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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Sydney home prices kept up their strong capital growth in February, as capital city home values rose a further 1.4 percent during the month, according to the monthly CoreLogic Hedonic Home Value Index.
The strong capital gain over February was led by Canberra (+3.2 percent) and Sydney (+2.6 percent), with Melbourne (+1.5 percent) and Hobart (+1.0 percent) also returning significant increases. 
In contrast, dwelling values were down over the month across Darwin (-4.3 percent), Perth (-2.4 percent) and Brisbane (-0.4 percent). Meanwhile, the rental market remains soft, pushing yields to a record low. The average dwelling yield across the combined capital cities fell to 3.2% over the month, a new low.
Summarising the capital gains in home values, CoreLogic head of research Tim Lawless said, “At a combined capital city level, growth conditions have been rebounding since the middle of last year when, on two separate occasions, interest rates were cut, and investor demand commenced trending higher.” 
“Prior to capital gains accelerating half way through last year, the growth trend had been moderating, reaching a cyclical low point over the twelve months ended July 2016 when the annual change in capital city dwelling values slowed to 6.1 percent.” 
<a href="https://www.propertyobserver.com.au/images/2017/03/1/CoreLogicIndex.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/03/1/CoreLogicIndex.png" alt="">
A new cyclical high for annual growth rates 
February’s results mark a new high point in the current growth cycle, with capital city home values increasing by 11.7 percent over the past twelve months, said Lawless.
“The annual growth rate across the combined capitals hasn’t been this strong since the twelve months ending June 2010,” he said.
“In Sydney, where the annual rate of growth is now 18.4%, this is the highest annual growth rate since the twelve months ending December 2002 when the housing boom of the early 2000’s started to slow.” 
The latest CoreLogic results take the current housing growth cycle into its 58th month. Since capital city dwelling values started to rise in June 2012, dwelling values have increased by a cumulative 47.3 percent, ranging from a 74.9 percent capital gain in Sydney, to a net rise of 6 percent in Perth. 
Sydney, and to a lesser extent, Melbourne, have remained at the top of the capital gain tables over the past two cycles. Since the beginning of 2009, Sydney dwelling values have more than doubled, rising by 104.5 percent while Melbourne values are 87.7 percent higher. The next best performing capital city over the same period was Canberra where dwelling values have risen by a comparatively modest 37.4 percent. 
<img src="https://www.urban.com.au/images/2017/03/1/CoreLogicHighs.png" alt="">
“The strong growth conditions across Sydney have provided a substantial wealth boost for home owners, however, the flipside is that housing costs are becoming increasingly out of reach. This is especially true for price-sensitive segments of the market such as first time buyers and low income families,” Lawless said. 
“Affordability challenges are most pronounced across the Sydney housing market where, based on September 2016 data, dwelling prices are almost 8.5 times higher than gross household incomes. The second most expensive capital city, Melbourne, has a dwelling price to income ratio of 7.1.” 
In contrast, the February results show that the cities with greater exposure to the mining downturn have continued to record weak housing market results. Dwelling values slipped lower in Perth and Darwin over the month, taking the cumulative decline in values since these markets peaked in 2014 to 10 percent and 11.5 percent respectively. Brisbane also recorded a fall in dwelling values over the month, however values have been slowly trending higher despite the negative monthly result. 
As a consequence, housing affordability has shown a marked improvement in these regions, with the dwelling price to income ratio tracking at 5.7 in Brisbane, 5.5 in Perth and 4.5 in Darwin based on September 2016 data. 
Rental yields slipping to record lows 
While dwelling values continued to rise, weekly rents remained comparatively soft. As a result, downward pressure has been placed on rental yields. The average dwelling yield across the combined capital cities fell to 3.2% over the month, which is a new record low. Five years ago, the average capital city yield was a full percentage point higher at 4.2 percent. 
Sydney has shown the most significant compression in rental yields over the past five years, with the average gross yield reducing by 150 basis points to reach 2.9 percent (2.7 percent for houses and 3.7 percent for units). 
Lawless said, “Despite the record low rental yields on offer, investor demand remains high, suggesting investors are likely to be relying on a negative gearing strategy to compensate for their cash flow losses. It also indicates that investors are speculating on future capital gains.” 
“The latest housing finance data from the Australian Bureau of Statistics indicates that investors comprise approximately 57% of new mortgage demand across New South Wales (excluding refinanced loans). This is substantially higher than the long run average, which is slightly above one third.” 
Commenting overall on the February results, Lawless said, “The renewed strength in the housing market is corroborated by a range of other data points such as auction results, low advertised stock levels and rapid selling times.” 
According to CoreLogic auction results, 2017 began on a very strong footing with capital city clearance rates generally tracking in the high 70 percent to mid-80 percent range from week to week. The results of ‘Super Saturday’ last week saw an unprecedented number of auctions for February; clearance rates reached a new high for 2017 despite the large number of auctions held. 
Advertised listing numbers remain low across the hottest housing markets, with total residential advertised listings in Sydney tracking 11.3 percent lower than the same period a year ago, Melbourne total listings are 5.1% lower than last year, Hobart listings are down by 35 percent and Canberra advertised stock levels are 6.2 percent lower than a year ago. 
Lawless said, “Low levels of advertised stock for sale at a time when buyer demand remains strong is creating a sense of urgency among buyers, which is adding to the upward pressure on prices. This helps to explain why clearance rates are so high, and private treaty sales are so rapid across the strongest markets.” 
Growth likely to moderate later this year 
“Overall, the latest results from the CoreLogic Hedonic Index highlights the performance diversity across Australia’s housing market. The continuation of the capital gains rebound is likely to create further discomfort among policy makers, particularly in light of the growing debate around affordability and the high level of demand from investors.” 
“I remain of the view that housing market conditions will moderate during 2017 due to affordability constraints impacting on housing demand, as well as higher supply levels and an eventual slowing of investment demand brought about either through changed policies from Australian lenders or via regulatory changes aimed at slowing credit growth across the investment sector.”
At around the median price of $635,000 a three bedroom house at<a href="https://www.realestate.com.au/sold/property-house-act-kambah-124457326" target="_blank"> 8 Sholl Place</a>, Kambah (above) was sold yesterday for $609,000. 
Similarly a four bedroom house at <a href="https://www.realestate.com.au/sold/property-house-act-amaroo-124657490" target="_blank">11 Cooloola Street</a>, Amaroo (below) was sold last week for $635,000, having last traded for $439,000 in 2004.
<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/2017/03/1/11%20Cooloola%20Street.jpg" alt="">
At around the median price of $405,000 a two bedroom unit at <a href="https://www.realestate.com.au/sold/property-apartment-act-watson-124626206" target="_blank">49/23 Aspinall Street</a>, Watson (below) was sold last week for $401,500, having last traded for $165,000 in 2008.
<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/2017/03/1/49_23%20Aspinall%20Street.jpg" alt="">
Similarly a two bedroom house at <a href="https://www.realestate.com.au/sold/property-apartment-act-belconnen-124227770" target="_blank">309/80 Chandler Street</a>, Belconnen (below) was sold two week ago for $402,000.
<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/2017/03/1/309_80%20Chandler%20Street.jpg" alt="">
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prateek24-ezbwHMbNAk

Capital city home values rise nearly 12 percent in a year, hitting new cyclical high: CoreLogic  

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The annual growth trend in capital city dwelling values reached a new cyclical high with an increase of 11.7 percent over the twelve months ending February 2017, according to CoreLogic’s latest report.
The property data firm says that the monthly CoreLogic Hedonic Home Value Index reported a further rise in the value of capital city dwellings in February, with values rising 1.4 percent over the month.
The strong capital gain over February was led by Canberra (+3.2 percent) and Sydney (+2.6 percent), with Melbourne (+1.5 percent) and Hobart (+1.0 percent) also returning significant increases.
In contrast, dwelling values were down over the month across Darwin (-4.3 percent), Perth (-2.4 percent) and Brisbane (-0.4 percent).
<a href="https://www.propertyobserver.com.au/images/2017/03/1/Screen%20Shot%202017-03-01%20at%2010.16.47%20am.jpg" target="_blank">Click to enlarge</a>
<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/2017/03/1/Screen%20Shot%202017-03-01%20at%2010.16.47%20am.jpg" alt="">
Tim Lawless, CoreLogic head of research, said prior to capital gains accelerating half way through last year, the growth trend had been moderating, reaching a cyclical low point over the twelve months ended July 2016 when the annual change in capital city dwelling values slowed to 6.1 percent.
He said the February results mark "a new high point in the current growth cycle," with capital city dwelling values increasing by 11.7 percent over the past twelve months.
“The annual growth rate across the combined capitals hasn’t been this strong since the twelve months ending June 2010," he said.
“In Sydney, where the annual rate of growth is now 18.4 percent, this is the highest annual growth rate since the twelve months ending December 2002 when the housing boom of the early 2000’s started to slow.”
Canberra had the highest February price growth.
At around the median price of $635,000 a four bedroom house at <a href="https://www.realestate.com.au/sold/property-house-act-amaroo-124657490" target="_blank">11 Cooloola Street</a>, Amaroo (below) was sold last week for $635,000.
Similarly a three bedroom house at<a href="https://www.realestate.com.au/sold/property-house-act-kambah-124457326" target="_blank"> 8 Sholl Place</a>, Kambah (above) was sold yesterday for $609,000. It last sold for $439,000 in 2004.
<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/2017/03/1/8%20Sholl%20Place.jpg" alt="">
At around the median price of $405,000 a two bedroom unit at <a href="https://www.realestate.com.au/sold/property-apartment-act-watson-124626206" target="_blank">49/23 Aspinall Street</a>, Watson (below) was sold last week for $401,500. It last sold for $165,000 in 2008.
<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/2017/03/1/49_23%20Aspinall%20Street.jpg" alt="">
Similarly a two bedroom house at <a href="https://www.realestate.com.au/sold/property-apartment-act-belconnen-124227770" target="_blank">309/80 Chandler Street</a>, Belconnen (below) was sold two week ago for $402,000.
<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/2017/03/1/309_80%20Chandler%20Street.jpg" alt="">
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j.ballantyne1990-6AQqhLzZaK

New high point in national property price growth cycle: CoreLogic's Tim Lawless

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GUEST OBSERVER
A retrospective look at median dwelling values across the suburbs of Australia shows the bracket creep that has occurred over the current growth cycle, highlighting the deterioration of more affordable housing across the capital cities over the past five years.
At the end of 2016, 7.6 percent of suburbs nationally had a median house value under $200,000 and 5.9 percent of suburbs had a median unit value below $200,000. 
To put these figures into some perspective, 11.4 percent of suburbs had a median house value of at least $1 million and 3.0 percent of suburbs had a median unit value of at least $1 million.
Over the five years to the end of 2016, there has been a substantial decline in the proportion of suburbs with a median value below $400,000. 
At the end of 2011, 53.5 percent of suburbs had a median house value of less than $400,000 and 69.8 percent of suburbs had a median unit value of less than $400,000. 
By the end of 2016, the proportion of suburbs with a median value of less than $400,000 had fallen to 41.0 percent for houses and 55.3 percent for units.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Corelogic-1.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/20/Corelogic-1.jpg" alt="">
A five year retrospective look at the individual capital cities highlights the significant shift in the proportion of suburbs with a median value under $400,000, particularly in Sydney and Melbourne.
In 2011, the proportion of total suburbs with a median house value below $400,000 across each capital city was: 21.2 percent in Sydney, 28.9 percent in Melbourne, 40.9 percent in Brisbane, 40.5 percent in Adelaide, 31.1 percent in Perth, 69.2 percent in Hobart, 2.1 percent in Darwin and 1.1 percent in Canberra. 
Units offer a more affordable option highlighted by the proportions of suburbs values below $400,000 at: 38.8 percent in Sydney, 48.2 percent in Melbourne, 81.7 percent in Brisbane, 94.3 percent in Adelaide, 59.8 percent in Perth, 92.7 percent in Hobart, 53.3 percent in Darwin and 44.6 percent in Canberra.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Corelogic-2.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/20/Corelogic-2.jpg" alt="">
By 2015, the proportion of suburbs with a median house value below $400,000 had shifted to: 1.2% in Sydney, 12.2% for Melbourne, 31.4% in Brisbane, 29.5% in Adelaide, 15.5% in Perth, 55.7% in Hobart and 0.0% in both Darwin and Canberra. 
For units, the proportion of suburbs with a median value of less than $400,000 in December 2015 were recorded at: 10.9% in Sydney, 34.9% in Melbourne, 64.4% in Brisbane, 87.7% in Adelaide, 37.2% in Perth, 88.4% in Hobart, 51.4% in Darwin and 50.5% in Canberra.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Corelogic-3.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/20/Corelogic-3.jpg" alt="">
The proportion of suburbs with a median house value of less than $400,000 at the end of 2016 was recorded at: 0.1% in Sydney, 6.3% in Melbourne, 29.2% in Brisbane, 28.0% in Adelaide, 18.9% in Perth, 52.1% in Hobart and 0.0% in Darwin and Canberra. 
For units the proportions were recorded at: 6.5% in Sydney, 31.8% in Melbourne, 62.7% in Brisbane, 85.1% in Adelaide, 46.4% in Perth, 88.4% in Hobart, 57.6% in Darwin and 45.8% in Canberra.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Corelogic-4.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/20/Corelogic-4.jpg" alt="">
Five years ago every capital city except for Darwin and Canberra had at least 20% of suburbs with a median house value of less than $400,000. 
At the end of last year, it was virtually impossible to find houses for less than $400,000 in Sydney, Darwin and Canberra while less than 7% of suburbs had a median house value below $400,000 in Melbourne. 
Across each city there has been a substantial decline in more affordable housing over the past year despite the fact that outside of Sydney and Melbourne there has been only moderate value growth over the period.
Even units have recorded a fairly substantial decline in the proportion of suburbs with a median value of less than $400,000 over the past five years.
At the end of 2016, looking at both houses and units, 20.5% of Sydney suburbs had a median value of less than $600,000 compared to 38.5% of suburbs having a median value of at least $1 million. 
To further highlight deteriorating housing affordability in Sydney, 34.6% of suburbs had a median unit value of less than $600,000 at the end of 2016. 
In each other capital city, a higher proportion of suburbs had a median house value of less than $600,000 than the proportion of suburbs with a median unit value of less than $600,000.
If you are earning a relatively low income in Sydney and are looking to buy a house or unit, you are competing for a rapidly declining pool of housing stock across the city. 
The pool is also declining across the remaining capitals, albeit not at the same pace of decline as in Sydney.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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ckusher-ujnxiKuFQs

Sydney's property bracket creep makes for declining housing options: Cameron Kusher

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<img src="https://counter.theconversation.edu.au/content/72867/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Moral panic over recent increases in visibly homeless people in central Melbourne has brought to the fore the critical shortage of affordable housing across the metropolitan areas of Australia’s wealthiest cities.
But living on the street is only the tip of the iceberg. Many more households are living in insecure and/or overpriced accommodation. Their plight is due to an undersupply of appropriately priced, sized and situated rental housing.
The Commonwealth government is reportedly planning to scrap the National Affordable Housing Agreement with the states. Without a clear alternative, the weakness of state policies, which lack clear targets and mechanisms for providing more and better affordable housing, adds to the problem. One state, Victoria, still doesn’t have an affordable housing strategy.
South Australia’s strategy has 15 percent inclusionary zoning as one of several mechanisms to achieve affordable housing targets. Western Australia provides regular progress updates on the regional targets of its Affordable Housing Strategy 2010-2020. Tasmania adopted a ten-year strategy in 2015.
New South Wales has had affordable housing policies in place since 2009. The NSW government has a new plan to build more social housing and improve existing stock. Queensland released a draft strategy in March 2016.
While these state policies vary in their success, Victoria does not even have a strategy to critique.
Victoria’s toxic planning legacy
No doubt Premier Daniel Andrews inherited several industrial-strength cans of toxic planning waste when Victorian Labor won office in November 2014. This legacy came not only from the Liberals, but from the earlier Bracks-Brumby Labor government.
Under the 2000s Labor government, the fourth new metropolitan strategy in four decades, Melbourne 2030, largely failed to stop sprawl. The main excuse for sprawl – that increased and largely unregulated housing supply would magically enable affordability – had become a sad joke.
As former Labor adviser Joel Deane’s book Catch and Kill shows, inability to respond to basic public concerns about planning and transport was perhaps the most significant factor in Labor’s 2010 election defeat.
If Labor had been ineffective in creating new affordable housing, the Liberals’ planning decisions between 2010 and 2014 were disastrous. Australia’s largest urban renewal site – Fishermans Bend – was drastically up-zoned from Industrial to Capital City (also known as “Anything Goes”). They did this without extracting a cent in added value from landowners towards affordable housing – or any other infrastructure.
Huge parts of the southeastern suburbs – Liberal strongholds – were essentially walled off from new housing, even though these had some of the best school and transport infrastructure to serve a rapidly growing population. Hundreds of job cuts meant the civil service lost experience and capacity to do better.
A long wait for action on affordable housing
The Victorian Labor 2014 election platform stated:
All Victorians have a right to safe, affordable and secure housing.
Yet in more than two years since its election, the Labor government has not completed any of the major reforms that would enable affordable housing.
Plan Melbourne’s “refresh” has not been published in its final form. The Residential Tenancies Act still has to be strengthened. The residential zone review hasn’t been completed.
Perhaps most disturbingly, we are still waiting for the results of the early announcement that the state treasurer was going to work with the planning and housing ministers to develop an integrated affordable housing strategy.
A new advisory body, Infrastructure Victoria, published a 30-Year Infrastructure Strategy in December 2016. “Social housing” (public and non-profit) was one of its top three priorities. However, compared with principles of “a good plan”, the affordable housing section of this strategy does not pass the test.
According to the literature on plan analysis, good plans should have seven elements: a clear vision; specific goals; a fact base informing alternatives; a spatialised sense of what goes where; a very specific implementation plan, with costs, timelines and responsible authorities; a monitoring and evaluation plan; and specific horizontal (across all parts of government, the private sector and civil society) and vertical (alignment between national, state and local government) integration.
Vancouver shows how to do it
The City of Vancouver’s Housing and Homelessness Strategy 2012-2021 is an example of an affordable housing plan that ticks the boxes. It has a clear vision embodied in the strategy’s subtitle:
A home for everyone.
The strategy sets specific numeric housing targets. These cover everything from supportive housing for homeless people with mental disabilities, to social housing, market rental and home-ownership options.
These targets are based on a robust and transparent analysis of housing trends across the city. While all subsequent neighbourhood plans are intended to achieve a mix of dwelling cost and size, there is a particular emphasis on locating supportive housing near areas with significant homeless populations.
The partnerships with other levels of government, private developers and non-profit providers are comprehensive. A new Vancouver Affordable Housing Authority has been established to coordinate these efforts. Since the report’s adoption, further mechanisms such as a community land trust have been established. Annual reporting against the targets is available on the City of Vancouver’s website.
In contrast, Infrastructure Victoria is an advisory body to state government, not an implementation agency. Its vision of a “thriving, connected and sustainable Victoria where everyone can access good jobs, education and services” begs the question of how progress towards these attributes would be measured.
Infrastructure Victoria does estimate an extra 30,000 affordable homes are needed over the next ten years. But it admits this figure is not well justified, due to a lack of good information on affordable housing deficits.
It recommends further work on an affordable housing plan with specific funding streams. However, this cannot really be expected to be the plan that “tackles [the] affordable housing shortage”, as its own website boasted of the draft report.
At best, Infrastructure Victoria’s plan is a baby step. It does clearly state the importance of social housing as critical infrastructure. It also begins to justify mechanisms that could achieve some scaling up of affordable housing outcomes.
But the public housing waiting list now has more than 35,000 names. About 120,000 households receiving Commonwealth Rent Assistance are still unable to afford living where they do. That includes 50,000 households in the lowest income bracket. And another one million new households are expected to move into Victoria within the 30-year timeframe of the infrastructure strategy.
This all means that baby steps will not be enough to prevent rapidly increasing homelessness.
 
Carolyn Whitzman is professor of Urban Planning, University of Melbourne and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/carolyn-whitzman-9944" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

States drag feet on affordable housing, with Victoria the worst

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The rise in home prices is expected to moderate in 2017, especially Sydney and Melbourne, where prices will take a breather from their double-digit growth, according to a forecast by leading economists in the 2017 BusinessDay Scope survey. 
The CoreLogic measure for home price increase will grow by just 4.9 per cent in Sydney, while for Melbourne it will be 4.3 per cent, a far cry from the 15.5 per cent growth for Sydney and 13.7 per cent for Melbourne in 2016. 
The BusinessDay survey carried by The Sydney Morning Herald is made up of forecasts from 27 leading economists. Over time its average predictions have proved to be more accurate than those of any of its individual members.
Some forecasters expect home prices to fall — Nicki Hutley (Urbis Consulting), Stephen Koukoulas (Market Economics) and author, Professor Steve Keen -- while two expect no growth (Jakob Madsen of Monash University and Richard Robinson from the property specialist BIS Shrapnel), the report said.
The highest forecasts are for further growth of 12 percent -- Julie Toth of Australian Industry Group and Renee Fry-McKibbin of Australian National University -- for Sydney and Mardi Dungey (University of Tasmania) for Melbourne.
The range of housing investment forecasts is also wide, with the highest being a growth of 11 per cent (Neville Norman of the University of Melbourne) while the lowest is a slide of 5.5 pe cent (from the Housing Industry Association).  The average forecast is a low 1.9 percent growth. 
The general consensus also says the Reserve Bank won’t adjust interest rates at its first meeting for the year on Tuesday and has very little pressure to adjust them at any time during the year. 
Below is the results of the survey given to the economists.
<table style="width: 472px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="118">
Name
</td>
<td valign="top" width="160">
Company
</td>
<td valign="top" width="87">
Sydney home prices year to Dec (%)
</td>
<td valign="top" width="106">
Melbourne home prices year to Dec (%)
</td>
</tr>
<tr>
<td valign="top" width="118">
Stephen Anthony
</td>
<td valign="top" width="160">
Industry Super
</td>
<td valign="top" width="87">
5.4
</td>
<td valign="top" width="106">
7.1
</td>
</tr>
<tr>
<td valign="top" width="118">
Sally Auld
</td>
<td valign="top" width="160">
JP Morgan
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
David Bassanese
</td>
<td valign="top" width="160">
BetaShares
</td>
<td valign="top" width="87">
5
</td>
<td valign="top" width="106">
5
</td>
</tr>
<tr>
<td valign="top" width="118">
Paul Bloxham
</td>
<td valign="top" width="160">
HSBC
</td>
<td valign="top" width="87">
5
</td>
<td valign="top" width="106">
3
</td>
</tr>
<tr>
<td valign="top" width="118">
Michale Blythe
</td>
<td valign="top" width="160">
Commonwealth Bank
</td>
<td valign="top" width="87">
7
</td>
<td valign="top" width="106">
5
</td>
</tr>
<tr>
<td valign="top" width="118">
Paul Dales
</td>
<td valign="top" width="160">
Capital Economics
</td>
<td valign="top" width="87">
8
</td>
<td valign="top" width="106">
10
</td>
</tr>
<tr>
<td valign="top" width="118">
Besa Deda
</td>
<td valign="top" width="160">
Bank of Melbourne
</td>
<td valign="top" width="87">
6
</td>
<td valign="top" width="106">
4
</td>
</tr>
<tr>
<td valign="top" width="118">
Bill Evans
</td>
<td valign="top" width="160">
Westpac
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Shane Oliver
</td>
<td valign="top" width="160">
AMP Capital
</td>
<td valign="top" width="87">
4
</td>
<td valign="top" width="106">
3
</td>
</tr>
<tr>
<td valign="top" width="118">
Sun-Lin Ong
</td>
<td valign="top" width="160">
RBC Capital Markets
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Riki Polygenis
</td>
<td valign="top" width="160">
National Australia Bank
</td>
<td valign="top" width="87">
3.9
</td>
<td valign="top" width="106">
4.8
</td>
</tr>
<tr>
<td valign="top" width="118">
Richard Yetsenga
</td>
<td valign="top" width="160">
ANZ Bank
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Janine Dixon
</td>
<td valign="top" width="160">
Victoria University
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Mardi Dungey
</td>
<td valign="top" width="160">
University of Tasmania
</td>
<td valign="top" width="87">
10
</td>
<td valign="top" width="106">
12
</td>
</tr>
<tr>
<td valign="top" width="118">
Saul Eslake
</td>
<td valign="top" width="160">
University of Tasmania
</td>
<td valign="top" width="87">
 
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Renee Fry-McKibbin
</td>
<td valign="top" width="160">
Australian National University
</td>
<td valign="top" width="87">
12
</td>
<td valign="top" width="106">
10
</td>
</tr>
<tr>
<td valign="top" width="118">
Steve Keen
</td>
<td valign="top" width="160">
Kingston University, London
</td>
<td valign="top" width="87">
0
</td>
<td valign="top" width="106">
-4
</td>
</tr>
<tr>
<td valign="top" width="118">
Guay Lim
</td>
<td valign="top" width="160">
Melbourne Institute
</td>
<td valign="top" width="87">
6
</td>
<td valign="top" width="106">
4.5
</td>
</tr>
<tr>
<td valign="top" width="118">
Jakob Madsen
</td>
<td valign="top" width="160">
Monash University
</td>
<td valign="top" width="87">
0
</td>
<td valign="top" width="106">
0
</td>
</tr>
<tr>
<td valign="top" width="118">
Bill Mitchell
</td>
<td valign="top" width="160">
University of Newcastle
</td>
<td valign="top" width="87">
8
</td>
<td valign="top" width="106">
8
</td>
</tr>
<tr>
<td valign="top" width="118">
Neville Norman
</td>
<td valign="top" width="160">
University of Melbourne
</td>
<td valign="top" width="87">
9
</td>
<td valign="top" width="106">
11
</td>
</tr>
<tr>
<td valign="top" width="118">
Nicki Hutley
</td>
<td valign="top" width="160">
Urbis Consulting
</td>
<td valign="top" width="87">
-3
</td>
<td valign="top" width="106">
-5
</td>
</tr>
<tr>
<td valign="top" width="118">
Stephen Koukoulas
</td>
<td valign="top" width="160">
Market Economics
</td>
<td valign="top" width="87">
-5
</td>
<td valign="top" width="106">
-6
</td>
</tr>
<tr>
<td valign="top" width="118">
Richard Robinson
</td>
<td valign="top" width="160">
BIS Shrapnel
</td>
<td valign="top" width="87">
0
</td>
<td valign="top" width="106">
0
</td>
</tr>
<tr>
<td valign="top" width="118">
Shane Garrett
</td>
<td valign="top" width="160">
Housing Industry Association
</td>
<td valign="top" width="87">
5
</td>
<td valign="top" width="106">
4.5
</td>
</tr>
<tr>
<td valign="top" width="118">
Margaret McKenzie
</td>
<td valign="top" width="160">
ACTU
</td>
<td valign="top" width="87">
-
</td>
<td valign="top" width="106">
-
</td>
</tr>
<tr>
<td valign="top" width="118">
Julie Toth
</td>
<td valign="top" width="160">
Australian Industry Group
</td>
<td valign="top" width="87">
12
</td>
<td valign="top" width="106">
10
</td>
</tr>
<tr>
<td colspan="2" valign="top" width="279">
Low
</td>
<td valign="top" width="87">
-5
</td>
<td valign="top" width="106">
-6
</td>
</tr>
<tr>
<td colspan="2" valign="top" width="279">
High
</td>
<td valign="top" width="87">
12
</td>
<td valign="top" width="106">
12
</td>
</tr>
<tr>
<td colspan="2" valign="top" width="279">
AVERAGE
</td>
<td valign="top" width="87">
4.9
</td>
<td valign="top" width="106">
4.3
</td>
</tr>
</tbody></table>
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jonathanchancellor-7SQnKwU6yx

Home price growth to take a breather in 2017, says survey of economists

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National Australia Bank has raised its expectations for house price growth in 2017 while also saying that apartment values will likely fall less than expected as further rate cuts will continue to support the market.  
The country’s fourth-largest mortgage lender said the strength of the Sydney and Melbourne markets continue to surprise and predicted solid albeit much slower, growth in prices.
NAB has raised its expectations for house price growth this year to 3.4 percent, while narrowing the loss it expects on apartment prices to 0.8 percent from 1.6 percent, citing improved sentiment from real estate professionals in its latest NAB Residential Property Index and expecting a continuation of last year's rate cut-driven demand. 
It dismissed the idea of sharp or sudden falls in prices, saying these would only happen if unemployment or interest rates surged, which it said was unlikely. However, even the revised figures represent a cooling from last year's capital city average of 11.6 per cent growth for houses and 5.9 per cent growth in apartment prices. 
The Reserve Bank of Australia is expected to cut the benchmark cash rate from the current record-low 1.5 per cent to 1 per cent by year-end as it fights weak inflation and as housing construction, which buoyed the economy last year, slows. 
"Most market commentators have been surprised by the strength in the Melbourne and Sydney property markets in the second half of 2016," said Riki Polygenis, NAB's head of Australian economics. "Because momentum is so strong, that's coming through in the survey in terms of the broad index that measures sentiment within the survey. We're still expecting a moderation in house prices going into 2017 but it is a modest revision upward from where we were".
<a href="https://www.propertyobserver.com.au/images/2017/02/01/NABExpertViews.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/01/NABExpertViews.png" alt=""> 
<a href="https://www.propertyobserver.com.au/images/2017/02/01/NABResiIndexbyState.png" target="_blank">Click to enlarge</a> 
<img src="https://www.urban.com.au/images/2017/02/01/NABResiIndexbyState.png" alt="">
 
The revised forecasts were part of the bank's latest quarterly survey of 250 property industry professionals. While the overall survey of sentiment left the headline Residential Property Index unchanged at a reading of 15 from the September quarter, underlying that was a weakening of sentiment in NSW, Queensland and WA, and a strengthening of sentiment in Victoria and (to a lesser extent) SA and NT. 
"Sydney and Melbourne will both see solid, albeit much slower, growth in prices, while Brisbane and Adelaide are forecast to cool a little," the report said. "Perth will remain very weak as house prices decline by another 2.7 percent this year, as the market continues to feel headwinds from the mining sector, slower population growth and ample housing supply."
Sydney, Adelaide and Hobart would be the best performers for units, the report said. Unit prices would fall 2.7 percent in Melbourne and 1.8 percent in Brisbane as a result of oversupply of new apartment product in the market, but the worst performance would still be in Perth, where apartment prices would likely fall 3.8 percent, it said. 
"Prices are generally expected to be fairly weak for apartments across the country in 2017," it said. "The record pipeline of apartment construction in Sydney naturally presents a significant downside risk to the forecast, but substantial pent-up demand for housing should support the market, while the relative affordability of apartments (in the country's most expensive market) could also trigger a shift in demand by some buyers."
<a href="https://www.propertyobserver.com.au/images/2017/02/01/NABHedonicPriceForecast.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/01/NABHedonicPriceForecast.png" alt="">
 
<a href="https://www.propertyobserver.com.au/images/2017/02/01/NABHedonicUnitForecast.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/01/NABHedonicUnitForecast.png" alt="">
Housing affordability remained the largest constraint on new housing development in Victoria, Queensland and SA/NT. In NSW, affordability and tight credit were seen as the biggest hurdles. In WA, the ability of price gains to be sustained was regarded as the biggest constraint.  
Separate figures from data provider Domain on Tuesday showed affordability worsened for buyers in Sydney, where the median house price topped $1.1 million. 
<a href="https://www.propertyobserver.com.au/images/2017/02/01/NABResiIndex.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/01/NABResiIndex.png" alt="">
The fourth quarter also marked the first increase in foreign buyers' share of the residential market in a year. 
In the three months to December, foreign buyers accounted for 10.9 percent of all new property purchases, up from 10.2 percent in September and the highest level since the three months to March. In established housing markets, their share rose to 7.6 percent from 6.4 percent in the September quarter and the highest level since the last quarter of calendar 2015, NAB said.
While the apparent boost in demand from foreign buyers, particularly Chinese ones, reflected the improved sentiment in the local residential market, the true extent of foreign demand was hard to measure, Ms Polygenis said. 
"It's very difficult to square up with reports that Chinese authorities are cracking down on capital outflows by households out of China," she said. "It's very difficult to know how exactly the figures from this survey translate through to actual demand on the ground. The official data we get from [the official Foreign Investment Review Board] is very delayed."
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NAB forecasts 3.4 percent price growth for houses in 2017, with falls in units less likely 

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GUEST OBSERVER
According to CoreLogic data Australian home price momentum has started the year on a solid note with capital city dwelling prices up 0.7 percent month on month in January or 10.7 percent year on year.   As has been the case for the last four years this remains dominated by Sydney and Melbourne where prices are up 1 percent/mom/16 percent/yoy and 0.8 percent/mom/11.8 percent/yoy respectively.
Other cities are far more moderate although Hobart is looking stronger with prices up 1.4 percent/mom/7.8 percent/yoy.
<a href="https://www.propertyobserver.com.au/images/2017/02/01/Screen%20Shot%202017-02-01%20at%201.15.27%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/01/Screen%20Shot%202017-02-01%20at%201.15.27%20PM.png" alt="">
 
Unit price increases have slowed in Melbourne to 2.8 percent/yoy presumably reflecting supply increases but remain very strong in Sydney at 13.1 percent/yoy.   The continuing strength in Sydney and Melbourne property prices coming on the back of a clear acceleration in lending to investors and high auction clearance rates will clearly add to RBA concerns about financial stability. While a surge in housing supply to record levels will act to slow the property market this is still yet to become clearly apparent (except perhaps in Melbourne unit prices).
In the meantime the focus around APRA tightening its macro prudential measures in order to slow investor activity in the Sydney and Melbourne markets, in order to provide the RBA with ongoing necessary flexibility on interest rates, is likely to intensify. This could take the form of APRA lowering its threshold for the stock of lending to investors from the currently level of 10 percent year on year.   We remain of the view that the RBA will cut interest rates again but not until May, but this likely to require either some slowing in property price momentum or a further tightening in APRA’s macro prudential policies. Meanwhile, the AIG’s manufacturing conditions PMI slipped back to 51.2points in January from a surprisingly strong 55.4 in December. This series is normally very volatile but it remains at a reasonable level and well above the lows of late last year.
SHANE OLIVER is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/news/olivers-insights" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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Continuing strength in Australian house prices: Shane Oliver

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Combined capital city dwelling values rose 0.7 percent for January with Sydney recording the highest annual capital gains with dwelling values up 16 percent over 12 months according to CoreLogic.
CoreLogic's Hedonic Home Value Index for January 2017 found since the growth cycle commenced in June 2012, Sydney dwelling values have increased by a cumulative 70.5 percent.
Tim Lawless, CoreLogic head of research said the largest month-on-month gains were recorded in Hobart (+1.4 percent), Sydney (+1.0 percent) and Melbourne (+0.8 percent).
"On a quarterly basis, the CoreLogic January index results confirmed that all capital cities recorded a rise in dwelling values, with Hobart in the lead, recording a 5.8 percent rise in dwelling values over the three months to the end of January. Sydney (+2.7 percent) and Melbourne (+2.4 percent) also posted strong increases over the rolling quarter," he said.
"The annual trend in dwelling value appreciation remained steady when compared with last month.
"The annual growth rate across the combined capital cities was 10.7 percent over the twelve months ending January 2017, compared with 10.8 percent over the previous rolling twelve month period.
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“While the growth trend in smaller cities such as Hobart can show higher levels of volatility, clearly the Hobart housing market is now well into its growth cycle. Strong housing market conditions are being driven by positive affordability of housing, as well as improving economic conditions and stronger migration trends.” 
"For Perth and Darwin, the rise in dwelling values over the rolling quarter may hint at a bottoming of the downturn, evident since 2014.
"Since dwelling values peaked in these markets they have reduced by a cumulative 7.7 percent in Perth and 7.5 percent in Darwin through to January 2017. Perth dwelling values were 2.1 percent higher over the past three months and Darwin values were up 1.8 percent.
“Buyers still have a great deal of leverage in these markets, with listing numbers remaining high, long selling times and high rates of discounting. However, in another indication that conditions may be moving through the bottom of the cycle, transaction volumes moved higher across both markets prior to the seasonal downturn in December and January, whilst the average selling time reduced from previously higher levels. With economic and demographic conditions remaining weak in these markets, a recovery in dwelling values is likely to be a slow process.” 
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 "Gross rental yields slipped to a new record low across the combined capitals index in January, with the gross yield on a house now recorded at 3.20 percent, falling from 3.50 percent a year ago and 4.12 percent five years ago.
"The gross yield on a unit also reached a new record low in January, recorded at 4.01 percent across the combined capitals; down from 4.25 percent a year ago and 4.86 percent five years ago.
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“While rental yields plumb new lows, investment in the housing market has been consistently ratcheting higher which implies that investors are speculating on further capital gains in the housing market."
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Sydney's price growth gets even stronger in 2017 with opening 16 percent annual gain

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December 2016 saw capital city dwelling values rise by 1.4%, taking the annual capital gain for 2016 to 10.9%; the highest growth rate for a calendar year since 2009.
Factoring in gross rental yields and capital gains, housing as an asset class, earned a total annual return of 14.7% based on the combined capital cities index results.
Across Australia’s capital cities, the annual change in dwelling values for 2016 ranged from -4.3% in Perth to 15.5% in Sydney, with Melbourne and Hobart also showing annual capital gains higher than 10%.
Capital city growth rates have also shown a growing divergence between the broad housing product types.
Over the past twelve months we have seen capital city house values rise by 11.6%, while unit values have increased by roughly half the pace at 5.9%.
The divergence in growth rates is the most distinct in Melbourne and Brisbane, where concerns around unit oversupply have eroded buyer confidence.
Melbourne house values are up 15.1% over the year compared with a 1.7% rise in unit values, while Brisbane house values are 4.0% higher over the year, with unit values falling by -0.2%.
Australia’s regional housing markets generally did not experience the same growth conditions as the capital cities, with annual growth to November recorded at 2.8% across the combined regional markets. Regional New South Wales showed the strongest growth conditions, with non-capital city house values rising 7.3% over the 12 month period to November 2016.
The remaining rest-of-state regions showed relatively sedate conditions, with values rising by half a per cent across regional Victoria, 1% across regional Queensland and 1.1% across regional South Australia. Regional Western Australia recorded a 7% fall in house values over the year. Those regional areas with intrinsic ties to the mining and resources sector have continued to record weaker housing market conditions since the end of the mining infrastructure boom, with Perth and Darwin recording the weakest housing market conditions across the capital cities.
Since values peaked in these markets during 2014, values have fallen by a cumulative 7.9% in Perth and 5.9% in Darwin.
More recently both these markets have shown signs of moving through the low point of their respective downturns, with values rising by 2.8% and 5.9% respectively over the final quarter of 2016.
Based on the annual housing market results, it is clear that housing markets across Australia have responded to regional differences in economic and demographic trends; strong population growth and economic activity have driven value growth in Sydney and Melbourne, however, more recently strong growth trends have spread to Hobart and Canberra, as well as many of the coastal and lifestyle markets where values are now also rising swiftly.
Post Global Financial Crisis, the CoreLogic index results show that Sydney’s dwelling values have almost doubled, rising by 97.5% since January 2009, whilst Melbourne dwelling values have increased by 83.5% over the same time frame.
Every other capital city has seen dwelling values rise at substantially lower rates over this period, highlighting just how strong the Sydney and Melbourne housing market conditions have been over the past eight years.
Sydney-siders saw dwelling values increase by approximately $10,000 per month over the past year, creating a significant boost in wealth for home owners; at the same time we’ve seen mounting affordability challenges for aspiring home owners.
The recent CoreLogic Housing Affordability Report shows Sydney dwelling prices were 8.3 times higher than annual household incomes and households were dedicating an average of 44.5% of their income to service a mortgage (based on an 80% loan to valuation ratio and the average discounted variable mortgage rate).
Tim Lawless heads up the CoreLogic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia.
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2016 dwelling value growth rates divergent even within the same capital city: Corelogic's Tim Lawless

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December 2016 saw capital city dwelling values rise by 1.4%, taking the annual capital gain for the year to 10.9%.
CoreLogic calculated it was the highest growth rate for a calendar year since 2009.
"Factoring in gross rental yields and capital gains, housing as an asset class, earned a total annual return of 14.7% based on the combined capital cities index results," Tim Lawless, the CoreLogic head of research said.
Across Australia’s capital cities, the annual change in dwelling values for 2016 ranged from -4.3% in Perth to 15.5% in Sydney, with Melbourne and Hobart also showing annual capital gains higher than 10%.
“Capital city growth rates have also shown a growing divergence between the broad housing product types.
"Over the past twelve months we have seen capital city house values rise by 11.6%, while unit values have increased by roughly half the pace at 5.9%.
“The divergence in growth rates is the most distinct in Melbourne and Brisbane, where concerns around unit oversupply have eroded buyer confidence.
"Melbourne house values are up 15.1% over the year compared with a 1.7% rise in unit values, while Brisbane house values are 4.0% higher over the year, with unit values falling by -0.2%.”
<a href="https://www.propertyobserver.com.au/images/2017/01/03/Graph%201.jpg" target="_blank">Click to enlarge</a>
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The difference in Sydney between houses and units was houses up 16.7% and units up 9.6%, the report for the year noted. 
Lawless noted Australia’s regional housing markets generally did not experience the same growth conditions as the capital cities, with annual growth to November recorded at 2.8% across the combined regional markets.
Regional New South Wales showed the strongest growth conditions, with non-capital city house values rising 7.3% over the 12 month period to November 2016.
According to Mr Lawless, the remaining rest-of-state regions showed relatively sedate conditions, with values rising by half a per cent across regional Victoria, 1% across regional Queensland and 1.1% across regional South Australia.
Regional Western Australia recorded a 7% fall in house values over the year.
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“Those regional areas with intrinsic ties to the mining and resources sector have continued to record weaker housing market conditions since the end of the mining infrastructure boom, with Perth and Darwin recording the weakest housing market conditions across the capital cities.
“Since values peaked in these markets during 2014, values have fallen by a cumulative 7.9% in Perth and 5.9% in Darwin.
"More recently both these markets have shown signs of moving through the low point of their respective downturns, with values rising by 2.8% and 5.9% respectively over the final quarter of 2016."
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