<p>Boutique developer SIERA has recently completed PIPIS, a rare, absolute beachfront address that embodies the best of the southern Gold Coast.</p>

<p>PIPIS was delivered in under three years, an achievement that reflects SIERA’s considered yet efficient approach. After securing the prime Golden Four Drive site in late 2022, the team refined the approved design and delivered a boutique collection of 19 residences, including two double-storey penthouses, homes that demonstrate how precision, craftsmanship and a disciplined approach to design can make the most of a rare beachfront location.</p>

<p>[smartcode_project:default project_id=138311 project_image_fid=353604]</p>

<p>With construction now complete and residents settled in, the final sub-penthouse offers a rare opportunity to join an address that captures the calm and quality of true beachfront living on the southern Gold Coast.</p>

<p>Beyond its location, PIPIS distinguishes itself through the depth of its amenity and the way those spaces are considered. Every element, from the magnesium lap pool and tropical landscaping to the dedicated dog wash and reformer Pilates equipment, has been planned with the residents’ day-to-day lives in mind. It’s not just what’s included, but how thoughtfully it’s executed.</p>

<p>[smartcode_project:default project_id=138311 project_image_fid=353605]</p>

<p>What truly sets PIPIS apart is the construction quality and craftsmanship, a hallmark of SIERA projects since its inception in 2014.</p>

<p>“Design and construction quality is the absolute first priority at SIERA,” says Managing Director Brent Thompson. “It’s the most important aspect of any project we do, before speed of delivery, before sales. If you can guarantee build quality, then the rest will fall into place.”</p>

<p>Thompson says the company’s reputation has been built on trust and lived experience rather than marketing promises. “What we want at SIERA is for future purchasers to speak to our past purchasers and ask them what it’s like living in a SIERA building. If we haven’t delivered on what we’ve promised previously, we won’t be successful in the future.”</p>

<p>[smartcode_project:default project_id=138311 project_image_fid=6572]</p>

<p>With a background in construction, Thompson’s hands-on approach is a key part of SIERA’s success. “If buyers are putting faith in the SIERA brand, it’s my responsibility that we deliver absolute quality and the highest level of service.”&nbsp;</p>

<p>But for Thompson and SIERA, liveability goes far beyond build quality. Every project begins with a clear understanding of who it’s being designed for. “Before we commit to buying a piece of land to develop, we consider who will reside there and what will matter to them,” Thompson says.</p>

<p>Every residence at PIPIS has been designed to open to the breeze, the natural light, and the sound of the ocean. Broad balconies extend living spaces outward, while the use of robust, tactile materials ensures each home feels grounded and easy to live in. It’s a design shaped by Queensland’s climate and a genuine understanding of how people want to live by the beach.</p>

<p>[smartcode_project:default project_id=138311 project_image_fid=353606]</p>

<p>Location was central to the vision for PIPIS. It was designed for people who know what makes the southern Gold Coast special, those who live here year-round and those who return whenever they can. “Our buyers all share the same mindset,” says Thompson. “They want to be close to Kirra, Palm Beach and Coolangatta, yet still have privacy and calm. They prefer smaller, well-crafted buildings to big towers, and they want to walk straight onto the beach. PIPIS was built around that sense of ease and familiarity.”’</p>

<p>With construction complete and residents now settled in, the final sub-penthouse offers a rare chance to join an address that defines absolute beachfront living on the southern Gold Coast, a building conceived with care, built with precision, and unlikely to be repeated anytime soon.</p>

<p>[smartcode_project_cta:default project_id=138311]</p>


Joel Robinson

Quality assured: The sole focus driving SIERA’s Gold Coast apartment pipeline as PIPIS in Bilinga completes

<p>When apartments are the minority in a suburb, their success often hinges on what’s available without needing a car.&nbsp;</p>

<p>Raya by <a href="https://www.urban.com.au/developers/core-developments">Core Developments</a> arrives at a time when apartment options in Gungahlin remain limited, and demand for well-located, walkable housing continues to grow.</p>

<p>Located on Ernest Cavanagh Street, <a href="https://www.urban.com.au/new-apartments/raya-gungahlin-ernest-cavanagh-street-gungahlin-act-2912">Raya</a> places residents within the most active part of Gungahlin.&nbsp;</p>

<p>Retail, dining, education and transport are all within close walking distance, with many of the suburb’s primary amenities located within a 150 to 300 metre radius.</p>

<p>“Raya has got the best to both worlds. A great looking building, that will be built impeccably. It will stand the test of time, and add enduring value for any buyer. And, this is quite simply the best residential location in <a href="https://www.urban.com.au/developments/gungahlin-act-2912">Gungahlin</a> with immediate access to every amenity Gungahlin has on offer. You could quite easily sell your car if you move here,” James Herbert of <a href="https://www.urban.com.au/project-marketer/lj-hooker-project-marketing-act-0">LJ Hooker projects</a> said.</p>

<p><img alt="Raya, Gungahlin" data-entity-type="file" data-entity-uuid="266b0b21-f56b-4d93-9039-e9e17a2c4b71" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/e450173a099aaad8055757c92e45efb1-1600x0-c-default.png?VersionId=4X06Ja6e9pQTjOo4QKBEfKiRP1T7hR68" /></p>

<p>Marketplace Gungahlin - the suburb’s main shopping precinct - is less than a two-minute walk from the site. It offers access to major retailers including Woolworths, Aldi, BIG W and Kmart, along with a variety of services, medical centres, and fitness providers.</p>

<p>Dining options in the surrounding blocks are diverse and expanding. Longstanding local favourites like Le Bon Mélange and EQ Café are now joined by new arrivals such as Ikigai Ramen, The Usual and Sunday Canberra, reflecting Gungahlin’s emerging reputation as one of Canberra’s up-and-coming café and dining destinations.</p>

<p>While apartment living often calls for easy access to open space, Raya benefits from its proximity to several parks and recreational facilities. Yerrabi Pond District Park is just minutes away and offers walking trails, playgrounds, and picnic spots, as well as outdoor fitness equipment and a skate park.&nbsp;</p>

<p>Gungahlin Enclosed Oval and the Gungahlin Leisure Centre are also nearby, supporting a range of community and sports activities.</p>

<p><img alt="Raya, Gungahlin" data-entity-type="file" data-entity-uuid="6b2ebc21-8257-4144-ad11-3970a73d5125" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/RAYA_2Bed-Living_nochair_3000-2000x0-c-default_0.png?VersionId=BJUJN_k6tZL9p9Lzq13m9OzyyKPstKQY" /></p>

<p>Public transport is a core strength of the location. The Gungahlin Place Light Rail stop, one of the network’s terminal stations, is located less than 100 metres from the development, providing direct access to Canberra’s inner north and CBD. Several local bus routes also operate from the same area, making car-free commuting a realistic option.</p>

<p>The immediate area also includes a number of schools catering to all levels, from early years through to college. Franklin School is within walking distance, while Gungahlin College and Burgmann Anglican School are both around two kilometres away. Childcare centres, health services and veterinary clinics are all established in the precinct.</p>

<p>Medical clinics, pharmacies, allied health services and a public walk-in centre are all available within the town centre footprint.</p>

<p><img alt="Raya, Gungahlin" data-entity-type="file" data-entity-uuid="7b35a7c5-dbee-491a-8ec4-ee41c06505b5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Raya_INT03_Rooftop_FP_3000-1600x0-c-default_0.png?VersionId=mTcDlZi3gAUq_spekHAWlWd5kvCbTiH3" /></p>

<p>Raya comprises 166 one, two and three-bedroom apartments, each with a private outdoor area. Balconies start at eight sqm, with some larger configurations offering upwards of 50 sqm of external space - a feature that aligns with the nearby parklands and active public spaces.</p>

<p>Buyers can secure an apartment now with a five per cent deposit, ahead of the project’s 2027 completion.</p>

<p>[smartcode_project_cta:default project_id=149952]</p>


Raya: Rare apartment living in Gungahlin’s town centre

<p>Leeka Group has gone down the path of bringing a heightened level of wellness to its recently unveiled Melbourne apartment development, Comme Prahran.</p>

<p>It isn't in the form of a suite of amenities, given the building is more boutique in nature with just 32 apartments, but with clever inclusions designed to uplift their residents lifestyle.</p>

<p><a href="https://www.apartments.com.au/new-apartments/comme-prahran-182-194-commercial-road-prahran-vic-3181">Comme</a>, directly opposition the iconic Prahran Market on Commercial Road, has been designed by renowned architecture studio <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> and&nbsp;will introduce the first-of-its-kind multi-dimensional wellness offering, where physical, mental, social, environmental, and cultural well-being are embedded throughout.</p>

<p>“Prahran has long been a destination for culture, community and quality of life, and Comme builds on that in a deeply intentional way,” says Leeka Director, Chek Ming Cheng.&nbsp;</p>

<p>“This project introduces a new kind of urban sanctuary, one that adapts to individual definitions of wellness, whether that’s through nutrition, rest, movement, design or connection. Every space has been thoughtfully shaped to support the diverse rhythms of modern life."</p>

<p>[smartcode_project:default project_id=108413 project_image_fid=353544]</p>

<p>There will be a rooftop with a&nbsp;Zen garden designed by <a href="https://www.apartments.com.au/landscape-architect/plume-studio">Plume Landscape Architects</a>, offering&nbsp;a sensory experience that activates all five senses, an edible herb wall to taste, calming botanicals to smell, reflexology paths to feel, lush plantings to see and the gentle sounds of water and birdsong to hear.</p>

<p>Inside each residence, wellness is deeply personal, and Comme embraces this individuality with a suite of customisation options designed to enhance both health and lifestyle. Residents can tailor their homes with circadian lighting automation, supported by research linking it to improved well-being, better rest, and even longevity.&nbsp;</p>

<p>[smartcode_project:default project_id=108413 project_image_fid=353546]</p>

<p>Other add-ons residents can opt for include real-time air monitoring and purification systems, ensuring a cleaner, healthier environment, while blackout blinds help optimise sleep quality. Additionally, the option to include integrated smart home technologies and security measures with multiple controlled access points offers ease, convenience, and peace of mind, supporting day-to-day living and contributing to overall mental well-being.</p>

<p>Kitchens can be fitted with healthy cooking appliances such as steam ovens and taps for instant filtered, sparkling or hot water, while ensuites can be transformed into spa-style sanctuaries complete with steam showers, heated floors, rain heads, smart toilets, and sensor night lights to support restful sleep cycles. In the penthouse residence, further options include an outdoor spa for enhanced recovery and indulgence.</p>

<p>“Comme isn’t just about design, it’s about how space can support your day-to-day life," Chek added.</p>

<p>"Whether you like a steam shower, checking your indoor air quality, simply enjoying a quiet moment in the rooftop garden, or reflecting on the artworks in the building, wellness is part of your everyday routine, not an afterthought."</p>

<p>[smartcode_project:default project_id=108413 project_image_fid=353543]</p>

<p>The residences will feature open-plan layouts compliant with Better Apartment Design Standards (BADS), with floor-to-ceiling windows that maximise ventilation, natural light and thermal comfort. Finishes such as natural stones, timber flooring and low-VOC paints are complemented by facade design that filters dappled light and aids in thermal comfort.</p>

<p>Cera Stribley, Co-Founder, Domenic Cerantonio, said the first thing you notice is the light.</p>

<p>"Natural light floods the living spaces, casting a soft glow that instantly lifts your spirits. It's as if the outside world melts away, and you're cocooned in a peaceful oasis."</p>

<p>The gallery-style residential lobby will feature circadian-inspired lighting and artwork, while the ground-floor will offer retail and hospitality spaces.</p>

<p>The building’s mixed-use design fosters connection, with ground-floor retail and hospitality creating a vibrant, welcoming destination. These spaces are thoughtfully designed to enhance the precinct and bring it to life.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=108413 project_image_fid=353545]</p>

<p>Sustainability and environmental responsibility are integral to Comme Prahran’s DNA. All homes are gas-free and designed to a 7-star energy average, with double glazing, WELS-rated plumbing, and EV charging capabilities available. A light-coloured exterior has been chosen to minimise heat absorption, supporting thermal efficiency and reducing reliance on artificial cooling.</p>

<p>Honouring the cultural richness of Prahran, the project reimagines an Edwardian-era landmark, integrating its historic character into a contemporary architectural form. Art experiences will activate the residential and retail lobbies, and a dedicated artwork on the external eastern facade will enrich the building’s street presence, embedding it into the creative fabric of the neighbourhood.</p>

<p>&nbsp;</p>

<p>[smartcode_project_cta:default project_id=108413]</p>


Comme Prahran launches opposite Prahran Market

<p>Apartment developer Third.i has seen "overwhelming interest" in its recently unveiled new harbourside apartment project, The Rushcutters.</p>

<p><a href="https://www.apartments.com.au/new-apartments/the-rushcutters-51-57-bayswater-road-rushcutters-bay-nsw-2011">The Rushcutters</a>, which is being delivered in partnership with James Packer's NPACT, will comprise just 13 luxury two- and three-bedroom apartments.&nbsp;</p>

<p>Demand is predominantly coming from local downsizers.</p>

<p>[smartcode_project:default project_id=144646 project_image_fid=351903]</p>

<p>“We’ve been absolutely blown away by the level of interest in The Rushcutters,” said Luke Berry, Director and Co-founder Third.i Group.</p>

<p>“It’s clear that buyers are seeking more than just a place to live, they’re looking for a lifestyle upgrade. The ability to amalgamate apartments into expansive, whole-floor homes is a game-changer for downsizers who want space without the maintenance of a traditional house.”</p>

<p>The Rubinstein Group is marketing the project alongside Hume Residential and JLL.</p>

<p>“It’s no surprise that if you’re downsizing from a five-bedroom house in Bellevue Hill, for example, you want to maintain that sense of space and luxury when looking for your next home, "&nbsp;Gavin Rubinstein, Founder of The Rubinstein Group, said.</p>

<p>“The Rushcutters is a great fit. Amalgamating apartments to create a bespoke, whole-floor home is a natural progression for buyers who aren’t willing to compromise on size and/or quality.”</p>

<p>[smartcode_project:default project_id=144646 project_image_fid=351901]</p>

<p>Amalgamating apartments has become a common theme among high-end buyers across Third.i's portfolio including Muse in Potts Point, and Elevate Hume Place in Crows Nest, which set a Lower North Shore apartment record with the $15.1 million sale of an amalgamation of a penthouse and sub-penthouse.</p>

<p>“We’re witnessing a clear shift towards more amalgamations in a number of our projects across Sydney,” said Jason Fraser, Principal at Woods Bagot.</p>

<p>[smartcode_project:default project_id=144646 project_image_fid=351899]</p>

<p>“The ability to combine apartments is enabling buyers to create truly unique, house-sized residences with high-end finishes, and proximity to vibrant urban precincts. The desire to amalgamate apartments to bespoke, house-sized residences is becoming a defining feature of Sydney’s evolving luxury apartment market."</p>

<p>Due to the City of Sydney’s no net dwelling loss policy, Thirdi is only able to offer one level for amalgamation at The Rushcutters, combining two apartments into a single, expansive residence.</p>

<p>[smartcode_project_cta:default project_id=144646]</p>


The Rushcutters a "great fit" for downsizers

<p>Lower North Shore developer <a href="https://www.apartments.com.au/developers/abadeen-group">Abadeen</a> has secured development approval for its ultra-luxury residential project on the <a href="https://www.apartments.com.au/new-apartments/34-burran-avenue-mosman-nsw-2088">dress circle Burran Avenue</a>.</p>

<p>The project, just&nbsp;50 metres from Balmoral Beach within Mosman’s prestigious Golden Triangle, will commence construction in early 2026,&nbsp;following the successful completion of its nearby Hampden Mosman project.</p>

<p>Lodged in April 2025 and approved in September 2025, the development will comprise three whole-floor residences, each designed to capture panoramic harbour views through Sydney Heads.</p>

<p><img alt="34 Burran Avenue, Mosman" data-entity-type="file" data-entity-uuid="7f4c7816-0ac8-4ef7-be0a-8ef23b693b68" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/BURRAN%20EV01%20R04%20option%201%20%281%29.jpg?VersionId=gVzI8pT6_K59Nhzaz0FLEvY6Kj9Kc8Fg" /></p>

<p>Set on an elevated 550 sqm corner site at the junction of Burran Avenue and Stanton Road, the building has been designed to sit within Balmoral’s natural slope. The façade mixes stone and metal cladding with angular forms, while oversized terraces and full-height sliding doors create a connection between interior living spaces and outdoor entertaining areas.</p>

<p>The delivery team from Abadeen’s Hampden Mosman project, which includes construction company Reform Projects and interiors company Mathieson, has been retained to bring the same level of execution and craftsmanship to Burran Avenue.</p>

<p><a href="https://www.apartments.com.au/architects/platform-architects">Platform Architects</a> has been appointed project architect, bringing extensive experience from recent luxury residential projects in Manly, Fairlight and Freshwater.</p>

<p>&nbsp;</p>

<p>Justin Brown, Executive Chairman and Founder of Abadeen, said sites of this calibre, this close to Balmoral, are incredibly rare.</p>

<p>“Burran Avenue is an extraordinary site; its location, its scale and its outlook make it truly one of a kind. Receiving DA approval marks an exciting milestone for Abadeen."</p>

<p>"We’re proud to be moving forward with an exceptional team to deliver a project that will set a new standard for ultra-luxury living on Sydney’s Lower North Shore. Construction is planned to commence in early 2026, and interest is already strong from discerning local buyers who recognise the uniqueness of this address."</p>

<p>Brown anticipates prices will set new Mosman benchmarks above $20 million. Sales are expected to launch in March 2026.</p>


Abadeen approved for Mosman's priciest apartments

Investor Lending

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<div>It's mainly a been a week of furious tax debate. Admittedly it's been quite a few years since I was employed in a tax position of any note, and even longer since I sat my tax exams.</div>
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<div>No matter, for almost everyone in Australia is a tax expert, and nearly all of us are in agreement that someone needs to pay more tax...just as long as it isn't us!</div>
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<br>Higher stamp duty levies, land tax, income tax, capital gains tax, imputed rental charges, corporation taxes, and superannuation taxes are just a handful of the tolls and contributions being demanded by the baying mob. We are suddently all sure loving the idea of higher taxes!<br><br>A couple of things I can recall from studying tax, particularly with regards to the interdependent sectors of the housing market, are that firstly it's far easier to tweak tax rates and sections of the tax legislation than it is to rip them up entirely, and secondly most modelling and scenario analysis falls over miserably because it fails to account accurately for behavioural change triggered by new tax legislation. </div>
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<div>To be frank, I'll believe any fundamental changes when I see them. Deductibility of mortgage interest for investors has effectively been a bi-partisan policy for decades, and it's only now in Opposition that the ALP is proposing a second stab at grandfathering negative gearing rules. My guess is that the most likely change to housing market taxes would be caps on deductibility, but that really is just a guess.</div>
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<br><strong><span style="text-decoration: underline;">Record residential construction boom</span></strong>
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<div>Perhaps the most curious part of the entire issue is the timing. A surge of investor lending has seen rental growth careering to 20 year lows, and with the supply response now in full swing a record nadir is almost certainly in the post. In fact, we're already there according to CoreLogic-RP Data's data series.<br><br>It's a well worn argument that investors don't add to the dwelling stock, but if you've ever worked in the development space you'll know that developers don't <span style="text-decoration: line-through;">give a</span> <span style="text-decoration: line-through;">care a toss</span> give a fig whether a property is bought by a homeowner or an investor, negatively geared or otherwise.<br><br>What creates new supply is declining financing costs, rising demand in aggregate, and thus rising prices, and as this cycle has progressed we have been getting all of these in spades, particularly resulting in a surge of new units, townhouses &amp; apartments, which in turn has already cooled these parts of the housing market naturally.<br><br>The strongest prices gains have been seen in Sydney and Melbourne and these cities have played host to the bulk of the supply response, though a combination of rising prices, low interest rates and, let's be blunt about this, a fresh market of Chinese mainland buyers of new apartments, has seen construction activity increase sharply in Brisbane and elsewhere too.<br><br>Only a couple of years after the system was apparently busted (which would allegedly march us into a recession) residential construction activity hit its highest ever level. So much for negative gearing restricting the dwelling stock - it's the greatest residential construction boom on record!</div>
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<strong><span style="text-decoration: underline;">Rents?</span></strong><br><br><span>As for whether falling demand from investors would lead to rents rising, logically the answer is obviously "yes" as rental supply diminishes, for not all renters want to buy, and many could not afford to do so without borrowing the full purchase price and associated closing costs, a dynamic regulators have been nervously edging away from ever since the financial crisis.</span><br><br><span>Unfortunately I don't have much hard Australian-based evidence upon which to base this assertion, since there have only been two instances where rents have spiked in Australia over the 33 years of available data, but one might reasonably expect that these coincided with downturns in investor activity.</span>
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<div>Incidentally, another quirky facet to the negative gearing debate has been the so-termed "Fact Check" articles which instruct us that rental growth indices "must" be adjusted for inflation i.e. the price of consumer goods (such as the price of cheese, pork, sewerage costs, goat, and so on). "Must" they, fact checkers? According to whom are these "facts" actually facts?<br><br>While there may conceptually be a very loose relationship between inflation and rental price growth, at best it is a link bound by a mile-long rubber band. I've never once come across a landlord adjusting rents for the growth in price of a tub of ice cream, or a dozen eggs, or a packet of smokes, the price of having a root canal, or whatever. It's an absurd notion, really.<br><br>Typically rental price growth is simply one function of the wider property market cycle, specifically supply (the number and type of rentals available for lease) and demand (the volume of renters in the market, and the product collectively in demand from them), although household income growth does indirectly play its part.</div>
<br><div>We can see in the chart below that investor lending more than halved from $0.210 billion in May 1985 to $0.099 billion by early 1986, so evidently the amendments to the tax legislation at that time did change investor behaviour, while dwelling starts also immediately collapsed as charted here previously.</div>
<br><div>Unfortunately the ABS data on investor loans is sawn off at January 1985, so it's not possible for me to put the drop into a wider context, although if you believe what property-loving folk wrote nearer to that time, investor sentiment fell dramatically, which contributed to rent increases in Sydney and Perth in the short space of time that interest deductibility was quarantined.</div>
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<span>The inverse link between investor activity and rental price growth in these two charts above could not be any clearer.</span><br><br><span>Moreover, the property markets of today aren't readily comparable unless population growth is dialled back, since in the major markets of Sydney and Melbourne absolute population growth is much higher. Victoria's population grew by 42,781 in 1985, for example, but has been tracking at around 2.5 times that level recently.</span><br><br><span>Mostly old ground. But what about more recently when annualised rental growth soared to 8.4 per cent in December 2008? Was there also a dip in investment lending then which led to the rental supply shortage and some wrecthed rent increases in parts of Sydney and elsewhere?</span><br><br><span>Again, clearly yes, the figures show that investor lending all but halved from $10.1 billion in June 2007 to just $5.1 billion by January 2009, coinciding exactly with the spike in rents as investors deserted the market, spooked by the onset of the global financial crisis and various predictions of a crash by market commentators.</span><br><br><span>As you can see in the chart below, investor lending rebounded strongly from the month of February 2009, which was the month within which Kevin Rudd announced his famous $42 billion stimulus package, and rental growth quickly cooled again.</span>
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<div>Overall the figures suggest that sharp rental price increases do follow declines in investor activity, pretty much exactly as you would expect.<br><br><strong><span style="text-decoration: underline;">Recent pullback</span></strong><br><br>At the end of the above chart, we can see that monthly investor lending has recently fallen from a peak of $15.5 billion in June 2015 to $12.6 billion by December. Despite this pullback, which was driven by APRA's interventionary measures, I actually don't see strong rental growth returning any time soon for a few reasons. </div>
<div> </div>
<div>Firstly because the rate of dwelling construction and work in the pipeline remains at very high levels. Secondly because such a high proportion of new dwellings is presently being bought by foreign buyers (and thus are not captured by this data). And thirdly because I also have a sneaking suspicion that a fair percentage of deemed "owner-occupiers" are magically switching to become investors post-purchase.<br><br>There may also be some small impacts from subtle shifts in rental practices such as the growth of Air B&amp;B, although these will surely be less influential than the key trends.</div>
<div> </div>
<div>Overall, despite media articles assuring us over and over again that hosing down investor activity would not lead to increasing rents, market experience tells me that in the largest capital cities this is precisely what would play out. </div>
<div><strong><span style="text-decoration: underline;"> </span></strong></div>
<div><strong><span style="text-decoration: underline;">Changes to tax?</span></strong></div>
<div> </div>
<div>Penultimately, few figures have been tortured more enthusiastically of late than those showing who claims negative gearing benefits or deductions for net rent. Of course, the highest deductions in dollar value terms are claimed by high income earners, since this cohort pays the highest rate of tax - and thus the most tax - and also tends to buy more expensive rental properties, which naturally have a weaker rental return. </div>
<div> </div>
<div>The data presented objectively by Cameron Kusher of CoreLogic-RP Data below show that negative gearing is used right across the spectrum of taxpayers by income bracket, although it <strong><em>is </em></strong>true that you are more likely to claim net rent deductions if you have taxable income of $80,000 or above (25.8 per cent of taxpayers in this cohort) than if you earn $80,000 or below (13 per cent).</div>
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<div>
<div>This rings true. From my own experience, none of my friends owned a rental property when we worked in part time jobs at university or in the years immediately after high school, but a fair few did so over time as they grew older, got full time and better paying jobs, met life partners who were incumbent property owners, and so on.</div>
<div> </div>
<div>The figures show that the overwhelming majority of taxpayers with rental properties never own more than one property, and most of the remainder own only two (this can easily happen by default as a couple leave their respective starter home apartments in order to cohabit), while my experience in the market tells me that everyday people in full time employment claim rental deductions just as frequently as CEOs and surgeons. You can see this for yourself every weekend at opens and auctions. </div>
<div> </div>
<div>In this regard, market experience is as instructive as the tortured data. Not dissimilarly it was obvious during the so-called "homebuyers strike" in Sydney that every second person who called me was a first-time buyer, but rightly or wrongly they were buying an investment property as a first step onto the ladder rather than a home (and as such were not being captured or classified as "homebuyers").</div>
<div> </div>
<div>There have been calls to halve the capital gains tax discount, but with a Coalition Prime Minister with a net worth of well over $100 million, this seems to me to be a seriously remote prospect.<br><br>It's worth noting that the introduction of the capital gains tax discount did not halve tax payable as is frequently implied, rather it replaced the old indexation of the cost base system which ran from 1985 and was not discontinued until 1999, inflicting a searing pain upon tax exam students and preparers of tax returns alike.<br><br>Capital gains tax (CGT) is a crappy tax, especially when it does not account for inflation, effectively a punitive double <a href="https://www.themoneyillusion.com/?p=7091" target="_blank">taxation of savings</a> which discourages investment. The optimal rate of CGT is zero. In any case new housing is already one of the most heavily taxed commodities there is.</div>
<br><strong><span style="text-decoration: underline;">New builds?</span></strong><br><br><div>Finally, on paper, Labor's proposal to limit negative gearing deductions to new builds sound plausible, but in practice this would simply replace one market distortion with another. In particular buyers of new-build investment properties benefitting from tax deductions would discover that their resale market had been ripped out from underneath them, effectively leaving them sitting on six-figure paper losses or "negative equity" from the date of settlement.</div>
<div>
<br>Indeed this already happens to buyers of new properties today, albeit to a less dramatic extent, which is why in the absence of homebuyer grants for new builds developers often sell to self-managed super funds lured by tax incentives and bad advice from accountants, or to foreign buyers. Chris Bowen's assertion that buying new property is not "in any sense" more risky than buying established is discredited by all available research.<br><br>Most of the debate this week has really been about intergenerational equity rather than budget repair, which is sensible, but perhaps overlooks the high level of supply of construction in the pipeline.<br><br>In my opinion changing negative gearing rules - which after all, is a timing difference rather than a genuine tax concession - would generate close to zero additional tax revenue after behavioural change, reduced stamp duty excise and soaring public housing costs are accounted for. In any event, net rental losses have declined since even in nominal terms in 2008, while net rental profits have increased by well over 50 percent.</div>
<div> </div>
<div>
<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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Record residential construction boom: Pete Wargent

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<div>If anyone doubted APRA's commitment or ability to quell interest-only lending, then they definitely shouldn't any more.</div>
<div> </div>
<div>New interest-only loans have been smashed to smithereens, down from 45.6 per cent of the market at the 2015 peak to just 16.9 per cent.</div>
<div> </div>
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<div>Banks continue to wind back high loan-to-value ratio (LVR) lending, continuing a trend that has been underway for 4 years now. </div>
<div> </div>
<div>Property buyers will not only need to pay back principal, they'll need to have a decent deposit too.</div>
<div> </div>
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<div>Despite this, the total value of residential mortgages on ADI books rose by +6.9 per cent over the year to September, as the pendulum swings from investors to homebuyers.</div>
<div> </div>
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<div>A seismic shift in the market then, as more borrowers will now be compelled to pay back some debt.</div>
<div> </div>
<div>With interest-only lending peaking in 2015, the greatest volume of rollovers will occur in 2020 - <a href="http://petewargent.blogspot.co.uk/2017/10/p-cliff" target="_blank">see here</a> for my thoughts on what might happen then. </div>
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<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
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APRA strikes back to quell IO lending

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<div>The Lending Finance data released yesterday for the month of June 2015.</div>
<div> </div>
<div>Total lending was once again superficially very strong at a seasonally adjusted $74.7 billion for the month.<br><br>While this was only a moderate increase for the month, on a rolling annual basis total lending has increased to a new high of $857 billion.</div>
<div> </div>
<div>Note that the "commercial loans" category includes property investment loans, so the recovery in credit growth is rather more housing-focused than first it may appear.</div>
<p><a href="https://3.bp.blogspot.com/-hLjERfYhiNk/VcgOlQzorcI/AAAAAAAAXg4/GdmpPCJx3a4/s1600/A4.jpg" target="_blank">Click to enlarge</a></p>
<p><br><a href="https://3.bp.blogspot.com/-hLjERfYhiNk/VcgOlQzorcI/AAAAAAAAXg4/GdmpPCJx3a4/s1600/A4.jpg"><img src="https://3.bp.blogspot.com/-hLjERfYhiNk/VcgOlQzorcI/AAAAAAAAXg4/GdmpPCJx3a4/s640/A4.jpg" width="640" height="280"></a></p>
<p> </p>
<p><strong><span style="text-decoration: underline;">nvestor loans - Sydney investor credit explodes</span></strong><br><br></p>
<div>Drilling into the commercial lending figures we can see that the property investment loans by state data is telling. </div>
<div> </div>
<div>Up until the month of June, while the investor loan crackdown by the regulator APRA may have had an impact in aggregate, investor lending in Sydney was still rising fast.</div>
<div> </div>
<div>In fact, New South Wales investor loans accelerated in June to a record $6.55 billion to record a rolling annual total of an astounding $64.9 billion.</div>
<p><a href="https://3.bp.blogspot.com/-Abb1wPadxP0/VcgOkqurF_I/AAAAAAAAXgs/o7VArJh790s/s1600/A3.jpg" target="_blank">Click to enlarge</a></p>
<p><a href="https://3.bp.blogspot.com/-Abb1wPadxP0/VcgOkqurF_I/AAAAAAAAXgs/o7VArJh790s/s1600/A3.jpg"><img src="https://3.bp.blogspot.com/-Abb1wPadxP0/VcgOkqurF_I/AAAAAAAAXgs/o7VArJh790s/s640/A3.jpg" width="640" height="278"></a></p>
<div>Thus while investor lending growth in aggregate had begun to slow by June, Sydney investors are now sitting on deep pools of equity following years of strong capital growth and this equity can often be used as 20 per cent deposits.<br><br>As a result as this stage investor loans may have been more impacted in other capital cities and regional centres where capital growth has been much weaker or in many cases non-existent.</div>
<div> </div>
<div>My information is that we should start to see investor loans slowing in the July and particularly August figures.</div>
<div> </div>
<div>However, as I looked at last week, the housing finance data also shows that owner-occupier commitments in New South Wales have now responded to low interest rates in booming to a record high $6.6 billion on a seasonally adjusted basis in June.</div>
<div> </div>
<div>Housing markets are the sum of their parts and therefore below I have charted the raw unadjusted "Original" data for New South Wales in a stacked columnar format.</div>
<div> </div>
<div>As you can see in the chart below, the month of June was by a significant margin the biggest month of lending on record for any state in Australia's history.<br><br>
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<div><a href="https://3.bp.blogspot.com/-pPjg2ax1nkM/VckXlsIKhOI/AAAAAAAAXiA/764PBQJU-qc/s1600/A9.jpg" target="_blank">Click to enlarge</a></div>
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<span>A couple of observations here.</span><br><br><div>Firstly, note that the ABS Lending Finance data series records loans written domestically, suggesting that the boom in Sydney dwelling prices has been primarily driven by domestic investors (and now homebuyers).</div>
<div> </div>
<div>That said, foreign capital is playing its part to some extent too, as I've written here previously, particularly relating to new dwellings.</div>
<div>
<br>Recall that foreign buyers without Australian residency are generally granted permission to buy new residential property.</div>
<div> </div>
<div>Foreign buyers with no Australian residency typically cannot buy established residential property unless they have specific permission to do so from the Foreign Investment Review Board (FIRB).</div>
<div> </div>
<div>This permission may be granted in some instances, such as for development projects.</div>
<div> </div>
<div>Licensed real estate agents, buyers agents and solicitors have simple procedures in place to ensure that they only deal with legal purchasers of established property.</div>
<div>
<br>As the above chart clearly shows there is more than enough domestic business from Australian residents without needing to seek business from buyers without Australian residency. </div>
<br><strong><span style="text-decoration: underline;">Around the states</span></strong><br><br><div>As noted above New South Wales investor loans accelerated in June to a new high of $6.5 billion in June. </div>
<div> </div>
<div>On a 12mMA basis investor loans in New South Wales rose to a record high $5.4 billion.</div>
<div> </div>
<div><a href="https://1.bp.blogspot.com/-7KU4Mf3dxnY/VcgOkrmanCI/AAAAAAAAXgo/XHBtOBINfEE/s1600/A1.jpg" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></div>
<div><span style="line-height: 1.3em;"> </span></div>
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<br><div>Low interest rates and expectations of future price growth have also impacted investor loans in Victoria. </div>
<div> </div>
<div>It's impossible to call the market peak accurately, but it's my belief that - unlike Sydney - Melbourne has been overbuilding in the unit and apartment market in particular, and this will result in stagnant rents and prices in due course for certain sectors of the market. </div>
<div> </div>
<div>There may be a material price correction in time too, especially for new and off-the-plan builds.</div>
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<div><a href="https://4.bp.blogspot.com/-CqPJELW4MwI/VcgVHrv8GeI/AAAAAAAAXhY/WgovxM2s70o/s1600/A6.jpg" target="_blank">Click to enlarge</a></div>
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<br><div>Queensland's resources regions and regional centres may be struggling as the mining investment boom turns to bust, but house prices are now rising in inner Brisbane.</div>
<div> </div>
<div>For my money, Brisbane may well be the best performing capital city housing market in 2016, although asset selection will be important here (there is much high-density building taking place).</div>
<div>The trendline below which records investor loans on a 12mMA basis shows that Queensland investor lending in aggregate is now tracking at their highest level since April 2008.</div>
<p><a href="https://3.bp.blogspot.com/-QTEbjM-b_nE/VcgOklLIqVI/AAAAAAAAXgk/5ASN33dV5wE/s1600/A2.jpg" target="_blank">Click to enlarge</a></p>
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<div class="separator">Western Australia's property markets are now demonstrably into their downturn phase, and consequently despite low interest rates investor loans volumes are trending down.</div>
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<div class="separator">Some property experts have painted themselves into a corner with regards to South Australia and will continue to recommend investing there come hell of high water.</div>
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<div class="separator">With very little building activity in the detached housing sector the Adelaide market has certainly been tightening nicely, yields are comparatively strong, and after 7 or 8 years of weak dwelling price growth there is plenty of value of money to be found, even close to the centre of Adelaide.  </div>
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<div class="separator">On a 12mMA basis investor loans in South Australia are now tracking at their highest ever level at $437 million.</div>
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<div class="separator">A word of warning, however,</div>
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<div class="separator">Barely a week passes without further news of redundancies in South Australia, with the unemployment rate having trended up alarmingly from 5.2 per cent in October 2011 to 7.9 per cent today...and rising.</div>
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<div class="separator"><a href="https://4.bp.blogspot.com/-Le2eMkeS8hE/VcgPuFZEDMI/AAAAAAAAXhI/C47G2MUkGGY/s1600/A5.jpg">Click to enlarge</a></div>
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<div class="separator">In fact, if you have a low budget, my personal belief is that a combination of foreign capital, a n ongoing depreciation of the Aussie dollar, record Chinese tourism spend and a tightening market will see Hobart emerge as the surprise package capital city housing market over the short term.</div>
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<div class="separator"><span>The longer term economic and demographic fundamentals in Tasmania are admittedly uncertain.</span></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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Pace of NSW investor lending accelerates: Pete Wargent

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<p>Lending finance data for August 2015 was released by the Australian Bureau of Statistics (ABS). </p>
<p>The latest data paired with the previously released housing finance commitments data shows that lending to investors has slowed sharply over recent months following the regulatory changes from APRA and the subsequent changes to lending policies from most mortgage lenders.</p>
<p><a href="/images/2015/10/13/Chart-13.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/13/Chart-13.jpg" alt=""></p>
<p><span>The above chart shows the proportion of new lending to investors across each state and territory in August 2015.  Note that when we say new lending we exclude refinances as they are not associated with a new purchase of property.  New South Wales had the greatest proportion of new lending to investors over the month however, we have seen lending to this segment of the market slow across each state and territory.</span></p>
<p><a href="/images/2015/10/13/Chart-22.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/13/Chart-22.jpg" alt=""></span></p>
<p> </p>
<p>Mortgage lending to investors peaked in May 2015 prior to most Australian ADI’s implementing changes to lending policies relating to investment mortgages.  At that time, the proportion of new lending to investors was much higher in each state and territory than it is currently.  In each state and territory there has been a significant decline in the value of new lending to investors between May and August of this year.  Across each state and territory the magnitude of the fall in investor lending has been recorded at: -10.5% in NSW, -14.0% in Vic, -15.2% in Qld, -17.0% in SA, -10.1% in WA, -10.0% in Tas, -35.6% in NT and -23.5% in ACT.</p>
<p>While new lending to investors has fallen away over recent months, there has been a rise in new lending to owner occupiers across some states and territories while others have seen falls across owner occupier lending too.  Between May 2015 and August 2015 the changes in the value of new lending to owner occupiers have been recorded at: +22.1% in NSW, +16.5% in Vic, +4.2% in Qld, +4.1% in SA, -2.4% in WA, -8.3% in Tas, -8.1% in NT and -10.8% in ACT.</p>
<p>As investor lending is slowing in NSW and Vic, lending to owner occupiers is generally picking-up which should help offset some of the slowdown in investment loans.  Elsewhere there has been no significant increase in owner occupier lending, or owner occupier lending has fallen; given this the data release may point to ongoing weaker housing market conditions outside of the two most populous states.</p>
<p>It’s important to note that this data only includes mortgage lending domestically.  What is not clear is to what extent the weakness in investor demand domestically over recent months is being offset by an uptick in demand from overseas.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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Sharp dip in investor housing demand since May: Cameron Kusher

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<div>Anyone who implies you that they have any genuine clarity around what is happening with Housing Finance data at the moment is telling you porkies, but since the September data was released today, let's at least see what we can deduce!</div>
<div> </div>
<div>At the margin there are evidently blurred lines between loans that are being classified as investor lending, and those which are determined to be owner-occupier approvals. </div>
<div> </div>
<div>The figures reported for new investor lending dropped sharply in September to $12.3 billion on a seasonally adjusted basis, having pulled back from a record peak of above $14 billion in April. </div>
<div> </div>
<div>As sure as night follows day, however, with Australia's major lenders continuing to target high returns on equity (ROE) there will certainly be a strong push to promote owner-occupier lending (ask for a mortgage discount!), and this was once again in evidence with another 3 per cent seasonally adjusted surge in the value of commitments in September to more than $21 billion.</div>
<div> </div>
<div>Thus while the monthly value of investor lending is now broadly flat year-on-year, the total value of owner-occupier commitments has leapt more than 23% higher.</div>
<div> </div>
<div><a href="/images/2015/11/12/HF1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/12/HF1.jpg" alt=""></div>
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<div>
<div><strong><span style="text-decoration: underline;">Blurred lines</span></strong></div>
<div> </div>
<div>Given the blurred lines in relation to loan classifications and refinancing right now, the most straightforward measure of housing market activity is simply to look at the aggregate value of housing finance. </div>
<div> </div>
<div>There was more than a slight suspicion that the rocketing value of owner-occupier commitments in the preceding month was partly a result of the mis-classification of refinancing as new lending.</div>
<div> </div>
<div>While this story remains somewhat unclear for now, the housing finance data showed another very strong month of lending in aggregate at a seasonally adjusted $33.4 billion, taking the trend estimate up to a fresh high.</div>
<div> </div>
<div><a href="/images/2015/11/12/HF2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/12/HF2.jpg" alt=""></div>
<div> </div>
<div>
<div>Classification issues or no, given that total seasonally adjusted monthly housing finance breached $25 billion for the first time only two years previously in September 2013, a total result of $33.4 billion is a phenomenally high level of activity by any reckoning.</div>
<div> </div>
<div>Ultimately, as pointed out by Reserve Bank Governor Stevens recently, borrowers can still source mortgage rates of close to 4 per cent despite the recent tightening on some investor loans, and there is still a good deal of appetite for borrowing where finance can be successfully sought.</div>
<br><strong><span style="text-decoration: underline;">Unintended consequences</span></strong><br><div> </div>
<div>Macroprudential measures taken to cool housing markets will inevitably have some unintended consequences, one of which may be that lenders demanding a high ROE target potential borrowers with existing equity, which in a curiously reflexive manner might skew lending towards markets which have already outperformed through the cycle.</div>
<div> </div>
<div>That is, cooling measures could accidentally spill fuel onto raging fires, since banks still have a desire to lend even in the face of stricter loan-to-value ratio (LVR) controls. </div>
<div>
<br>Certainly in London we saw the Pommie equivalent Mortgage Market Review (MMR) gum up UK market activity in aggregate, yet by the end of Q2 2014 the London housing market was blowing off in a spectacular starburst of bubbliness, recording its fastest annual rate of price growth in nearly three decades at +26 per cent.</div>
<div> </div>
<div>Nor has the underlying problem remotely gone away since, with record low mortgage rates helping to thrust the average London house price considerably <a href="https://petewargent.blogspot.co.uk/2015/10/average-london-house-price-500000" target="_blank">hig</a><span><a href="https://petewargent.blogspot.co.uk/2015/10/average-london-house-price-500000" target="_blank">her still to <span>£</span>500,000</a>, </span>and the latest <a href="https://www.cityam.com/228290/uk-house-prices-london-property-prices-to-rise-a-third-by-2019-as-demand-continues-to-outweigh-supply" target="_blank">forecasts</a> projecting another kamikaze 31 per cent boom in London house prices by 2019. </div>
<div>
<br>Commentary suggesting that Auckland house prices would be curbed by macroprudential measures also proved to be misguided, at least in the near term, with house prices thereafter bubbling up in rampant fashion towards the million dollar mark, although a reversal may at last now be falling due.</div>
<div> </div>
<div>Another of the unintended consequences of macroprudential measures may be a premature end to Australia's residential building boom, with loans for the construction of new homes sinking almost right across the board over the past year, and investor loans for the construction of new residential properties having tanked by nearly a quarter.<br><br>Thirdly, tighter lending measures will almost certainly knock more budding first time buyers out of the market, with market share tumbling from 15.8 per cent to 15.4 per cent in the month, and first time investors or "rent-vestors" doubtless befalling a similar fate due to their lack of existing equity.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Granularity of markets</span></strong></div>
<div>
<br>In this context it will be interesting to see what happens to lending in Sydney and Melbourne over the year ahead, since there exists tentative evidence of similar patterns unfolding.</div>
<div> </div>
<div>Of the 23 per cent boom in the value of monthly owner-occupier commitments over the past year, New South Wales has accounted for nearly two thirds of that increase, and Victoria one third.<br><br>The two most populous states - and home to the two capital cities which have overwhelmingly played host to the housing value growth through this cycle to date - have accounted for almost all of the increase in the value of lending.</div>
<div> </div>
<div><a href="/images/2015/11/12/HF3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/12/HF3.jpg" alt=""></div>
<div> </div>
<div>
<div>Queensland is home to any number of regional markets which have floundered in contrast to their supposed hotspot status of 2012 - Moranbah, Dysart, Emerald, Bowen, Chinchilla, Roma, and Gladstone, to name but a few - so in this context the relatively moderate uptick in lending commitments at the state level can be no surprise.</div>
<div> </div>
<div>Indeed the figures conversely augur well for housing market activity across the Greater Brisbane area given that the original data for Queensland in September showed solid total owner-occupier lending of $3.44 billion, taking lending volumes up to a 67 month high on a 12mMA basis.</div>
<br><div>As for the New South Wales figures in September, there has never been a month of home lending like it in Australia, with the original data busting out a +46.2% year-on-year increase in the value of lending to an astonishing $8.55 billion.</div>
<div> </div>
<div><a href="/images/2015/11/12/HF4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/12/HF4.jpg" alt=""></div>
<div> </div>
<div>
<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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Investor lending cools: Pete Wargent

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<p><span>A reasonably solid set of </span>Lending Finance<span> numbers were reported for October 2015, with commercial finance fairly flat, down 1% at a seasonally adjusted $45.6 billion (following a 9% jump in September), and total lending tentatively inching up to a new trend high of $73.7 billion. </span></p>
<p><span>Both commercial lending and total lending finance have recently breached 7 year highs.</span></p>
<p><a href="/images/2015/12/15/LF1.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/15/LF1.jpg" alt=""></span></p>
<p> </p>
<p><span>As we saw </span>earlier in the week<span>, owner-occupier lending has increased very sharply, with commitments for the purchase or construction of dwellings up by 23% over the past year on a seasonally adjusted basis.</span></p>
<p><a href="/images/2015/12/15/LF2.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/15/LF2.jpg" alt=""></span></p>
<p> </p>
<div>Lease finance increased by 17 per cent over the year, but loans for the purchase of blocks of residential land are down by some 25 per cent since one year ago.</div>
<p><br><strong><span style="text-decoration: underline;">Investor finance derailed</span></strong><br><br></p>
<div>The flip side to the strong home loans data is that the cooling macroprudential measures implemented by APRA have derailed the runaway investor boom, with investor commitments crashing off their respective tracks across every state and territory.</div>
<div> </div>
<div><a href="/images/2015/12/15/LF3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/15/LF3.jpg" alt=""></div>
<div> </div>
<div>
<div>Demand was fading in Western Australia and the Northern Territory in any case, and now after lending curbs even those who want to source investor finance are struggling to do so. </div>
<div> </div>
<div>Prices will almost certainly thus follow rents down in 2016 in Perth and Darwin. The Top End in particular is looking set for a sharp correction, with median detached house rents having declined by around 20% and investor loans now tanking, down by more than 40 per cent over the past year. </div>
<div> </div>
<div><a href="/images/2015/12/15/NT.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/15/NT.jpg" alt=""></div>
<div> </div>
<div>
<strong><span style="text-decoration: underline;">Borrowers flipping the script</span></strong><br><br><div>The crimping of investor lending has clearly been enough to bring many property markets back to stall speed, as evidenced by stumbling auction clearance rates. However, there is a bit more to this than meets the eye, and it does not necessarily follow that APRA's measures will lead to declining house prices across the board (it seems unlikely that this was the intention in any case).</div>
<div> </div>
<div>For "Exhibit A" the Reserve Bank's Financial Aggregrates data has already implied that some loans are being switched to or reclassified as owner-occupier products, as borrowers aim to obtain the cheaper mortgage rates now associated with that sector of the market (see <a href="https://petewargent.blogspot.co.uk/2015/12/credit-growth-at-near-7-year-high" target="_blank">here</a> for more).</div>
<div> </div>
<div>And now for "Exhibit B", refer to the Housing Finance data for October released this week, which implies exactly the same thing, that borrowers and lenders are flipping the script in order to counter APRA's regulatory intervention. </div>
<div> </div>
<div><a href="/images/2015/12/15/LF4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/15/LF4.jpg" alt=""></div>
<div> </div>
<div><span>To date most of the increase in owner-occupier commitments has been focussed upon New South Wales and Victoria, although a fair proportion of that has related to refinancing rather than genuinely new lending.</span></div>
<div><span> </span></div>
<div><a href="/images/2015/12/15/LF5.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2015/12/15/LF5.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div>The Reserve Bank's Financial Aggregates data for October mirrored these trends closely, the net result being that housing credit growth rose to a fresh cyclical high of 7.5%, although it does seem that the pace of increase is steadying. </div>
<br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><div> </div>
<div>There is evidently quite a bit going on in the housing finance space at the moment and not a great deal of clarity surrounding the numbers. In truth some lenders themselves probably have little clarity around the classification of loans beyond their initiation.</div>
<div> </div>
<div>To date it has become clear that the APRA measures have scrambled the market and have stopped the Sydney boom from rolling unchecked into another calendar year, with investor commitments having pulled back sharply right across the board.<br><br>In time, this will be seen to be a worthy step, since many markets had become far too top-heavy with investors. At the peak of the investor market, excluding refinancing, in New South Wales and Victoria investor loans had breached 60 and 50 per cent of the mortgage market respectively. Today the equivalent numbers are down to 50 and 40 percent and falling.</div>
<div> </div>
<div>My experience in the UK suggests to me that caution should be exercised before declaring the unpredictable outcomes of macroprudential measures prematurely. Britain's Mortgage Market Review (MMR), which had the stated goal of curbing irresponsible lending, radically changing mortgage rules with effect from April 2014 and for six months the housing market was gummed up by the paperwork and pen-pushing. </div>
<div> </div>
<div>Yet as of today UK housing prices are once again rising at a reomping annualised pace of 9 per cent, with the popular markets of the south east tracking in double digit territory to record highs. Unlike the global real estate experts out there I don't pretend to know a great deal about the experiences related to macroprudential measures in New Zealand, but assume similar tales could be told, at least in Auckland. </div>
<div> </div>
<div>It will be an interesting start to 2016, which I think will be a more unpredictable year than most, and not only in the housing market space.</div>
<div> </div>
<div>
<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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2016 unpredictable for housing after APRA runs interference: Pete Wargent

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<p>Earlier this week, housing finance data for August 2016 was released by the Australian Bureau of Statistics (ABS). </p>
<p>Over the month there was $31.4 billion worth of housing finance commitments which was -1.0 percent lower over the month and -5.1 percent lower than it was at its peak in April 2015.</p>
<p><a href="/images/2016/10/13/chart-1-580x211.jpg" target="_blank">Click to enlarge</a></p>
<h1 class="title"> <img src="/images/2016/10/13/chart-1-580x211.jpg" alt="">
</h1>
<div class="entry">
<p>The $31.4 billion worth of commitments in August was split between $19.5 billion worth of commitments by owner occupiers and $11.9 billion in commitments to investors.</p>
<p>The value of lending to owner occupiers has fallen over two consecutive months while lending to investors has risen for the fourth consecutive month.  The value of lending to owner occupiers is now -8.6 percent lower than its peak in December 2015. </p>
<p>Investor lending remains well below its April 2015 peak, down -18.5 percent however, the recent rebound has seen the value of investor lending increase by 10.0 percent from its recent trough in April 2016.</p>
<p><a href="/images/2016/10/13/chart-2-580x210.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/13/chart-2-580x210.jpg" alt=""></p>
<p>The $19.5 billion worth of mortgage borrowing by owner occupiers was comprised of: $1.8 billion for construction of dwellings, $1.0 billion for purchase of new dwellings, $6.4 billion for refinancing of established dwellings and $10.2 billion for purchase of established dwellings. </p>
<p>The two largest components of owner occupier lending; refinancing and purchase of established dwellings, have both trended lower over recent months. </p>
<p>The value of refinance lending is -13.4 percent lower than its peak of $7.4 billion in December 2015 and purchase of established dwellings is -11.2 percent lower than its $11.5 billion peak in September 2015. </p>
<p>With an interest rate cut which wasn’t passed on in full by most lenders in August, there is a decent probability that refinance activity will increase over the coming months.</p>
<p><a href="/images/2016/10/13/chart-3-580x211.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/13/chart-3-580x211.jpg" alt=""></p>
<p>For investors there was $11.9 billion in mortgage lending in August 2016, which was split between $0.9 billion in lending for construction and $11.1 billion for established housing. </p>
<p>The value of lending for construction was at its lowest level since September 2015 and down -49.5 percent from its recent peak of $1.7 billion in March 2016. </p>
<p>The $11.1 billion in lending for established housing has increased over four consecutive months and is at its highest level since August 2015. </p>
<p>Housing credit data also highlights the recent up-tick in investor mortgage lending with monthly investor credit data increasing over each of the five months to August 2016.</p>
<p><a href="/images/2016/10/13/chart-4-580x214.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/13/chart-4-580x214.jpg" alt=""></p>
<p>Focusing solely on new construction which includes owner occupier construction of dwellings, owner occupier purchase of new dwellings and investor lending for construction, there was $3.7 billion in lending in August 2016. </p>
<p>The $3.7 billion was the lowest value of lending for new housing since September 2015 with lending for new housing having trended lower since March 2016.  Based on this data, only 14.9 percent of the total value of housing finance commitments in August 2016 were for new housing. </p>
<p>Of the $3.7 billion, 23.1 percent of lending was to investors.</p>
<p>The trends ae emerging whereby demand from the investment segment is increasing again while owner occupier demand is slowing. Although investment demand is lifting, it is not expected to lift to the substantial levels recorded earlier in the current housing cycle. </p>
<p>The fading demand from owner occupiers reflects that many have already upgraded or downgraded in the current cycle as much as the fact that particularly in Sydney and Melbourne it is probably getting a little harder to justify a move in the context of significant transactional costs. </p>
<p>When owners look at the cost of upgrading and the market exit cost (agent commission etc) and entry costs (stamp duty) many are probably now considering a renovation as a better option than moving.</p>
<p>Housing market listings have increased in spring and over recent months auction volumes and clearance rates have also increased.  It will be interesting to see whether this translates into a lift in housing finance commitments over the coming months as the data becomes avaialable.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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Investor housing demand rises as owner occupier fades: CoreLogic

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<p>GUEST OBSERVER</p>
<p>The Australian Bureau of Statistics (ABS) released lending finance data earlier today and when it is paired with the earlier housing finance data release, the figures provide insight into the value of mortgage lending over the month in each state and territory. </p>
<p>Over recent months investor demand for mortgages has been trending higher and this is being largely driven by resurgent investor demand in New South Wales and Victoria. </p>
<p>Of course the capital cities of these two states have consistently recorded the strongest value growth of all capital cities over the past five years and also have the lowest rental returns.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/25/chart-1-3.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/25/chart-1-3.jpg" alt=""></p>
<p>The data analysed is based on the value of mortgage finance commitments. </p>
<p>Given this it is important to consider that more expensive markets (such as NSW) will tend to result in borrowers taking out larger mortgages whereas borrowers in more affordable markets will generally take out smaller mortgages.  More than half of all the mortgage lending to investors in November 2016 was lent in New South Wales and with a further 24.5 percent in Victoria, three quarters of all mortgage lending to investors occurred in the two most populous states.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/25/chart-2-3.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/25/chart-2-3.jpg" alt=""></p>
<p>Looking only at new lending (that is excluding refinances) investors accounted for 56.7% of the value of lending in New South Wales in November 2016.  Looking over the past four years, the value of new lending to investors in New South Wales has been greater than new owner occupier lending for 42 of the past 48 months. </p>
<p>Victoria was previously seeing slightly more than 50% of new lending to investors but was recorded at 45.0% in November 2016.  Across the remaining states and territories, the proportion of total new lending to investors in November 2016 was recorded at: 39.7% in Queensland, 37.1% in South Australia, 31.0% in Western Australia, 26.1% in Tasmania, 40.3% in the Northern Territory and 38.7% in the Australian Capital Territory.</p>
<p>It’s clear that demand for mortgages from the investor segment is picking up, particularly in New South Wales and Victoria, which are proxies for Sydney and Melbourne respectively.  With a low cost of borrowing and many owner occupiers having seen substantial increases in housing equity in Sydney and Melbourne over the past 4.5 years it is easy to understand why investor demand is rising. </p>
<p>On the other side of things, you have a value growth phase that has now run for 4.5 years, largely focussed on two major cities and rental returns at historic low levels in these cities.  Investors should be considering the potential risks, especially as housing supply is responding and that the value growth phase is now quite mature.  While many have seen a substantial increase in the value of properties and may continue to do so, at some point growth will slow. </p>
<p>With record low yields, slow rental growth and additional housing supply entering the market over the coming years, if investors need to start relying on rental returns rather than increase in the asset value, boosting those returns is likely to prove difficult.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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New lending to investors in NSW has accounted for more than half of all new lending for 42 of the past 48 months: Cameron Kusher

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<p>GUEST OBSERVER</p>
<p>Interest rate cuts and the return of lending to investors over the past year have seen a re-emergence of investors as a dominant force in the national housing market.</p>
<p>At the end of last week the Australian Bureau of Statistics (ABS) published housing finance data for January 2017 and it showed that at that time, demand from the investment segment of the market was continuing to surge.  Pairing the housing finance data with the Reserve Bank’s (RBA) lending aggregate data provides deeper insight into housing investor behaviour. </p>
<p>The January 2017 housing finance data showed that over the month, investors committed to a total of $13.8 billion in finance for investment properties.  The figure represented a 4.2 percent rise over the month and a 27.5 percent increase year-on-year (the largest annual increase since August 2014). </p>
<p>The first chart shows that the value of investor housing finance commitments remains below its previous peak but has ramped-up significantly over the past 12 months.  In fact, the value of investor housing finance commitments in January 2017 was just -5.3 percent lower than its historic peak in April 2015. </p>
<h3>Monthly value of investor housing finance commitments</h3>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/22/2017-03-20-image1.png" target="_blank">Click to enlarge</a></p>
<div>
<h3><img src="https://www.urban.com.au/images/2017/03/22/2017-03-20-image1.png" alt=""></h3>
<p> </p>
<p>The second chart highlights how most of the investor housing finance commitments are flowing to established homes rather than new homes.  This isn’t really a surprise when you consider that the amount of established housing stock is substantially greater than new stock and new housing typically has a price premium over existing stock.  Over the month, $1.2 billion in commitments were for new construction compared to $12.6 billion for established housing stock.</p>
<h3>Monthly value of investor housing finance commitments by property type</h3>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/22/2017-03-20--image2.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/22/2017-03-20--image2.png" alt=""></p>
<p>The third chart comes from data published by the RBA on investor housing credit which represents the total amount outstanding to mortgage lenders for the purposes of investor housing.  In January 2017, investor credit expanded by 0.6 percent to be 6.6 percent higher over the year. The monthly change was actually the lowest it has been in four months while the annual change was the highest it has been in 10 months. </p>
<p>Much like the housing finance data, the credit data shows the impact of APRAs recent curbs to investor credit growth which have slowed growth however, more recently credit has once again started to expand. </p>
<h3>Monthly and annual change in investor housing credit to Australian lenders</h3>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/22/2017-03-20--image3.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/22/2017-03-20--image3.png" alt=""></p>
<p>The final chart shows the monthly value of investor credit outstanding to Australian lenders.  At the end of January 2017, the RBA reports that there was $572.2 billion in investor credit outstanding to Australian lenders.  This figure accounted for 34.9% of all housing credit outstanding ($1.637 trillion) and 21.5 percent of total outstanding credit.  The chart shows a significant rise in investor housing credit, in fact, two decades ago investor credit represented 21.8% of total housing credit and 8.7 percent of all credit.</p>
<h3>Monthly value of investor housing credit to Australian lenders</h3>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/22/2017-03-20--image4.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/22/2017-03-20--image4.png" alt=""></p>
<p>All of the data presented highlights that the latest data we have shows demand from the investor segment in the housing market continues to surge.  With the substantial increase in dwelling values in Sydney and Melbourne over recent years, home owners are able to utilise the equity in their principal place of residence to purchase investment properties.  It is clear from the data that many are doing so. </p>
<p>While investor activity is rampant, the proportion of total housing finance commitments to owner occupier first home buyers is at an historic low.  On one hand it is positive that home owners are investing on the other hand they can continue to outbid those people that don’t already own homes further locking many potential buyers out of the housing market.</p>
<p>It is anticipated that over the coming months we will see further tightening of lending policies to investors with some lenders approaching APRAs 10 percnet speed limit.  Should this occur it is likely to result in a moderate slowing of demand from the investment segment, at least temporarily like we saw in mid-2015 and early 2016.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <span class="s2"><a href="https://blog.corelogic.com.au/about/" target="_blank">here</a>.</span></em></p>
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Investor lending gathers pace as dwelling values surge higher: Cameron Kusher

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<p>It was interesting - if a little alarming - to hear Shadow Treasurer Bowen this week noting that there was "no evidence" that investors are rushing in to the market in order to beat proposed changes to tax legislation relating to property.</p>
<p>It's unclear if the ALP just doesn't 'do' liaison with the real estate industry or whether this was a natural response to downplay a mildly accusatory question.</p>
<p>A huge number of investors I speak to are unsurprisingly concerned about prospective changes to tax legislation, and as such many are aiming to buy as much property as soon as they can.</p>
<p>This can be a problem with flagging future shifts in tax legislation well in advance, as we have also seen in Victoria over the past fortnight. </p>
<p>Regardless of the political debate, it's on, and regulators may need to step in again later in the year. </p>
<p>Housing finance surges on</p>
<p>The ABS reported the January housing finance figures on Friday morning which showed the value of investor lending tearing 28 per cent higher year-on-year.</p>
<p>So there's the evidence, lest anyone really needed it. </p>
<p>Another surge in investor lending took total housing finance to comfortably its highest ever level both in seasonally adjusted and trend terms in the month January 2017. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/13/A1.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/03/13/A1.jpg" alt=""></p>
<p>One point that should be acknowledged is that these are January figures, and some steps have since been taken by lenders to cool the investment lending sector.</p>
<p>On this evidence, it's likely that more tweaks will be needed.</p>
<p>On a national basis, the monthly figures for the homebuyer market were relatively flat. </p>
<p>Loan sizes can sometimes be lower in January, yet even in seasonally adjusted terms the value of owner-occupied housing commitments was down a notch in the month (-0.2 percent), despite an uptick in the number of loans.  </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/13/A3.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/03/13/A3.jpg" alt=""></p>
<p>Homebuyers around the traps</p>
<p>The national figures for owner-occupier commitments are being pulled down by Western Australia, where the number of commitments has been in a long downtrend from November 2013 (7,729) all the way through to January 2017 (5,803). </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/13/A5.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/03/13/A5.jpg" alt=""></p>
<p>It's a similar story for the value of owner-occupier commitments in WA, which have dropped from $2.42 billion in 2014 to $1.94 billion. </p>
<p>Finally, the average first homebuyer loan size was generally also a little lower over the Christmas period. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/13/A2.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/03/13/A2.jpg" alt=""></p>
<p>I'll take a look on Wednesday next week at where the investors are buying, but I can save you the suspense because the answer is Sydney and Melbourne.  </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/13/A4.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/03/13/A4.jpg" alt=""></p>
<p>The wrap</p>
<p>Housing finance continues to scale new monthly peaks, and the figures for investment lending will do little to quell the belief that APRA will be tapping on the shoulders of a few more lenders as this year progresses. </p>
<p>That said, today's figures were for January and the most widely reported figures are seasonally adjusted, so there will be lots of attention directed at the next two months of data. </p>
<p> </p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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