<section data-scroll-anchor="false" data-testid="conversation-turn-48" data-turn="assistant" data-turn-id="request-WEB:55d7c6ac-8e6d-4881-ad49-0ed9bf66d1cc-23" dir="auto">
<p data-end="447" data-start="0">Melbourne’s apartment market entered 2026 with renewed momentum, but the recovery is uneven, policy-driven, and increasingly shaped by constrained supply.</p>

<p data-end="447" data-start="0">According to the RPM Apartments &amp; Townhomes Market Report (April 2026), apartments have begun to outperform detached housing on key metrics,yet that performance is occurring against a backdrop of falling approvals and a tightening development pipeline.</p>

<p data-end="904" data-start="449">At the end of 2025, Melbourne unit values reached a three-year high of $656,500, recording quarterly growth of two per cent. That figure edged ahead of the 1.8 per cent growth recorded in the house market over the same period, marking a notable shift in relative performance. While modest in absolute terms, the outperformance is significant given the sustained dominance of houses through much of the previous cycle.</p>

<p data-end="1420" data-start="968">This shift has been driven in large part by policy. The federal government’s expanded five per cent Deposit Scheme has had a disproportionate impact on apartment demand, particularly in Melbourne where the $950,000 price cap captures a large share of medium- and high-density stock.</p>

<p data-end="1420" data-start="968">As RPM notes, the scheme “heavily favours medium and high-density dwellings,” effectively accelerating demand in the apartment sector.</p>

<p data-end="1822" data-start="1422">The impact is most visible in buyer activity. Victoria recorded more than 43,000 new housing loans in Q4 2025, the highest quarterly volume since mid-2022 and one of the strongest results in over a decade. This lift was broad-based across all buyer types, with first home buyers, owner-occupiers and investors all returning to the market with greater confidence.</p>

<p data-end="2308" data-start="1876">This surge in demand has flowed directly into apartment pricing, particularly in Melbourne’s middle and outer rings. Middle-ring unit values reached approximately $757,500, a four-year high, while outer-ring units climbed to a record $650,000. Quarterly growth of 2.9 per cent and 2.5 per cent respectively significantly outpaced both the inner ring (0.8 per cent) and the broader house market.</p>

<p data-end="966" data-start="906">&nbsp;</p>

<p data-end="966" data-start="906"><img alt="RPM" data-entity-type="file" data-entity-uuid="4628dde5-ad63-4b03-b18e-77d0f750e2aa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.23.32%E2%80%AFAM.png?VersionId=ig6mqc7Oz7UaszRuzULrGtLPUxGf4NJC" /></p>

<p data-end="2353" data-start="2310">&nbsp;</p>

<p data-end="2746" data-start="2355">The divergence between apartments and houses is also being shaped by affordability. Detached housing remains out of reach for many buyers, pushing demand toward apartments as a more accessible entry point into well-located suburbs. This is particularly evident among first home buyers and downsizers, both of whom are increasingly prioritising location, amenity and lifestyle over land size.</p>

<p data-end="3059" data-start="2748">At the same time, population growth continues to underpin demand. Victoria added more than 122,000 residents in the year to Q3 2025, with Melbourne attracting both overseas migrants and interstate movers, partly due to its relative affordability compared to other capitals.</p>

<p data-end="3115" data-start="3061">&nbsp;</p>

<p data-end="3115" data-start="3061"><img alt="Population" data-entity-type="file" data-entity-uuid="49e10567-a8b3-47c3-afbd-290f0bb62c49" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.22.25%E2%80%AFAM.png?VersionId=.2Drmko4TPh02X55JdF3mIC1EcG0ZfGl" /></p>

<p data-end="3207" data-start="3117">However, the most critical factor shaping the apartment market is not demand, it is supply.</p>

<p data-end="3663" data-start="3209">Apartment approvals across Greater Melbourne have fallen sharply, signalling a constrained pipeline of future stock. In Q4 2025, just 2,339 apartments were approved, down 20 per cent on the previous quarter and 47 per cent lower than the same period a year earlier. On an annual basis, 11,066 apartment approvals were recorded, an improvement on the previous year, but still well below medium- and long-term averages.</p>

<p data-end="3710" data-start="3665">&nbsp;</p>

<p data-end="3710" data-start="3665"><img alt="Apartment approvals" data-entity-type="file" data-entity-uuid="12f2e7bc-fe01-40c0-80b5-9e829b279d98" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.21.56%E2%80%AFAM.png?VersionId=5mnIXkXGoDgIJdAFhA0alm0cSKzEytqZ" /></p>

<p data-end="4035" data-start="3712">This decline reflects a broader contraction cycle that has been underway since 2020. As RPM notes, “apartment approvals appear to be sliding back into a downward trend,” with developers increasingly focused on launching and completing existing projects rather than initiating new ones.</p>

<p data-end="4519" data-start="4037">The reasons are well understood. Construction costs have risen more than 20 per cent since 2021, driven largely by labour shortages and material price escalation. At the same time, financing conditions have tightened, with lenders requiring higher contingencies and taking a more cautious approach to risk. Combined with recent interest rate rises, these factors have made feasibility more challenging, particularly for higher-density projects.</p>

<p data-end="4910" data-start="4521">This dynamic is creating a disconnect in the market. Demand for apartments—particularly at the more affordable end—is strengthening, while the pipeline of new supply is weakening. In the short term, this may limit the number of new projects coming to market. Over the medium term, however, it is likely to support price resilience and potentially further outperformance relative to houses.</p>

<p data-end="5296" data-start="4912">There are some signs of policy-driven supply response. The introduction of Victoria’s Mid-Rise Code, which streamlines approvals for four- to six-storey developments, is expected to improve delivery in well-serviced middle-ring locations. However, this is unlikely to materially offset the broader decline in apartment approvals in the near term.</p>

<p data-end="6044" data-start="5747">Despite the positive momentum at the end of 2025, the outlook for 2026 has become more complex. Two interest rate rises early in the year have already impacted consumer confidence, while broader cost pressures, particularly energy and fuel, are feeding through to construction and development costs.</p>

<p data-end="6206" data-start="6046">“Victoria’s built form market ended 2025 on a high, but early 2026 rate rises quickly reversed the momentum,” RPM notes.</p>

<p data-end="6548" data-start="6208">The implication is that while apartments are currently outperforming houses, the trajectory of that outperformance will depend on how these competing forces evolve. Policy support and affordability are clearly working in favour of apartments, but constrained supply and rising costs are likely to shape the pace and nature of future growth.</p>

<p data-end="6858" data-start="6550">What is increasingly clear is that apartments are playing a more central role in Melbourne’s housing market. As population growth continues and affordability pressures intensify, higher-density housing is becoming not just an alternative to detached homes, but a primary solution to the city’s housing needs.</p>
</section>


Joel Robinson

Units lead Melbourne price growth as apartments outperform houses: RPM

<p>Brunswick is set for some of its largest apartments ever delivered with the upcoming new development Frith &amp; Howarth, where the apartments are around 20 per cent larger than what has come before it in the sought-after suburb.</p>

<p>Developer Young Group focused its design on Frith &amp; Howarth around size and scale, but within a boutique building, to create a mini neighbourhood within the mid-rise development. There are just 24 apartments in the mid-rise building on Victoria Street, a short walk to Brunswick Station and the cafe and dining strip along Sydney Road.</p>

<p>“We spent hours comparing what’s currently on the market so we could offer genuine points of difference,” Young Group says, pointing to room sizing, storage, and functional planning as key drivers behind the design.</p>

<p>All of the two-bedroom apartments in the building have been snapped up, with just the large three- and four-bedroom apartments, with the biggest floorplans and best outlooks, remaining.</p>

<p>[smartcode_project:default project_id=134317 project_image_fid=354139]</p>

<p>Apartments open directly into open-plan living zones where full-height glazing draws light deep into the apartment. Sliding doors extend the space outward to terraces, many oriented toward the adjacent park or back toward the city skyline.</p>

<p>Kitchens sit within this central space, anchored by sculptural island benches that reference the building’s faceted exterior language. Storage is integrated across multiple layers, overhead cabinetry, concealed joinery, and, in larger configurations, dedicated sculleries or butler’s pantries.</p>

<p>[smartcode_project:default project_id=134317 project_image_fid=354137]</p>

<p>The penthouse is the largest ever offered in Brunswick. The penthouse measures nearly 400 sqm all-up, with 242 sqm of internal space complimented by a further 149 sqm of terraces.</p>

<p>It spans the whole top floor and has four bedrooms, four bathrooms, and parking for four cars.</p>

<p>[smartcode_project:default project_id=134317 project_image_fid=354133]</p>

<p>Low maintenance resident amenity has been created in the form of a landscaped rooftop, complete with&nbsp;vegetable plots, outdoor cooking areas, and aflresco dining spaces, designed as a place for neighbours to gather outside of their homes.</p>

<p>“To enable connection with neighbours, generous rooftop gardens with communal spaces and outdoor cooking areas offer a chance to develop a sense of community,” says John Patrick, Principal of <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick Landscape Architects</a>.&nbsp;</p>

<p>“Private open spaces with a selection of native and exotic plantings and gorgeous city views on the rooftop create a high-end aesthetic, with a low maintenance lifestyle. The perfect balance, so that residents can enjoy a serene living space.”</p>

<p>[smartcode_project:default project_id=134317 project_image_fid=354134]</p>

<p>Sustainability is embedded at both the building and apartment level. <a href="https://www.apartments.com.au/new-apartments/frith-howarth-288-290-victoria-street-brunswick-vic-3056">Frith &amp; Howarth</a> is one of only a small number of all-electric residential developments in Brunswick, supported by solar infrastructure, EV-ready parking, and high-performance glazing. These measures sit alongside less visible systems such as rainwater reuse and high-grade insulation, reducing long-term operational costs while maintaining consistent internal conditions.</p>

<p>Positioned within walking distance of Brunswick Station, Route 96 trams, and established retail along Sydney Road and Barkly Square, the development balances access to transport with proximity to open space, a combination that has become increasingly difficult to secure in inner-city sites.</p>

<p>“These exquisite homes are nestled in a culturally diverse neighbourhood, with parklands and nature right on your doorstep,” says Young Group.</p>

<p>[smartcode_project_cta:default project_id=134317]</p>


Frith & Howarth to deliver Brunswick’s largest apartments

<p><a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> in Brunswick is entering its final stages of construction, with the removal of the project’s last tower crane and the unveiling of the building’s full façade marking a significant milestone ahead of completion this coming spring.</p>

<p>The Park Street development, designed by <a href="https://www.apartments.com.au/architects/bates-smart">Bates Smart</a>&nbsp;and Mirvac Design with landscaping by <a href="https://www.apartments.com.au/landscape-architect/jack-merlo">Jack Merlo</a>, is now largely structurally complete, with internal works progressing across the 169-apartment project opposite Princes Park.</p>

<p><a href="https://www.apartments.com.au/builders/mirvac-construction">Mirvac Construction</a> Project Manager Sam Payne said the latest update reflects a transition from structure to refinement.</p>

<p>“Since our last update, all façade panels have been installed and the scaffolding and gantry has come down, unveiling the building in its full form for the very first time,” Payne said.</p>

<p>“A significant milestone was reached this month with the removal of our final tower crane, signalling the completion of major structural works and a pivotal step forward in the building’s transformation.”</p>

<p>[smartcode_project:default project_id=4802 project_image_fid=366856]</p>

<p>Apartments are now well advanced internally, with joinery completed to level eight and tiling to level six, alongside the delivery of a prototype apartment used to set the benchmark for the remaining residences.</p>

<p>This next phase coincides with the release of a completed furnished residence, styled by MCM House, and the introduction of private buyer tours, giving purchasers a clearer understanding of the finished product ahead of settlement.</p>

<p><a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> will comprise 169 one to four-bedroom apartments, with completion targeted for early spring. Interiors focus on natural materials and muted tones with two design schemes, while kitchens and bathrooms adopt a restrained palette anchored by stone, timber and textured finishes.</p>

<p>Bates Smart Director Jeffery Copolov said the project reflects a shared design direction centred on liveability and sustainability.</p>

<p>“Blending Mirvac and Bates Smart’s focus on wellness and sustainability, <a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> offers a new kind of conscious, elevated living in Melbourne’s inner north,” Copolov said.</p>

<p><a href="https://www.urban.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> presents Mirvac's third parkside collaboration with&nbsp;<a href="https://www.urban.com.au/architects/bates-smart">Bates Smart</a>&nbsp;in Victoria.&nbsp;Their previous collaborations delivered two of the city’s landmark apartment buildings: The Melburnian opposite Kings Domain and The Eastbourne on Fitzroy Gardens.</p>

<p>[smartcode_project:default project_id=4802 project_image_fid=366857]</p>

<p>A key focus of the development is its landscape-led amenity offering. The central courtyard, spanning around 600 sqm, will feature established trees and planting grown off-site, alongside communal lawns and seating areas designed for everyday use.</p>

<p>Development Manager James Gardner said the outdoor spaces are central to the project’s lifestyle positioning.</p>

<p>“<a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> isn’t just a home, it’s a complete lifestyle offering, and the resident amenity is just one example of the elevated living experience the soon-to-be-complete building will be known for,” Gardner said.</p>

<p>The courtyard connects to a series of shared indoor and outdoor spaces, including a residents’ lounge, dining room, library and secondary west-facing garden area, designed as extensions of the apartments themselves.</p>

<p>Located directly opposite Princes Park and around four kilometres from the CBD, the development places residents within one of Melbourne’s most established inner-north precincts, with access to open space, transport and the retail and hospitality offerings of Brunswick and Carlton.</p>

<p>With façade works complete and landscaping and final finishes now underway, <a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> is moving into its most active construction phase, with permanent services and external works to be finalised in the coming months ahead of completion in spring.</p>

<p>[smartcode_project_cta:default project_id=4802]</p>


Mirvac’s latest landmark, Prince & Parade Brunswick, enters final construction phase

<p>Boutique Perth developer ADC has unveiled its latest project.</p>

<p>The developer, which focuses on bringing apartments to some of Perth's most premium inner-city and riverside suburbs, has launched <a href="https://www.apartments.com.au/new-apartments/mos-lane-mosman-park-46-manning-street-mosman-park-wa-6012">Mos Lane</a>, 68 luxury apartments and townhouses in the heart of <a href="https://www.apartments.com.au/developments/mosman-park-wa-6012">Mosman Park</a>.</p>

<section data-scroll-anchor="true" data-testid="conversation-turn-124" data-turn="assistant" data-turn-id="request-69e027bc-1530-839b-a316-e9dad2cbd4d9-34" dir="auto">
<p data-end="496" data-start="78">Alongside the one-, two-, three- and four-bedroom apartments, the development will also include five two-level townhomes and two luxe penthouses. ADC is also introducing a significant retail offering for residents through Mos Lane Village, which will feature a wellness studio, fish and chips shop, barber, and florist, adding a layer of amenity not typically found in the predominantly residential Mosman Park area.</p>

<p data-end="876" data-is-last-node="" data-is-only-node="" data-start="498">Construction has already commenced on the project, which sits just a short walk from the Swan River, Mosman Park Bowls Club, and Mosman Park Golf Course.</p>

<p data-end="876" data-is-last-node="" data-is-only-node="" data-start="498">House Agency Directors Tom House and Lachlan McDonald say they are fielding the majority of buyer interest from local downsizers, as well as buyers with a long-standing affinity for Mosman Park.</p>
</section>

<p>[smartcode_project:default project_id=148957 project_image_fid=364591]</p>

<p>Mos Lane will comprise two buildings; Samson House and Manning House, which have been designed by&nbsp;<a href="https://www.apartments.com.au/architects/nelson-koo">Nelson + Koo</a>, an emerging design consultancy specialising in the masterplanning and design of mixed use places and spaces.</p>

<p>The two buildings adopt distinct architectural responses to their surroundings. Manning House references the strong roof forms of nearby homes, with floorplates oriented to maximise light and long-range views, while Samson House is organised around a central atrium designed to bring daylight deep into the building and create a greater sense of openness.</p>

<p>At ground level, the inclusion of five townhomes introduces a typology more commonly associated with Mosman Park’s established streets, each with private courtyards and direct frontage, offering a transition between traditional housing and apartment living.</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364103]</p>

<p>Interiors have been led by Melbourne-based Hecker Guthrie, with an emphasis on practical, long-term liveability. Residences incorporate sculpted joinery, generous storage and flexible multi-purpose rooms that can adapt to changing household needs, whether for working from home, guest accommodation or additional living space.</p>

<p>Material selections draw on a restrained palette of textured stone, timber and neutral tones, with options for lighter or darker schemes. Detailing such as fluted glass, full-height joinery and integrated appliances is intended to balance functionality with a more refined residential finish.</p>

<p>Outdoor spaces are a consistent feature across the development, with balconies and terraces designed for dining and entertaining, and larger apartments incorporating outdoor kitchens. Orientation has been considered to allow residents to choose between morning or afternoon sun, while mature street trees and landscaped communal areas contribute to a softer streetscape.</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364107]</p>

<p>Shared amenities are positioned to support both day-to-day convenience and occasional use. These include a private dining room with a caterer’s kitchen, alfresco entertaining areas, and a bookable guest suite for visiting friends and family. Additional practical features such as a resident workshop, storage facilities, car and pet wash areas, and concierge-style services for cleaning and dry-cleaning collection reflect a focus on usability.</p>

<p>Positioned between the Swan River and Cottesloe Beach, and within reach of schools such as Iona Presentation College and St Hilda’s Anglican School, the development is aimed at a broad buyer group, from downsizers seeking a lower-maintenance alternative to larger homes, through to local residents looking to remain in the area in a different housing format.</p>

<p>Mos Lane represents one of the more significant additions to Mosman Park’s limited pipeline, combining new housing supply with a village-style retail centre in a suburb where opportunities for large-scale redevelopment are relatively constrained.</p>

<p>[smartcode_project_cta:default project_id=148957]</p>


Living village precinct set for Mosman Park as ADC launches Mos Lane

<p>An entity linked to I&amp;D Group Founder Ivan Filipović has filed plans for a new residential development at 188–202 Swan Street in Cremorne, targeting a prominent site within the tightly held Swan Street activity corridor.</p>

<p>The proposal seeks to redevelop the consolidated Swan Street landholding into a <a href="https://www.apartments.com.au/new-apartments/188-202-swan-street-cremorne-vic-3121">high-density mixed-use project</a>, replacing a series of existing commercial buildings with a significantly scaled residential outcome. The planning submission positions the development as a response to increasing demand for housing in well-connected inner-urban locations, particularly within established activity centres.</p>

<p>Plans outline the construction of a 14-storey building delivering 165 apartments above a four-level basement, alongside a ground-floor retail and commercial offering designed to activate the streetscape. A key feature of the scheme is a new north–south pedestrian link connecting Swan Street to Railway Place, intended to “enhance permeability and provide an active, publicly accessible connection through the site.”</p>

<p><img alt="First Look: Plans lodged for Ivan Filipović-linked Cremorne apartment project on Swan Street" data-entity-type="file" data-entity-uuid="7332a8f8-dd2b-483d-b86e-320658838c84" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/cremorne.png?VersionId=cXm8vAaRdHh.LpYVbecrRkjckgu9mtAF" /></p>

<p>The development will retain part of the existing built form at 198–200 Swan Street, while the remainder of the site will be cleared to accommodate the new structure. Basement levels will provide 196 car spaces and 113 bicycle spaces, with vehicle access from Railway Place. Communal amenity is distributed across the building, including a shared outdoor area on Level 1 and a rooftop terrace for residents.</p>

<p>Ground level uses include retail tenancies fronting Swan Street and the pedestrian link, a residential lobby, and a flexible commercial space positioned to support community-oriented uses. The planning report notes this space “could be offered as a flexible space within the development for community groups,” supporting short-term or longer-term occupancy arrangements.</p>

<p><img alt="First Look: Plans lodged for Ivan Filipović-linked Cremorne apartment project on Swan Street" data-entity-type="file" data-entity-uuid="8208bf7b-cc67-485d-ad0f-1d73a74c907f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/cremorne%20lane.png?VersionId=69ctjC0txXv0zCHy7qQUpJyGwvPAT7gw" /></p>

<p>The site sits within the Swan Street Major Activity Centre, surrounded by a mix of retail, hospitality, and emerging residential development, and directly opposite tram services along Swan Street. East Richmond Station is located to the south, providing strong rail connectivity, while the broader Cremorne precinct continues to evolve as a mixed-use hub.</p>

<p>I&amp;D Group, founded by Ivan Filipović, is regarded as one of Victoria’s largest formwork contractors, partnering with major construction firms across large-scale public and private developments. The Swan Street proposal signals a move into development-backed opportunities tied to strategic inner-city sites.</p>


First Look: Plans lodged for Cremorne apartment project on Swan Street

Housing Correction

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<p>There are several possible risks facing Australia's housing markets: a change in sentiment leading people to stop buying homes, the crackdown on investor lending, rising interest rates, and a glut of new homes to be absorbed. </p>
<p>I heard Tapas Strickland of NAB note that he just can't see a meaningful housing correction coming looking at the fundamentals, and on today's evidence he will be proven right.</p>
<p>A couple of dozen lenders have dropped their mortgage rates since July 1 to entice homebuyers back into the market, and even by the end of July this was clearly working. </p>
<p>Not only have homebuyers not shunned the market, they are coming back in droves, with the number of owner-occupier commitments excluding refinancing surging 4.5 per cent higher in July, with the trend result rising to the highest level since the financial crisis stimulus. </p>
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<br><div>Loans for the purchase of established dwellings jumped 5 per cent in July, and average loan sizes are gently trending to new highs too. </div>
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<div>As a result, owner-occupier commitments rose to a record high in July 2017, helping to offset a 7-month decline in investor loans, with total monthly housing finance still tracking at around $33 billion. </div>
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<div>First homebuyer incentives are also back in play from July 2017 forth, and the number of first homebuyer loans immediately rose to the highest level in 44 months.</div>
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<br><div>The number of first homebuyer loans in New South Wales jumped to the highest level since 2012, while in Victoria the figure hit the highest level since 2013, consistently reflected in rocketing auction results in markets such as Geelong. </div>
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<div>In fact, my state level analysis, not posted here, shows that homebuyers in Victoria are by far the most ebullient of all states and territories, with new loan activity in New South Wales also rising.</div>
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<div>Finally, as for the glut of new stock, there was upbeat news here too, with the number of homebuyers financing new dwellings accelerating to the highest level in 38 years. </div>
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<br><div>New home sales are trending down, suggesting that the rate of construction will fall over the next few years, but on this evidence homebuyers will gladly mop up the new stock as it's released to the market (on the flip side, taxes will slow buyers from offshore investors, while domestic investors are finding it harder to access credit). </div>
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<div>A lot of people seem frustrated by this, but the housing juggernaut does not conform to ideologies, and for now it continues to power on. </div>
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<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/09/home-loans-back-in-favour"> </a></h3>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/09/home-loans-back-in-favour"></a></h3>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
<h3 class="post-title entry-title"><a href="https://petewargent.blogspot.com.au/2017/09/home-loans-back-in-favour"></a></h3>
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Home loans back in favour: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>The correction in Australian dwelling prices that has been running since late 2017 is showing clearer signs of moderating in early 2019.</p>
<p>The CoreLogic home value index, covering the eight major capital cities, fell 0.4% in May to be down 8.4%yr. After tracking a 10% annualised pace of decline between Nov and March, price slippage has been running at a more moderate 6.7% annual pace over the last two months.</p>
<p>While that is a clear improvement it is still well short of stabilisation.</p>
<p>Prices nationally are now 10.7% below their Sep 2017 peak. The current price adjustment has now been running for 20mths putting, eclipsing the much shallower 2010-11 correction.</p>
<p>More major capital cities recorded price declines in May. The moderation in price falls continues to be slightly more pronounced in the Sydney and Melbourne markets.</p>
<p>The annual pace of declines in these markets improved for the first time since early 2017 but is still tracking a solid pace, –10.7%yr in Sydney and –9.9%yr in Melbourne with cumulative declines of 14.9% and 11.8% respectively.</p>
<p>Performances across other markets continue to be more varied. Perth's longer running correction accelerated again, prices down –1%mth, –8.8%yr. Brisbane, which was stable through 2018, has continued to see price slippage in 2019, prices down –0.5%yr, –2.3%yr. Adelaide remains an isolated area of calm amid the sea of red, prices nudging 0.2% higher in the month to be up 0.4%yr, essentially stable.</p>
<p>Across the smaller markets: Hobart is coming off its boom sharply with a second month of price declines paring annual price growth back to 3.4%yr, well down on the double digit pace nine months ago. Canberra has been steadier, prices dipped 0.2%, annual growth holding just under 2.5%yr.</p>
<p>The mining-dominated Darwin market is mirroring the difficult conditions in Perth, its long-running correction also re-accelerating with a 1.6% decline in the month taking prices down 8.6%yr to their lowest level in over 12yrs.</p>
<p>The dwelling type detail continues to show units outperforming houses slightly in recent months although both segments are showing a similar moderation in the pace of price declines.</p>
<p>The breakdown by tier shows a more pronounced moderation in price declines across properties in the top tier, albeit with this group coming from a weaker starting point. In Sydney, the three tiers have been tracking closely over the last 3mths. Bottom tiers are outperforming in Melbourne and Brisbane, with prices in these segments close to stabilisation.</p>
<p>The moderation in price declines is consistent with the improved tone from auction markets in recent months, with a notable lift post-election, the result meaning changes to the tax treatment of investor housing are now off the table.</p>
<p>With interest rates set to move lower, some relaxation in regulatory guidelines for loan assessments likely and increased Federal assistance for first home buyers, prospects for an eventual stabilisation in prices are looking considerably better, boding well for an eventual stabilisation in prices.</p>
<p>MATTHEW HASSAN is a senior economist for Westpac</p>
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Price adjustment hits 20 month mark but correction continues to slow: Westpac's Matthew Hassan

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<p>EXPERT OBSERVER</p>
<p>As the property downturn draws to an end, there are important lessons for policy-makers, lenders and investors to be learned. </p>
<p>Labor’s loss has eliminated the number one risk to the property market and this, combined with the high likelihood of interest rate cuts by the RBA this year, the introduction of the First Home Loan Deposit Scheme and APRA’s proposal to remove the 7% ‘stress test’ replacing it with a 2.5% buffer, will support the bottoming of the Sydney and Melbourne markets by the end of the year and then a gradual recovery. </p>
<p>There are six key lessons to be learned from the downturn and how to mitigate them to avoid another property crash in the future.</p>
<ol>
<li>Despite claims by some experts it had been on the verge of collapse, the market remained viable, despite price falls. And, with a “good arsenal of tools” by the policy-makers, there should be no crash.<br><br>In September last year, some experts warned of collapse due to ballooning household debt, compounded by sliding prices in Sydney and Melbourne, that would escalate to falls of 40 to 45% in the next 12 months.<br><br>Not only has it not happened - and would not even if the Labor had won the election - but more importantly, policy-makers have taken measures to boost demand. <br><br>The First Home Buyers Scheme (that could also be a larger-scale first home buyers’ grant, if needed) was introduced prior to the election by the Coalition and was adopted a few hours later by Labor. In addition, the flow-on effect of lower property prices on household wealth, consumer spending and also on dwelling commencements and, consequently, lower GDP, increases the likelihood of interest rate cuts to ‘almost certain’.<br><br>APRA’s credit restrictions to reduce investor demand had eased and it was proposing lenders scrap the 7% ‘stress test’ requirement on home loans replacing it with a buffer of 2.5% on top of the interest rates.<br><br>The important thing to remember here is that in the future don’t expect total collapse of the housing market in a US GFC-style meltdown. It is extremely unlikely, and policy-makers take actions when required.<br><br>It’s equally important that decisions should not be made under the assumption that very extreme scenarios will take place, for example, following the <em>60 Minutes </em>story in September 2018 in which it was reported there could be a 40% drop in Australia's house prices … this had an impact on sentiment and confidence to some extent.<br><br>
</li>
<li>A more aggressive monetary policy is required by the RBA.<br><br>The RBA should have cut interest rates already and should not have made statements declaring the next move being upwards when there were so many economic indicators and key risk indicators that should have been taken note of, such as the strong connection between dwelling prices, household wealth and spending.<br><br>An example of this is the stronger than expected fall in dwelling commencements, as published by RiskWise in December 2018, alongside an extended period of time when inflation was consistency well below target and wage growth was poor.<br><br>
</li>
<li>Investors amplify credit and dwelling price cycles contributing to financial stability risks. <br><br>Therefore, any major reduction in investor activity has an impact on the demand of both existing and new properties.<br><br>It is unrealistic to expect an increase in dwelling commencements when investor activity is significantly reduced.<br><br>This is a key lesson for any policy-maker who proposes a policy with a major impact on investor demand, and the proposed taxation changes by Labor are a prime example for that.<br><br>
</li>
<li>Off-the-plan units mainly in high-supply areas carry a high level of risk. Since mid-2017, RiskWise has been warning that many areas subject to unit oversupply carry high risk of low demand and price reductions.<br><br>This risk is very relevant to construction lenders, developers and obviously buyers, largely investors,” he said.<br><br>Prime examples include the Brisbane CBD where, even as early as June 2016 in Statistical Area Level 4 (SA4) Brisbane Inner-City, price growth was -1.8% with 17,417 units in the pipeline, an addition of 24.5% to the current stock.<br><br>A recent <a href="https://www.afr.com/business/banking-and-finance/off-the-plan-apartments-bomb-for-investors-20190404-p51aw4" target="_blank">analysis</a> by BIS Oxford Economics also demonstrates that two out of three Melbourne apartments sold off-the-plan over the past eight years made no price gains or lost money upon resale, despite a property boom and record immigration. <br><br>
</li>
<li>It’s important to listen to mainstream economists and research houses which provide accurate and up-to-date predictions.<br><br>This was particularly the case from the end of 2017 when it was obvious property prices would materially decrease.<br><br>The only question then was ‘by how much exactly?’<br><br>This is a key lesson, mainly for lenders and investors, as the majority of the assets that were purchased in the past couple of years experienced material price reductions, and many of them with negative or very little equity.<br><br>Obviously, in some cases poor credit decisions have been made and some investors will need a number of years to see their property value increasing to the original purchase price.<br><br>Mainstream leading economists and research houses shared with the media the results of their analysis – the same results they provide to their clients, in most cases lenders and investment funds.<br><br>They have no incentive to mislead their clients and talk the market up or down.<br><br>Any major policies must be constantly reviewed and their impact reassessed according to recent developments in the housing market. Eg Labor’s proposed changes to negative gearing did not have a visible reassessment process from when it was suggested in 2016, despite major changes in the property market.<br><br>Policy-makers should have a proper process of challenge and feedback from mainstream bodies that research the market, especially if that research is saying the implications could be adverse.<br><br>
</li>
<li>Affordable areas show more resilience than the top end of the market </li>
</ol>
<p>This can be demonstrated using CoreLogic’s latest Quarterly Economic Review from February which showed despite a 7% fall across Melbourne for the last three months of 2018, the bottom end enjoyed a 0.5% increase.</p>
<p>Also, in the past 12 months houses in the lucrative areas of the Eastern Suburbs of Sydney have fallen by 10.9% and the Inner-East in Melbourne by 18.8%.</p>
<p>Investors or owner-occupiers with low equity have to reconsider purchasing a property at the top end of the market as they could suffer from high volatility in the short term.</p>
<p>For example, if you plan to refinance or sell and move to another property in three to five years expecting strong capital growth, this could be significantly impacted by major economic events.</p>
<p>However, the lower end is by far less volatile and generally less subject to such strong market movements.</p>
<p><em><strong>DORON PELEG</strong> is CEO of RiskWise Property Research.</em></p>
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Six key lessons from the recent property downturn: Doron Peleg

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<p>The Australian housing market will continue its downward correction on a national basis through 2018 and most of 2019, according to <span lang="EN-GB">the CoreLogic-Moody’s Analytics Australian Home Value Index Forecast</span>.</p>
<p>They see trends that will show a degree of diversity at the city and state levels.<span class="Apple-converted-space"> </span></p>
<p><span class="Apple-converted-space">Sydney values, which Moodys predict will fall 5.1 percent this year, will only rise 0.6 percent in 2019.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">National values are forecast to fall by 1.6% year on year in 2018, following a 9.5% gain in 2017.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Click here <a href="https://www.propertyobserver.com.au/images/2018/9/17/house-values.jpg" target="_blank">to enlarge.</a></span></p>
<p class="x_MsoNormal"><span lang="EN-GB"><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/2018/9/17/house-values.jpg" alt=""></span></p>
<p class="x_MsoNormal"><span lang="EN-GB">In the rest of New South Wales outside of Sydney, demand has increased as areas show better affordability.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">The Central Coast, which has benefitted from Sydney's soaring house prices, is forecast to escape the correction. </span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Moody's sees a 3.6 percent rise in 2018 and eight percent in 2019.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Click here <a href="https://www.propertyobserver.com.au/images/2018/9/17/softer%20housing.jpg" target="_blank">to enlarge.</a></span></p>
<p class="x_MsoNormal"><span lang="EN-GB"><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/2018/9/17/softer%20housing.jpg" alt=""></span></p>
<p class="x_MsoNormal"><span lang="EN-GB">The growth in house values in Melbourne is forecast to decelerate sharply - after a 12.5% rise in 2017 - to 0.3% in 2018, on the back of declines in inner Melbourne areas. </span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Recovery is elusive in the near-term, with Melbourne house values forecast to fall 0.2% in 2019.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">House values across Brisbane are forecast to see a mild 1.5% gain in 2018, with strength in West Brisbane and Inner Brisbane offsetting declines in South Brisbane. </span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Despite stabilising commodity prices, house values in Perth – whose economy is very much tied to the mining industry -- will likely decline by 1.9% in 2018, followed by a further 0.5% retreat in 2019. However, a slow recovery is likely in 2020 as the local economy improves thanks to population growth.</span></p>
<p class="x_MsoNormal"><span lang="EN-GB">Meanwhile Adelaide’s housing market will have a stable run, with values forecast to rise 1.5% in 2018, after a 4.9% gain in 2017. Hobart’s housing market is likely at the end of its bull run. </span></p>
<p class="x_MsoNormal"><span lang="EN-GB">While values are forecast to rise 11.3% in 2018, they will fall 0.3% in 2019. </span></p>
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Sydney house values to grow 0.6% in 2019: CoreLogic-Moody’s Analytics Australian Home Value Index Forecast

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<p>The ARCO fund manager George Colman is warning of a "slow-motion property market crash" as credit gets harder to secure.</p>
<p>"Broadly speaking, we think that the game has changed in terms of consumer behaviour," he told The Australian Financial Review.</p>
<p>"Bank credit is creating a steep change."</p>
<p>Property borrowers moving from interest-only to the more expensive fixed-rate mortgages was another source of market stress, Colman suggests.</p>
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<p>Colman believes the economy now suffers from declining breadth after a years-long narrowing of focus on housing and related sectors.</p>
<p>"We might limp along," he says.</p>
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<div>
<p>Arco was formed in 2008 at the height of the global financial crisis by Mr Colman and Peter Whiting and the Melbourne-based investment management firm had $147 million of assets under management in its long-short Absolute Trust at the end of June.</p>
<p data-gtm-vis-first-on-screen-7770372_137="63642" data-gtm-vis-total-visible-time-7770372_137="1800">The fund returned 6.5 per cent over the 2018 financial year.</p>
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