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

Joel Robinson

Units lead Melbourne price growth as apartments outperform houses: RPM

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

Frith & Howarth to deliver Brunswick’s largest apartments

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

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

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

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

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

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

Investment Loans

<html><body>
<div>If it seemed that the big capital city housing markets were strengthening into Christmas then so it was, with a massive 4.9 percent jump in investment loans to a 17-month high of $13.3 billion, up 21.4 percent from a year ago in seasonally adjusted terms. </div>
<div> </div>
<div>It never pays to get too excited about month to month changes, but even with the ABS drilling its trend line through the figures it's clear than investors were resurgent. </div>
<a href="https://www.propertyobserver.com.au/images/2017/01/18/HF1.jpg" target="_blank">Click to enlarge</a>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/18/HF1.jpg" alt=""></div>
<div class="separator"> </div>
<div>Total housing finance increased by 2.2 percent in the month to a strong $32.7 billion.</div>
<div> </div>
<div>Ex-refinancing, the number of owner-occupier loans picked up in the month, but the real story is the huge flip back to investment loans. </div>
<a href="https://www.propertyobserver.com.au/images/2017/01/18/HF2.jpg" target="_blank">Click to enlarge</a>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/18/HF2.jpg" alt=""></div>
Average loan sizes are now clearly trending up again, having been knocked back by the first salvo of macroprudential measures to curb investor lending. 
<a href="https://www.propertyobserver.com.au/images/2017/01/18/HF4.jpg" target="_blank">Click to enlarge</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/2017/01/18/HF4.jpg" alt="">
 
<div>In the owner-occupier markets, Melbourne and to some extent Queensland are seeing strong mortgage volumes for owner-occupiers. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/01/18/HF3.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/18/HF3.jpg" alt=""></div>
<div class="separator"> </div>
<div>The number of first homebuyer loans jumped from 7,302 to 8,281 in November in original terms, but overall it's a tough environment for first homebuyers in Sydney (which in part accounts for why so many are turning to investment property as a first purchase).  </div>
<a href="https://www.propertyobserver.com.au/images/2017/01/18/HF5.jpg" target="_blank">Click to enlarge</a>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/18/HF5.jpg" alt=""></div>
 The wrap - $1 trillion of home loans 
<div>Investment loans increased for the sixth time in seven months, and this one was a big leap, taking the year-on-year increase to above 21 per cent, the highest such percentage increase since the peak of the Sydney boom in Q2 2015. </div>
<div> </div>
<div>In part thanks to net loan reclassifications and some cases of 'switching' of loan purpose, the stock of outstanding investor loans increased by only 3 per cent over the year to November.</div>
<div> </div>
<div>Owner-occupier loans outstanding on the other hand surged by more than 9 per cent to pass $1 trillion.</div>
<div> </div>
<div class="separator"><a href="https://4.bp.blogspot.com/-g5-Tg33GHjs/WH31_I5OUZI/AAAAAAAAhRU/VCV8q8CCN5c4WJuXe286wL37ZzkAc-_yQCLcB/s1600/HF6.jpg"><img src="https://4.bp.blogspot.com/-g5-Tg33GHjs/WH31_I5OUZI/AAAAAAAAhRU/VCV8q8CCN5c4WJuXe286wL37ZzkAc-_yQCLcB/s640/HF6.jpg" width="640" height="356"></a></div>
<div> </div>
<div>Regardless of the blurred classification of outstanding credit, the key takeaway is that investors were pouring back into the market in late 2016, particularly in Sydney and Melbourne,</div>
<div> </div>
<div>I'll look as those investment loans in more detail and by state. </div>
<div> </div>
<div>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>. </div>
</body></html>

pwargent-M4siyDbqQY

APRA shrugged? Investments loans up 21 percent: Pete Wargent

<html><body>
National Australia Bank have cut their three-year fixed investor interest only deals, making it the cheapest lender of the big four.
CBA have their rates at 4.29 percent, ANZ are at 4.49 percent and Westpac are the only one breaking the 4.5 percent barrier at 4.54 percent.
NAB were the last of the big four banks this month to announce it was moving a number of its fixed rate loans, with the other three making cuts earlier in March.
Some loans, such as the five-year fixed owner occupier principal and interest, has been by 50 basis points. It went from 4.59 percent to 4.09 percent.
Three-year, interest-only fixed deals for investors have dropped from 4.49 percent to 4.19 percent.
All the changes only apply to new fixed rates deals and not for existing borrowers.
A NAB spokeswoman said the changes was a result of the bank wanting “to help Australians achieve their property goals.”
The Reserve Bank of Australia board this week kept the cash rate on hold at 1.5 per cent.
AMP Capital's Shane Oliver, among other experts, believes there may not be another cash rate move until later this year or in 2019.
 
 
</body></html>

jonathanchancellor-7SQnKwU6yx

NAB cut investor interest only deals and outdo other big four 

<html><body>
GUEST OBSERVER
The real estate sector has been a key driver of China’s economic growth in recent years, helping to support the economy during the transition away from growth led by investment in heavy industry towards domestic consumption.
However, this growth has also built a sizeable debt burden which will have to be carefully managed in coming years to avoid a major downturn. 
This is the first of two parts looking into the real estate sector. This part provides a high level view of the importance of the sector and recent trends, while part two will look at the risks related to the sector going forward.
PROPERTY SECTOR A CORE COMPONENT OF CHINA’S ECONOMY
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/CORELOGIC%201.jpg" alt="">
Private ownership of real estate has a short history in China. Prior to the period of opening up that commenced in 1978, all property was state-owned. Two decades of gradual reforms saw the introduction of ‘commodity houses’ in 1998 – private properties that could be bought and sold at market prices. Chinese residents embraced home ownership – with surveys conducted by Peking University showing that around 90% of households own their home.
The property sector is a critical part of China’s economy, and has been a major driver of growth over the past decade. In 2017, the broad sector (accounting for construction and real estate services) comprised 13.2% of China’s economy – compared with 10.8% a decade earlier, highlighting above average growth over this period. The IMF estimates that when combined with upstream and downstream demand (including cement and steel, along with furniture, electronics and automobiles), real estate drives around a quarter of the Chinese economy.
Similarly, investment in real estate (as a share of GDP) rose sharply from the start of the century – peaking at almost 15% of GDP in 2014, before easing back to 13.3% in 2017. The residential sector accounts for over two-thirds of this total. The trend over this period was supported by the mass migration of Chinese residents from rural areas to cities, as well as a substantial improvement in the quality of housing for existing urban residents.
Property a major part of the economy 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/CORELOGIC%202.jpg" alt="">
Real estate’s importance to the financial sector has also increased in recent years. Outstanding loans to real estate have rapidly increased over the past decade – from around RMB 4.8 trillion to over RMB 32 trillion in Q4 2017. This increase has outpaced lending growth to other sectors as well as the broader economy– with real estate lending (as a percentage of GDP) increasing from 18% a decade ago to around 39% at the end of last year. Although this share is not particularly high when compared with advanced economies – particularly Australia (where it is around 90% of GDP) and the United States – its rapid growth poses some concern.
The key contributor to the increase in real estate lending has been residential mortgages – with the mortgage share of total real estate lending rising to 74% in December 2017, up from 63% in December 2007. In addition, the property sector has lured funds from the shadow banking sector (although data on this sector is patchy at best). In Q3 2017, around 10% of funds from the trust sector (one component of shadow banking) were invested in real estate. 
Property loans have grown rapidly 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/CORELOGIC%203.jpg" alt="">
Finally, the sector has been extremely important to government balance sheets – with land sales a major source of revenue for the often highly indebted local governments. In 2016, land sales accounted for almost 26% of the total – although this share varies widely across the country. Governments also benefit from tax revenue from the real estate sector – although at present there are no residential property taxes. The sector is also been a major employer – around 27 million people were employed in construction in 2016, with a further 4 million in real estate management, which together accounts for almost 18% of urban employment (and with it income tax revenue). 
Land sales still a major source of funding 
This implies that there are various bodies – both state and private – that benefit from continued growth in construction and property development, despite growing concerns around oversupply once again. This incentive to continue to expand increases risks around China’s economy. 
RECENT TRENDS IN PROPERTY 
China’s previous residential property cycle peaked in April 2014 – following a period of domestic and international concern around potential price bubbles and overbuilding (particularly in so-called ghost cities). Aggregate prices for 70 major cities fell over the next twelve months before the recovery commenced (led by the largest Tier 1 cities – Beijing, Shanghai, Shenzhen and Guangzhou).
During this period, there was a substantial slowdown in investment in the real estate sector – with the rate of growth down from around 15% yoy (on a three month moving average basis) to -0.6% yoy (3mma) by November 2015. This resulted in a drop in construction activity, with residential starts (measured in square metres of floor space) falling considerably between February 2014 and January 2016. These weaker conditions flowed through into the next link in the chain – local government revenues from land sales fell 24% in 2015 on weaker demand from developers. 
PROPERTY PRICES BY TIER - Vast disparities between China’s cities 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/CORELOGIC%204.jpg" alt="">
However, investment in real estate recovered in 2016 – as easing property purchase restrictions allied to a credit boom, fiscal stimulus and poor performance in other asset classes supported a fresh surge in property demand and construction activity. Much of the attention was focussed on the extraordinary price increases in tier 1 cities – by September 2016, prices in these locations were 40% above their April 2014 peak – however these cities accounted for just 8% of real estate investment in 2016 (IMF). The majority of investment (59%) occurred in smaller tier 3 and 4 cities (where prices in December 2017 were only 4.0% above the previous peak), where concerns around oversupply have been higher.
This growth provided a major boost to China’s economy in 2016 – at a time where fears of a hard landing were elevated. In real terms, real estate and construction grew by 8.6% and 7.2% respectively in 2016, well above the rest of the economy. 
Growing fears around overheating property markets have seen a tightening in property policies since this time– including higher down payments, restrictions on finance and tighter eligibility for purchases – however these policies have varied across the country. Prices stabilised in tier 1 cities and growth slowed substantially in tier 2 ones. As a result, the strong growth in construction starts and property sales in the first half of 2017 slowed considerably in the second half.
CONCLUSIONS 
We anticipate the slowing trends generally exhibited across the property sector in late 2017 will extend into this year. Slowing sales and softer price trends should flow through into weaker construction activity – which would have downstream effects for steel and cement demand (along with Australian iron ore) and local government revenues (with land sales likely to fall as well). 
Gerard Burg is senior economist - Asia Group Economics at National Australia Bank.
</body></html>

j.ballantyne1990-6AQqhLzZaK

China's property sector slowing amid growing fears of overheated market: NAB's Gerard Burg

<html><body>
Heritage Bank, the nation's second largest mutual, will stop offering property investment loans amid fears it is close to the regulatory speed limit on lending growth set by APRA.
after recent attractive offers attracted a deluge of borrowers.
It follows the decision of CUA, the nation's largest mutual, to stop writing new loans for property investors because demand is so strong.
The combined lenders have about $17.5 billion of assets and account for about 1.5 per cent of the total property lending market.
Their withdrawal from the market highlights continued strength of buyer demand in Melbourne and Sydney at the beginning of peak Spring sales and the inherent disadvantage on smaller lenders of a blanket 10 per cent cap.
Major banks, which because of their size can write much more loans and comfortably remain within limits, are cutting rates, waiving fees and offering lucrative promotional packages.
It also means that other lenders offering investment loans will come under greater pressure to remain within the caps from borrowers chasing the best deals.
Heritage Bank said it will "temporarily stop" accepting new applications for investment loans to ensure it remains "comfortably" within Australian Prudential Regulation Authority limits.
Under the restraints, which are intended to cool demand and direct buyers away from riskier interest-only loans, investor lending growth must remain under 10 per cent and interest-only loans can only total 30 per cent of all loans in a quarter.
"Heritage has experienced a sharp increase in the proportion of investment lending in our new approvals," the bank said.
"That's the result both of our attractive pricing structure and the actions of competitors in the market place," it said.
In July, Heritage chief executive Peter Lock said investment lending was only 2 per cent of mortgage growth, well below the 10 per cent regulatory cap.
Mr Lock warned he did not want the bank to become "an open harbour" to borrowers declined by other lenders as it launched highly competitive one and three-year fixed rate investment mortgages.
In recent weeks it has attempted to correct the lending imbalance and increase principal and interest lending by increasing interest-only investment lending rates and imposing an 80 per cent loan-to-value cap on interest-only loans for investment lending.
"We need to manage our investment lending carefully, to ensure we stay within the caps APRA has placed on growth in investor and interest only lending," the bank said.
In addition, its Family Guarantee packages will from today only be on offer to owner-occupier borrowers.
The bank is also introducing loan-to-value pricing tiers for two of its home loan products.
It means borrowers with smaller deposits will pay higher interest rates to "account for the higher risk".
It will calculate the new rate on the total amount funded, which will include fees and charges.
Heritage is offering a discount variable rate of 3.97 per cent for owner occupiers with a deposit of at least 20 per cent.
A spokesman for CUA said it continues to monitor investment lending but has no immediate plans for their reintroduction.
It is offering investment loans to some established customers that meet borrowing criteria.
</body></html>

Investment Loans

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Investment Loans

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News