings increased $163.1 billion to $6.6 trillion. The mean price of dwellings in Australia is now $669,700. 
 
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jonathanchancellor-7SQnKwU6yx

March quarter rise for residential property prices: ABS

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GUEST OBSERVER
In 1956, US geophysicist M. King Hubbert predicted that the rate of petroleum production for a given geographic area follows a hump-shaped curve, and that the world would reach “peak oil” production in 1970.
And, as the figure shows, Hubbert was pretty right about the peak part, not so much about the inevitable decline thereafter. But the reason “Hubbert Peak” is in the zeitgeist is because once something peaks there is a natural narrative about its secular decline thereafter.
<a href="https://www.propertyobserver.com.au/images/2017/06/01/file-20170601-25664-18glgj0.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/01/file-20170601-25664-18glgj0.png" alt="">
The Hubbert Peak. Red line = predicted Green line = actual. Wikipedia
Perhaps that’s why there has been so much focus this week on the possible peak of Sydney housing prices, and even Australian equities. The CoreLogic hedonic price index was down in May by 1.3% in Sydney and 1.7% in Melbourne.
This was met with some relatively measured responses like that of AMP economist Shane Oliver who tweeted: “May is weak seasonally so exaggerates but the boom is likely over…”  
That seems like an awful lot of faith to put in one datum point. But perhaps Oliver and others are right. And perhaps there is a very happy story where more supply is coming online while demand is being cooled by APRA’s crackdown on interest-only loans to investors.
Partially consistent with that happy scenario, the ABS reported that new housing approvals in April were up by 4.4% on a seasonally-adjusted basis, helping claw back some of the 10.3% decline (on revised figures) from the previous month.
On the demand side, however, figures released by the RBA on Wednesday showed investor credit up 0.6% on a seasonally-adjusted basis in April – a rate of growth unchanged from March. That put annual growth at 7.3%. If APRA’s measures have given investors pause then it doesn’t seem to have filtered through to the data yet.
Altair Asset Management chairman Philip Parker was worried not only about the housing market, but the ASX as well. In a remarkable decision, Altair announced that it “was to sell all the underlying shares in the Altair unit trusts and to then hand back the cash to those same managed fund investors”.
This sort of thing doesn’t happen every day – particularly by a fund manager with a 30-year track record. Or, as Parker put it: “Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s [sic] assets is what all fund managers should put before their own interests.”
Parker expressed serious concerns about China, the US, and equity valuations in Australia. But his chief concern was property-driven household debt in Australia, saying: “When you speak to people candidly in the banks, they’ll tell you very specifically that they are extraordinarily worried about the over-leverage of the Australian population in general.” 
It’s not just Parker who is worried. Melbourne-based funds manager JCP Investment Partners recently warned that interest-only loans could be to Australia what sub-prime mortgages were to the US at the brink of the financial crisis. The RBA’s increasingly urgent observation that around one-third of mortgage holders don’t have a month’s payment buffer is certainly consistent with that.
The deeper worry is that the Australian banks have been lending – both on interest-only and amortising loans – far too much as a proportion of people’s incomes. I don’t know if Australian banks have been overlending, but here’s a little test. Suppose one puts the same post-tax income and expense variables into a big-4 bank calculator in Australia and a major national US bank. Which says you can borrow more, and by how much?
I did that exercise for a couple both earning A$80,000 pre-tax with two children, no other debts, a modest credit card limit, and reasonable expenses. I then did the same for the same income and expense profile in the US (but in US dollars with US tax rates). Banks taking equivalent risks should lend those hypothetical couples the same amount.
The US lender would allow maximum monthly repayments of $3,733. The Australian lender would allow $4,709. More than 26% more.
I don’t know if we have reached peak anything in Australia. But the real question is, if we have, what does the other side of the curve look like? The US petroleum data, or Hubbert’s scary curve?
Richard Holden is professor of Economics and PLuS Alliance Fellow, UNSW and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">here</a>.
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j.ballantyne1990-6AQqhLzZaK

Have we finally reached "peak" house prices? Richard Holden

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Dwelling values across the combined capital cities fell 1.1 percent in May month on month on the back of declines in Sydney and Melbourne.
Releasing the CoreLogic May 2017 Home Value Index Results, Tim Lawless, CoreLogic head of research said values have fallen during May in four of the past five years.
Reading through the seasonality, he said, indicates that value growth in the market has lost momentum, particularly in Sydney and Melbourne where affordability constraints are more evident and investors have comprised a larger proportion of housing demand.
 “The past three months has seen capital city dwelling values rise by a modest 0.4 percent, with four of the eight capitals recording a fall. Over the past three months, Sydney dwelling values are unchanged while Melbourne values have increased by 0.7 percent,” he said.
“The trend in growth rates across the smaller capital cities was mixed with dwelling values across Brisbane and Adelaide continuing to inch higher while values in Perth and Darwin showed further easing over the most recent rolling quarter.
"A steep drop in the Hobart index has reversed the gains recorded over the previous quarter and the Canberra index was also -1.5 percent lower over the past three months.
“Adding to the complexity in reading the current market is the recent Australian Prudential Regulation Authority (APRA) announcements at the end of March for a new round of macroprudential measures aimed at slowing the pace of interest only lending.”
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%209.40.26%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%209.40.26%20AM.png" alt="">
He said another factor that is likely contributing to slower growth conditions is a dent in consumer confidence as consumer sentiment towards housing, as measured by Westpac and the Melbourne Institute, has shown a marked downturn in May.
“In particular, the Westpac ‘time to buy a dwelling index’, fell 6.5 percent over the month. According to Westpac, ‘consumer sentiment towards housing shows an increasingly negative view’.
"Other market indicators suggest a slower pace of growth such as a reduction in market activity, a moderating trend in auction clearance rates and rising advertised stock levels.
“It appears that housing activity has eased which is attributable to a range of factors including affordability constraints, tighter credit policies, rising mortgage rates and a downturn in consumer sentiment towards housing."
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<img src="https://www.urban.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%209.42.55%20AM.png" alt="">
According to the report the largest year-on-year falls have been in Melbourne (-12.4 percent), Brisbane (-11.1 percent) and Sydney (-4.3 percent) suggesting that housing demand has eased relative to a year ago across the three largest cities.
CoreLogic’s Mortgage Index was tracking 9.3 percent lower than at the same time last year over May.
The number of residential properties advertised for sale has started to edge higher across some cities, with Sydney in particular seeing a surge in newly advertised stock, up 15 percent compared with last year, while total advertised listings are now 6.3 percent higher than a year ago, according to Mr Lawless.
He said higher stock levels should provide prospective buyers with more choice and reduce some of the urgency that has been contributing to rapid selling times and price escalation. 
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%209.49.37%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%209.49.37%20AM.png" alt="">
"Based on the most recent data from the Australian Bureau of Statistics, investors comprised 48 percent of the value of new mortgage demand (excluding refinances) in March, well above the long term average, but the lowest proportion of mortgage demand since August last year," he said.
“Considering we are yet to see the full effect of the recent round of macroprudential measures flow through, there is a high possibility that investor activity, and consequently housing demand, will slow further during 2017.
“Investor demand will also be dampened due to higher mortgage rates and tighter credit policies as well as the added disincentive of low rental yields and reduced ability to claim depreciation and travel expenses.
“While we are expecting investment activity to slow, the fact is other asset classes aren’t likely to be as attractive as property to investors. Cash and bonds continue to provide low but safe returns and equities remain volatile. Considering the alternatives, we are likely to see property investment remain a popular option,” he said.
"Mortgage rates could edge higher over coming months as lenders accommodate recent macroprudential announcements within their credit policies.
"The funding levy announced in this year’s federal budget could also see higher mortgage rates as lenders potentially pass on some of the associated costs.
“The jury is still out on whether the housing market has peaked, however if it hasn’t, a peak could be just around the corner.
"Based on CoreLogic data, as well as other indicators, it’s fair to say that growth conditions appear to be slowing in Sydney and Melbourne while the performance across other capital city regions remains mixed.
"The housing market remains as diverse as ever and the flow of data over coming months will be critical to get a better understanding of the trends.” 
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jchancellor-FAypfDUnLy

Melbourne housing market declined in May, and so did Sydney

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The failure of regulators to halt recent east coast house price growth has led to the downgrade of the wider Australian banking sector.
The global ratings agency S&amp;P Global Ratings has downgrade the credit quality of 23 banks and lenders, including Australia's biggest regional bank.
It comes as it warns of a sharp correction scenario in property prices and bigger bank losses.
The Ratings agency base case for the housing market is an "orderly unwind" of house prices.
"We still maintain our base case expectation that the unwinding of these imbalances will be orderly and we think that will be either a slowdown growth rate of property prices or a very mild decline in property prices," S&amp;P advised.
"That is our base case."
The downgrades were triggered by S&amp;P's decision to increase Australia's "economic risk" score, from three to four on account of economic imbalances, specifically rising property prices and high household debt.
The big four banks were spared because of their implied "too big to fail" government guarantee status. 
S&amp;P Global Ratings director Sharad Jain said risks to the Australian economy had become even more pronounced since the ratings agency downgraded the Australian banking sector to negative watch back in October 2016 as house prices continued to move higher and higher.
"Growth in private sector debt was more or less in line with expectations since then while property prices accelerated in the two quarters," Mr Jain said.
Mr Jain said that until the imbalances had "substantially unwound" the banking sector remains exposed to an "elevated level of risk of a sharp correction for property prices".
"To reflect the increased risk, we have lowered our assessment of the standalone credit profiles [SACPs] of almost all financial institutions operating in Australia."
Mr Jain acknowledged that house price growth had begun to slow and that the macro-prudential interventions made by APRA were likely to have more impact in the months ahead and see the imbalances "move in the right direction".
Jain said that although he expected macro-prudential measures from the Australian Prudential Regulation Authority, such as caps on investor and interest only lending, to contribute to a further slowing of house price growth in Melbourne and Sydney, the impact of a correction on the banks "was no longer consistent with our previous assessment".
Among the bigger institutions to be hit by the downgrade are AMP Bank, Bank of Queensland and Bendigo and Adelaide Bank. AMP has been downgraded to A+ with a negative outlook to A with a stable outlook while Bank of Queensland and Bendigo and Adelaide Bank have both been downgraded from A- with a negative outlook to BBB+ with a stable outlook.
Among the others to be downgraded were Australian Central Credit Union, Auswide Bank, Community CPS Australia, Credit Union Australia, Defence Bank, Fisher &amp; Paykel Finance, G&amp;C Mutual Bank, Greater Bank, IMB, Liberty Financial, mecu, Members Equity Bank, MyState Bank, Newcastle Permanent, Police Bank, QPCU, Rural Bank, Teachers Mutual and Qudos Mutual (formerly Qantas Credit Union).
The downgrade brings S&amp;P's ratings in line with rival Moody's.
Meanwhile the Australian Financial Review says investors are surging into mortgage bonds in Australia.
New residential mortgage-backed securities issuance has more than doubled so far this year to $10.5 billion from $5.1 billion a year earlier, data compiled by Bloomberg show.
More than half of the issuance has been fuelled by non-bank lenders. 
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Orderly correction in property prices forecast by S&P

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Do house prices always double every decade? I ponder the well versed notion every time I compare the latest price with its earlier sale.
Sydney's most affordable weekend auction acquisition was a hefty $502,500 for a three bedroom house at Windsor, in the Hawkesbury district.
Having traded at $255,000 in 2008, its price had nearly doubled over its nine year ownership, so mark that result to yes they can.
It had traded at $257,000 in 2005, showing that prices can fall too, albeit not quite off a cliff.
And it was interesting that the cottage's price had exactly doubled in amazing quick time from $110,000 in 2000 to $220,000 in boom time 2003.
These differing price surges nicely illustrate recent CoreLogic research calculating the current boom was actually subdued compared to previous times.
Over the 10 years to January 2016, Sydney home values increased by a total 78 percent - somewhat short of the so-called benchmark doubling over the decade.  
Sitting smack on 100 percent, Melbourne was the only capital city housing market where home values doubled over the decade.
Looking at the 10 years to January 2006, Sydney home values more than doubled but the 138 per cent growth was the lowest performing capital as the 2004 price reversal hit hard.
Melbourne recorded home value growth at 167 per cent, with Perth out front with 175 percent growth in that decade.
There are lessons to be learnt from what’s happened to Perth where property valuer Gavin Heaney recently recalled boom time Western Australia thought it was "infallible."
“They say in the top end of Perth on a quiet day you can hear the property values falling,” a jocular Hegney was cited by www.news.com.au as saying last month.
Some years on after the end of the mining boom, Perth is still on its knees with financial counsellors in demand with people neck-deep in debt coming to them for advice. 
People who were earning high incomes during the mining boom are now struggling to get work and pay their mortgages.
With little wage growth and eratic economic uncertainty, it is likely that even for Sydney there are limits to what people can pay for housing.
It seems Sydney is starting to see common sense and wise economics as we move through the latter stages of the autumn auction market. 
Those many consecutive weekends of 80 percent clearance rates might be a thing of the past.
Meanwhile property investors who paid reckless prices will soon emerge as tax loss selling usually begins in May before the end of the financial year.
I will be watching for how deep they go as this is when investors crystallise capital losses.
The proportion of loss-making resales over the December 2016 quarter sat at 21 percent in Perth, while Sydney saw fewer than 2 percent resale losses.
This article first appeared in the Daily Telegraph. 
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Tax loss time for property investors to test market 

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Citi says its sees property prices falling by as much as 7 percent as the housing boom unwinds by 2018.
Lending curbs will hit and household debt will be lowered, according to Citi, with the hardest hit potentially being apartments in inner-city Brisbane and Melbourne.
The forecast from Citi came in a 47-page analysis addressing tighter lending standards, higher lending rates, reduced foreign investment and increased supply relative to demand.
Sentiment towards real estate compared with lowering debt had "soured" even before the latest efforts by the Australian Prudential Regulation Authority to rein in lending to investors, according to the Citi analysts.
"APRA's tightening measures probably contributed to the April prices result, but Easter and school holidays may also have contributed to the slowdown," the Citi analysts wrote.
"Given the stretched house price valuations in Sydney and Melbourne some correction would seem likely as supply continues to catch up to demand.
"The largest price falls would be higher rise, inner city apartments in Brisbane and Melbourne given their greater potential for oversupply.
"Either way, we aren't expecting large enough price falls to trigger a downturn in the economy, but the downside risks have risen as house prices and household debt have continued to increase briskly."
The Citi modelling advised if APRA succeeds "ultimately we see some mild deleveraging, there could be a partial correction in house prices during the course of the next two years.
"This would be the case even if population growth remained strong."
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Inner Melbourne and Brisbane to be hardest hit as Citi sees property prices falling 7 percent

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GUEST OBSERVER
The CoreLogic Home Value Index of capital city home prices rose by 0.1 percent in April and was up 11.2 percent over the year.
It was the smallest monthly lift in prices in 16 months. Prices rose in six of the eight capital cities. Regional house prices by 1.1 percent in March (latest available).
High end decline: Prices of homes in the upper quartile of properties by value fell by 0.4 percent in April – the biggest decline in 17 months.
Manufacturing: The Performance of Manufacturing index rose by 1.7 points to 59.2 in April – a reading just below 15-year highs. A reading above 50.0 indicates that the sector is expanding. This was the seventh consecutive month of expansion.
China data: The manufacturing purchasing managers’ index eased from 51.8 to 51.2 in April (forecast 51.6). The services index eased from 55.1 to 54.0. 
What does it all mean?
You can debate all you like about the accuracy of economic indicators. But it is hard to argue with surveys of businesses. The latest survey of manufacturers indicates that business conditions are around the strongest levels in 15 years. The NAB survey of a broader range of businesses suggest conditions are the best in at least 9 years. Overall, the economy is in good shape.
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Policymakers will be happy that home prices recorded more modest gains in April, especially the Sydney market. But there is more evidence that higher home prices in Sydney and Melbourne and spreading to other capital cities and regional centres. This was always on the cards with investors perceiving that Sydney and Melbourne markets had become more fully valued and shifting their attention to other markets. 
Annual growth in regional house prices is the strongest in 21⁄2 years with regional NSW leading the way. House prices in regional NSW are up 10.2 per cent on a year ago – the fastest growth in the eight years of records. And Hobart home prices are recording the strongest annual gains for over 12 years. 
What do the figures show?
Home prices
The CoreLogic Home Value Index of capital city home prices rose by 0.1 percent in April and was up 11.2 percent over the year. It was the smallest monthly lift in prices in 16 months.
In regional Australia, house prices rose by 1.1 percent in March and were 4.9 percent higher than a year ago. (Regional prices cover just houses and data is up to the end of March).
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In capital cities, house prices rose by 0.3 per cent in April while apartment prices fell by 1.2 per cent. House prices were up 11.9 per cent on a year ago and apartments were up by 6.2 per cent.
The average Australian capital city house price (median price based on settled sales over quarter) was $661,200 and the average unit price was $550,000.
Dwelling prices rose in six of the eight capital cities in April: Hobart (up 1.0 per cent), Adelaide (up 0.8 per cent), Brisbane (up 0.6 per cent), Melbourne and Darwin (both up 0.5 per cent). Sydney prices were flat while prices fell in Perth (down 1 per cent) and Canberra (down 2.8 per cent).
Home prices were higher than a year ago in six of the eight capital cities. Prices rose most in Sydney (up 16.0 per cent); followed by Melbourne (up 15.3 per cent), Hobart (up 13.6 per cent); Canberra (up 8.4 per cent); Adelaide (up 2.2 per cent); and Brisbane (up 2.1 per cent). Prices fell in Perth (down by 6.0 per cent) and Darwin (down 2.3 per cent)
Total returns on capital city dwellings rose by 14.9 percent in the year to April with houses up 15.5 per cent on a year earlier and units up 10.6 per cent.
Performance of Manufacturing
The Performance of Manufacturing index rose by 1.7 points to 59.2 in April. A reading above 50.0 indicates that the sector is expanding. This was the seventh consecutive month of expansion for the Australian PMI® and the strongest monthly result since February 2017 and before that, since May 2002.
AIG notes “All seven activity sub-indexes in the Australian PMI® expanded in April. New orders remained elevated (61.5 points) while sales surged higher (65.5 points), as did production (60.7 points), exports (58.6 points) and employment (55.9 points). Inventories eased to a more modest rate of expansion (51.2 points) in April.”
“Comments from manufacturers in April indicate demand continues to improve. Increasing exports are a key theme, with several manufacturers reporting success in new markets in Asia. Stronger output and prices in the local agricultural and mining sectors is supporting demand for some types of machinery, equipment and chemicals, while large public infrastructure projects are fuelling demand for building materials, metals, transport equipment and others. Cyclone Debbie appears to have dampening activity in Queensland and Northern NSW, although the direct impact on manufacturing has not been severe.”
What is the importance of the economic data?
The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending. 
The Australian Industry Group compiles the Performance of Manufacturing Index (PMI) each month. The Australian PMI is the Australian equivalent of the US ISM manufacturing gauge. The PMI is one of the timeliest economic indicators released in Australia. The PMI is useful not just in showing how the manufacturing sector is performing but in providing some sense about where it is heading. The key ‘forward looking’ components are orders and employment.
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What are the implications for interest rates and investors?
The latest economic news is generally positive. Manufacturing is expanding solidly with exports leading the way. And home prices have flattened in the high-flying Sydney market. The thing to watch now is the extent to which high prices in the south-east spread across Australia.
The flattening out of home prices in Sydney and declines in apartment prices represent a wake-up call to investors. At present total returns on shares is out-performing returns on homes. The Reserve Bank has no need to lift or cut rates as yet. Rate hikes are still more likely to come in 2018 but the risk is that they arrive earlier rather than later. 
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx">CommSec</a>. 
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cjames-5S2v74qSNK

Home prices flatten: Craig James

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Dwelling value growth was flat in Sydney over April with Melbourne values up 0.5 percent over the month according to CoreLogic's Hedonic Home Value Index for April
Tim Lawless, head of CoreLogic research said the moderation in growth was due largely to a slightly negative April result in Australia’s largest capital city housing market, Sydney, where dwelling values were broadly flat (rounded up from - 0.04 percent) over the month. 
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"The result for Melbourne was also lower than previous months of 2017, with dwelling values up 0.5 percent over the month,” he said.
"Dwelling values increased by 0.1 percent across the combined capital cities in April, with housing market conditions slowing in both Sydney and Melbourne.
"The softer results across Australia’s two largest capital cities comes after dramatic capital gains were recorded over the second half of 2016 and the first three months of 2017.
"Between July 2016 and the end of March 2017, Sydney dwelling values surged 11.3 percent, whilst Melbourne values increased slightly more at 12.6 percent in the same period.
"The April results mark the weakest monthly change in dwelling values across the Sydney market since December 2015, when CoreLogic reported a 1.2 percent fall in Sydney dwelling values; the soft reading comes after dwelling values have risen by 75.1 percent over the past five years, an annual rate of growth of 15 percent over this period.
"Most other capital cities also recorded softer growth conditions in April than for the first three months of 2017.
The trends generally remain positive, with quarterly growth of 2.9 percent across the combined capitals index.
"Based on the rolling quarterly change in dwelling values, the strongest housing market is currently in Hobart, where home values have risen 5.1 percent over the past three months.
"Hobart’s housing market has staged a solid improvement over the past two years and is now the third best performing capital city on an annual basis, with dwelling values moving almost 14 percent higher over the past twelve months alone.
“We need to be cautious in calling a peak in the market after only one month of soft results.
“April, in particular, coincides with seasonal factors including Easter, school holidays and ANZAC day long weekend.
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"The softer results should also be viewed against a backdrop of an ever evolving regulatory landscape s which is firmly aimed at slowing investment and interest-only mortgage lending. Testament to this is mortgage rates which have been edging higher, particularly for investors and interest-only loans, as well as rental yields which have been hovering around record lows. The higher cost of debt, as well as stricter lending and servicing criteria, has likely dented investment demand over recent months.” 
“In a city like Sydney, where more than 50 percent of new mortgage demand has been from investors, a tighter lending environment for investment purposes has the potential to impact housing demand more than other cities."
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Melbourne makes move on Sydney's top price growth mantle: CoreLogic

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Between January 2000 and February 2007, capital city dwelling values increased by 98.2% compared to an increase of 44.9% over the period from January 2010 to February 2017, according to CoreLogic's latest Property Pulse.
The property data firm says that so far this decade, dwelling values growth is less than half that over the same period last decade.
While values consistently moved higher over the previous decade, there has been very little growth in values so far this decade.
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Sydney dwelling values increased by 61.1% compared to 78.3% over the same period this decade between January 2000 and February 2007.
Early in 2000, values rose rapidly before starting to fall in 2004.
By comparison, values fell early in this decade but have been trending higher since June 2012.
Sydney is the only capital city that has recorded a greater increase in values so far this decade compared to the previous decade.
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Melbourne dwelling values increased by 95.6% between January 2000 and February 2007 compared to an increase of 55.1% so far this decade.
Brisbane dwelling values increased by a mere 6.6% since January 2010 compared to an increase of 147.2% between January 2000 and February 2007.
Similar to Brisbane, growth in Adelaide dwelling values has been much softer this decade compared to last.
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Between January 2000 and February 2007, dwelling values rose 124.4% compared to an increase of 11.0% between January 2010 and February 2017.
Perth dwelling values declined by -3.3% between January 2010 and February 2017, by comparison they increased 199.4% between January 2000 and February 2007.
While values in Perth rose continuously throughout the first 86 months of last decade, they’ve declined since the end of 2014.
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Hobart dwelling values increased by 198.0% while over the same 86 months so far this decade, values are just 3.4% higher.
Growth in the Hobart housing market slowed shortly after February 2007 and has only recently started to show signs of a sustained recovery.
Darwin dwelling values increased by 97.3% between January 2000 and February 2007 compared to a fall of -5.0% between January 2010 and February 2017.
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So far this decade growth has been sluggish with values having fallen since the middle of 2014; by comparison values trended higher throughout the previous decade.
Canberra, dwelling values have increased by 23.8% between January 2010 and February 2017 compared to an increase of 133.4% between January 2000 and February 2007.
According to research analyst Cameron Kusher, Sydney and Melbourne were the only cities to record dwelling value increases of more than 25% since the beginning of 2010.
“As a comparison, the weakest growth in values between January 2000 and February 2017 was 61.1% in Sydney which is actually higher than the growth in all capital cities except for Sydney so far this decade,” he said.
“Our research reinforces concerns around over-valuations in the housing market, if any, are very much focused within Sydney and Melbourne.
“For the remaining capitals, the reality is that since the beginning of the decade there has been very little value growth.”
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Dwelling value growth falls over decade: CoreLogic

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A downturn in China would trigger a recession in Australia, modelling by consulting firm Deloitte Access Economics shows. 
House prices would fall by 9 percent, in the “China sneezes, Australia catches pneumonia” scenario.
Although the Reserve Bank would respond by cutting rates and, when rates reached zero, by pumping liquidity into the market, Deloitte warns that global financial markets may become more ­reluctant to finance Australia’s deficits and may push rates higher.
Deloitte partner Chris Richardson says that while a Chinese downturn is not his central forecast, its elevated debts and reliance on government stimulus spending to keep growth going means that it is a plausible risk, particularly given global tensions over trade.
“Compared with the global ­financial crisis, Australia’s vulnerabilities are higher, our defences are weaker, and this time around China would be a cause of the problem rather than a part of the solution,” Mr Richardson says, in an advance copy of a speech to be delivered to the National Press Club today, and reported by The Australian.
The Deloitte modelling is based on a scenario in which China’s growth rate slows from the 6.5 percent targeted this year to less than 3 percent.
Mr Richardson notes that ­Australia’s dependence on China is greater than with any other country.
Employment would contract by 500,000, with half those numbers formally joining the unemployed and the remainder exiting the labour force.
The construction industry would account for more than a third of the 500,000 jobs lost across the economy and would contract by 25 percent. 
Deloitte says a downturn in China is only one scenario, with it also being possible that China and Asia more generally may sustain the growth that has supported Australia’s extended run of growth since the 1990-91 recession.
Queensland would be among the hardest hit regions in Australia from a severe slowdown in China.
Deloitte says the slowdown in China’s economy since 2011 had already taken a toll, Deloitte Queensland managing partner John Greig said.
The scenario of China stumbling is one of the three potential scenarios detailed in major consultancy Deloitte’s latest “Building the Lucky Country” series report.
The report says that “none of these three scenarios is the ‘most likely’ outcome for Australia. But they’re all plausible”.
The report says that Australia’s gains from our relationship with China have been huge, but there is a flip side in that Australia has increased its dependence on China.
“Australia doesn’t have the defences we had back in 2008 and 2009 — we lack firepower in interest rates and the Budget,” report author Chris Richardson said.
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