Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

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

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

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

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

Housing Debt

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GUEST OBSERVER
What if you had the lowest interest rates in a generation but no one wanted to borrow.
While Aussie consumers continue to take out loans to buy homes, they continue to slash other debt.
In fact personal credit is falling at the fastest rate for over seven years. Businesses are also not keen to borrow – credit growth is the slowest in three years. Banks and other lenders certainly have the funds – in fact annual growth of bank deposits exceeds that of loans by the biggest margin in four years.
In these more conservative and less volatile times, borrowers are also less keen to embrace margin lending. The number of client accounts stands at 13-year lows while the average number of daily margin calls is at record lows (almost 17 years of records).
The Chinese economy continues to turn over nicely despite constant worries from doomsayers to the contrary. The economy is transitioning from manufacturing to services. And the good news is that the services sector is expanding just below the fastest pace in three years. The 54.5 result for the services gauge in May was just below the recent high of 55.1 in March. The results of the purchasing manager surveys are good news for Australian exporters and importers.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%208.12.26%20AM.png" target="_blank">Click to enlarge</a>
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What do the figures show?
Private sector credit
Private sector credit (lending) rose by 0.4 percent in April after a 0.4 percent gain in March. Annual credit growth eased from 5.0 percent to a near 3-year low of 4.9 percent.
Housing credit grew by 0.5 percent in April to be up 6.5 percent on a year ago – annual growth is lifting from the lowest levels in 30 months.
Owner occupier housing credit rose by 0.5 percent in April to stand 6.1 per cent higher than a year ago – the slowest growth in 19 months. Investor housing finance lifted 0.6 percent in April to stand 7.3 percent higher over the year – the fastest growth in 15 months.
Personal credit fell by 0.1 percent in April to be down 1.5 percent over the year – equalling the biggest annual decline in 71⁄2 years.
Business credit rose by 0.4 percent in April after a 0.1 percent rise in March and 0.1 percent fall in February. Business credit is 3.1 percent higher than a year ago – the slowest growth in almost 3 years (35 months). 
Loans and advances by banks rose by 6.3 percent in the year to April – the slowest pace in 31⁄2 years. Bank deposits (term, current, other and certificates of deposit) rose by 7.8 percent in the year to April – the fastest pace in 21⁄2 years.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%208.15.50%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%208.15.50%20AM.png" alt="">
What is the importance of the economic data?
 Private sector credit figures are released by the Reserve Bank on the last working day of the month. Credit is separated into three categories – housing, other personal and business. Private sector credit is effectively the amount of loans outstanding in the economy. If growth in lending is strong then it suggests that credit from financial institutions is freely available, underlying demand for assets such as cars and houses is firm and that the price of credit (interest rates) is attractive.
The National Bureau of Statistics in China releases purchasing manager survey results for manufacturing and services sectors around the end of the month/first day in the month. The data is useful in tracking the health of the Chinese economy – Australia’s major trading partner. The data is valuable for Australian exporters and importers. 
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%208.17.00%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/31/Screen%20Shot%202017-06-01%20at%208.17.00%20AM.png" alt="">
What are the implications for interest rates and investors?
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.
The Reserve Bank may fret that housing debt is exceeding that of wages, but that is only part of the story. Consumers are trimming other debt including personal loans and credit card debt. Margin loans are out of favour despite low interest rates, low sharemarket volatility and healthy returns on investments. The issue for banks is that inflows of cash are growing at a faster rate than outflows, putting pressure on margins, profitability and potentially dividends.
Interest rates will remain on hold over the rest of 2017. There is no pressing need for a change in rates in any direction. 
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<div class="column"> Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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cjames-5S2v74qSNK

Slowest pace of borrowing in three years: Craig James

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The federal budget has taken positive steps toward infrastructure commitment by the government, but it still is a missed opportunity to capitalise on low bond rates and a triple-A credit rating, according to a senior industry executive.
Megan Motto, chief executive of built-environment body Consult Australia, welcomed the direction of the 2017/2018 Federal Budget but declared it a missed opportunity to capitalise on historic low borrowing rates.
Consult Australia represents 49,000 consulting firms in the built environment.
The government plans to spend $75 billion on development and upgrade of infrastructure, which includes a potential buy-out of the Snowy Hydro scheme from the states. Also included is a $20 billion rail line upgrade.
Major projects like Snowy Hydro, Inland Rail, a National Rail Program, and Western Sydney Airport, all point to a government that understands the long-term nature of infrastructure projects. But real spend on infrastructure delivery would fall as share of GDP from 25.5% to 25.2% in 2020-21, Motto said. 
Yet, “historically low bond rates and a triple-A credit rating means it has never been a better time to borrow, to take on more good debt,” Motto said.
 “This is an Infrastructure Budget 1.0 that begs for an Infrastructure Budget 2.0 to better connect the strong sense of direction to implementation and the opportunity for Australia to maintain future economic growth,” said Motto.
“This was a budget big on planning for longer-term infrastructure dividends.” 
“It recognised infrastructure as a tool to increase productivity, the importance of business case development to get the right projects off the ground, and the role of government in being able to drive economic growth.
“Over $14 billion of direct government equity in major infrastructure delivery and financing agencies,” she said.
But Motto added that “in the short term there is a sense of missed opportunity”.
Motto also lamented the foreign worker levy for businesses that will make it harder for them to bring in skills needed to deliver Australia’s infrastructure agenda.
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j.ballantyne1990-6AQqhLzZaK

Budget fails to capitalise on historic low borrowing rates

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GUEST OBSERVER
Given the Reserve Bank’s intense concentration on stability issues, including the introduction of new guidelines from APRA, the April Stability Review is of particular interest.
Our interest is twofold. Firstly to gauge the degree of concern with which the Bank views the current risks and secondly whether it has released any new research which sheds more light on the issues.
Evidence on the first issue confirms the Bank’s concerns. “Risks to household balance sheets and housing markets have increased.” Compare that assessment with the previous Review in October last year, “Risks to financial stability from lending to households have lessened a little over the past 6 months.”
The risk that was emphasised back in October – “risks around the projected large increases in supply in some inner city apartment markets are coming to the fore, especially in Brisbane and Melbourne” - is still seen to be a major consideration - “concerns about an oversupply of apartments in pockets of Melbourne and in parts of Brisbane.”
Current risks around household balance sheets are seen to be macroeconomic in nature rather than direct risks to the stability of financial institutions. The key dynamic is seen to be “a highly indebted household sector is likely to be more sensitive to declines in income and wealth and may respond by reducing consumption sharply”.
Of most interest is the investor. While the Bank recognises that arrears data shows that investors have historically performed better than owner occupiers, this observation has not been tested “in a severe downturn.”
The recent guideline from APRA to limit the interest only component of new lending to 30 percent appears to be aimed at investors. Only around 23 percent of owner occupier loans are interest only whereas 64% of investor loans are interest only. IO loans have a higher average indebtedness over the loan than principal and interest; while after the IO period expires (typically 5-10 years) repayments are considerably higher.
Since the October Review, household indebtedness has increased further primarily due to rising levels of housing debt and weak income growth.
The Bank has emphasised in the past that offset accounts and redraw facilities have increased considerably (at around 17 percent of outstanding balances or around 2.5 years of scheduled repayments at current interest rates).
But around one third of borrowers have either no accrued buffer or a buffer of less than one month’s repayments. For the vulnerable “highly indebted households”, which represent the top 10 percent on the household debt to disposable income ratio measure, only 40 percent hold any kind of buffer.
Presumably as new lending lifts this ratio will continue to rise since minimal buffers are dominated by newer mortgages or lower income or lower wealth households. This ratio strongly debunks the assertion that the “buffer” is an important source of stability.
However, in previous Reviews a much more relaxed Bank has emphasised the point that those borrowers with the high leverage tend to be the high income earners who can best manage debt. The Review takes a revised look at “Highly Indebted Households”.
The aggregate household debt to income ratio has increased further in recent years up to 160 percent, but 30 percent of households have no debt.
In assessing the characteristics of highly indebted households the Bank uses information on the distribution of debt, income, and wealth which is available in the Household, Income, and Labour Dynamics Survey (HILDA). Unfortunately this data is only available to 2014. In fact it is only collected every 4 years with the next survey due for 2018 – an interminable wait for an update to the critical issue of whether debt is accumulating with those borrowers who are the most vulnerable.
The Household Debt to Disposable Income ratio has risen from around 150 percent to over 160 percent (latest available). The Bank defines a “highly indebted” household as one with debt to income ratio in the top 10 percent. Over the 10 years to 2014, households in that group had a debt to income ratio above 550 percent and represented 35-40 percent of total household debt. Around 30 percent of the “highly indebted” households’ debts were investor loans.
Of some concern is that around 25 percent of the highly indebted households are in the bottom two quintiles for income and wealth, although this group only owes 12 percent of the debt owed by the highly indebted households.
These “ratios” confirm the Bank’s previous position that much of the debt held by highly indebted households is owed by households with high income and wealth. However, the lift in household indebtedness since 2014, coupled with the lack on any significant “buffer” for the highly indebted borrower, must be presenting reasons for the Bank and APRA to raise concerns.
The other issue is around the risks of relying on “averages” . Even though the 2014 data indicated that only 12 percent of the debt of highly indebted borrowers is held in the two bottom income quintiles, that still represents nearly 5 percent of total household debt .
The policy challenge for the Bank is clear. It’s most comforting “defence” of the risks associated with Australia’s high household debt is that high debt levels are associated with those in the best position to deal with them – high income / high wealth. But this data is already three years out of date and an update will not be available for another year at least. Household debt to disposable income ratios have lifted from 150 percent to above 160 percent over that time period and appear to be rising further.
Vulnerable borrowers with limited buffers appear to be growing. The higher risk aspects of interest only loans may be exacerbating that issue.
All the Bank can really do is focus on slowing the rise in household debt without really having much comfort about the risks they face.
For our part we remain reasonably relaxed about these risks, not because of the distribution of the debt, but because we see that Australia has sufficient flexibility around policy; its exchange rate and strong banking system to ameliorate the impact of shocks.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
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Rising household debt risks but no timely measure of the effective threat: Westpac's Bill Evans

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NAB-owned digital bank UBank has launched an ad campaign featuring terminally ill Australians who talk about rethinking priorities on assets and not take on too much debt.
The ad says it is a ‘unique perspective on the Australian dream’.
UBank chief executive Lee Hatton says the advertisement, produced with support from Palliative Care Australia by the ad agency, The Monkeys has been designed to encourage viewers to question their choices when it comes to taking on too much debt, according to an article in The Australian Financial Review.
"We think it's important that Australians start thinking about borrowing less and living more. It's not morbid, there's actually a really positive message in there," Hatton said.
The ad begins with a dark line by Julie, one of the terminally ill group. “When you are given a death sentence, you really evaluate what it's all about,” she says. 
Five more terminally ill Australians speak about the pitfalls of taking on too much debt and working away all your life to repay that. 
‘It’s not about bricks and mortar, it’s about what you put into those bricks and mortar,’ says one of them in the ad, which closes with the punchline ‘Borrow less, live more.”
In the film the group speak of coming to terms with their illnesses and then reflecting on how their priorities had changed, with a focus on big ticket items such as cars and houses.
UBank will be pushing the campaign through traditional channels and social media. The video can be found at ubank.com.au/home-truths.
Mike Hill, the film’s director, has worked on a number of projects that focused on people nearing the end of their lives. 
"It's an exploration of the Australian dream and it's really refreshing to hear people calling that out and saying 'Hey maybe that really big mortgage, that big house with all the bells and whistles isn't that important to your quality of life'," Hill said.
UBank previously ran a campaign that tried to reframe the concept of home ownership to include apartments after conducting research that showed large numbers of young people had given up on "the great Australian dream".
The digital-only bank does not lend on loan-to-valuation ratios of more than 80 percent.
It has 350,000 customers.
To view the campaign, <a href="https://www.youtube.com/channel/UCmRY0GyFo0t8xBgd8-v7J6Q" target="_blank">click here</a>.
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Terminally ill feature in UBank ad to spread message on borrowing less

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It would however more than likely add further momentum to the property market and expansion of household leverage, according to Merrill Lynch economist Alex Joiner. 
"It is our view that future risks outweigh any benefit especially when we consider any future tightening cycle," he said.
"Future risks will define any tightening cycle.
"Indeed, we already think that the level of dwelling prices and household debt pose significant future risks to the economy without the RBA exacerbating them with even lower interest rate settings.
"And because of this, we think the balance of downside risks in the economy will increasingly transition from the business sector to the household sector. This is especially true when the RBA eventually does raise rates from what are record ‘emergency’ lows.
<a href="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2010.59.43%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2010.59.43%20AM.png" alt="" width="683" height="447">
It would however more than likely add further momentum to the property market and expansion of household leverage.
"It is our view that future risks outweigh any benefit especially when we consider any future tightening cycle.
"Future risks will define any tightening cycle.
"Indeed, we already think that the level of dwelling prices and household debt pose significant future risks to the economy without the RBA exacerbating them with even lower interest rate settings.
"And because of this, we think the balance of downside risks in the economy will increasingly transition from the business sector to the household sector. This is especially true when the RBA eventually does raise rates from what are record ‘emergency’ lows.
<a href="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.01.37%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.01.37%20AM.png" alt="" width="1153" height="426">
Joiner reckons the RBA decision making or lack thereof has arguably encouraged asset price inflation, household debt accumulation and almost inevitably speculative activity in the property market.
"In our view, the RBA and prudential regulators have been too cautious in its treatment of the property market in this easing cycle.
"It seems clear to us that stronger macroprudential measures should have been put in place significantly earlier than the ‘soft’ measures that are currently in place.
"And now, we think it may be a case of too little too late.
"In hindsight, it may have been worth it for the RBA to sacrifice some of the positive dwelling price impact on consumer spending and residential construction in order to reduce future risks (and potentially elongate cycles).
"Our analysis suggests that dwelling prices growth will decelerate markedly by the end of 2016 to be at or around the pace of income growth.
"Yet once the rate tightening cycle has begun, we would expect house prices to be 5-6% lower by the end of 2017.
"China is not the only hard landing risk in town.
"The scenario that is our base case, outlined above, looks for a modest but not detrimental decline in dwelling prices that will weigh on growth.
<a href="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.04.17%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.04.17%20AM.png" alt="" width="880" height="336">
 
 
<a href="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.05.23%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Screen%20Shot%202015-10-13%20at%2011.05.23%20AM.png" alt="" width="1043" height="341">
 
"We are not forecasting collapse or the bursting of any perceived bubble.
"That said, it is not difficult to envisage a more ‘hard landing’ scenario in the property market. 
This would clearly have a greater negative macro-economic impact channelled through households and the residential construction cycle.
"A recent investor trip highlighted such an event as a key concern for clients across all asset classes along with a hard landing in the Chinese economy.
"We highlighted recently that the latter is a low probability, high impact, event that would be difficult for policymakers to manage. 
"A disorderly decline in dwelling prices is a greater risk in our view and would be equally high impact and difficult to manage.
"It could come from a number of sources: households; investors; inadvertently from the RBA itself; or a combination of all three.
"Clearly the RBA will be closely watching dwelling prices as it eventually tightens policy.
"At best, we will escape with some cyclicality in dwelling prices that has little material impact on the broader economy.
"At worst, a hard landing that could represent a marked setback for the economy in coming years," Joiner advised.
 
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