<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Interest Rates

<html><body><div class="page" title="Page 1">
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<div class="column"><span style="line-height: 1.3em;">GUEST OBSERVER</span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">Consumer sentiment predictably eased last week after a stellar gain in the previous week. </span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">Concerns about higher interest rates and the outlook for the housing market together with a softer Aussie dollar led to the modest softening of sentiment. But consumers are still more upbeat than a year ago and sentiment is above the short- term average. Also, the Reserve Bank believes that the question on the outlook for family finances is most instructive and the latest result is still well above average levels.</span></div>
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<br><span style="line-height: 1.3em;">The Reserve Bank Board rationalised the soft economic growth figures in the June quarter: </span><span style="line-height: 1.3em;">“The weakness in the June quarter had reflected temporary, weather-related disruptions to resource exports as well as the ongoing decline in mining investment.” </span><span style="line-height: 1.3em;">The Board expects a pickup in the September quarter. If this fails to occur, then this could prompt the Board to assess the need for more stimulus.</span>
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<br><span style="line-height: 1.3em;">Overall the RBA Board remains watchful – there are no indications that the neutral policy stance was likely to change any time soon.</span>
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<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">What do the figures show?</span></div>
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<br><span style="line-height: 1.3em;">Consumer sentiment</span>
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<br><span style="line-height: 1.3em;">The </span><span style="line-height: 1.3em;">weekly ANZ/Roy Morgan consumer confidence rating fell 2.0% to 113.3 in the week to October 18 from a 15-week high. Confidence is up 1.5% over the year and above the average of 111.4 since 2014.</span>
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<br><span style="line-height: 1.3em;">Four of the five components of the index eased in the latest week:</span>
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<span style="line-height: 1.3em;">The estimate of family finances compared with a year ago was </span><span style="line-height: 1.3em;">down </span><span style="line-height: 1.3em;">from +9 to +8;</span>
</li>
<li>
<span style="line-height: 1.3em;">The estimate of family finances over the next year was </span><span style="line-height: 1.3em;">down </span><span style="line-height: 1.3em;">from +30 to +25;</span>
</li>
<li>
<span style="line-height: 1.3em;">Economic conditions over the next 12 months was </span><span style="line-height: 1.3em;">steady </span><span style="line-height: 1.3em;">at -1; </span>
</li>
<li>
<span style="line-height: 1.3em;">Economic conditions over the next 5 years was </span><span style="line-height: 1.3em;"><span style="line-height: 1.3em;">down </span></span><span style="line-height: 1.3em;">from +13 to +11;</span>
</li>
<li>
<span style="line-height: 1.3em;">The measure of whether it was a good time to buy a major household item was </span><span style="line-height: 1.3em;">down </span><span style="line-height: 1.3em;">from +27 points to +23 points. </span>
</li>
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<p style="line-height: 1.3em;">The key quotes from the Board minutes:</p>
<p><span>Stronger growth expected: “Members noted that overall growth was expected to have strengthened in the September quarter, with indications of growth in resource exports and dwelling investment.”</span></p>
<p><span>Risks: “The key domestic sources of risk to financial stability, and stability of the Australian economy more broadly, revolved around developments in local property markets.”</span></p>
<p><span>Job market: “Members also noted that conditions in the labour market had strengthened further over recent months and were somewhat better than had been expected earlier in the year. Nevertheless, spare capacity remained in the economy, domestic cost pressures were very low and inflation was expected to remain consistent with the target over the next one to two years.”</span></p>
<p><span>Bank lending: “Banks were also reportedly becoming increasingly wary of lending to property developers in markets that were thought to be at risk of becoming oversupplied.”</span></p>
<p><span>Housing data: “In relation to lending for housing, members noted that the data on the split of lending to owner-occupiers and investors were of questionable quality at present.”</span></p>
<p><span>Imports of goods</span></p>
<p><span>The Australian Bureau of Statistics noted the following. “Preliminary analysis shows that goods debits (imports) on a balance of payments basis in original terms rose $1,562m (7%) to $25,043m between August and September 2015.</span></p>
<p><span>In seasonally adjusted terms, goods debits rose $332m (1%) between August and September 2015 to $23,853m. This is the highest on record surpassing the revised August 2015 estimate of $23,521m. Consumption goods rose $264m (3%) and non-monetary gold rose $161m (47%). Intermediate and other merchandise goods fell $59m (1%) and capital goods fell $34m (1%).</span></p>
<p><span>What is the importance of the economic data?</span></p>
<p><span>The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.</span></p>
<p><span>The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.</span></p>
<p><span>What are the implications for interest rates and investors?</span></p>
<p><span>CommSec expects no change to interest rates over the coming year. </span></p>
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<span style="line-height: 1.3em;"><span> </span><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>. </em></span><span style="line-height: 1.3em;"> </span>
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jchancellor-FAypfDUnLy

RBA tips firmer growth: CommSec's Savanth Sebastian

<html><body>
<p><span>When the RBA board decided to leave the cash rate unchanged at 2% in early October, the members finally noted growth in housing prices in Sydney appeared to have eased slightly in recent months.</span></p>
<p><span>It also noted auction clearance rates in Sydney and Melbourne had declined a little from their recent peaks.</span></p>
<p><span>"However, it was too early to be confident that these signs of slowing in housing price inflation would be sustained," they advised in their notes yesterday.</span></p>
<p><span>In relation to lending for housing, members noted that the data on the split of lending to owner-occupiers and investors were of questionable quality at present.</span></p>
<p><span>The available data suggested that there had been a modest decline in the growth of credit extended to investors in housing of late, which was consistent with the tightening in banks' lending standards in response to actions of the Australian Prudential Regulation Authority (APRA).</span></p>
<p><span>With housing credit growth overall remaining steady over the past year, there had reportedly been a slight pick-up in the growth of housing credit to owner-occupiers.</span></p>
<p><span>Dwelling investment had increased strongly over the year to June, despite recording a decline in the June quarter.</span></p>
<p><span>Building approvals had declined a little from their recent peak, but remained at levels that implied further growth in dwelling investment, albeit at a gradually declining rate.</span></p>
<p><span>Loan approvals for construction of new dwellings had also fallen over the past year. </span></p>
<p><span>Members noted that domestic sources of risk to financial stability in Australia continued to revolve mainly around developments in local property markets.</span></p>
<p><span>"In the context of recent developments in the housing market and household credit, members discussed the findings from the enhanced scrutiny of housing lending practices undertaken by APRA and the Australian Securities and Investments Commission since the end of 2014.</span></p>
<p><span>"This scrutiny and related work had shown that investor activity was considerably higher – and lending standards in some parts of the market weaker – than had originally been thought."</span></p>
<p><span>Members further observed that the risks in commercial property and the property development sector were rising.</span></p>
<p><span>"Building approvals for new apartments remained very strong over 2015, even though rental markets appeared soft in some areas.</span></p>
<p><span>"The divergence between commercial property valuations and rents had widened further, with strong domestic and foreign investor interest for new and existing office buildings in particular, even though vacancy rates were quite high.</span></p>
<p><span>It acknowledged while Australian banks continued to perform well, they were taking steps to enhance their resilience.</span></p>
<p><span>"Banks' asset performance continued to improve, profitability remained high, and the large banks had raised substantial amounts of capital in advance of forthcoming prudential requirements.</span></p>
<p><span>"Most banks had strengthened the serviceability metrics used in their mortgage lending and taken steps to slow the pace of growth in investor lending towards the prudential regulator's expectations.</span></p>
<p><span>"Banks were also reportedly becoming increasingly wary of lending to property developers in markets that were thought to be at risk of becoming oversupplied.</span></p>
<p><span>"Nonetheless, competition among lenders had intensified in the owner-occupied segment of the housing market and had continued to do so in parts of the business lending market.</span></p>
<p><span>"Members observed that a key challenge would be to ensure that lending standards at both Australian and foreign-owned banks did not weaken from this point."</span></p>
<p>Members noted that reductions in the cash rate earlier in the year continued to provide support to aggregate demand, particularly dwelling investment and household consumption.</p>
<p>Members also noted that conditions in the labour market had strengthened further over recent months and were somewhat better than had been expected earlier in the year.</p>
<p>Nevertheless, spare capacity remained in the economy, domestic cost pressures were very low and inflation was expected to remain consistent with the target over the next one to two years.</p>
<p><span>The key domestic sources of risk to financial stability, and stability of the Australian economy more broadly, revolved around developments in local property markets.</span></p>
<p><span>"Members noted that growth in lending for housing had been steady over recent months and that there were some signs of an easing in the strong rate of increase in dwelling prices in Sydney, in particular, although trends had been more varied in a number of other cities.</span></p>
<p><span>"At the same time, members judged that there were signs that the response of the banks to supervisory measures implemented by APRA were helping to manage risks in the housing market."</span></p>
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Too early to conclude housing price inflation tamed: October RBA minutes

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<div>Having recently listed on the securities exchange, Australian Finance Group (AFG) now opts to release its aggregate mortgage data on a quarterly basis, having previously released monthly figures.</div>
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<div>The figures for the September 2015 quarter, which are not seasonally adjusted, revealed a +16% year-on-year increase in mortgage volumes.</div>
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<span>Mortgage volumes have increased by more than +68% over the past three years, which may be partly reflective of changes in market share. </span><br><br><strong><span style="text-decoration: underline;">Average mortgage size soars</span></strong><br><br><div>Significantly the average new mortgage size in Australia has soared further from $433,000 to $471,000 over the past year.</div>
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<div>Unsurprisingly, the main driver of the gains has been the average size of mortgages sold in New South Wales which has jumped by more than $60,000 over the past year, and has soared from $454,000 to $584,000 over the past three years. </div>
<div> </div>
<div>Over the past year the average mortgage size also increased significantly in Victoria (+$34,000), Queensland (+$24,000), South Australia (+$30,000).</div>
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<div>There were also increases over the last year in Western Australia and the Northern Territory, but these resources states saw declines in their respective average mortgage sizes in Q3 2015.</div>
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<div><strong><span style="text-decoration: underline;">Investor market share declines</span></strong></div>
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<div>Perhaps the most significant aspect of this release was the very sharp drop in investor market share.</div>
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<div>According to AFG the investor share appears to have stabilised in recent months at around 32 to 33% of the mortgage market.</div>
<div> </div>
<div>Notably investor market share for Q3 2015 of just 33% was well below the 3 year average of 38%.</div>
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<div class="separator">This once again implies that APRA's advisory speed limit of +10 per cent annualised credit growth in relation to invetsment loans will be comfortably met in due course, and the housing market story going forward will largely be one of to what extent owner-occupier loans pick up the slack.</div>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Westpac taps the market with raising</span></strong></div>
<div class="separator"> </div>
<div class="separator">This morning Westpac went into a trading halt and announced that it would be tapping investors for a $3.5 billion renounceable entitlement offer in order to bolster its capital position, while noting in a separate announcement to the ASX that it will be whacking 20bps onto its home loan and investment loan rates, effective from November.</div>
<div class="separator"> </div>
<div class="separator">It is widely expected that the other retail banks will follow suit in due course in respect to mortgage rates.</div>
<div class="separator"> </div>
<div class="separator">This move seems likely to be a game changer for cash rate futures markets, with another interest rate cut from the Reserve Bank as soon as next month already considered by some to be an each way bet.</div>
<div class="separator"> </div>
<div class="separator">If Thursday's employment data is weaker than expected then a rate cut in November may become more likely than not.</div>
<div class="separator"> </div>
<div class="separator">AFG noted in its release that many borrowers consider further rate cuts to be increasingly likely, with fixed rate mortgages declining to just 11.3% of total loans processed for the quarter, which is the lowest level for more than three years. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Average mortgage size soars: Pete Wargent

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<p><span>GEUST OBSERVER</span></p>
<p><span>Westpac’s move to increase interest rates on its owner occupier loans will be the first from many lenders</span><span>. </span></p>
<p><span>We find that when one of the majors make a change like this, others </span><span>follow.</span></p>
<p><span>Mozo calculates Westpac will earn an extra $1.59 million in interest each day from its decision which will impact existing and new owner occupier and investor loan customers. </span></p>
<p><span>With APRA’s requirements not due until 1 July 2016, Westpac has made a bold move to increase rates so early, but we’re going to see a lot more of it over the coming months.</span></p>
<p><span style="line-height: 1.3em;">Despite rates being at record lows, lenders are looking at ways to meet APRA”s capital requirements including raising rates, not passing on official interest rate cuts or curbing discounts.</span></p>
<p><span>If the RBA cuts rates on Melbourne Cup day, we could see banks holding back part of a rate cut or not passing on cuts altogether.</span></p>
<p><span>The ‘borrower bonanza’ of sub 4% variable rates and incentives we’ve seen lately may become a distant memory come 2016.</span></p>
<p><span>In another measure to increase the ratio of deposits as a funding channel, Westpac, St George, </span><span>Bank of Melbourne and Bank of SA have increased at call and term deposit rates. </span></p>
<p><span>Westpac upped the introductory </span><span>rate on its eSaver account by 6 basis points to 3.31% and its 4 and 6 month term deposits by 10 basis points and 1 year term deposit by 5 basis points in September. This comes after a 14 basis point increase in August for the eSaver introductory rate to 3.25%. </span></p>
<p><span>After a long period of uncompetitive savings rates, deposit holders might have some light at the end of the tunnel with rates likely to increase over the next six months, thanks to the new capital rules.</span></p>
<p><span>It would be highly unlikely for any of the Big 4 banks not to follow Westpac’s early lead - which will also see them gain new deposit business.</span></p>
<p><em>Kirsty Lamont is marketing director of <a href="https://mozo.com.au" target="_blank">Mozo</a>.</em></p>
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More rate hikes to follow Westpac move: Mozo's Kirsty Lamont

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<p><span>Westpac will raise its home lending rates by 20 basis points to help boost its capital reserves. </span></p>
<p><span>The surprise move lifts mortgage rates on residential property by 20 basis points, for owner occupiers and property investors.</span></p>
<p><span>The new rates will take effect from November 20.</span></p>
<p><span>The country's second biggest bank will increase headline owner-occupier rates to 5.68%, and investor rates to 5.95%.</span></p>
<p><span>Chief executive Brian Hartzer said the capital raising places its capital ratio "within the top quartile of banks globally".</span></p>
<p><span>"Capital raised responds to changes in mortgage risk weights that will increase the amount of capital required to be held against mortgages by more than 50%, with the increased regulatory required to be applied from July 1, 2016," the bank statement said.</span></p>
<p><span>The increase in mortgage rates would also help meet the capital requirements, it said. </span></p>
<p><span>UBS and Merrill Lynch are handling the capital raising for the bank. <span>The changes apply only to Westpac-branded loans, not St George, Bank of Melbourne or BankSA.</span></span></p>
<p><span>The <em>Australian Financial Review's Chanticleer</em> columnist Tony Boyd wrote <span>Westpac's decision to share the pain of higher capital charges with shareholders and home loan borrowers will "deliver a big jolt to the economy - and fend off a potential hedge fund attack."</span></span></p>
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Westpac to raise home loan rates for all by 20 basis points in November

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<div class="column"><span style="line-height: 1.3em;">GUEST OBSERVER</span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">The latest housing finance statistics certainly point to some interesting reading. Not only is the size of the average home loan holding at a record high, but it is growing at the fastest pace in 12 years. </span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">Over the past year the average home loan grew by 15.4% and is showing no signs of slowing down. Clearly the lift is been fuelled by the low interest rate environment.</span></div>
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<br><span style="line-height: 1.3em;">Policymakers would be encouraged by the lift in owner-occupied loans at the expense of investor finance. The value of investment loans has now fallen for three out of the past four months. Overall the housing finance statistics do not suggest a huge pullback in home landing, although there are signs that activity levels are starting to ease. Over the next few months the tighter bank lending standards will filter through to the housing statistics.</span>
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<br><span style="line-height: 1.3em;"><span style="line-height: 1.3em;">There is no doubt the pullback in investor loans is a positive, and will help to cool property prices but housing is all about demand and supply. Encouragingly loans to build new homes lifted after falling for the prior three months. If there is a substantial pullback in new construction it could be more of a detriment in the longer-term. The situation bears watching but at present the anticipated lift in supply over the coming year coupled with tighter lending  </span></span><span style="line-height: 1.3em;">standards should result in home prices easing and rents also falling. </span>
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<p><span>What do the figures show? </span></p>
<p><span>Housing finance</span></p>
<span style="line-height: 1.3em;">The </span><span style="line-height: 1.3em;">number </span><span style="line-height: 1.3em;">of new owner-occupier housing loans (commitments) rose by 2.9% in August. Excluding the refinancing of dwellings, the number of loans was up by 5.2%.</span><br><p style="line-height: 1.3em;">Loans by owner-occupiers for the construction of homes rose by 2.4% in August; loans to buy newly-erected dwellings rose by 2.6% and loans for the purchase of established dwellings (excluding refinancing) rose by 6.0%. The number of refinancing transactions fell by 1.5%.</p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Housing finance - value</span></p>
<p style="line-height: 1.3em;">The value of new housing commitments (owner occupier and investment) rose by 3.5% in August.</p>
<p style="line-height: 1.3em;">Owner-<span style="line-height: 1.3em;">occupier loans rose by 6.1% while investment loans fell by 0.4%.</span></p>
<p style="line-height: 1.3em;">The value of loans by owner-occupiers and investors to build new homes rose by 2.8% in August after falling by 0.4% July. The value of loans to build stood at $2.6 billion, easing further from the record high of $2.9 billion in December 2014.</p>
<p style="line-height: 1.3em;">Housing finance – other statistics</p>
<p><span>The proportion of first-time buyers </span><span>in the home loan market rose from 15.4% to 15.7%in August. (However the figures take into account refinancing loans and as such the figures may be skewed). </span><span>Fixed rate loans </span><span>fell from 9.9% to 9.6% of all loans in August – a four year low. And the </span><span>average home loan </span><span>across Australia stood at $371,200 in August, up 15.4% on a year ago – the fastest pace of growth in 12 years. </span></p>
<p><span>What is the importance of the economic data? </span></p>
<p><span>Housing Finance </span><span>data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market. </span></p>
<p><span>What are the implications for interest rates and investors? </span></p>
<span style="line-height: 1.3em;">The Reserve Bank will be keeping a close eye on the housing market. The hope would be that while housing plays an integral part in driving the broader growth story, other sectors step up to the plate given the attractive low interest rate environment. In particular policymakers would be hoping that the non-mining business sector looks to invest and create more employment over the coming year.</span>
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<div class="column"><span style="line-height: 1.3em;">CommSec expects the Reserve Bank to remain on the interest rate side lines over the coming year. </span></div>
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<div class="column"><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></div>
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Home loans growing at fastest rate in 12 years: CommSec's Savanth Sebastian

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<p>GUEST OBSERVER</p>
<p>As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 2%.</p>
<p>Arguably the Governor’s statement in October represents the fewest number of changes to the previous month’s statement that we have ever seen. This may be a clear strategy to discourage markets from expecting any imminent change in policy. Of course this is particularly important given that the next meeting will be in November, which is one of the four meetings per year where the Bank reviews its forecasts for both growth and inflation and therefore represents the most likely timing for a policy adjustment. In providing minimal wording changes the signal seems quite clear that it is unlikely that the Bank will see the need to substantially revise its growth forecasts and therefore need to further ease rates.</p>
<p>The most important change in wording was around the assessment of “regulatory measures”. In September the statement merely recognised that the policies were in place whereas in October “regulatory measures are helping to contain risks that may arise from the housing market”. This might seem to be a marked increase in confidence over the month although the minutes to the September meeting noted that “there were indications that the measures implemented by APRA had slowed the growth in lending for investment housing”.</p>
<p>Another change was around house prices where in September prices were acknowledged to have continued to rise strongly in Sydney whereas in the October statement both Sydney and Melbourne were singled out for “strongly rising prices”.</p>
<p>The key consistent themes around “softening conditions in China and east Asia”; “moderate expansion in the Australian economy”; “stronger growth of employment and a steady rate of unemployment over the past year”; “economy operating with a degree of spare capacity”; “inflation under control even with a lower exchange rate” were repeated in this statement.</p>
<p>As expected the wording around the Australian dollar was unchanged,” The Australian dollar is adjusting to the significant declines in commodity prices.” There was also no reason to change the commentary around the Australian dollar which prior to the September meeting was around US 71.20 and today is around US 70.80, with iron ore prices generally stable.</p>
<p>Of course the most important part of the statement is the closing paragraph which is repeated word for word from the September statement. Recall that this statement is ‘middle of the road’. On the one hand not signalling a specific change with terms such as ‘for the time being’ or ‘scope’  but  also not using the language of 2014  ‘the most prudent course is likely to be a period of stability in interest rates’.</p>
<p><strong>Outlook</strong></p>
<p>Markets have shaved the probability of a move this year to around 40% but still have a 100% probability of a move by February/March next year.</p>
<p>It is our view that the Bank will not need to sufficiently change its growth forecasts for 2015 and 2016 that would necessitate further policy support. That would mean rates on hold in both 2015 and 2016. However, risks on rates remain to the downside particularly around the global outlook; the terms of trade; and the labour market.</p>
<p><span><em>Bill Evans </em></span><em>is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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Governor’s recent statement discourages November rate move: Westpac's Bill Evans

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<p><span style="line-height: 1.3em;">GUEST OBSERVER</span></p>
<p><span style="line-height: 1.3em;">The cash rate has been left at a record low of 2% for a fifth month (six months of rates at 2%). The Reserve Bank has left the accompanying statement the same – almost word-for-word.</span></p>
<p><span>The Aussie dollar rose by a third of a cent as investors gave up on hopes for a rate cut in the future. </span><span>What does it all mean?</span></p>
<p><span style="line-height: 1.3em;">In outlining where the Reserve Bank stands on interest rate settings, the Governor recently told the House of Representatives Economics Committee, </span><span style="line-height: 1.3em;">"I think we are pretty content where we are right now.” </span><span style="line-height: 1.3em;">And little more needs to be said.</span></p>
<p><span style="line-height: 1.3em;">The key question now, is what will be the next move on rates? It is clear to us that the economy is picking up momentum but there are still challenges ahead, so interest rates should remain on hold. But there is certainly no case for rate cuts. </span></p>
<p><span style="line-height: 1.3em;">Consider:</span></p>
<p><span style="line-height: 1.3em;">Car sales are at record highs</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Building approvals are at record highs</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Job ads have lifted for 14 of the last 16 months</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Employment has posted the biggest 6-month gain in 41⁄2 years</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Manufacturing &amp; services sectors are expanding</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">The Aussie dollar has fallen around US17 cents over the past year</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">The only real changes to the text of the statement. In September: </span><span style="line-height: 1.3em;">“Equity markets have been considerably more volatile of late, associated with developments in China, though other financial markets have been relatively stable”</span><span style="line-height: 1.3em;">. In October: </span><span style="line-height: 1.3em;">“Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired.”</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Also, in September: </span><span style="line-height: 1.3em;">“The Bank is working with other regulators to assess and contain risks that may arise from the housing market.” </span><span style="line-height: 1.3em;">In October: </span><span style="line-height: 1.3em;">“Regulatory measures are </span><span style="line-height: 1.3em;">helping to contain risks that may arise from the housing </span><span style="line-height: 1.3em;">market.”</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">The only other change: the Reserve Bank noted </span><span style="line-height: 1.3em;">“Dwelling prices continue to rise strongly in Sydney and Melbourne...” </span><span style="line-height: 1.3em;">In September it only referred to prices in Sydney.</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Bottom line is that there has been no change to the neutral policy stance – a stance that suggests that the next move in rates could be either up or down. </span></p>
<p style="line-height: 1.3em;"><a href="/images/2015/10/06/Screen%20Shot%202015-10-06%20at%209.24.39%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;"><img src="/images/2015/10/06/Screen%20Shot%202015-10-06%20at%209.24.39%20PM.png" alt=""></span></p>
<p style="line-height: 1.3em;"> </p>
<p style="line-height: 1.3em;"><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em></p>
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RBA's contentment with neutral stance maintained: CommSec's Craig James

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<p>The Reserve Bank of Australia (RBA) has kept the official cash rate at 2%, for the fifth month. The meeting noted r<span>egulatory measures are helping to contain risks that may arise from the housing market. </span></p>
<p>CoreLogic RP Data head of research Tim Lawless said the flat rate of growth across the Sydney housing market last month, together with a slowdown in investment related mortgage activity wasn’t enough to sway the RBA into another interest rate cut this month. </p>
<p>"We saw the rate of capital gain flatten out across the Sydney housing market during September, however the trend rate of growth remains very strong, with Sydney values almost 17% higher over the past twelve months and 4.6% higher over the September quarter," he said.</p>
<p>"In contrast, Australia’s second largest housing market has gathered some momentum over the past quarter, outperforming Sydney with a 2.4% rise in dwelling values last month and a 7.4% shift over the quarter. Other housing market data is suggesting that conditions may be slowing, with clearance rates reducing to the low 70% range in both Sydney and Melbourne on higher volumes and the number of homes available for sale rising higher than a year ago, providing prospective buyers with more options and less urgency in their decision making. </p>
<p>"With the Aussie dollar holding around the US$0.71 mark, inflation remaining low and labour market conditions relatively steady, the RBA is in a good position to keep interest rates at their record lows.</p>
<p>"The slower capital gain conditions in Sydney may give the RBA some flexibility when considering future interest rate movements, however if the Melbourne market continues to gather pace as Sydney slows down, the effects of slower conditions in Sydney may not be seen in the headline readings for housing market performance. </p>
<p>"With interest rates remaining on hold, borrowers are still enjoying historically low mortgage rates which should continue to drive demand for housing."</p>
<p> </p>
<p>Laing+Simmons managing director Leanne Pilkington supported the RBA’s decision to leave interest rates on hold as the wider market undergoes several key shifts heading towards summer.</p>
<p> </p>
<p>“By maintaining the low interest rate environment for the foreseeable future, the Reserve Bank is providing stability to a real estate market that is otherwise undergoing a significant transition at the moment,” Ms Pilkington said.</p>
<p> </p>
<p>“Firstly – and at long last – we are beginning to see new stock come online and present some more options for buyers. This is the result of a combination of factors, including a new wave of development bringing new supply as well as the spring selling season playing out.</p>
<p> </p>
<p>“As a consequence auction clearance rates have been lower in recent weeks, albeit from an extremely high base, as buyers exercise the discretion that comes with more alternatives.</p>
<p> </p>
<p>“Nevertheless, warnings about auction bloodbaths and plummeting prices remain the domain of doomsayers as opposed to actual experts in the market."</p>
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RBA holds rates at 2% for fifth month

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<p>Statement by Glenn Stevens, Governor: Monetary Policy Decision</p>
<p>At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.</p>
<p>The global economy is expanding at a moderate pace, with some further softening in conditions in China and east Asia of late, but stronger US growth. Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. Australia's terms of trade are falling.</p>
<p>The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease policy. Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.</p>
<p>In Australia, the available information suggests that moderate expansion in the economy continues. While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.</p>
<p>In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney and Melbourne, though trends have been more varied in a number of other cities. Regulatory measures are helping to contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.</p>
<p>The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.</p>
<p> </p>
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