A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

Joel Robinson

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.

In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.

The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.

The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments

The site currently comprises three commercial properties.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" />

The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.

The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" />

A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.

Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.

Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.

First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

<a href="https://www.apartments.com.au/new-apartments/otium-parkdale-123-125-como-parade-east-parkdale-vic-3195">Otium Parkdale</a>, the 13-residence boutique development by&nbsp;<a href="https://www.apartments.com.au/developers/huxtable-property">Huxtable Property</a>, has entered its final stages of delivery, with completion expected within the coming month and more than half of the residences sold.

The Como Parade East project is nearing the finish line at a time when opportunities to purchase new apartments in <a href="https://www.apartments.com.au/developments/parkdale-vic-3195">Parkdale</a> remain exceptionally limited. Fewer than 10 per cent of dwellings in the bayside suburb are apartments, making developments like Otium a relatively rare addition to a market traditionally dominated by detached housing.

[smartcode_project:default project_id=134974 project_image_fid=5427]

The three-level development comprises 13 residences, including ten two-bedroom apartments and three larger three-bedroom homes, all positioned above a secure basement car park.

Designed by <a href="https://www.apartments.com.au/architects/almeida-architects">Almeida Architects</a> with a strong connection to its coastal surroundings, Otium combines red brick, exposed concrete and dark metal detailing with integrated landscaping and greenery. Expansive glazing, generous balconies and terraces have been incorporated throughout the design to maximise natural light and reinforce indoor-outdoor living.

Inside, the residences feature engineered European oak flooring, natural and reconstituted stone benchtops, Bosch kitchen appliances, ducted heating and cooling, lift access and secure entry systems. The larger three-bedroom residences on the upper level have been designed with house-like proportions, while the two-bedroom apartments prioritise functionality, flexibility and low-maintenance living.

[smartcode_project:default project_id=134974 project_image_fid=5421]

The project is now in its final stages, with <a href="https://www.apartments.com.au/builders/labco">Labco</a> completing the remaining landscaping and external finishing works following the completion of the residences' interiors.

Otium's location within the heart of Parkdale continues to underpin its appeal. Residents will be just steps from local cafés, restaurants, shops and the newly elevated Parkdale Station, while the beach is less than a kilometre away.

With the project tracking ahead of schedule, buyers can currently secure a residence with a five per cent deposit and benefit from settlement terms of up to eight months. The advanced stage of construction also provides buyers with the opportunity to walk through the near-complete residences and experience the quality and finishes firsthand ahead of completion.

[smartcode_project_cta:default project_id=134974]

Otium Parkdale enters final month before completion as rare apartment opportunity nears sellout

A new boutique apartment development is entering the market in <a href="https://www.apartments.com.au/developments/chermside-qld-4032">Chermside</a>, with Brisbane-based developer <a href="https://www.apartments.com.au/developers/ausdev">Ausdev</a> bringing 33 residences to a well-connected pocket of Brisbane's north.

<a href="https://www.apartments.com.au/new-apartments/parkdrive-apartments-chermside-25-sammells-drive-chermside-qld-4032">Parkdrive Apartments</a>, at 25 Sammells Drive, will comprise a mix of one- and two-bedroom residences positioned within walking distance of Westfield Chermside, The Prince Charles Hospital, and Bradbury Park.

Established in 1989, Ausdev has a long-standing presence across both development and construction, with Parkdrive Apartments representing its latest residential project in Brisbane's northern suburbs.

[smartcode_project:default project_id=152125 project_image_fid=363778]

The development has been designed around open-plan living and natural light, with residences featuring stone benchtops, timber cabinetry, BOSCH appliances, and private balconies that extend the living areas outdoors.

Kitchens are positioned as the centrepiece of the homes, incorporating natural material palettes and integrated appliances, while bathrooms have been designed with a focus on functionality and understated finishes.

Residents will have access to a communal barbecue and entertaining area on Level 3, providing shared outdoor space within the development. Secure parking and lift access are also incorporated into the building.

The project will deliver a limited collection of 33 apartments, with one-bedroom residences priced from $749,000.

[smartcode_project:default project_id=152125 project_image_fid=363782]

Beyond the building itself, the location places residents within easy reach of several of Chermside's key amenities. Bradbury Park is around 350 metres away, while Westfield Chermside is approximately 1.3 kilometres from the site. The Prince Charles Hospital is located within 750 metres, and the Chermside Bus Interchange is around 1.5 kilometres away, providing connections across Brisbane.

Parkdrive Apartments adds to the growing residential pipeline in Chermside, a suburb that continues to evolve as a major retail, healthcare, and transport hub for Brisbane's north.

[smartcode_project_cta:default project_id=152125]

Ausdev introduces boutique Parkdrive Apartments to Chermside's growing centre

<a href="https://www.apartments.com.au/developers/skymark-group">Skymark</a>'s boutique Cronulla development Solis has secured a 10-year Latent Defects Insurance policy through Resilience Insurance, providing buyers of the 16-residence building on Ewos Parade with structural and waterproofing protection that extends a decade beyond the building's completion.

Currently under construction and due for completion in late 2027, <a href="https://www.apartments.com.au/new-apartments/solis-cronulla-8-ewos-parade-cronulla-nsw-2230">Solis</a> is one of a small number of new developments in the Sutherland Shire to carry Resilience LDI coverage, a distinction that carries increasing weight as buyer confidence in the off-the-plan sector continues to be shaped by how developers stand behind their product.

Latent Defects Insurance, which entered the Australian market in 2022 when Resilience Insurance was approved to offer the cover, protects buyers against major structural or waterproofing defects for ten years post-completion. Unlike traditional statutory warranties, it operates as a first-resort policy, if a covered defect arises, the insurer responds directly, without the buyer needing to pursue the builder or developer through a lengthy claims process.

Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.

"The overarching feedback from prospective buyers in the new development space is that they want more confidence and assurances around the quality of the build," Nugent says.

"Resilience Insurance Latent Defects Insurance not only gives them complete peace of mind for 10 years, but it shows the developer they are buying from is standing by their product."

[smartcode_project:default project_id=150499 project_image_fid=370898]

For Solis, the Resilience LDI policy adds a meaningful layer of accountability to an already considered project. The development comprises nine two-bedroom and seven three-bedroom residences, including one dual-level three-bedroom apartment, across a five-storey building on Ewos Parade, positioned between Shelly Beach and South Cronulla.

Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;

All 16 residences include at least one balcony or courtyard, and select apartments on the upper floors feature bar areas and secondary flexible living spaces.

Hiba Sander, Managing Director of Skymark, says Solis offers a rare balance, nestled between the quiet beauty of secluded beaches and the lively charm of South Cronulla's esplanade.

"It's a place to choose your pace and live gracefully, seaside'," Sander says.

[smartcode_project:default project_id=150499 project_image_fid=370900]

The architecture, designed by <a href="https://www.apartments.com.au/architects/ida-design-group">IDA Design Group</a>'s Michael Trinh, draws from the natural erosion patterns of <a href="https://www.apartments.com.au/developments/cronulla-nsw-2230">Cronulla</a>'s sandstone headlands, translating the organic forms of the coastline into soft curves, pavilion-style massing, and a material palette chosen for longevity in a salt-tinged environment.&nbsp;

Textured natural stone, soft renders, and timber-look battens reference the tones of the surrounding cliffs, while the building has been oriented to maximise natural light and passive ventilation, with primary living spaces facing north and east to capture morning sun and sea breezes.

"At Solis, our aim was to create architecture that feels quietly confident, grounded in natural materials like stone and timber, and elevated by light and landscape," Trinh says.&nbsp;

"The buildings are designed to sit gently within their coastal surrounds, with expansive glazing and abundant greenery creating a seamless dialogue between inside and out."

[smartcode_project:default project_id=150499 project_image_fid=370897]

Interiors by <a href="https://www.apartments.com.au/architects/hot-black">Hot Black</a> carry the same material language through to every room. Kitchens feature integrated Gaggenau appliances, sculpted stone benchtops, and Lo &amp; Co joinery, while bathrooms feature natural stone, timber, and brushed metal finishes.&nbsp;

Hot Black Founder and Design Director Sophie Safrin describes the intent as one of considered restraint: "At Solis, every detail has been thoughtfully considered to create a timeless coastal retreat, calm, refined, and effortlessly liveable. From natural finishes to seamless indoor-outdoor flow, Solis offers a quiet elegance that's deeply connected to its surroundings.

The landscape, designed by Julian Brady of <a href="https://www.apartments.com.au/landscape-architect/sitedesignstudios">Site Design Studios</a>, treats green space as an integral part of the resident experience rather than an afterthought.&nbsp;

"Gentle curves and layered native plantings mirror the ebb and flow of the ocean," Julian Brady says, "creating a serene connection between architecture and place."&nbsp;

Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.

[smartcode_project:default project_id=150499 project_image_fid=370899]

Skymark has an established track record in the Sutherland Shire, with a portfolio spanning Cronulla, Woolooware and Burraneer that includes Isla, Sylva, Bask, Shells, Sula and Mist. Securing LDI on Solis reflects a broader shift in how the developer is positioning its buildings to buyers, at a time when Resilience Insurance expects the policy to become mandatory in New South Wales by 2028.

Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.

[smartcode_project_cta:default project_id=150499]

Skymark takes out 10-year Resilience Insurance LDI at Solis Cronulla

Financial Debt

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Quite surprising that nothing has been said when last Friday, the Australian government debt ticked just over $475 billion.
For the last twelve months, the government on average has been borrowing $6.35 billion each month, so what happens when they hit the debt ceiling of $500 billion? Will that then bring an end to Australia’s prized membership of the AAA – rated club?
Standard &amp; Poor’s, Moody’s and Fitch have just 9 countries in the AAA club – Australia, Canada, Denmark, Germany, Luxembourg, Norway, Singapore, Sweden and Switzerland. Should our membership be revoked that would mean that borrowing costs would increase overnight, which is not a good sign for the Australian economy. The Australian Taxation Office (ATO) currently estimates that Australian small businesses currently owe $13 billion in unpaid tax debts. Obviously, there is no impact on existing debt although when it comes time to refinance then that would be an entirely different story.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.03.18%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.03.18%20AM.png" alt="">
With the federal government recently weighing into the housing affordability debacle there are two things that I would immediately implement to critique our housing markets.
The ATO has taken over responsibility for being Australia’s biggest property manager so land banking must be the first point of call. It is estimated that Sydney now has well over 100,000 permanently vacant apartments so they should be rented out to ease the rental crisis. Look at the lost revenues the ATO is missing out on with these land banked properties, where the clear majority are owned by overseas investors. Land banking in Australia must be outlawed.
Reverse the ridiculous off-the-plan ratio back to 50 percent from 100 percent to overseas buyers. We are now going into the ninth year of 100 percent and the only clear impact we are seeing is that foreign investors have become a most dominant player. In 2016, Chinese developers acquired almost 40 percent of the Australian residential sites that were offered to the marketplace. All these properties are offered exclusively to Asia and these properties are not available for local buyers. Reducing the ratio back to 50 percent would have a big impact on housing affordability.
 
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.04.36%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.04.36%20AM.png" alt="">
A recent survey by Roy Morgan Research found that approximately 7 per cent of Australian mortgage holders have little or zero equity in their homes in the twelve months to October 2016. That would equate to approximately 300,000 properties across Australia. Western Australia has the highest number with 54,000, followed by South Australia with 27,000, Queensland with 63,000, Melbourne has 50,000, Victoria has 65,000, NSW has 73,000 and Sydney has 33,000. Tasmania came in with 5,000 – these are concerning numbers when you consider the east coast has enjoyed unprecedented capital appreciation.
<a href="https://www.propertyobserver.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.05.32%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/20/Screen%20Shot%202017-02-20%20at%209.05.32%20AM.png" alt="">
Since 2009, Sydney home values have doubled and Melbourne have climbed 85 percent. In 2011, less than 10 percent of investors held multiple investment properties, according to Digital Finance Analytics. This has now grown to 16 percent nationally, and on the east coast multiple investment properties is now approximately 18 percent.
Really makes one wonder, just what data our elected politicians and policy makers are actually looking at or quite possibly, they don’t even understand this data?
The most recent data from CoreLogic shows that the rental yields in Sydney and Melbourne are on the decline. For Sydney, houses yield is 2.8 percent and units are 3.8 percent. In Melbourne, houses are 2.7 percent and units are 4.0 percent. It will be most interesting to see just how low these yields will go with all the new developments entering the market. It is quite clear that investors have been enjoying the unprecedented capital growth over rental yields in Sydney and Melbourne, although this is about to change.
With very few alternate investment opportunities, we don’t at this particular point in time expect to see investors retreating out of the market, although we do expect to see carnage in the CBD markets. This should not come as a great surprise as these markets have introduced thousands and thousands of new apartments, and many suburbs have constructed less than one hundred new apartments.
Whatever the case, if you like watching real estate machinations 2017 will keep you highly entertained.
To add to this, the Commonwealth Bank advised mortgage brokers this week, that from February 13, it will cease accepting refinancing applications for investment home loans. Will the other major lenders then follow suit?
ROBERT SIMEON is a director of <a href="https://www.rwm.com.au/">Richardson Wrench Mosman and Neutral Bay</a> and has been selling residential real estate in Sydney since 1985. 
He has also been writing real estate blog <a href="https://www.rwm.com.au/news/">Virtual Realty News</a> since 2000.
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robertsimeon-hRNTwJyXkQ

The ticking time bomb in our property markets: Robert Simeon

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The Agency have again pushed back their debt repayment with their major funder Macquarie.
Earlier this week The Agency, set up in 2017 by a band of former McGrath agents, updated shareholders that they negotiated a two week extension on their debt repayment to their tier one funder.
It pushed the March 31 payment to April 9.
The Agency have negotiated a further extension, with the repayment date now pushed until after Easter, April 14.
"The Board will provide a further update to the market closer to the conclusion of the extension period", the ASX update advised.
The Agency's share price has dropped 20 per cent since the initial announcement, with shares now trading at ¢4, down from ¢5.
In their first debt payment extension notice, The Agency advised it had been in discussions with other credible debt providers regarding refinancing of its primary bank debt.
All non-commissioned staff at The Agency will see their hours cut, effective mid-April, given the reduced workloads due to the ongoing COVID-19 pandemic. 
 
 
 
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jrobinson-rf4aSBido9

The Agency gets funding extension until after Easter

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GUEST OBSERVER
<h1>The number of Australian's with no savings has increased.</h1>
If you needed A$2,000 in a hurry where would you get it? <a href="https://www.csi.edu.au/financialresilience/" target="_blank">70% of those we surveyed</a> said they would ask friends or family, although almost half said that it’s very or fairly unlikely that their social connections could help.
This is just one of the takeaways from our <a href="https://www.csi.edu.au/financialresilience" target="_blank">new report</a>, funded by NAB, that shows financial resilience is declining in Australia. Large numbers of Australians are struggling to meet expenses, pay bills and manage or recover from financial shocks despite two decades of <a href="https://www.rba.gov.au/chart-pack/au-gdp-growth" target="_blank">GDP growth</a>, <a href="https://theconversation.com/income-inequality-ticks-down-as-the-rich-see-their-incomes-fall-abs-83883" target="_blank">declining income inequality</a> and <a href="https://www.csi.edu.au/financialresilience" target="_blank">increasing financial capability</a>.
And while more adults in Australia are reporting regular social contact, and fewer are reporting needing community or government support, the number of Australians needing support but not receiving it has increased from 3.2% to 5.3%.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/RhNx5/9/" frameborder="0" width="100%" height="400"></iframe>
The problem is especially acute for those on low incomes. A recent <a href="https://www.sprc.unsw.edu.au/research/projects/a-new-healthy-living-minimum-income-standard-for-low-paid-and-unemployed-australians/" target="_blank">report</a> found most low-income households are unable to afford a minimum and healthy standard of living, with their incomes falling short by between A$9 and A$89 a week.
In this week’s <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6530.0Main%20Features72015-16?opendocument&amp;tabname=Summary&amp;prodno=6530.0&amp;issue=2015-16&amp;num=&amp;view=" target="_blank">Household Expenditure Survey</a>, the Australian Bureau of Statistics found that two in every five households are experiencing at least one indicator of financial stress. In households with incomes in the bottom 40%, this ratio increases to one in two.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/TzNNI/1/" frameborder="0" width="100%" height="400"></iframe>
People on the lowest incomes <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6530.0Main%20Features72015-16?opendocument&amp;tabname=Summary&amp;prodno=6530.0&amp;issue=2015-16&amp;num=&amp;view=" target="_blank">are</a>:
<ul>
<li>12 times more likely to be unable to raise A$2,000 in a week for something important</li>
<li>Five times more likely to be unable to pay a utility bill on time</li>
<li>Ten times more likely to be unable to heat their homes than the highest income households.</li>
</ul>
The lowest income households are also more likely to be socially isolated than the highest income group. For example, they were at least ten times more likely to be unable to afford a special meal once a week or a night out once a month.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/US8vA/3/" frameborder="0" width="100%" height="400"></iframe>
As you can see in the above graphic, the proportion of Australian adults who are financially secure has decreased significantly between 2015 and 2016, from 35.7% to 31.2%. One in eight Australians (12.6%) now experience severe or high financial stress, up from 11.1%.
In practical terms financial stress may mean a combination of limited or no savings; difficulties meeting everyday living expenses, managing debts and raising funds in an emergency; no direct access to a bank account; no access to appropriate and affordable credit and/or low levels of social support.
When you dig deeper into the data you see this is not a problem of behaviour or financial literacy. The decline in financial resilience has occurred despite a significant improvement in the proportion of people with moderate to high levels of financial knowledge and behaviour (from 50% to 55%).
This includes a knowledge of, and confidence using, financial products and services. And a willingness to seek financial advice and engage in proactive behaviours like saving, budgeting and paying more than required on debts.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/u21Ej/3/" frameborder="0" width="100%" height="400"></iframe>
This leads to the conclusion that the cause of the decrease in financial resilience is due to a decline in external resources. This means people having enough money to meet living expenses and manage debts, and having access to a bank account, appropriate credit, insurance and being able to access social and community supports when needed.
We can see this by looking at data on savings.
More Australians are saving (up to 60.2% in 2016 from 56.4%). However, as you can see in the chart below, the total amount of savings has declined. Only one in two people had three months or more of income saved (a drop from 51.9% in 2015 to 49.5% in 2016). And people with savings of a month or less increased from 27.3% to 31.6%.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/Xxy7t/5/" frameborder="0" width="100%" height="400"></iframe>
More Australians are budgeting, too. With 51.6% following a budget in the latest survey as compared to 49.1% in 2015.
The data also shows us that an inability to access appropriate financial products and services affects a large number of Australians. This was mainly driven by increases in the number of people who only had indirect access to a bank account (from 1.2% in 2015 to 2.7% in 2016) and increases in the number of people who had no access to appropriate credit (20.2% in 2015 compared to 25.6% in 2016).
Appropriate and affordable credit is important to assist people who cannot draw on savings when they experience financial shocks, such as the sudden need to replace a washing machine or fridge, or to fix a car needed to get to work.
<iframe style="border: none;" src="https://datawrapper.dwcdn.net/rJeuR/2/" frameborder="0" width="100%" height="400"></iframe>
As we can see, stories of economic growth and declining income inequality aren’t capturing the whole picture. It is important that we don’t overlook the large number of people and households in Australia who are experiencing high levels of financial stress, who are struggling to pay the bills and meet basic living expenses.
Our research shows that large numbers of people and households are not prepared, or adequately supported, should a financial shock (such as an increase in interest rates or a recession) materialise.
<img src="https://counter.theconversation.com/content/84053/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">While most people have strong social support; more appropriate, affordable and accessible financial support from the government, communities and financial institutions is required. This is along with appropriate mechanisms to help identify people most at risk and to cross refer where required.
<a href="https://theconversation.com/profiles/kristy-muir-158422" target="_blank">Kristy Muir</a>, Professor of Social Policy / Research Director, Centre for Social Impact, <a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a> and <a href="https://theconversation.com/profiles/axelle-marjolin-161212" target="_blank">Axelle Marjolin</a>, Researcher at the Centre for Social Impact, <a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/income-inequality-may-be-declining-but-financial-vulnerability-is-increasing-84053" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Income inequality may be declining but financial vulnerability is increasing

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The aggregate household debt-to-income ratio has increased further in recent years, rising from already high levels according to RBA’s Financial Stability Review 2017.
This has raised concerns about the household sector’s resilience to unexpected declines in income or asset prices.
Debt-to-income ratios vary substantially across households; roughly 30 per cent of households owe no debt, while some other households have debt-to-income ratios that are well above the average.
One important issue for financial stability is the number and characteristics of highly indebted households.
These households are most likely to have difficulty repaying debt and sustaining consumption if their circumstances change.
If the number of highly indebted households is large, their response to adverse income shocks could amplify and propagate an economic downturn, declines in housing prices and losses at financial institutions.
This article outlines some of the characteristics of highly indebted households.
Household-level information on the distribution of debt, income and wealth is available in the Household, Income and Labour Dynamics in Australia (HILDA) Survey, which collects data on owner-occupier mortgage debt every year and provides a detailed breakdown of total household debt every four years (most recently in 2014).
These data indicate that the share of households with very high debt-to-income ratios was little changed between 2006 and 2014 (Graph C1).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20C1.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/2017/04/19/Graph%20C1.jpg" alt="">
In contrast, the proportion of households with more moderate debt-to- income ratios increased steadily, while the share of less indebted households declined.
However, because the latest HILDA data on total debt are for 2014, it is not possible to discern whether these trends have continued more recently.
The aggregate ratio of debt to income was overall little changed between 2006 and 2014, but has since risen.
There are several ways to classify household indebtedness.
The approach used here is to classify ‘highly indebted’ households as those with debt-to-income ratios in the top 10 per cent of indebted households in a given survey year.
Over the 10 years to 2014, most households in this group had a debt-to-income ratio above 550 per cent and as a group these households accounted for around 35–40 per cent of total household debt.
While the median debt-to-income ratio of the top 10 per cent of indebted households increased sharply from around 600 per cent to over 750 per cent between 2002 and 2006, it was little changed between 2006 and 2014.
Highly indebted households steadily became more leveraged between 2002 and 2014, with the median debt-to-asset ratio of these households rising from around 50 per cent to just under 60 per cent.
The type of debt owed by highly indebted households was different to that for less indebted households.
Less indebted households mostly had owner-occupier housing debt, while highly indebted households owed a rising share of ‘other’ property debt, most of which was investor housing debt (Graph C2).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20C2.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/2017/04/19/Graph%20C2.jpg" alt="">
Between 2002 and 2014, the average share of highly indebted households’ total debt comprised of ‘other’ property debt increased from around 20 per cent to nearly 30 per cent.
The HILDA Survey also includes information on the repayment behaviour of households.
As might be expected, highly indebted households were less likely to be ahead of schedule on both owner-occupier debt and ‘other’ housing debt than less indebted households (Graph C3).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20C3.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/2017/04/19/Graph%20C3.jpg" alt="">
Part of the reason is that they tended to have newer mortgage debt that had less time to amortise.
Nonetheless, the share of highly indebted households ahead of schedule on their owner-occupier debt rose between 2006 and 2014, which suggests that, like other borrowers, these households took advantage of low interest rates to pay down debt at a faster rate.
The share of highly indebted households ahead of schedule on ‘other’ property debt was lower, and increased only a little between 2006 and 2010.
This is unsurprising given the greater tax incentives to retain debt on rental properties than on owner-occupier properties.
Around one-quarter of highly indebted households were in the bottom two quintiles for income and wealth, which is a higher share than for less indebted households (Graph C4).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20C4.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/2017/04/19/Graph%20C4.jpg" alt="">
Lower-income households tend to devote a higher share of their income to essential living expenses (leaving less income for debt servicing), while households with lower wealth may be less able to sell assets to resolve any difficulties in servicing their debt.
Nonetheless, a relatively small share of the total stock of debt owed by highly indebted households was owed by lower income or lower wealth households.
In 2014, for instance, households in the bottom two income quintiles accounted for only 12 per cent of total debt owed by highly indebted households.
Using HILDA, it is possible to track highly indebted households over time. Households that were highly indebted in a particular year tended to reduce their debt-to-income ratios substantially in subsequent years.
For instance, in 2002 households that were highly indebted had a median debt-to-income ratio of 600 per cent, yet by 2006 the median debt-to-income ratio of these particular households had fallen to below 350 per cent and their debt-to-income ratio had fallen further by 2010 (Graph C5, left panel).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20C5.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/2017/04/19/Graph%20C5.jpg" alt="">
The HILDA Survey also includes questions on financial stress experienced by households over the previous year.
There was a broad-based decline in the share of households experiencing episodes of financial stress between 2001 and 2015 (the time span available in the HILDA Survey).
Nonetheless, households that were highly indebted in a particular year had a greater propensity to experience financial stress.
For instance, households that were highly indebted in 2002 were more likely to experience at least one incidence of financial stress in all other years compared with households that were less indebted in 2002 (Graph C5, right panel).
The result also holds true for other cohorts.
This suggests that a greater share of highly indebted households face financial difficulties and are more likely to be vulnerable to events that affect their ability to repay their debt, such as income declines or increases in interest rates.
Overall, these data highlight that highly indebted households can be more vulnerable to negative economic shocks and pose risks to financial stability.
In particular, highly indebted households are less likely to be ahead of schedule on their mortgage repayments and they are more likely to experience financial stress, hence could be more vulnerable to adverse macroeconomic shocks.
The consequent effects of this stress on the broader economy may be exacerbated by the disproportionately large share of investor housing debt owed by highly indebted households.
Heightened investor demand can contribute to the amplification of the cycles in borrowing and housing prices, particularly when this investment is highly leveraged.
Nonetheless, HILDA data also show that much of the debt held by highly indebted households is owed by households with high income and wealth, who are typically better placed to service larger amounts of debt.
Find the RBA's latest Financial Stability Review 2017 <a href="https://www.rba.gov.au" target="_blank">here</a>.
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