ASX-listed developer Cedar Woods is progressing its plans for its Southbank arts precinct site.&nbsp;

The developer has filed plans, which are now with the&nbsp;Department of Transport and Planning, for a new 20-level tower at&nbsp;<a href="https://www.apartments.com.au/new-apartments/141-151-sturt-street-southbank-vic-3006">141–151 Sturt Street</a>, a 2,718 sqm block opposite the Habitat Filter sculpture.

The proposal seeks to demolish the two-level&nbsp;commercial building, including a small supermarket and medical tenancies, and create a new building with 180 apartments and a focus on an&nbsp;active public realm and arts integration.

&nbsp;

<img alt="Southbank site" data-entity-type="file" data-entity-uuid="76a72db6-91ef-43ae-827d-a9cfa72893d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Site.png?VersionId=DZgtB4K6BswVh0QtCs3iLjXaLp0CbcEb" />

&nbsp;

There will be a full mix of apartment configurations, including 28 studio apartments, 16 one-bedroom, 104 two-bedroom, and 32 three-bedroom units.

Retail, creative arts, and residential amenity functions are integrated across the lower levels. A food and drink tenancy is planned to front Dodds Street, while a retail tenancy fronting Sturt Street will be accessed via an elevated walkway. The first floor includes a substantial 734 sqm creative arts space, envisioned to support Melbourne’s growing cultural and digital industries.

Architecture firm <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has put together the plans. In their&nbsp;Urban Design Report they highlighted the project’s ambition to embed itself within Southbank’s evolving cultural fabric.

A central feature of the design is a through-block link connecting Sturt and Dodds Streets, landscaped with native plantings and embedded with universal access ramps.

“The ramp has been thoughtfully integrated as the primary access point, ensuring universal accessibility for all users,” the report noted, with the link offering “a direct response to the urban planning scheme of creating more green spaces within our communities”.

<img alt="Southbank podium" data-entity-type="file" data-entity-uuid="4d24b1b2-d69c-4a11-a11d-ec6df432221c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium.png?VersionId=geWoJyZDmPSLODZ_.PNJ0LvpOmyyCdpo" />

The building’s podium form responds to the mandatory height limits along Dodds Street and maintains a fine-grain interface to adjoining developments. Above the podium, the tower is articulated with recessed balconies and a focus on views toward the CBD and surrounding arts institutions. A communal rooftop recreation deck and indoor lounge are positioned on level four, adjoining seven apartments and providing over 900 sqm of resident amenity space.

Vehicle access and loading will be provided via Dodds Street, with 155 resident car spaces located across two basement levels and the first three above-ground floors. Bicycle storage is more generous, with 226 spaces distributed across resident, staff and visitor needs.

Rothelowman describes the architecture as “humanist,” with ground-level interfaces designed to encourage social interaction and provide a dignified entry for both residents and passers-by. “All street interfaces are crafted to invite and nurture human connections,” the design report states. “The façade transitions to a human scale, providing an approachable and engaging streetscape”.

Cedar Woods, while well-known for its large communities it develops outside of Australia's capital cities, they have recently developed in Melbourne's inner-ring before. They are approaching completion at <a href="https://www.apartments.com.au/new-townhouses/88-leveson-north-melbourne-88-leveson-street-north-melbourne-vic-3051">88 Leveson</a>, just 15 townhouses in the heart of North Melbourne.

Joel Robinson

Cedar Woods progresses with new apartment plans in Southbank arts precinct

Brisbane developers Core Property Partners and Vector Property Australia has teamed up for Brisbane's newest apartment development.

The duo identified <a href="https://www.apartments.com.au/developments/east-brisbane-qld-4169">East Brisbane</a> as their preferred suburb, on the fringe of the Gabba Precinct, where they've just revealed BANKSII, 72 apartments opposite Raymond Park.

[smartcode_project:default project_id=136432 project_image_fid=5481]

The one-, two-, and three-bedroom apartments will sit in a glass-wrapped building that will also feature a rooftop with an&nbsp;infinity-edge pool, a BBQ area and alfresco dining spaces, sun lounges, and a sauna, as well as a resident-only gym and a ground-floor cafe.

Rhett Williams, Director of Vector Property Australia, said the project will lift the quality of the East Brisbane community and set a new benchmark.

"In Brisbane’s current property landscape, <a href="https://www.apartments.com.au/new-apartments/banksii-east-brisbane-169-wellington-road-east-brisbane-qld-4169">BANKSII</a> stands out through its emphasis on lifestyle-oriented living, connectivity and sophisticated design," Williams says.

[smartcode_project:default project_id=136432 project_image_fid=5479]

The 10-level building has been designed by MAS Architecture. Their designs were inspired by the native Banksia flower, with the architecture and interiors reflecting the organic symmetry of its namesake flora. MAS has interpreted this throughout the building’s curved form, façade detailing and interior palette.&nbsp;

The building’s flowing geometry and natural tones are complemented by large balconies and floor-to-ceiling glazing, maximising cross-breezes, daylight and views over the city, parklands and river.

“Having a strong narrative for a building helps us architecturally,” MAS noted. "We can choose colours that come off that species of flowers. The trunk and the trees and the flower elements all are now visible in our joinery on the inside and in our architectural finishes on the outside."

[smartcode_project:default project_id=136432 project_image_fid=5485]

Apartments will feature timber floors, soft porcelain tiles, brushed bronze fittings, and stone benchtops with warm veining.&nbsp;

Kitchens feature premium SMEG appliances and generous storage, while bathrooms have been designed as calming retreats with curved cabinetry and twin sinks in the master ensuites.

The building will feature a suite of rooftop and wellness amenities. Residents will have access to an infinity-edge pool, BBQ and alfresco dining areas, sun lounges and a rooftop sauna.&nbsp;

A residents-only gym will be located on the podium level, while a ground-floor café and landscaped laneway will further activate the site and improve neighbourhood connectivity.

[smartcode_project:default project_id=136432 project_image_fid=5488]

BANKSII will rise from a prime Wellington Road site, with the building oriented to overlook the adjacent Raymond Park and take in extensive city views. It is also on the doorstep of key&nbsp;lifestyle infrastructure, including the future Kangaroo Point Green Bridge, The Gabba stadium, and the planned Brisbane Live arena.&nbsp;

Public transport options, including ferry, bus and rail - including the future Cross River Rail Woolloongabba station - are all nearby, supporting a car-optional lifestyle just minutes from the CBD.

Williams said the team spent over a year searching for the ideal site before securing this location.

"We were attracted to <a href="https://www.apartments.com.au/developments/east-brisbane-qld-4169">East Brisbane</a> as it is a vibrant and growing community that offers a perfect balance of urban convenience and natural beauty with the parklands and river on our doorstep.”

The project is part of the broader Woolloongabba Games precinct, which is undergoing significant investment in the lead-up to the 2032 Brisbane Olympics. This urban renewal, coupled with infrastructure upgrades, is expected to enhance long-term liveability and capital growth in the area.

Given the wide max of configurations, BANKSII is expected to suit everyone from first home buyers and investors to families and downsizers.

[smartcode_project_cta:default project_id=136432]

BANKSII sales launch in booming East Brisbane apartment market

The Minns Labor Government will deliver Sydney’s first new heavy rail station in more than a decade – enabling up to 10,000 new homes by rezoning land around Woollahra and Edgecliff stations, right next to the CBD, to tackle the housing crisis and rebalance growth across the city.

Recent reports by the NSW Productivity Commission have warned that Sydney is losing twice as many young people as it is gaining, while also finding that Woollahra is the most feasible Local Government Area (LGA) in New South Wales to build new housing.

Despite this, housing approvals in Woollahra consistently lag well behind other LGAs, and the population has declined by 11 per cent over the past 50 years while Greater Sydney as a whole has grown by 74 per cent.

The new station that will be an eight-minute trip from Sydney CBD, will be located on the Eastern Suburbs train line in Woollahra, where a station build was started in the 1970s but never completed.

To enable the delivery of new homes the NSW Government will lead a rezoning of Woollahra and Edgecliff stations similar to other state led rezonings to allow additional homes to be built around the stations.

Affordable housing will also make up a proportion of development on the site with the final amount of affordable housing required, to be determined as part of the rezoning process.

The area surrounding the new station is within walking distance of major green and recreational space including Cooper, Trumper, Rushcutters Bay and Centennial Parks.

The Eastern Suburbs train line between Bondi Junction and Sydney CBD also has the lowest passenger usage rates during the AM peak of any line on the Sydney network, with only 43 per cent of operating capacity during the AM peak currently being utilised by passengers.

Sydney Water and Infrastructure NSW have confirmed there is capacity in the water and wastewater systems to accommodate the proposed 10,000 dwellings without major upgrades.

The rezoning is expected to take around two years and will further support the Government’s housing targets that rebalance the delivery of new homes around existing infrastructure.

&nbsp;

&nbsp;

Next stop Woollahra train station - delivering up to 10,000 new homes in the heart of Sydney

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Fresh off completing its mixed-use Malvern project Malvern Collective, Kokoda Property Group has acquired a prime site on Richmond's Bridge Road.

They are planning a mid-rise residential development with&nbsp;integrated wellness amenities and a vibrant ground-floor retail and dining offering.

The site, at&nbsp;487–495 Bridge Road, spans&nbsp;1,650 sqm with 50 metres of dual frontage across Bridge Road and Palmer Street. It is currently leased to Adairs, and has a large retail building and 20 onsite car parks.
</section>

<section data-element_type="section" data-id="534a164">
Kokoda Property Group’s acquisition forms part of a broader phase of growth in Melbourne, building on momentum from the completion of Malvern Collective and the recent purchase of a Burnley Street site for the developer’s first commercial project.&nbsp;

Mark Stevens, Kokoda Property Group’s Founder and Managing Director, said that the company’s Bridge Road site acquisition signals confidence in a city that is re-accelerating.

“Melbourne is regaining momentum,"&nbsp;Stevens said.

"After a cautious period post-COVID, we’re seeing buyer sentiment stabilise and capital leaning back into well-located, quality projects. Victoria now benefits from deep builder capacity and competitive delivery pricing, creating a rare opportunity to bring design-led inner-city developments to market without compromising on craftsmanship.

“Richmond ticks all the boxes for us – connectivity, culture and everyday amenity – making Bridge Road the perfect address for an amenity-rich, multi-use development."

<img alt="Kokoda" data-entity-type="file" data-entity-uuid="9a8de51d-8092-480a-8b7e-e081816692c2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-08-29%20at%208.54.27%E2%80%AFAM.png?VersionId=VRHpV5.6beOu2cieKHWrw3ErMPuVOAuj" />

Envisioned as an “urban lantern” the building will bring a distinctive new presence to Bridge Road with a sculptural retail frontage, designed to honour the street’s heritage character while contributing to its renewal.

Stevens said the acquisition reflects the developer’s commitment to design-led addresses in Melbourne’s inner city.

“Drawing on Richmond’s rich heritage and dynamic character, we’ve envisioned a contemporary building that respects the past while elevating the way people live today. With dual frontages, curated ground-floor spaces, and a focus on wellness, this project will contribute to the neighbourhood’s evolution, appealing to both downsizers and a new generation of professionals.”

Kokoda Property will now progress concept design ahead of a future planning process.
</section>

Mark Stevens, Kokoda Property Group’s Founder and Managing Director, said that the company’s Bridge Road site acquisition signals confidence in a city that is re-accelerating

First look: Kokoda secures Richmond site for new apartment development

Gold Coast developer Drew Group is fast approaching sell-out at its Main Beach apartment development, Lagoon Main Beach.

In the last nine months, Drew Group and sales partner Pezet Matheson have secured 31 sales totalling over $75 million, as the two-tower development advances towards completion under the expert eye of Hutchinson Builders.

“Today's buyers are more discerning than ever," Drew Group Managing Director Jon Drew says.

"It's essential to provide something truly unique that sets a development apart, and we believe Lagoon has achieved just that."

[smartcode_project:default project_id=108747 project_image_fid=193023]

Just over 50 per cent of recent&nbsp;sales have been to local buyers, reflecting the deep trust and connection within the Gold Coast community that Drew Group has developed over the years.

Demand has been particularly robust at the top end, with two of the three exclusive penthouses already sold, alongside five sub-penthouses. Only seven apartments remain in Lagoon's Signature Series — one&nbsp;penthouse and six sub-penthouses.

[smartcode_project:default project_id=108747 project_image_fid=284864]

Drew Group has also removed the much-maligned sunset clause from all contracts at Lagoon. The sunset clause — although rarely invoked, yet on occasion known to have been — allows developers to take back contracts on apartments should the building not be completed within the timeframe specified in the contract.

Pezet Matheson Co-Director Jayde Pezet says the fact Lagoon is&nbsp;within a year of completion, and has no sunset clause in contracts, provides certainty to buyers.

"This is paramount in the current market," Pezet says.

Drew Group has committed to providing the highest level of security inclusions — none more impressive than the Ubiquity Access Control System, a cutting-edge facial recognition technology that is one of the most state-of-the-art keyless entry systems on the market.

[smartcode_project:default project_id=108747 project_image_fid=190743]

One of the biggest drawcards to Lagoon has been the size of the apartments.

"It is unlikely that any future new development in Main Beach will be able to offer such spacious living at this price point," Drew says.

"Today's buyers are more discerning than ever, carefully evaluating amenities like gyms, spas, workspaces, and beach lockers, along with quality finishes. It's essential to provide something truly unique that sets a development apart, and we believe Lagoon has achieved just that."

Lagoon is set to complete construction in mid-2026.

[smartcode_project_cta:default project_id=108747]

Lagoon Main Beach approaches sell-out as local buyers drive $75m in sales

Housing Downturn

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EXPERT OBSERVER
Although the official statistics suggest something slightly different, by my reckoning Sydney's housing market has now entered its third year of downturn.
<div>From a purely psychological point of view, this makes for a testing time for owners, and some may now choose to sell.  </div>
<div class="separator"> </div>
<div>I'm interested in opportunities, but one of the challenges facing bargain-hunters - at least in the areas that are typically of most interest - is that Sydney's regional unemployment rates are as close to zero as you'll ever see. </div>
<div> </div>
<div>Click <a href="https://1.bp.blogspot.com/-zQj8VeqmxnU/XHhf4Egzx6I/AAAAAAAAuw4/_7pp0VW2TYcFLt_g8Pi1qPhoEz_JtIb6gCLcBGAs/s640/UE.jpg" target="_blank">here</a> to enlarge</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-zQj8VeqmxnU/XHhf4Egzx6I/AAAAAAAAuw4/_7pp0VW2TYcFLt_g8Pi1qPhoEz_JtIb6gCLcBGAs/s640/UE.jpg" width="640" height="368" data-original-height="795" data-original-width="1381"></div>
<div> </div>
<div>The cash rate setting is also at the lowest ever level, so there's little in the way of mortgage stress to report in inner Sydney, although tighter access to credit and the interest-only mortgage reset could smoke out some portfolio investors. </div>
<div> </div>
<div>And despite record levels of construction in recent years, Sydney doesn't really have a structural oversupply.</div>
<div> </div>
<div>What it does have, though, is a few concentrated gluts of apartment completions and projects hitting the market at the same time, which might give rise to some distressed sales or failed apartment projects. </div>
<div> </div>
<div>Pockets of pain</div>
<div>
 My experience in Britain has taught me that sharp price falls are sometimes seen when the economy really turns bad, leading to rising unemployment and forced sellers - hardly a widespread problem facing Sydney at this point in time - and sometimes in the most supply-responsive areas.</div>
<div> </div>
<div>I spent a long time last week looking for bargains in the Sydney market, and in the east I couldn't find anything - I mean, not a single thing - that you might term a bargain, or anything even approximating to a bargain. </div>
<div> </div>
<div>I don't really know enough about Homebush, Parramatta, Blacktown, or Western Sydney to comment in any meaningful way.</div>
<div> </div>
<div>The best examples I could find of significant price declines, at least within 20 kilometres of the City, were mostly in areas zoned for higher-density housing or construction hotspots.</div>
<div> </div>
<div>Epping was a standout example, where scores of apartments were sold off the plan around 2014, and it's not too hard in that area to find examples of units for sale at well below the 'as new' price (although, interestingly, some have been advertised 'almost as new').</div>
<div> </div>
<div>Resale prices in some developments look likely to be up to 15 to 20 per cent lower than the off-the-plan price after an assumption for discounting is factored in.</div>
<div> </div>
<div>A high proportion of such apartments was bought by non-residents, and jt's probably fair to say that total return might not have been absolutely front of mind for some off the plan buyers. </div>
<div> </div>
<div>Locations around Epping and parts of the Hills District have experienced a huge surge in apartment completions in recent years. </div>
<div> </div>
<div>Finding a tenant would be hard work right now for landlords, which might encourage more sellers in 2019.</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. </div>
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Where are the Sydney property bargains? Pete Wargent

soliver-smf6LQXgW9

Capital city home prices up, what happened to the downturn? Shane Oliver

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EXPERT OBSERVER
The July CoreLogic index results show the Melbourne property market is the worst capital city performer since the onset of COVID-19. June marked the third consecutive month of value falls across the city. This sees values down -2.3% from the previous quarter, when the market hit a record high. 
The results may be surprising, particularly when considering that the Sydney growth rate, which often moves quite closely with Melbourne property, was less than half this rate in the same period (at -0.8%). Several factors may explain why Melbourne in particular has experienced a more rapid decline.
Melbourne has sometimes ‘led’ cycles, and has often been more volatile
Data suggests that the Melbourne market has experienced a turn in its market before others. This was evident in the most recent upswing, where Sydney and Melbourne saw peak growth rates around November 2019, while other capital cities continued to see a more moderate but accelerating growth rate.
A longer-term view suggests it is not uncommon for Melbourne to outpace capital growth in Sydney, or to see deeper rates of decline.
The divergence is particularly evident through the 2010-2012 downturn, following a substantial over-performance from Melbourne during the post-GFC stimulus fuelled growth phase.
The most recent upswing before COVID-19 also saw Melbourne growth rates peak higher than in Sydney. The Melbourne quarterly growth rate peaked at 6.4%, compared with 6.2% across Sydney.
Cyclically then, it is not unreasonable to see Melbourne values slip at a greater rate than other capital cities.
Research also suggests that property markets where incomes are higher, households are more indebted and investor activity is higher can also be more sensitive to changes in economic conditions. This has been consistently evident in the upper quartile of values across the Melbourne market, which had the strongest value increases amid the last upswing, and are currently showing the largest falls.
High levels of investment are also evident in the Melbourne market, which may be contributing to volatility, though this is present in Sydney too.
ABS finance data shows investor lending has comprised an average 32.3% of total mortgage lending across Victoria for the past 5 years.
This is higher than most other states and territories.
Given that Melbourne has also experienced higher growth rates before the onset of COVID, and may be approaching a trough more quickly, Melbourne may not be the ‘worst performer’ over the entire cycle, but just based on a snapshot view of the past couple of months.
However, there are some key structural factors creating added downward pressure on Melbourne property prices.
ELIZA OWEN is the Head of Research Australia at CoreLogic
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Why is Melbourne property leading the downswing? CoreLogic's Eliza Owen

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The RBA deputy governor Guy Debelle has noted that the housing market downturn seems to have come to an end.
Debelle, who was the keynote speaker at the 14th Annual Risk Australia Conference in Sydney on Thursday, said there is evidence the decline has reached his conclusion.
"If this is the case, the drag from declining wealth and turnover will dissipate," Debelle said.
"Housing market conditions may even start to support consumption growth again in the period ahead."
Debelle suggested the dynamics of the housing markets have affected the consumption outlook.
"Overlaid on the slow growth in household income has been the effect of the decline in housing prices," Debelle said
"Some part of that effect comes through a wealth effect: as housing prices fall, homeowners' wealth declines, which reduces their spending.
"Some part of the effect comes through the lower housing turnover that has accompanied the decline in housing prices.
"Housing turnover is around its lowest level in more than 20 years. When people move house, they spend more on things like household furniture."
Debelle suggests households are benefitting, in aggregate, from the effect of lower interest rates.
"While the income of households with deposits is lower, the household sector as a whole has around twice as much debt as deposits. Hence the cash flow boost from lower mortgage payments outweighs that of lower deposit rates.
"Again, there is uncertainty about how much of that cash flow boost will be spent or saved, including in the form of paying down mortgages faster.
"If households use the additional cash flow to pay down their mortgages, it does bring closer the date that they will be more comfortable with their balance sheets and return to more regular spending habits.
Debelle says the RBA are expecting the GDP growth outcomes to strengthen after a run of disappointing numbers.
"This outlook is supported by a number of developments including: lower interest rates, the recent tax cuts, a depreciation of the Australian dollar, a brighter outlook for investment in the resources sector, some stabilisation of the housing market and ongoing high levels of investment in infrastructure," Debelle added.
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Evidence decline in house prices has reached an end: RBA's deputy governor Guy Debelle

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Over the month of June, house prices in both Sydney and Melbourne didn't record losses for the first time in nearly two years, according to CoreLogic.
The end of the housing downturn in the two major capital city markets has been forecasted since the Coalition won parliamentary honours over Labor in May.
The declines slowed down drastically since.
The month of May saw Sydney houses dropping just 0.4 percent and Melbourne 0.6 percent.
The latest figures from CoreLogic, who analyse the housing markets every month, saw Sydney house prices unmoved in June, with Melbourne scoring a 0.1% increase.
Nationally dwelling values are down just 0.2%, with house values down 0.1% and unit values up 0.2%.
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/7/1/Capital%20City%20markets%20June%20CoreLogic.jpg" target="_blank">click here</a>.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/1/Capital%20City%20markets%20June%20CoreLogic.jpg" alt="">
Hobart's cooling off period only lasted a few months, with house values increasing by 0.1% in June.
The biggest house value declines were felt in Darwin (-1.7%) and Canberra (-0.9%).
Perth saw its house values drop 0.7%, followed by Brisbane 0.6% decline and Adelaide at 0.5%
CoreLogic head of research Tim Lawless believes that the June housing market results provide further evidence that the downturn is running out of steam.
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“The improvement in housing market conditions over the first five months of the year has largely been organic, however since mid-May there has been a raft of announcements that should provide a further positive flow through to housing demand", Lawless said. 
“Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market.
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/7/1/CoreLogic%20June%2030%20Capital%20City.jpg" target="_blank">click here</a>.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/1/CoreLogic%20June%2030%20Capital%20City.jpg" alt="">
“Aided by the housing downturn, we have also seen an improvement around housing affordability, although dwelling values remain high relative to household incomes in Sydney and Melbourne.
"Add to this lower mortgage rates and the high likelihood that interest rate serviceability tests are set to improve.”
The last time Sydney and Melbourne houses didn't record losses in the same month was August 2017 when Sydney's housing downturn began, some six months before Melbourne started declining.
 
 
 
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Sydney and Melbourne housing downturn weakening to a halt

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Not too many surprises in the Treasurer's 2019 Federal Budget, then.
Tax cuts for households were effectively doubled from around $150 billion to about $300 billion, in rounded numbers. 
Quite a substantial saving of tax for households was mooted to be released in stages, and more Aussies eventually set to be paying tax at 30%.
There were some more immediate handouts, something of a boost to infrastructure spending, and a broadening of the scope for business asset write-offs.
Nothing too unexpected nor dramatic, but an expansionary Budget nonetheless. 
Rentals tightening ex-Sydney
Assuming the Opposition wins the election, as is widely expected, there may be changes to tax policy for housing. 
But although this hasn't showed up in official data yet, the squeeze on property investors is now quietly beginning to hurt some of the people Labor's policy is designed to help, most notably renters.
I'd suspected this might happen, but had no worthwhile evidence for it until this week.
I've been in Melbourne for a few days, and agents are now reporting queues and multiple applications on some rental properties, and offers being made above asking rents prior to settlement for entrant landlords.
This is mainly taking place in the landlocked inner- and middle ring suburbs of Melbourne.
And granted it's far more so the case for trendy terraces and family homes than it is for apartments. 
But it's the first hard evidence that a reduced supply of rental stock will eventually lead to an accommodation shortage and a spike in rents, with or without Labor's proposed changes. 
The construction pipeline is also now shrinking after a record cycle for housing starts. 
Fixed rates falling
Affordability in cities such as Sydney has improved over more than two years since the first quarter of 2017, with transactions taking place at a level about 15% lower than at the heady peak, on average, while incomes are also up modestly by about 5% over the past couple of years. 
Unemployment rates in the two most populous cities and states have fallen to multi-decade lows at about 4 to 5%. 
Funding costs have eased suddenly and sharply, globally the upwards pressure on interest rates has quickly reversed, and fixed mortgage rates in Australia are now falling. 
Yesterday the Reserve Bank took a "surprising and significant step" towards a formal or explicit easing bias after a couple of years in a more balanced position, through amending the closing sentence of its monetary policy decision to a more dovish stance. 
That paves the way for an interest rate cut some time between May and August, with another to follow later (markets are pricing about a three in 10 chance of a cut as soon as next month). 
We aren't quite there yet, but the end of the downturn in housing market sentiment appears to be closer.
An official cash rate heading towards 1% will do that, of course, even when banks don't pass on the full 50 basis points. 
Perhaps more important than all of the above is that there are some tentative signs of lending to investors picking up.
And if leading indicators are our thing, all industry participants I've spoken over the past week or two have reported a noticeable lift in activity of late...especially on the 'buy side'. 
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. 
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End of housing downturn draws closer: Pete Wargent

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EXPERT OBSERVER
With the housing market weakening over the past few years, most capital cities have experienced dwelling value falls with a more significant correction experienced in Sydney, Melbourne, Perth and Darwin.
Although the past few decades have been characterised by increasing property values, that doesn’t mean there haven’t been periods when property values have reversed; in fact the housing market is highly cyclical with upswings generally followed by a period of falling values.
At a national level, since 1980 there have been eight separate housing market downturns (as highlighted in the first chart).
The current downturn which commenced after October 2017, has seen values fall by -6.8%. Although that may not seem like a substantial downturn, since the early 80s there have only been two downturns which were larger, 2008-09 and 1982-83.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%201.JPG" alt="">
 
National housing market downturns have also been generally fairly short-lived with the current downturn of 16 months already the second longest with the 2010-12 decline running two months longer than the current downturn.
The decline in values throughout the current downturn has been larger across the combined capital cities, with values now -8.6% lower.
By next month, assuming the falls continue, this will be the largest downturn in the combined capital city index any time since 1980.
The current downturn is also closing in on being the longest.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%202.JPG" alt="">
 
With values having peaked in September 2017, they have now been falling for 17 months with the previous longest period of decline coinciding with the last recession, running for 20 months between 1989 and 1991.
Since peaking in July 2017, Sydney dwelling values have fallen by -13.2% to February 2019.
Not only is this now the deepest period of decline it is also one of the longest. With little sign that the falls will abate over the coming months, this current downturn may end up being the deepest and longest in modern times.
This downturn is also very different to other downturns which have generally been driven by an economic contraction or higher interest rates.
This downturn is more closely linked to a significant tightening of credit conditions at a time in which the economy continues to grow and interest rates are unchanged (despite some moderate increases for owner occupiers and larger rises for investors).
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%203.JPG" alt="">
 
The housing market in Melbourne peaked in November 2017 and up until the end of February 2019 dwelling values across the city have fallen by -9.6%.
Interestingly, comparing the downturn in Melbourne to Sydney, 15 months into Melbourne’s downturn values have fallen -9.6% compared to a decline of -8.2% 15 months into Sydney’s downturn.
The downturn in Melbourne’s housing market is closing in on its largest downturn of -10% between 1989 and 1992 while the downturn (so far) has been much shorter than the 36 month period in 1989-92.
 
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%204.JPG" alt="">
While Sydney and Melbourne have recorded substantial increases in dwelling values over recent years and are now seeing large falls, Brisbane never saw anywhere near the magnitude of value growth during the upswing.
Despite more moderate growth in recent years, values in Brisbane are now falling on an annual basis, albeit quite moderately.
Brisbane dwelling values peaked in April 2018 and they have now declined by -1.0% to February 2019. To date the fall is moderate however, with housing market weakness entrenched values are expected to move slightly lower or, at best hold firm, over the coming months.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%205.JPG" alt="">
Much like Brisbane, value growth in Adelaide has been moderate over recent years however, that has not stopped values from starting to decline over recent months.
Values peaked in December of 2018 and have fallen over each of the past two months to be -0.3% lower at the end of February 2019.
While there have been previous periods of value falls in Adelaide, they have tended to be more moderate than those recorded across the other capital cities.
To-date the decline has been short and moderate and it will be interesting to see over the coming months whether values continue to fall.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%206.JPG" alt="">
The Perth housing market has been in an extended downturn over recent years with values having now fallen by -17.8% since their June 2014 peak.
The current downturn has run substantially longer than previous downturns and it is also a much deeper value fall than recorded across previous downturns.
In late 2017/early 2018 it was looking as if the falls were coming to an end however, the market has weakened further in line with weaker labour market and economic conditions as well as tighter credit conditions.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%207.JPG" alt="">
Hobart is the only capital city in which dwelling values are continuing to rise.
Although they are still rising, the annual rate of growth in February 2019 was recorded at 7.2% which was its slowest rate of growth since October 2016.
Housing affordability has been a big driver of growth over recent years however, housing affordability has been eroded and there is a likelihood that the rate of growth will continue to ease over coming months.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%208.JPG" alt="">
Darwin housing data commences from 1999 and over that time there have only been two downturns. The current downturn which commenced from May 2014 has now seen values in Darwin fall by -27.0%.
The downturn is significantly longer and deeper than the previous downturn and the deepest downturn recorded for any capital city over recent decades.
With weak labour market and economic conditions persisting, there is a high likelihood of further declines this year.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%209.JPG" alt="">
Canberra dwelling values fell by -0.2% in February 2019. Although there is no evidence of a negative trend, the rate of annual growth has been consistently slowing and it is clear that some heat has exited the Canberra housing market.
Although values may edge lower, the outlook for Canberra’s housing market is likely to be relatively steady conditions.
<img src="https://www.urban.com.au/images/2019/3/14/Widespread%2010.JPG" alt="">
With values now falling across most capital cities the question of course becomes when do the falls stop.
No one really knows the answer to that question, our models show, at least for the short-term, that values are likely to continue trending lower, with the rate of decline easing later this year and into 2020.
The other main question is once markets reach a trough, how quickly will the market recover?
Historically, market recoveries from their trough have generally been fairly rapid however, the recoveries have generally been driven by lower interest rates or a mix of stimulus such as the first home buyers grant boost.
Although there is an expectation that interest rates may move lower, we probably won’t see the entire rates cuts passed through to mortgage rates and the much tighter credit conditions are likely to limit any rebound in the housing market, particularly given borrowers are being assessed on their ability to repay a mortgage at a much higher rate (above 7%).
CAMERON KUSHER is a Senior Analyst for CoreLogic
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House value downturn still spreading: Cameron Kusher

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EXPERT OBSERVER
The housing cycle and house prices always incite high interest in Australia. Until recently it was all about surging prices and poor affordability – particularly in Sydney and Melbourne. Over the last year it’s turned into how far prices will fall and what’s the impact on the economy.
Global issues and the election aside, the housing downturn is likely to be the main issue for Australia in 2019.
 How far have home prices fallen?
According to CoreLogic data, up until December capital city dwelling prices are down 7% from their September 2017 high. This masks a wide range though with Sydney down 11% from its July 2017 high, Melbourne down 7% from its November 2017 high, Perth down 16% and Darwin down 25% from their mid 2014 mining investment boom highs but other cities continuing to trend up to varying degrees. Recently the declines have been led by Sydney and Melbourne. House prices are on average down more than unit prices and prices in regional centres have generally held up better than capital cities.
What is driving the falls?
The fall in property prices comes after a boom – most recently over the five years to 2017 that in particular saw Sydney prices rise 72% and Melbourne prices gain 56%. This, on top of gains since the mid-1990s, saw a sharp deterioration in affordability, prices become overvalued relative to income, rents and their long-term trend and reach expensive levels by global standards. The surge in home prices went hand in hand with a surge in debt that has seen the ratio of household debt to income go from the low end of OECD countries to the top end. High prices and high debt left Australian housing very vulnerable.
What has changed in the last two years is that:
<ul>
<li>It’s become harder to get a loan as regulators forced banks to tighten lending standards and the Royal Commission seems to have made banks even more cautious. </li>
<li>A big pool of interest only borrowers are switching to principal and interest driving higher debt servicing costs. </li>
<li>Banks have cut lending to SMSF funds to invest in property. </li>
<li>The supply of units has surged to record levels. </li>
<li>Foreign demand has fallen sharply. </li>
<li>As rising prices fed on themselves by driving expectations for more price gains (FOMO - fear of missing out), falling prices are driving reduced price expectations and leading to reduced demand and FONGO (fear of not getting out). </li>
<li>Investors are starting to factor in less favourable negative gearing and capital gains tax arrangements if there is a change of government. </li>
<li>Problems regarding the Lacrosse and Opal buildings have dented confidence around building standards. </li>
<li>It's unlikely interest rate cuts will quickly end this property cycle downturn as occurred in the 2008 and 2010-12 downswings. Rates are already low &amp; debt is much higher.</li>
</ul>
What will be the impact of tax changes?
The Australian Labor Party’s policy since the last election has been to limit negative gearing to new property and double capital gains tax on investments held for more than 12 months. This is aimed at improving housing affordability which means lower prices. Put simply, such changes would make it less attractive for investors to invest in residential property which would be negative for prices.
A study by Riskwise Property Research and Wargent Advisory found that this would lower property prices ranging from 2 to 3% in Tasmania to around 9% in Sydney. While the tax changes are proposed to be grandfathered, it’s likely it’s already reducing investor demand as investors worry that when it comes time to sell their property if the tax changes occur then there will be less demand.
How far will home prices fall?
For Sydney and Melbourne our base case has been that prices would have a top to bottom fall of around 20% out to 2020. However, the further plunge in auction clearance rates and acceleration in price falls late last year suggest a deeper fall possibly of around 25% (although it’s impossible to be precise). This suggests around another 15% fall in Sydney and more in Melbourne. A 25% top to bottom drop would take prices back to where they were in late 2014/early 2015.
While prices in other cities are being affected by credit tightening they were less speculative and so are less vulnerable. Perth and Darwin have already seen prices fall back to decade ago levels. Other capital cities and regional centres generally didn’t have a boom and so are unlikely to have a bust. So for the rest of Australia flat prices to modest gains are likely. Taken together this suggests a top to bottom fall in national average prices of 10 to 15%, with another 5 to 10% this year.
Will home prices crash?
This is a bit of an unhelpful question like the “are we in a property bubble” questions of a few years ago as it’s hard to define and implies a degree of inevitability in terms of the implications. A 25% plunge in Sydney and Melbourne may seem like a crash but given the extent of the prior gains it’s arguably not. But a 25% national average fall would probably be interpreted as a crash.
Our assessment is that this is unlikely unless we see much higher interest rates or unemployment (neither of which are expected) driving a sharp rise in defaults and forced property sales or a collapse in immigration (which would collapse demand). Strong population growth is still driving strong underlying demand for housing. While mortgage stress is a risk, it tends to be overstated, and is unlikely to be a generalised issue unless interest rates or unemployment shoot higher. And, while Sydney and Melbourne are at risk, other cities have not seen the same boom &amp; so are unlikely to crash.
Although many like to make comparisons to the US at the time of the GFC, there are two big differences. Australia has not seen the surge in sub-prime loans where money was lent to home owners who often had “no income, no job, no asset” (NINJA loans). Secondly, our mortgages are full recourse meaning we won’t see “jingle mail”, where home owners can send back the keys just because the house value falls below their debt, which then saw the bank put the property back on the market pushing home prices even lower.
However, the risk of a crash cannot be ignored given the danger that banks may become too tight and that investors decide to exit in the face of falling returns.
Have home prices fallen before?
A common property myth is that prices only ever go up and never fall. But a simple look at history tells us this is not so. Real house prices (ie prices after the impact of inflation) in Sydney fell 36% in 1934-35, 32% in 1937-41, 41% in 1942-43, 12% in 1947-48, 14% in 1951-53, 12% in 1961-62 and 22% in 1974-77.
In nominal terms based on CoreLogic data Sydney dwelling prices fell 25% in 1980-83, 10% in 1989-91, 8% in 2004-06 and 7% in 2008-09. So a 25% fall this time around would be similar to that seen in the early 1980s.
What will be the impact on the economy? The housing downturn will affect the broader economy via slowing dwelling construction, negative wealth effects on consumer spending (ie, our wealth goes down, we feel poorer, we spend less than otherwise) and if rising defaults drive a further slowing in bank lending. The first two will detract 1 to 1.5 percentage points from economic growth. Growth in infrastructure spending and business investment should help keep the economy growing but its likely to be constrained to around 2.7% which in turn will keep wages and inflation low.
What is the impact on banks?
The main risk for banks is that the property downturn drives a rise in defaults. However, full recourse loans mean that just because home prices fall resulting in negative equity, defaults won’t necessarily rise. In the absence of much higher interest rates or unemployment making it harder for people to service their loans, a big rise in defaults is unlikely.
However, it’s still a risk and the housing downturn will likely mean slower bank lending which will constrain bank profits.
What will it mean for interest rates?
Constrained growth due to the housing downturn resulting in lower for longer inflation will likely drive the RBA to cut interest rates this year, with two cuts taking the cash rate to 1% by year end. Our base case is that this will occur in August and November (giving the RBA chance to assess the election and tax cuts), but soft data could see it come earlier.
Tax cuts from July are unlikely to be big enough (the Government is allowing for just $3bn pa in tax cuts which is just 0.1% of GDP) to head off the need for rate cuts.
Is the house price downturn good or bad?
This depends on who you are. For baby boomers who got in years ago, have paid off their debt and saw the value of their home rise to levels they never believed sustainable, a fall back to 2014/15 levels may be no big deal.
For those who got in more recently and have a big mortgage price falls are more of a downer and its this group for whom negative wealth effects will be greatest.
For millennials trying to get in its great news – assuming the housing downturn is not so great that it knocks the economy for six and they lose their jobs. For investors…
What does it mean for investors?
Over the very long-term, residential property adjusted for costs has similar returns to Australian shares. So, there is a role for it in investors’ portfolios. However, right now the slump in property prices in some cities is bad news for investors given that rental yields are often just 1-2% after costs.
Falling rents in Sydney are a double whammy. Add to this uncertainty about tax and it’s not a great time for a property investor. That said, other cities and regional centres offer more attractive rental yields than Sydney and Melbourne and falling prices in Sydney and Melbourne will throw up opportunities at some point.
Dr Shane Oliver is the Head of Investment Strategy and Chief Economist for AMP Capital.
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How bad will the housing downturn get? Shane Oliver answers the burning questions

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Sydney’s current house price downturn is the sharpest in more than two decades, although the duration is yet to surpass the 2004-06 slump, according to Domain's latest House Price Report.
The report found that for the second time since Domain records began in 1993, house prices have fallen for four consecutive quarters, the only other period this occurred was in 2008. 
House prices fell 3.2% over the quarter and 9.9% over the year to $1,062,619. 
Unit prices fell 3.3% over the quarter and 5.8% over the year to $702,012.
<a href="https://www.propertyobserver.com.au/subscribe" target="_blank"><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/2019/1/1/Strip%20ad%20keep%20up%20in%202019.jpg" alt=""></a>
Domain Senior Research Analyst, Dr Nicola Powell said: "Despite the consistent quarterly moderations, the depth of the falls have not gained significant momentum. The pullback in price was anticipated given the stellar run of growth that lasted almost six years. Homeowners reaped an unprecedented gain of 89% over this period.
“Historical performance proves unit prices have a tendency to hold firmer than houses, with slumps being of shorter duration and intensity. Similar to houses, unit prices have also fallen for four consecutive quarters. The latest annual decline the steepest in more than 20 years, taking unit prices back to mid-2016 levels.
“Since changes to macroprudential policies began in late 2014, obtaining a home loan has become increasingly challenging. Although this has resulted in fewer buyers, it has removed the loans written on thin grounds. Having met more stringent lending standards, those who are active in the market are ready to transact.
"Astute investors, who are able to secure finance, may start to look to Sydney as they hunt for the right opportunity to purchase under softer market conditions. Educated investors will continue to take a careful approach, even with the 30% growth cap on interest-only loans lifted.
“Affordability is improving in the harbour city. First home buyers have fewer investors to compete against, greater choice and a wider window to make their purchase. This also provides opportunity for the upsize buyer. It may mean selling at a lower price point compared to the boom, but if buying and selling under the same market conditions, it is likely to be offset by a more affordable upsize purchase.”
<img src="https://www.urban.com.au/images/2019/1/23/Domain%20Q4%20Syd.JPG" alt="">
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