Developer-builder <a href="https://www.apartments.com.au/developers/dasco-australia">DASCO</a> has pushed beyond the now-standard inclusions of rooftop pools and landscaped podiums at its recently launched new Epping project, Senso.

It has laid out over 4,000 sqm of resident-only amenity in a move designed to compete directly with low-density housing on livability, not just density. The result is a development that supports genuine daily use through purposeful spaces distributed across its five-building, 479-apartment precinct.

[smartcode_project:default project_id=134954 project_image_fid=4396]

Two rooftop pools form the anchor of Senso. One is a 27-metre lap pool adjoining a heated spa, designed for everyday fitness rather than just summer leisure. The second sits on a lower podium, allowing different buildings to share in vertical access and reducing crowding during peak times.

It is the secondary spaces that start to distinguish Senso from other large-scale suburban projects. A rooftop cinema is integrated into a landscaped terrace, offering open-air screenings with natural ventilation and passive cooling.&nbsp;

The inclusion of a “sensory walk”, an elevated boardwalk that threads through the site, suggests a rare investment in non-commercial, non-essential amenity: space for quiet movement that doesn’t double as access or traffic circulation.

[smartcode_project:default project_id=134954 project_image_fid=4402]

The gym and wellness centre, often relegated to a small ground-floor room in many builds, takes on more substance here. Residents have access to a fully equipped gym, as well as outdoor yoga areas and meditative zones that integrate greenery and natural light.&nbsp;

The Club Lounge is similarly designed to support multiple use cases, with a private dining terrace, kitchenette, workspace, and lockable wine storage. These aren’t superficial additions; their scale and spatial allocation indicate serious intent for frequent resident use.

[smartcode_project:default project_id=134954 project_image_fid=4391]

Importantly, Senso’s amenities are embedded within a site that spans more than 10,000 sqm, allowing for better separation between spaces and reduced noise spillover, a critical but often overlooked factor in high-density developments. This spatial generosity also enables multiple alfresco kitchens and communal terraces without compromising individual privacy or usable space.

While many developments make claims about lifestyle, few back it with this level of built infrastructure. Senso’s mix of dedicated fitness, wellness, social and passive green spaces suggests a conscious response to the post-pandemic shift in housing expectations, especially among owner-occupiers.&nbsp;

DASCO is one of several leading developers who have taken out Resilience Insurance's Latent Defects Insurance policy, providing buyers with a 10-year structural and waterproofing warranty, and giving them the ultimate peace of mind.

Senso is scheduled for completion in late 2028.

[smartcode_project_cta:default project_id=134954]

Staff Writer

The outdoor amenities elevating life at Senso, Epping

Following the proposal by the Minns Labor Government to rezone Parramatta Road to create up to 8,000 new homes, prominent developer Ceerose has gone to the NSW Gov to increase the density of its new mixed-use residential building in Leichhardt.

<a href="https://www.apartments.com.au/builders/ceerose">Ceerose</a>, founded by Edward Doueihi nearly three decades ago, has filed plans for 154 apartments above ground-floor retail at 307-315 Parramatta Road, a key corner site near Norton Street, the main high street strip in Leichhardt.

It's an upsize from the previously approved scheme of 63 apartments across a seven-storey building.

<img alt="Ceerose" data-entity-type="file" data-entity-uuid="ba1ae75b-5f08-43fb-b8d5-3de6d9f6ef71" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.39%E2%80%AFAM.png?VersionId=yA3hBBLPH4ev7MsAE0_hieXeqiFqBUb7" />

The project is being advanced through the State Significant Development (SSD) pathway, with concurrent rezoning sought to facilitate the proposal. The 10-storey development would rise over a four-level basement and deliver two retail tenancies, one a larger-format offering and the other a smaller “hole in the wall” space, addressing the Parramatta Road frontage. 21 of the apartments are dedicated as affordable housing.

According to the Urban Design Report by Architecture AND, the scheme includes a podium and tower configuration, with a fine-grain, two-storey parapet street wall that references the traditional shopfront rhythm along the corridor. “An elegant tower form is proposed, combined with a characterful two storey frontage... articulating it as two related buildings, providing consistency with the rhythm and grain of Parramatta Road,” the report notes.

The residential component is split across two slender towers set back from the street edge, a design move aimed at preserving solar access and reducing perceived bulk. This massing strategy also seeks to improve residential amenity by focusing scale toward the quieter northern interface, away from Parramatta Road’s noise and pollution.

<img alt="Ceerose" data-entity-type="file" data-entity-uuid="347f2f8f-5d36-4388-b40a-2e77380b9c19" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.02%E2%80%AFAM.png?VersionId=xvyUE2ujT1lzivXTo.mHBJFF4SmfgLtz" />

Architecture AND has worked with Ceerose on previous Inner West projects, and cites a deep familiarity with the local character. Their design draws heavily on context, heritage, and sunlight access considerations, and engages with the Inner West Council’s “Our Fairer Future” strategic planning framework.

The site spans 2,712 sqm and is located near key intersections with Catherine Street, Hay Street, and Redmond Street. It adjoins a public carpark to the north and is within walking distance of Stanmore and Petersham stations. It is also flagged in state and local planning strategies, including the Parramatta Road Corridor Urban Transformation Strategy, as a suitable candidate for increased density.

Ceerose recently completed The Alex Collective on McEvoy Street in Alexandria, Abbie's Lane in Annandale, and the award-winning Munro House in Elizabeth Bay.

The Parramatta Road corridor is coming to life with the proposed rezoning which is serviced by a significant number of bus, light rail and train routes.

Deicorp is progressing with its $1.8 billion <a href="https://www.apartments.com.au/new-apartments/kings-bay-village-five-dock-53-75-queens-road-five-dock-nsw-2046">Kings Bay Village</a> precinct on Parramatta Road in Five Dock, as is <a href="https://www.apartments.com.au/news/nsw/toga-to-push-on-with-five-dock-mixed-use-masterplan">TOGA further down the street</a>. Those two projects alone will bring nearly 2,000 new homes to Parramatta Road.

Joel Robinson

First look: Ceerose plots mixed-use Leichhardt development on Parramatta Road

North Sydney's landmark 'SBS Building' on Alfred Street is set to be demolished to make way for a new mixed-use residential tower in the booming North Sydney.

Commercial property group FiveX is behind the plans for a <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">39-storey tower</a>, the latest project to advance under the NSW Government’s Housing Delivery Authority pathway.

They are proposing 184 apartments above retail spaces, which will replace the existing 20-storey commercial building. FiveX was set up more than five decades ago by Joshua and Marko Berger. It is currently led by Joshua's son Lesli.&nbsp;

<img alt="First look: Fivex plans 39-storey residential tower at 275 Alfred Street, North Sydney" data-entity-type="file" data-entity-uuid="2efa0980-53fa-4cca-9f9e-9c3c845d4746" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29%20%281%29_0.png?VersionId=y_YyPMq3NQLfYRs84pP4os9UgWiMLp75" />

According to the Architectural Design Report by <a href="https://www.apartments.com.au/architects/fjc-studio">FJC Studio</a>, the slender tower form has been deliberately designed to respect the site's transitional setting at the southern gateway to the North Sydney CBD, where high-rise towers give way to lower-scale residential precincts.

"The slender tower form and articulated podium establish a respectful relationship with nearby heritage and low rise buildings, including the Whaling Road Heritage Conservation Area,” the architecture firm noted, adding that the tower “completes a missing link in the urban fabric” while enhancing the Alfred Street streetscape.

The proposed building will include a mix of one-, two- and three-bedroom apartments, with 15 percent of the gross residential floor area allocated as affordable housing. There is an agreement already in place that those apartments will be managed by Evolve Housing.

The project aligns with broader state housing objectives, including the National Housing Accord target of delivering 1.2 million new homes by 2029. The Scoping Report filed with the State Significant Development Application (SSDA) suggests the site "presents no impediments to rapid delivery,” with construction able to commence within 12 months of receiving consent.

North Sydney has been one of the most popular suburbs in Sydney for new and off the plan apartment development, but hasn't had the supply to keep up with demand, until recently.

AURA by Aqualand was, for a long time, the only off the plan apartment building on the market. That completed last year, and has sold the majority of its 386 luxury apartments. Recently ALAND launched <a href="https://www.apartments.com.au/new-apartments/the-walden-173-179-walker-street-north-sydney-nsw-2060">The Walden</a> on the same street, selling over $100 million within just a few hours of its launch, while developer CASA also launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/the-mclaren-north-sydney-45-mclaren-street-north-sydney-nsw-2060">The McLaren</a>&nbsp;in the same precinct.

First look: Fivex plans 39-storey residential tower in booming North Sydney

Kokoda Property Group has announced the Sydney-based Versatile Construction as the builder for its landmark $1.5 billion <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> precinct.

Construction of the 17,612 sqm site is scheduled to commence in December 2025 and is expected to be delivered in stages from 2028. Once complete, <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> will comprise 212 residences across four architecturally distinct buildings, alongside Brisbane’s first Kimpton Hotel, extensive retail, hospitality, and wellness amenities.

[smartcode_project:default project_id=139896 project_image_fid=295098]

Kokoda Property Group Founder and Managing Director, Mark Stevens, said appointing Versatile Construction marks a significant milestone for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>.

“Partnering with Versatile Construction gives us confidence in delivering a precinct that sets a new benchmark for luxury living, curated experiences and vibrant riverfront activation," Stevens said.

"Together, we will bring the vision for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> to life, creating a destination that residents and visitors will enjoy for generations."

Throughout the construction phase, more than 2,000 jobs will be created, supporting hundreds of local contractors and suppliers.

[smartcode_project:default project_id=139896 project_image_fid=352274]

Marco Fahd, Chairman &amp; CEO at Versatile Group, said the company is looking forward to&nbsp;expanding their footprint in the state, taking on their inaugural project in Brisbane.

"We are proud of the unwavering commitment our team of experts have to quality and certainty in delivery and are excited to work with Kokoda to bring their vision for this unique project to life," Fahd says.

Sales reached $285 million on the launch of <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>, with sales momentum continuing to "exceed all expectations."

Stevens says the overwhelming response from buyers validated the group’s vision for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>.

“The demand for a luxury product in this enclave has been extraordinary, we’ve never seen anything like it before. It reinforces everything we’re doing around quality, design, and creating genuine lifestyle precincts. Buyers are recognising the enduring value of Brisbane’s riverfront and are responding to the opportunity to live within a world-class destination that celebrates both place and lifestyle.”

[smartcode_project_cta:default project_id=139896]

Kokoda appoints builder for $1.5 billion Teneriffe Banks waterfront precinct

Castle Hill’s booming development market is set for another boost, with builder-developer Buildex proposing a new mid-rise apartment building near Castle Towers.

Buildex has submitted plans to The Hills Shire Council for a <a href="https://www.apartments.com.au/new-apartments/197-old-northern-road-castle-hill-nsw-2154">nine-storey building comprising 57 apartments</a> on Old Northern Road. The company acquired two adjoining sites earlier this year, totalling more than 2,683 sqm.

Texco Design has prepared the scheme, which includes five one-bed plus study apartments, 37 two-bedrooms, and 15 three-bedrooms.

Castle Hill has become a hotspot for developers in recent years, undergoing significant transformation driven by the opening of the Hills Showground Precinct to development and the introduction of two metro stations servicing the suburb.

Developers including Deicorp and Kassis Homes have already completed projects, and are progressing future developments, while Meriton, Arada, and Ellipse are currently delivering new projects in the rapidly evolving area.

First look: Buildex plans 57 apartments near Castle Towers

Home Buyers

Sydney developer, Coronation Property is helping to make stepping onto the property ladder a little easier for aspiring home buyers.&nbsp;

Coronation, a local developer of mixed-use developments and masterplanned communities across Sydney, has recently launched their &#39;Own Way&#39; finance scheme, which offers flexible deposit arrangements for aspiring buyers.&nbsp;

The scheme caters to homebuyers wanting to get a foot in the door, but who may be struggling to save for the substantial 10 per cent deposit, with the payment scheme allowing purchasers to secure an apartment with just a one per cent, up front deposit.

[smartcode_project:default project_id=31751 project_image_fid=160999]

After which, buyers can continue to save and pay off the remaining balance of the 10 per cent deposit over a 12-month period.

Further easing the burden for young buyers, the Own Way payment scheme has no impact on eligibility for the NSW Government&rsquo;s First Homeowner Grant and First Home Buyers Assistance Scheme.

The scheme is eligible at Coronation Property&#39;s&nbsp;project, Mason &amp; Main - the group&#39;s precinct-style project west of Sydney in Merrylands.

Les Landerer, a senior executive at Coronation Property, says the scheme was primarily designed to support first home buyers and young families, who are consistently priced out of the housing market.

&ldquo;Coronation Property is committed to helping more purchasers on their personal journey towards buying their first property, because we understand it&rsquo;s one of the most valuable and rewarding investments most people will make in their lifetime,&rdquo; Landerer says.

[smartcode_project:default project_id=31751 project_image_fid=161005]

&ldquo;With the gap between median house and unit values in Sydney increasing, the Own Way scheme allows buyers to enter the local property market at an attainable price point, without having to sacrifice on quality.

&ldquo;We collaborate with the most distinguished architects and interior designers in the industry to develop and build high-quality, high-design residences, crafted especially for the diverse lifestyles of our buyers, and this new scheme is our way of helping people gain affordable entry into Sydney&rsquo;s housing market.&rdquo;

After trialling the incentive with select customers in 2021, Coronation Property noticed strong uptake of the offer, which in turn helped with the decision to expedite the launch.

First home buyer, Soomin Lee, was among the first to take advantage of the Own Way scheme, purchasing a two-bedroom apartment at&nbsp;Mason &amp; Main.

[smartcode_project:default project_id=31751 project_image_fid=161001]

&ldquo;I feel like we&rsquo;re always told to buy house and land, but the 10% upfront deposit wasn&rsquo;t feasible for me,&rdquo; Lee said.

&nbsp;&ldquo;By locking in an apartment on a one per cent upfront deposit instead, and then having time to save the remaining portion of the deposit, I was able to get into the property market straight away and have the convenience of being able to pay the remaining balance over a reasonable timeframe.

&ldquo;Without the one per cent incentive I would have had to wait another two to three years to buy a home. It was always in the back of my mind, but I wasn&rsquo;t able to make it a priority,&rdquo; Lee added.

[smartcode_project_cta: project_id=31751]

The scheme caters to homebuyers wanting to get a foot in the door, but who may be struggling to save for the substantial 10 per cent deposit, with the payment scheme allowing purchasers to secure an apartment with just a one per cent, up front deposit.



alisonwarters@gmail.com

Coronation Property launch one per cent home deposit scheme to support homebuyers

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The stage is well and truly set for the return of theatrical home sales in New South Wales, after the state government lifted restrictions on in-person auctions and open-for-inspections this weekend.
Real estate agents are back to selling homes in an environment that maximises their performance and prospective homebuyers have been able to inspect properties more easily.
The Northern Territory lifted restrictions on live auctions and open-for-inspections last weekend, while up to 10 people are allowed to inspect homes in Western Australia.
A return to the usual ways that people can buy, sell and rent property is the best news for the industry since mid-March, but the real benefit will come once we see increased real estate listings.
A big challenge for Australia’s economic recovery will be confidence, and right now, listing volumes are still well down.
Listings are down but buyer search activity is up
Since the weekly low over a month ago, buyer search activity on realestate.com.au has increased by 46 per cent nationally and is now flowing through to buyer enquiry.
Enquiry is now up 24 per cent compared to the same time last year. While the connection between buyer enquiry and transactions is not an exact one, it does show greater intent to purchase than searches alone.
There are many factors driving this uptick including a relatively low number of active COVID-19 cases, a stable banking system, incredible levels of government stimulus, and importantly, the gradual opening of the economy.
Interest in commercial farming surges ahead
Buyer interest in all commercial property types dropped in April with the exception of commercial farming.
Compared to April last year, demand (views per listing) is now up 22 per cent. At the other end of the commercial property spectrum, retail demand dropped 37 per cent and office demand declined 30 per cent.
Interest in commercial farming is likely to be partly driven by COVID-19. Unlike shopping centres and offices, which are experiencing high numbers of closed stores and empty spaces, farms are still operational, and people still need food.
Other factors also playing a role in commercial farming demand include the weak Australian dollar and the drought breaking,. Many buyers are also looking beyond seasonal and commodity cycles when purchasing.
Western Australia is attracting the most interest while South Australia is the only state with a decline in activity. During the drought, some WA commercial farms were recording bumper conditions contrasting what was happening on the eastern seaboard.
Homes are selling faster compared to last year
Interesting data looking at days on site from realestate.com.au outlines just how quickly homes are selling at the moment compared to the same time last year.
Seasonality often impacts how quickly properties sell. For example, selling a home in January generally takes longer than in September, which is also consistent with broader market activity.
Since COVID-19 lockdowns started in mid-March, days on site – the number of days a listing was active on realestate.com.au to the date it was delisted due to being sold – has increased.
However, this increase is not unusual and is typical of what we see in April given the Easter holiday period, as well as Anzac Day.
Encouragingly, days on site in April 2020 were far lower than what they were in April 2019. It is likely that the low number of properties for sale, combined with increasing levels of search and enquiry, are driving this trend.
NERIDA CONISBEE <a href="https://www.realestate.com.au/news/author/nerida-conisbee/" target="_blank">is the chief economist for the REA Group</a>
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nconisbee-4KnoX9XmtH

Listings are down but buyer search activity is up: REA's Nerida Conisbee

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House buyers who purchased in the past three years, particularly in Sydney and Melbourne, are the most worried by recent falls in house prices, according to a recent survey by home loan lender ME bank. 
The survey of 1,500 respondents indicated there may be a flow on to effect consumer spending.
Those who made purchases more than three years ago not as worried about owing more than their property is worth, 27% compared to those who bought property in the past 36 months of whom 62% say they are concerned.
<img src="https://www.urban.com.au/images/2018/12/3/Me%20bank%20worry.JPG" alt="">
Half of the respondents said falling prices made them feel less wealthy, while 73% said they would be more careful with their money in future.
Those who think prices will go up outnumber those who think prices will fall in every states except NSW, demonstrating that the recent turn in prices has had an effect on consumer sentiment.
ME’s head of home loans Andrew Bartolo sai,: “There’s little point worrying about what will happen to prices short-term if you’re intending to live in a property long-term. Same goes for long-term investors.
“Those looking to borrow should ensure they have a strong savings history, a deposit over 20%, and can demonstrate they can keep their levels of expenditure to low levels long-term,” he advised.
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j.ballantyne1990-6AQqhLzZaK

House price movement is worrying recent buyers most: ME bank

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Domain's revised results for the weekend of April 28 and 29 put the Sydney clearance rate at 48.1 per cent.
It was a significant occurrence, the first time below 50 percent on an ordinary auction weekend for many years.
<table style="height: 173px; width: 531px;" border="0"><tbody>
<tr>
<td>Last week revised tally</td>
<td>Saturday 28 April 2018</td>
</tr>
<tr>
<td>City</td>
<td>Sydney</td>
</tr>
<tr>
<td>Clearance rate</td>
<td>48.1%</td>
</tr>
<tr>
<td>Number listed</td>
<td>673</td>
</tr>
<tr>
<td>Number reported auctions</td>
<td>502</td>
</tr>
<tr>
<td>Number sold</td>
<td>301</td>
</tr>
<tr>
<td>Number w/drawn</td>
<td>124</td>
</tr>
<tr>
<td>Total value sold (million)</td>
<td>$261.7</td>
</tr>
<tr>
<td>Auction median houses</td>
<td>$1,307,000</td>
</tr>
<tr>
<td>Auction median units</td>
<td>$905,000</td>
</tr>
</tbody></table>
Cooley Auctions' auctioneer Damien Cooley recently suggested a generally accepted auction clearance rate for a healthy market, where both sellers and buyers have equal bargaining positions, was between 50 per cent and 60 per cent.
The original Saturday night had the clearance rate at 58.1 percent.
<table style="height: 174px; width: 414px;" border="0"><tbody>
<tr>
<td>City</td>
<td>Sydney</td>
</tr>
<tr>
<td>Clearance rate</td>
<td>58.1%</td>
</tr>
<tr>
<td>Number listed</td>
<td>670</td>
</tr>
<tr>
<td>Number reported auctions</td>
<td>378</td>
</tr>
<tr>
<td>Number sold</td>
<td>264</td>
</tr>
<tr>
<td>Number w/drawn</td>
<td>76</td>
</tr>
<tr>
<td>Total value sold (million)</td>
<td>$224.1</td>
</tr>
<tr>
<td>Auction median houses</td>
<td>$1.3 milion</td>
</tr>
<tr>
<td>Auction median units</td>
<td>$905,000</td>
</tr>
</tbody></table>
"Buyers certainly feel like the tides have changed ... but we won't call them buyers' markets unless clearance rates are less than 50 per cent.""Things are changing and the market is not as good as it was, but it's a very fair market," Cooley Auctions' auctioneer Damien Cooley told Fairfax Media recently.
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jchancellor-FAypfDUnLy

Domain put Sydney clearance rate at just 48 percent, i.e. a buyer's market

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<img src="https://counter.theconversation.edu.au/content/67693/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Australian Prudential Regulation Authority (APRA) has moved away from its non-prescriptive “principles based” regulatory approach to a one size fits all explicit guidance but it doesn’t appear to be encouraging lenders to be more prudent. 
The housing market may be getting away from APRA and the Reserve Bank of Australia (RBA). In late 2015, both regulators voiced concerns about the “horribly low” standards of the mortgage lending sector and the risks to financial stability. Even bankers are getting jittery.
There has also been well-publicised problems with brokers originating dodgy mortgages that lenders have not picked up. In its existing guidance (which has not been changed in the latest version), APRA requires lenders to have all sorts of procedures to catch dodgy mortgage applications from brokers including procedures to verify the accuracy and completeness of provided information.
But APRA has not named and shamed the lenders who failed to catch dodgy mortgage applications, not imposed capital sanctions or reprimanded directors and management. It hasn’t required that lenders change their broker process.
What APRA is asking is that banks slug first time buyers even more. In the new rules, home buyers are now required to prove they can service a 7 percent mortgage interest rate on a loan to value ratio of less than 90 percent with less income being taken into account. This is on top of trying to save a deposit that is disappearing every day as house prices boom.
It is going to take a lot more than forgoing a few smashed avocado toasts to make up for the additional burden imposed by APRA.
There are a few important questions raised by APRA’s sudden conversion to pragmatic rather than purely principled regulation.
First, the numbers. Where did the 7 percent come from? APRA doesn’t disclose this, but in an era of almost zero interest rates, it’s big. And maybe in time, when the RBA announces its changes to interest rates, the 7 percent may be changed in-line and economists will begin to bet on whether it will go to 6.5 percent or 7.5 percent. 
In looking at a borrower’s income, APRA notes that it is “prudent practice is to apply discounts of at least 20 percent on most types of non-salary income”. No explanation also on why this particular percent. It’s also not specific on what “most” means.
If banks are indeed lending imprudently surely the banks themselves should suffer. First by naming and shaming, then if necessary, requiring additional capital buffers, thus driving down dividends – a real market based solution.
<h2>APRA is changing the way it regulates</h2>
Throughout the turmoil of the global financial crisis and the regulatory mayhem that followed, APRA held fast to its “principles based” approachto regulation:
"To be principles-based is to give emphasis to the achievement of sound prudential outcomes in setting regulatory requirements and expectations, without necessarily seeking to specify or prescribe the exact manner in which those outcomes must be achieved."
In short, APRA lays out the high-level principles that it will use to supervise the banks and insurance companies that is responsible for, and then will check that those principles are being adhered to. It did not believe in a “one size fits all” approach.
But this week, there appears to have been a back-flip. In a consultation paper for an update to APRA’s guidance on mortgage lending, the regulator has been very specific indeed. It notes:
“Prudent serviceability policies should incorporate a minimum floor assessment interest rate of at least seven percent.” 
This very specific guidance replaces an earlier guidance that was more general. From a regulatory perspective, an important question is why abandon principles-based regulation? If it hasn’t worked in the past, then a rethink of the role and approach of prudential regulation is needed. 
This has happened overseas, where the UK Financial Conduct Authority, while retaining 11 principles that firms should adhere to, has become much more intrusive. Unlike our regulators, the authority has even going so far as to impose massive fines for misconduct. It states:
“We also adopt a markets-focused approach to regulation, both in our work as a competition regulator and more broadly to deliver regulation that works with the market to improve consumer outcomes. Interventions at the market level are an effective and powerful way of tackling and mitigating problems across a large number of firms, which in turn benefits a large number of consumers.”
Rather than APRA slipping in such a major change like this latest one into a consultation paper, it might be appropriate to have a transparent debate about such a potentially significant change in prudential regulation in Australia.
<div class="hover tooltip bottom">Pat McConnell is honorary fellow, Macquarie University Applied Finance Centre, Macquarie University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/pat-mcconnell-13137" target="_blank">here</a>.</div>
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New APRA guidance on lending will hurt home owners when it should be the banks

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The financial literacy of some first home buyers (FHBs) is a matter of concern, according to a recent survey.
According to Mortgage Choice’s annual First Home Buyer Survey, 18.3% of first time buyers didn’t know banks can move rates independently of the central bank.
"It is clear there is more work to be done to help improve the financial literacy of Australians. Anyone planning to get their foot on the property ladder needs to understand the role and power financial institutions have on the rise and fall of interest rates,” said Mortgage Choice chief executive John Flavell.
“Buying property is one of the biggest financial commitments a person will ever make, so future first home buyers need to know exactly what they are getting themselves in for when taking on a mortgage."
The survey also found the majority of potential first time buyers are concerned about rates rising independently of the Reserve Bank, with more than half (57.5%) of Australians surveyed planning to purchase property in the next two years "very concerned" or "somewhat concerned" about lenders moving interest rates independently of decisions made by the central bank.
Many lenders, including the Big Four -- Westpac, CBA, NAB, ANZ -- lifted their variable rates independently of the RBA in October by an average of 18 basis points.
One basis point is one-hundredth of a percentage point.
For your free Property Observer eBook from RAMS, 12 tips for first-time buyers, covering everything you need to know when it comes to purchasing property, click here.
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One in five first home buyers don't know banks can act independently on interest rates: survey 

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Policy should not advantage property investors at the expense of prospective owner-occupier home buyers, according to the Reserve Bank of Australia.
In the submission to the inquiry into Home Ownership, the Reserve bank stated that financial stability considerations would suggest that tax and regulatory frameworks should avoid encouraging over-leveraging into property, whether by owner-occupiers or investors. 
"In considering opportunities for reform, the Bank believes that it is worth bearing in mind that there are both benefits and costs of owner-occupation. 
"The broad policy objective of ensuring that all Australians can access suitable housing at reasonable cost need not translate into an objective that all households should purchase their home early in life, let alone that they should all be able to purchase their first home in their ideal location. 
Home ownership in Australia increased considerably over the past century, but has been stable at around 70 per cent since the 1960s. 
"The increases were concentrated in the periods immediately after the two world wars, particularly World War II (WWII), as a result of significant government assistance including War Service Homes programs."
According to the latest Census, around 68% of Australian households owned their own home in 2011.
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"The general stability in home ownership in Australia over recent decades has masked some marked changes in home ownership among different age groups. 
"In particular, there has been a pronounced decline in home ownership among younger households, particularly in the 25–34 and 35–44 age groups. Home ownership rates have generally been more stable among older households. 
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<img src="/images/2015/09/10/Screen%20Shot%202015-09-10%20at%201.11.04%20PM.png" alt="" width="466" height="402">
 
Factors contributing to lower home ownership rates among younger households include the following.
"An increase in income inequality over recent decades, in part reflecting the simultaneous rise of two-income households with increasing workforce participation by women as well as the rise of single adult households (with or without dependents). 
"This led to increased borrowing capacities for households with high home ownership propensities, which will tend to have advantaged older households over younger ones. Accordingly, the decline in home ownership rates over the past decade or so has been concentrated in the third and fourth income quintiles, while that of the top income quintile has been little changed.
"Financial innovation in the 1990s and the 2000s arguably led to greater relaxation of restrictions on borrowing for higher-income households than for lower-income households. 
"Increased labour market flexibility, accelerated technological change and other factors may have increased employment and income insecurity and so reduced the willingness of some households to take on the long-term financial commitment of owning a home (or the ability to service a loan) and the capability of some to remain in home ownership."
The home ownership rate in most states remains above levels. While all states had home ownership rates between 65 and 75 per cent as at the latest Census, there is still considerable variation across states, with home ownership ranging from a low of around 65 per cent in Queensland to a high of almost 72 per cent in Tasmania and Victoria. 
"The transition to a low-inflation regime, implying lower nominal interest rates, has significantly increased households’ borrowing capacities relative to their current incomes, and therefore their capacity to service debt on owner- occupied housing. 
"Survey evidence suggests that total housing costs of owner-occupiers have not moved much relative to incomes over the past couple of decades. 
"Alongside the other demand drivers, one fundamental determinant of housing demand will be the rate of new household formation, which is in turn dependent on the interaction between population growth and developments in average household size. 
"After relatively stable growth from the early 1990s through to the mid 2000s, Australia’s population growth stepped up significantly owing to higher net immigration and, to a lesser extent, a slightly higher rate of natural increase.
"The composition of population growth can also influence housing demand. Much of the fluctuation in population growth rates over the past decade has been driven by fluctuations in net arrivals of people on student visas."
Recent rule changes have made it easier for students to remain in Australia after graduation, including by becoming permanent residents. 
"Over the shorter term, fluctuations in interest rates can be expected to affect the demand for housing. By reducing the burden of debt repayments relative to income, lower interest rates may ease cash-flow constraints and increase borrowing capacity at the margin. This effect applies both to owner-occupiers and investors. 
"Lower interest rates also encourage households to save less and borrow more in the present, thereby shifting consumption from the future. 
"However, prudent buffers on the minimum interest rates that lending institutions use to calculate allowable mortgage loan sizes imply that this effect might be smaller when interest rates are already low. 
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"The Australian Prudential Regulation Authority (APRA) has recently provided guidance to lenders that the interest rate used in these serviceability tests should be at least 7% (APRA 2014). The Bank estimates that the lower limits on interest rates used in these calculations are probably binding at present, or close to binding. 
"Thus, households that already planned to borrow as much as lenders would permit would not see an increase in borrowing capacity from a decline in interest rates at present. 
The proportion of the housing stock owned by investors looks to have risen over recent decades, offsetting the decline in the prevalence of public housing. 
The investor share is also likely to have risen a little further over the past few years, as investors have accounted for an increasing share of property purchases since 2012.  
"While the incidence of property investment increases with the level of income, the Household, Income and Labour Dynamics in Australia (HILDA) Survey also suggests that most investor households are in the top two income quintiles. 
"These households hold nearly 80 per cent of all investor housing debt, and appear well placed to service their debt: they typically use less than 25 per cent of their income to service their total property debt, and around half are ahead of schedule on all their mortgage repayments.
It would be counterproductive to try to encourage more home ownership by making it easier for marginal buyers to borrow more. Both for this reason and in the interests of financial system stability, the Bank would not support measures that expanded credit supply to households at the expense of prudent mortgage lending standards. 
The Bank believes that there is a case for reviewing negative gearing, but not in isolation. Its interaction with other aspects of the tax system should be taken into account. 
"The ability to deduct legitimate expenses incurred in the course of earning income is an important principle in Australia’s taxation system, and interest payments are no exception to this. To the extent that negative gearing induces landlords to accept a lower rental yield than otherwise (at least while continued capital gains are expected), it may be helpful for housing affordability for tenants. 
"It is worth noting, however, that the interaction of negative gearing with other parts of the taxation system may have the effect of encouraging leveraged investment in property. 
"In particular, the switch in 1999 from calculating CGT at the full marginal rate on the real gain to calculating it as half the taxpayer’s marginal rate on the nominal gain resulted in capital gain-producing assets being more attractive than income-producing assets for some combinations of tax rates, gross returns and inflation. 
"This effect is amplified if the asset can be purchased with leverage, because the interest deductions are calculated at the full marginal rate while the subsequent capital gains are taxed at half the marginal rate. 
"Since property can usually be purchased using higher leverage than other assets that produce capital gains, property is especially affected by this feature of the tax system. 
"Another change in the landscape since 2003 is that superannuation funds are now able to borrow. Some self-managed superannuation funds have taken advantage of this by adding geared property into the fund portfolio, both residential and, in particular, commercial property. 
"The Bank has previously observed that leverage in superannuation funds may increase vulnerabilities in the financial system and therefore supports limiting the scope for leverage in these funds.
"Additional housing supply ought to dampen housing prices, and more probably will reduce the growth rate of housing prices that occurs in response to increases in demand for housing. 
"There is no example in Australia or internationally where supply expansion on its own generated housing price declines of a similar order of magnitude to the increases in prices seen in some Australian cities in recent years; some academic work on this issue suggests that removing supply constraints in a single population centre might not reduce prices significantly (Aura and Davidoff 2008)." 
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Housing Debt Serviceability
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Tax, regulations should avoid encouraging over-leveraging into property: RBA

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The ACT Government has recommitted to its long term plan to abolish conveyance duty paid on homes.
ACT Chief Minister Andrew Barr, in the submission to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership, highlighted taxes as one of the key issues. 
"We consider that competition in demand for housing from investors is an area for further consideration. We note the benefits of investment in terms of increasing supply, which helps overall affordability. However it can also impact on opportunities for first homebuyers to enter the market.
"The ACT Government's role is outlined in the Affordable Housing Action Plan (AHAP), which commenced in 2007. The Plan, now in Phase III, includes 94 objectives aimed at making housing more affordable for all Canberrans. It has been a key contributor in responding to housing demand and providing a welcome economic boost to the Territory.
"Data from the 2011 Census shows that in the ACT, the rate of the home ownership is 60%, with 87,700 of the 145,500 homes either owned or in the process of being purchased. Of the remaining dwellings, there are around 30,250 private rentals and 9,500 public properties."
As shown in the table, the proportion of investment housing relative to owner-occupied housing is 26%.
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<img src="/images/2015/08/19/Screen%20Shot%202015-08-19%20at%203.43.22%20PM.png" alt="">
"The Government has a long term plan to abolish conveyance duty paid on homes. This will make homes more affordable to more Canberrans, by significantly reducing the upfront costs for homebuyers. 
"It will also encourage greater turnover of properties, which leads to a better allocation of housing stock."
 
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