<p>The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p data-end="345" data-start="110">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.</p>

<p data-end="689" data-start="347">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.</p>

<p data-end="689" data-start="347">Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.</p>


Joel Robinson

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

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.</p>

<p>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.</p>

<p>“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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.</p>

<p>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.</p>

<p><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" /></p>

<p>“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.</p>

<p>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.</p>

<p>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.</p>

<p>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>.</p>

<p><em>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></em></p>


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

<p><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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.”</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>


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

<p>Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;</p>

<p>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;</p>

<p>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;</p>

<p>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;</p>

<p>Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;</p>

<p>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;</p>

<p>“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;</p>

<p>“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."</p>

<p>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;</p>

<p>"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;</p>


Bottega House secures landmark riverfront site in St Lucia 

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" dir="auto">
<section data-scroll-anchor="false" data-testid="conversation-turn-2" data-turn="assistant" data-turn-id="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" data-turn-id-container="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" dir="auto">
<p data-end="157" data-start="0">The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.</p>

<p data-end="459" data-start="159"><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.</p>

<p data-end="459" data-start="159">[smartcode_project:default project_id=112661 project_image_fid=359603]</p>

<p data-end="651" data-start="461"><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.</p>

<p data-end="950" data-start="653">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.</p>

<p data-end="1081" data-start="952">“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.</p>

<p data-end="1081" data-start="952">[smartcode_project:default project_id=112661 project_image_fid=355935]</p>

<p data-end="1307" data-start="1083">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.</p>

<p data-end="1522" data-start="1309">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.</p>

<p data-end="1522" data-start="1309">[smartcode_project:default project_id=112661 project_image_fid=361052]</p>

<p data-end="1714" data-start="1524">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.</p>

<p data-end="1945" data-start="1716">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.</p>

<p data-end="1945" data-start="1716">[smartcode_project:default project_id=112661 project_image_fid=359607]</p>

<p data-end="2220" data-is-last-node="" data-is-only-node="" data-start="1947">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.</p>
</section>
</section>

<p>[smartcode_project_cta:default project_id=112661]</p>


SIERA kicks off construction at Northcliffe tower Exhale

House Prices

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<p class="caption">GUEST OBSERVER</p>
<div class="WordSection1">
<p>As expected the RBA left interest rates on hold at 1.5 percent following its March meeting, for the seventh month in a row.</p>
<p>Apart from removing references to soon to be released economic forecasts and the December quarter CPI data and adding in some comments relating to December quarter GDP growth there was hardly any change in the post meeting Statement.</p>
<p>The RBA remains more confident regarding global growth, sees Australian economic growth as okay, regards the labour market as being mixed, sees a gradual rise in underlying inflation and continues to see conditions in the housing market as varying considerably across the country.</p>
<p>As a result it remains comfortably on hold regarding interest rates. As noted last week we now expect the RBA to leave rates on hold for the rest of the year. Another rate cut is still possible but it would require another leg down in underlying inflation. That said if the RBA is to do anything on rates this year a cut is more likely than a hike. A rate hike is unlikely until later next year.</p>
<p>While a hotting up in expectations for US rate hikes this year from three hikes to four starting next week has led some to speculate that this may bring forward RBA rate hikes it is noteworthy that the US economy is further into a growth recovery cycle than Australia as evidence by a much tighter labour market and rising wages growth. And since the Global Financial Crisis RBA interest rate moves have diverged from those in the US - with the RBA hiking in 2009 and 2010 when the Fed was on hold and the RBA cutting rates last year when the Fed had commenced a tightening cycle. So just because the Fed hikes does not mean the RBA follows.</p>
<p>One area where the RBA may be signalling something a bit more interesting though is in relation to the housing market where in the February post meeting Statement it noted that “supervisory measure have strengthened lending standards” to now saying that “supervisory measures have contributed to <strong><em>some</em> </strong>strengthening of lending standards” which suggests that the RBA thinks a further tightening in lending standards in relation to lending for housing may be required. Its possibly a sign that more macro prudential measures to slow property market investment may be on the way.</p>
<p>This could take the form of lowering the threshold for banks’ growing total lending to property investors to say 7 percent year on year from 10 percent currently. The RBA’s comments around lending standards are also consistent with recently expressed concerns by the RBA regarding household debt.</p>
<p><em><span><a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a></span> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.</em></p>
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soliver-smf6LQXgW9

RBA possibly signalling that macro prudential controls could do more to slow house prices: Shane Oliver

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<p>I'm not yet clear whether there has been a revision to the Residex house price index methodology.</p>
<div>But, for what it's worth, here are the latest median prices, which have now been disclosed.</div>
<p>The Sydney median house price hit a new high of $1,117,500 in December 2016.<br><br>The Sydney median unit price increased to a new high of $725,500.</p>
<p>Click to enlarge</p>
<div class="separator"><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/2017/02/10/RESI1.jpg" alt=""></div>
<p><br>The median unit price rose by 7.4 percent in 2016, while the median house price increased by 7.1 percent.</p>
<div>One of the metrics I've been tracking has been the change in Sydney unit prices when priced in Chinese yuan terms. </div>
<div> </div>
<div>As you can see in the chart below, Sydney unit prices have increased by only 15 percent since this cycle began for offshore Chinese buyers. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/10/RESI2.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><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/2017/02/10/RESI2.jpg" alt=""></div>
<p> </p>
<div>Rising prices have therefore not been much of a deterrent for Chinese buyers.</div>
<div> </div>
<div>However, regulatory measures have been.</div>
<div> </div>
<div>Upon discussion this week with developers in Brisbane, it's clear that activity from China has, if not halted, slowed up dramatically since last year. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Rates on hold</span></strong></div>
<div> </div>
<div>In other news, there were few surprises in the Reserve Bank's Monetary Policy Decision, whereby the official cash rate was left in hold at 1.50 per cent.</div>
<div> </div>
<div>The RBA expects reasonable growth in the economy in the December quarter, and expects growth to remain at around 3 per cent over the next couple of years. </div>
<div> </div>
<div>The real cash rate now sits just below zero.</div>
<div> </div>
<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/02/10/REAL%20CASH%20RATE.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><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/2017/02/10/REAL%20CASH%20RATE.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator">
<em>PETE WARGENT is the co-founder of </em><a href="https://allenwargent.com/"><span class="s2"><em>AllenWargent</em></span></a><em> property buyers (London, Sydney) and a best-selling author and </em><a href="https://petewargent.blogspot.com/"><span class="s2"><em>blogger</em></span></a><em>. </em>
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pwargent-M4siyDbqQY

Sydney median prices rose in 2016: Pete Wargent

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<p>GUEST OBSERVER</p>
<p>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.<br> <br>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.</p>
<p>Other cities are far more moderate although Hobart is looking stronger with prices up 1.4 percent/mom/7.8 percent/yoy.</p>
<p><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></p>
<p><img src="https://www.urban.com.au/images/2017/02/01/Screen%20Shot%202017-02-01%20at%201.15.27%20PM.png" alt=""></p>
<p> </p>
<p>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.<br> <br>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).</p>
<p>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.<br> <br>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.<br><br>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.</p>
<p>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.</p>
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Continuing strength in Australian house prices: Shane Oliver

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<p>GUEST OBSERVER</p>
<p>Here are the six standout charts over the past week covering home prices, Australian All Ordinaries Accumulation index, business investment, planned business investment, Nymex oil price and US 10-year bond yields.</p>
<p><a href="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.06.56%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.06.56%20PM.png" alt="" width="760" height="500"></p>
<p><a href="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.07.06%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.07.06%20PM.png" alt="" width="654" height="214"></p>
<p><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></p>
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jchancellor-FAypfDUnLy

The six standout charts for this week: CommSec's Savanth Sebastian

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<div class="column">GUEST OBSERVER </div>
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<div class="column">If you just looked at the top level results, there wasn’t a lot of good news in the business investment report.</div>
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<div class="column">Spending recorded a sizable quarterly fall, expectations of future investment are down over 14 percent compared with a year ago and the weakness was across all the states and territories bar Victoria and Queensland.</div>
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<div class="column">But this is really backward looking, categorising an environment that included the lead up to the Federal Election and Brexit – hardly an environment that would see businesses lift investment plans.</div>
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<br>However the main good news or rather glimmer of hope was the lift in expected investment plans compared with last quarter. The fourth estimate for 2016/17 is $106.9 billion, up 1.7 per cent on the third estimate (June quarter). In addition investment plans have lifted substantially in the past six months, up by 17 percent.<br><p>Encouragingly the lift in investment plans over the last couple of quarters, may be a sign of a shift in momentum by the business sector, but it is too early to tell. Certainly the lift in business conditions in recent months may be supportive of a lift in investment plans – especially in light of the surge in commodity prices and improvement in the global economy. No doubt the rebalancing across the economy is also being supported by the slide in the Australian dollar – an outcome that should garner further traction in coming quarters. But as we have seen in the past, business may plan for future investment but then mothball projects if the economic landscape doesn’t improve.</p>
<p><a href="/images/2016/12/02/Screen%20Shot%202016-12-02%20at%201.22.20%20PM.png" target="_blank">Click to enlarge</a></p>
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<div class="column">Business spending looks like continuing to be a weight on Australia’s economic growth performance in the medium term. The Reserve Bank could cut rates again, but it is far from certain that this would have a measurable impact in further lifting business spending. The Reserve Bank is more forward- looking and is likely to maintain its neutral bias on a more upbeat medium term growth outlook.</div>
<div class="column"> </div>
<div class="column">It may be no surprise to see that home prices continue to lift across most capital cities. But what was clearly surprising was the slide in apartment prices across the nation, in particular the outsized 3.2 per cent fall in Melbourne apartment prices. Over the last year there has been a lot of discussion on the anticipated lift in housing supply, with particular concern on inner city Melbourne and Brisbane. And it may just be that this is the first sign of the lift in apartments coming on stream and curtailing price growth.</div>
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<div class="column">While the housing market is more mixed across the nation, it was encouraging to see some of the resource states seeing a decent lift in prices over November. And the lift in commodity prices may suggest that the mining towns may have come through the worst of the downturn.<br><p>  Overall policymakers will keep a close eye on the housing sector the early part of 2017, and will prefer to see more balanced house price growth across the nation. And in particular a lift in regional house prices would be a positive outcome. Annual growth in home prices across regional centres was just 1.4 per cent over the past 12 months. </p>
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<p>What do the figures show?</p>
<p>Private business investment</p>
<p>Overall: Business investment (spending on buildings and equipment) fell by 4 per cent in the September quarter after falling by 5.2 per cent in the June quarter. Spending on buildings fell by 5.7 per cent in the quarter while spending on equipment fell by 1.9 per cent. Investment is down 13.7 per cent over the year with buildings down by 24.3 per cent while equipment was up by 4.6 per cent.</p>
<p>Sectors: Mining investment fell by 7.2 per cent in the September quarter (ninth straight decline), while manufacturing spending fell by 4.9 per cent, spending by “other selected industries” fell by 1.9 per cent.</p>
<p>States: In seasonally adjusted terms investment fell in six of the eight states and territories in the September quarter. Investment fell the most in Western Australia (down 11.4 per cent), followed by Northern Territory (down 10 per cent), the ACT (down 8.1 per cent), South Australia (down 4.8 per cent), NSW (down 3.5 per cent), and Tasmania (down 0.1 per cent). The only rise was in Victoria (up 3.3 per cent) followed by Queensland (up 2.7 per cent).</p>
<p>Prices: The overall deflator for investment goods fell by 0.3 per cent in the September quarter after falling by 0.5 per cent in the June. The cost of buildings and structures rose by 0.2 per cent while the cost of equipment fell by 0.8 per cent. Over the year, the cost of investment goods fell by 0.5 per cent – the largest fall 41⁄2 years. The cost of buildings rose by 0.9 per cent while the cost of investment equipment fell by 3 per cent.</p>
<p>Forecasts: The fourth estimate for investment in 2015/16 is $106.9 billion, up 1.7 per cent on the third estimate but down 14.3 per cent over the year. Over the last six months, investment expectations have lifted by 17.1 percent.</p>
<p>Home prices</p>
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<p>The CoreLogic Home Value Index of capital city home prices rose by 0.2 per cent in November and was up 9.3 per cent over the year.</p>
In regional Australia, house prices fell by 0.2 per cent in October and were just 1.4 per cent higher than a year ago. (regional prices cover just houses and data is up to the end of October).</div>
<div class="column">
<br>In capital cities, house prices rose by 0.2 per cent in November while apartment prices fell by 0.1 per cent. House prices were up 9.6 per cent on a year ago and apartments were up by 7.2 per cent.</div>
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<br>The average Australian capital city house price (median price based on settled sales over quarter) was $645,000 and the average unit price was $540,000.</div>
<div class="column"> </div>
<div class="column">Dwelling prices rose in six of the eight capital cities in November: Darwin (up 3.7 per cent), followed by Adelaide (up 2.9 per cent), Hobart (up 0.9 per cent), Sydney (up 0.8 per cent), Perth (up 0.6 per cent), and Brisbane (up 0.4 per cent). Prices fell only in Melbourne (down 1.5 per cent). Dwelling prices in Canberra were unchanged.</div>
<div class="column"> </div>
<div class="column">Home prices were higher than a year ago in seven of the eight capital cities. Prices rose most in Sydney (up 13.1 per cent); followed by Melbourne (up 11.3 per cent), Hobart (up 8.5 per cent); Canberra (up 8.4 per cent); Adelaide (up 4.7 per cent), Brisbane (up 3.9 per cent) and Darwin (up 1.1 per cent). Prices fell in Perth (down by 3.4 per cent).<br><p>Total returns on capital city dwellings in the year to November rose by 13.1 per cent with houses up 13.3 per cent on a year earlier and units up 11.8 per cent.</p>
<p>Performance of Manufacturing</p>
The Performance of Manufacturing index rose by 3.3 points to 54.2 in November. A reading above 50.0 indicates that the sector is expanding. The index had been above 50 for 13 months up until August 2016 – the longest period of expansion since September 2006.<br><p>AIG notes “The expansionary conditions were broad-based, with six of the seven sub-indexes in the Australian PMI indicating expansion in November. The strong lift in new orders (59.5 points) together with solid growth in sales (53.5 points) is promising.”</p>
<p>What is the importance of the economic data?</p>
<p>“Private New Capital Expenditure and Expected Expenditure” is released quarterly by the Bureau of Statistics. The figures show both actual and expected spending by businesses on tangible assets such as new buildings, machinery and office equipment. The figures are obtained after sampling 8,000 private business units.</p>
<p>The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.</p>
<p>The Australian Industry Group compiles the Performance of Manufacturing Index (PMI) each month. The Australian PMI is the Australian equivalent of the US ISM manufacturing gauge. The PMI is one of the timeliest economic indicators released in Australia. The PMI is useful not just in showing how the manufacturing sector is performing but in providing some sense about where it is heading. The key ‘forward looking’ components are orders and employment.</p>
<p>What are the implications for interest rates and investors?</p>
</div>
</div>
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<div class="column">The great unwinding of mining investment continues although the lift in commodity prices may result in more of a soft landing in coming quarters.</div>
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<div class="column">The Chinese economic data remains encouraging, showing that the transition from the industrial sector to household sector remains on track. The manufacturing sector is expanding, while the services sector is clearly the driver taking up any slack.</div>
<div class="column"> </div>
<div class="column">The latest Australian manufacturing data is encouraging, suggesting that the current levels of interest rates and the Australian dollar are working in favour of domestic producers.</div>
<div class="column"> </div>
<div class="column">The Reserve Bank has regularly noted that housing supply will lift over coming years as work is completed on the bevy of new homes – especially apartments. The Reserve Bank looks to be comfortably on the interest rate sidelines over the coming year. </div>
<div class="column"> </div>
<div class="column"><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></div>
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Subdued business investment, healthy home prices: CommSec's Savanth Sebastian

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<p><span>GUEST OBSERVER</span></p>
<p><span>The revised Metropolitan Strategy for Sydney along with the six District Plans contains a 10 percent levy proposal on new housing to fund affordable housing and this could increase the cost of all new housing. </span></p>
<p><span>While there is a lot of good work in the long awaited District Plans for Sydney there is an ominous proposal </span><span>to add yet another levy onto new housing</span><span>. </span></p>
<p><span>The plans use a </span><span>false logic that by requiring developers to provide up to 10 percent of new housing as affordable this will help with </span><span>Sydney’s rapidly escalating house prices. Clearly the cost of giving away 10 percent of new homes will have to be </span><span>distributed a</span><span>cross the other 90 percent of new homes therefore forcing house prices up.</span></p>
<p><span>The Urban Taskforce has presented a better way to create even more affordable housing by allowing </span><span>new projects an increased floor space of 20 percent provided it is for affordable housing. We estimate that this </span><span>could provide 40,000 new affordable homes over the next 10 years.</span></p>
<p><span>The Greater Sydney Commission fact sheet is now targeting 189,100 new homes over 5 years which </span><span>requires an average of 37,820 new homes a year. The highest number of new homes in recent years has been 30,000 last financial year so the most important task the Greater Sydney Commission has is to </span><span>increase housing supply but by adding a new tax the opposite is likely to occur.</span></p>
<p><span>A Greater Sydney Commission Fact Sheet does suggest that the levy would be in areas where some floor space uplift would compensate for the levy but the approach to give away affordable homes under SEPP 70 rather than providing them as low cost rental for ten years as indicated in the Affordable Rental Housing SEPP will certainly impact of the feasibility of future housing development.</span></p>
<p><span>Sydney needs a plan to increase housing supply dramatically and to provide large numbers of affordable </span><span>homes. The Urban Taskforce approach achieves both of these aims.</span><span><br></span></p>
<p><span>The District Plans seem to be fairly general documents with little data on heights or density. There are </span><span>broad jobs and housing targets but the real definition of built form would appear to be delegated to the development of Local Environmental Plans by councils. This could leave certainty in the planning system on hold for a few years particularly as elections for new amalgamated councils are a year off. The new data in the draft District Plans is likely to generate many planning proposals that want to vary existing controls.</span></p>
<p><span>We have a concern that the definitions of District and Strategic Centres now do not include residential accommodation. The Urban Taskforce supports mixed-use urban centres that are activated all the time </span>rather than only being 9 to 5 work environments. With so much focus on providing transport infrastructure to major centres it is important that this investment supports a bustling 24/7 mixed use environment.</p>
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<p><span>The package of documents does not seem to address the issue of Value Capture that was recently raised by the Federal Government to help fund new infrastructure and this could become another tax on the cost of new homes.</span></p>
<p><span>The Urban Taskforce is keen to work with the Greater Sydney Commission to ensure housing supply is maximised and that quality mixed use urban centres can be achieved.</span></p>
<p><span><em>Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.</em></span></p>
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Proposed levies in Metro Sydney Plan could increase housing costs: Chris Johnson

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<p>Mullewa is the cheapest suburb to purchase a house across Australia, according to Investar’s latest market report.</p>
<p>The property investment firm states that the median price for a house in Mullewa is $60,000.</p>
<p>Mullewa is a town in the Mid West region of Western Australia, 450 kilometres north of Perth and 98 kilometres east-northeast of Geraldton.</p>
<p>It is the gateway to Wildflower country.</p>
<p>Its affordable pricing is followed by Norseman in WA at $65,000 and Andamooka at $75,000 in South Australia.</p>
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
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<p>Suburb</p>
</td>
<td valign="top" width="85">
<p>State</p>
</td>
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<p>Dwelling type</p>
</td>
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<p>Bedrooms</p>
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<p>Median listing price</p>
</td>
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<p>Mullewa</p>
</td>
<td valign="top" width="85">
<p>WA</p>
</td>
<td valign="top" width="85">
<p>House</p>
</td>
<td valign="top" width="85">
<p>3</p>
</td>
<td valign="top" width="85">
<p>$60,000</p>
</td>
</tr>
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<td valign="top" width="85">
<p>Norseman</p>
</td>
<td valign="top" width="85">
<p>WA</p>
</td>
<td valign="top" width="85">
<p>House</p>
</td>
<td valign="top" width="85">
<p>3</p>
</td>
<td valign="top" width="85">
<p>$65,000</p>
</td>
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<p>Andamooka</p>
</td>
<td valign="top" width="85">
<p>SA</p>
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<td valign="top" width="85">
<p>House</p>
</td>
<td valign="top" width="85">
<p>1</p>
</td>
<td valign="top" width="85">
<p>$75,000</p>
</td>
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<p>Zeehan</p>
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<td valign="top" width="85">
<p>TAS</p>
</td>
<td valign="top" width="85">
<p>House</p>
</td>
<td valign="top" width="85">
<p>3</p>
</td>
<td valign="top" width="85">
<p>$78,500</p>
</td>
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<p>Mullewa has a four bedroom home at <a href="https://www.realestate.com.au/property-house-wa-mullewa-120578481" target="_blank">68 Jose St</a> (above) that is for sale for $65,000. It last sold at $69,000 in 2006.</p>
<p>Another example would be a three bedroom home at <a href="https://www.realestate.com.au/property-house-wa-mullewa-109081231" target="_blank">8 Main Road</a> (below) that is for sale from $65,000.</p>
<p><span>The fibro residence, on 849 sqm, is </span><span>tenanted at $185 per week, an almost 15 percent gross rental yield.</span></p>
<p><img src="/images/2016/10/22/8%20Main%20Road.jpg" alt=""></p>
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Australia's cheapest houses - Mullewa's $60,000 offerings: Investar

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<p>Australia's regional areas under now under the spotlight as value growth increases and capital city markets become less affordable.</p>
<p>CoreLogic observations confirmed that with most major regional areas now seeing an increase in home values, demand for housing in the regions is picking up and follows a number of years of being in the doldrums.</p>
<p>As an example, markets such as June quarter top performer, Illawarra, recently recorded its largest annual increase in values for houses at 14.3 percent, and units at 13.9 percent.</p>
<p>The CoreLogic Regional Market Report provided analysis on the performance of Australia’s largest council areas for:</p>
<ul>
<li>NSW: Newcastle &amp; Lake Macquarie, Illawarra, Richmond-Tweed;</li>
<li>VIC: <a href="/expert-insights/buying/median-house-value-rising-faster-than-unit-values-in-geelong-region-corelogic">Geelong</a>, Latrobe-Gippsland;</li>
<li>QLD: Gold Coast, Sunshine Coast, Townsville, Wide Bay, Cairns;</li>
<li>WA: Bunbury.</li>
</ul>
<p>While the Illawarra region recorded the largest annual increase in values for both houses and units, CoreLogic research analyst Cameron Kusher said, “given that the Illawarra is close to Sydney, the result for the regional is likely to be contributing to its strength with some buyers priced out of the Sydney market now looking to this region.”</p>
<p>In contrast, the only regional market to record a fall in values, was Townsville where houses dropped by 4.5 per cent. Consistent with the Townsville result for houses, unit values in the city dropped by -3.7 percent. Unit values were also lower across the regions of Wide Bay at -1.2 percent, and Bunbury at -6.0 per cent.</p>
<p>In NSW, Newcastle and Lake Macquarie, and the Richmond-Tweed regions, saw home values rise by less than 10 per cent compared to stronger levels of growth in the Illawarra region. Transaction activity was lower over the year in two out of the three regions, with Richmond–Tweed showing a year-on-year growth in sales activity.</p>
<p>In Queensland, the two leading lifestyle markets of the Gold Coast and Sunshine Coast were the strongest performing regions across the state over the period, with an increase for both house and unit values.</p>
<p>Transaction activity results were mixed with sales volumes across the Gold Coast remaining steady over the year. However, these were well above the five-year average.</p>
<p>Both the Gold Coast and Sunshine Coast are recording annual rates of growth similar to that in Brisbane indicating rising demand for homes across the South-East Queensland region.</p>
<p>Across the Sunshine Coast, volumes fell over the 12 month period. Townsville, Wide Bay and Cairns followed with median values remaining relatively flat, or falling.</p>
<p>In Victoria, sales activity in Geelong and Latrobe–Gippsland dropped by 2 percent over the year; however median values and rental rates increased over the year. Geelong recorded the strongest performance, with house values rising by 5.6 percent and unit values up 3.4 percent, while across the rental market, advertised rental rates were up 3.0 percent and 3.6 percent respectively.</p>
<p>In Western Australia, the Bunbury region recorded mixed performance over the year. House values rose (+3.0 percent), while unit values fell (-6.0 percent).</p>
<p>CoreLogic research analyst Cameron Kusher said, “Overall, market conditions in Bunbury remained fairly weak over the period and is largely demonstrated by the fact that 14.3 percent fewer homes sold over the year to June 2016 when compared to June 2015.”</p>
<p>“Our latest data points to an increase of value growth in regional markets, particularly those which are located adjacent to capital cities. As people are priced out of certain capital cities, buyers now appear to be looking to these adjacent regions.”</p>
<p>“Home owners in Sydney and Melbourne have seen a substantial rise in housing equity over recent years. Subsequently we are seeing some evidence that these buyers are starting to look for holiday and investment properties in certain regional markets which is also providing an impetus for some of the value growth we are currently seeing,” he said.</p>
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CoreLogic sees house price growth in the regions

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<p><strong> </strong>National dwelling prices rose 1.1 percent in August with home value rises in Sydney and Melbourne leading the nation according to the latest Home value Index from CoreLogic.</p>
<p>Sydney dwelling values increased 1.4 percent month to month with Melbourne dwelling values up 1.5 percent.</p>
<p>Tim Lawless, CoreLogic head of research, said despite a strong month-on-month reading, the pace of annual capital gains has trended lower compared with the 2015 peak in growth conditions, when capital city dwelling values were rising at 11.1 percent per annum.</p>
<p>“The most recent twelve month period has seen dwelling values rise by a lower 7 percent per annum," he said.</p>
<p>"However, the rate of annual growth in Sydney has virtually halved from a recent 18.4 percent peak to the current annual rate of 9.4 percent.</p>
<p>"Similarly, in Melbourne the annual growth trend peaked at 14.2 percent per annum last year and has since tracked back to 9.2 percent per annum over the most recent twelve month period.” </p>
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<p><span>“For </span><span>the remaining capital cities, each city continued to show a modest trend in value appreciation.</span></p>
<p><span>"Signs are emerging that the pace of capital gains may be accelerating across Canberra and Hobart, with dwelling values up 7.6 percent and 6.5 percent respectively over the past twelve months. </span></p>
<p><span>"One year ago, </span><span>Canberra’s </span><span>annual growth rate was negative, at -0.9 percent, while in Hobart, values increased by only 1.5 percent.</span><span><br></span></p>
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<p>“While the annual growth trend is now lower than it was one year ago, the rate of capital gains remain well above other benchmark measures such as inflation, income growth and rents, which is pushing already stretched affordability ratios to new record highs.</p>
<p>He said the August Home Value Index shows a substantial difference between the performance of house and unit values and at a combined capital’s level, house values rose by 7.2 percent over the past twelve months, compared with a 5.5 percent rise in unit values.</p>
<p>“The trend for house value growth outperforming unit values is apparent across most of the capital cities, particularly in Melbourne and Brisbane, where concerns around inner city unit oversupply are mounting. House values by more than double the rate of units over -10 percent the past year in each of Melbourne, Brisbane, Adelaide and Canberra," he said.</p>
<p>“Looking at housing market performance across the broader value segments over the past 12 months, the most affordable suburbs have recorded the greatest value rises, while the most expensive suburbs have seen a more moderate rate of growth." </p>
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Sydney, Melbourne capital gains drive national rise higher in August 2016: CoreLogic

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<div class="column">CommSec chief economist Craig James believes home prices may wane over the coming year as more new homes are completed in Sydney, Melbourne and Brisbane.</div>
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<div class="column">In his latest research note he says nationally, lower priced properties have been outperforming higher-priced properties for the past five months.</div>
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<div class="column">"The housing market remains generally healthy. The key concern is what happens to prices over the next year as more new homes are completed," he said.</div>
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<p>"The lower quartile of properties by value have shown price increases of 9.8 percent over the past year while the upper quartile of properties by value are up just 6.2 percent.</p>
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<p class="x_Bullets"><span><span>"Over the past two months, prices of free-standing houses have risen by 2.2 per cent while apartment prices have edged up just 0.3 per cent. With a lot of apartments being built across the country, the gap between house and apartment prices is likely to widen.</span></span></p>
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<div class="column">"The CoreLogic Home Value Index of capital city home prices rose by 1.1 percent in August and was up 7.0 percent over the year. Back in July, home prices had grown at the slowest annual rate since September 2013 (6.1 per cent).</div>
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<br>"In regional Australia, house prices fell 0.1 per cent in July and were just 1.4 per cent higher than a year ago. (regional prices cover just houses and data is up to the end of July).</div>
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<div class="column">"In capital cities, house prices rose by 1.3 percent in August while apartment prices rose by 0.3 percent. House prices were up 7.2 percent on a year ago and apartments were up by 5.5 percent. "</div>
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