<p>ASX-listed developer <a href="https://www.apartments.com.au/developers/stockland">Stockland</a>&nbsp;is continuing its push back into the new apartment market, filing plans for a prominent gateway site between Collingwood and East Melbourne.</p>

<p>The development giant, which moved back into the new apartment space when it announced Stanton Place in Sydney's Rosebery and have since filed plans for a 50-storey tower, are jumping into the off the plan Melbourne market.</p>

<p>They are hoping to create a mixed-use neighbourhood precinct for <a href="https://www.apartments.com.au/new-apartments/79-81-victoria-parade-collingwood-vic-3066">79-81 Victoria Parade</a>, replacing an existing commercial building with a scheme by <a href="https://www.apartments.com.au/architects/john-wardle-architects">Wardle</a>&nbsp;for 478 apartments,&nbsp;ground-floor retail, new public open spaces and a publicly accessible pedestrian laneway.</p>

<p><img alt="First look: Stockland plans new mixed-use neighbourhood precinct for Collingwood gateway site" data-entity-type="file" data-entity-uuid="72dbbca9-3918-4073-afad-a0c0c35be8e7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/stockland%20pers.png?VersionId=bzMVUKKxvwuNK1m0v_td126Rgct32uk_" /></p>

<p>The design report identifies the public realm as a central driver of the proposal.</p>

<p>"Collingwood has limited access to high-quality parks and public open space, and the proposal delivers valuable new areas for respite, social interaction and fine-grain retail activity."</p>

<p>The development would deliver a diverse mix of housing, including studio, one, two and three-bedroom apartments alongside townhouse-style residences. Two basement levels are proposed beneath the development, providing resident and retail parking as well as extensive bicycle facilities.</p>

<p>Wardle's design draws heavily on Collingwood's industrial character, using articulated building forms, brickwork and robust materials inspired by the suburb's warehouse and manufacturing heritage. The built form has been broken into a series of smaller volumes to better respond to the surrounding streetscape while extensive communal gardens, rooftop amenities and shared resident spaces are integrated throughout the project.</p>

<p><img alt="First look: Stockland plans new mixed-use neighbourhood precinct for Collingwood gateway site" data-entity-type="file" data-entity-uuid="7b2135ed-65df-4253-ad53-f216f06bd467" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/stockland%20podium.png?VersionId=l1B6Hqn8zs772VxH6L1fDPg0KHshan9v" /></p>

<p>The planning documents describe the existing office building as offering little engagement with the public realm, with the redevelopment intended to create a more permeable and active neighbourhood destination.</p>

<p>"The proposed scheme presents a significant opportunity to deliver a vibrant retail plaza and a local neighbourhood hub serving both existing and future Collingwood residents."</p>

<p>The 79–81 Victoria Parade site occupies a strategic location about 1.5 kilometres east of Melbourne's CBD, at the threshold between Collingwood and East Melbourne. It is well served by tram services along Victoria Parade and sits within walking distance of St Vincent's Hospital, Fitzroy Gardens, the Fitzroy activity centre and a broad range of employment, retail and hospitality destinations.</p>


Joel Robinson

Stockland plans new mixed-use neighbourhood precinct for Collingwood gateway site

<p>An 1880s timber cottage that has survived Kangaroo Point's transformation from riverside suburb to high-density apartment precinct is set to become the centrepiece of <a href="https://www.apartments.com.au/developers/zephyr">Zephyr Group</a>'s proposed Banksia development.</p>

<p>Rather than see the locally heritage-listed Alpha Cottage as an obstacle to navigate, plans integrate the landmark home into a new 18-storey residential tower, giving one of the suburb's oldest surviving residences a new role as the project's communal hub.</p>

<p>The development application covers a 1,177 sqm amalgamated site at 127-133 Lambert Street and 30 Shafston Avenue, where Zephyr Group plans to deliver 64 apartments above three basement levels. Designed by <a href="https://www.apartments.com.au/architects/joe-adsett-architects">Joe Adsett Architects</a>, the proposal carefully weaves the retained heritage cottage into a contemporary residential scheme, with the tower elevated above the historic building to preserve its presence within the Lambert Street streetscape.</p>

<p><img alt="First look: Zephyr Group's Banksia to wrap new Kangaroo Point tower around 1880s Alpha Cottage" data-entity-type="file" data-entity-uuid="f9dc5bdb-d691-4c60-bf2b-c3ed405a3e75" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Banksia.png?VersionId=Jh4bjlewU.o8HXWt0V4KaFA_lPcF7KWM" /></p>

<p>Named after the native Australian Banksia flower, the project draws inspiration from its distinctive form through curved balconies, sculpted planter boxes and cascading subtropical landscaping that soften the building's profile.</p>

<p>As the design report explains: "The tower's identity is defined by its feature facade, drawing direct inspiration from the Banksia wildflower. The building departs from traditional rigidity through the use of elegant, GRC-moulded planter boxes that appear as if shaped by the breeze."</p>

<p>Plans propose 64 apartments, comprising 32 two-bedroom and 32 three-bedroom residences, across an 18-storey tower. Residents would have access to rooftop amenities including a swimming pool, spa, gym, sauna, private cinema, dining spaces and landscaped recreation areas, while more than half the site is dedicated to planting and open space.</p>

<p><img alt="First look: Zephyr Group's Banksia to wrap new Kangaroo Point tower around 1880s Alpha Cottage" data-entity-type="file" data-entity-uuid="16041b5f-033e-47fa-8fbe-9886e072c1f2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pool.png?VersionId=kpx5w4EbLx0_TdWfDoD1vrSs0_cZ5Ao1" /></p>

<p>The heritage component is the defining feature of the proposal. Constructed in the early 1880s and occupied from at least 1883, Alpha Cottage is recognised by Brisbane City Council as an important surviving example of Kangaroo Point's nineteenth-century residential development and as a representative transverse-gable timber cottage. Despite extensive redevelopment across the peninsula, the building has retained a high degree of its original form and internal fabric.</p>

<p>As part of the redevelopment, the cottage will be carefully relocated a short distance within its original allotment to facilitate construction before being returned to a prominent position along Lambert Street. Original verandah elements will be dismantled, catalogued and reinstated, while significant internal features, including timber flooring, wall linings, joinery, doors, windows and hardware, will be retained. Later additions, including the enclosed rear verandah, will be removed to better reveal the building's original form.</p>

<p>Once restored, Alpha Cottage will accommodate the building manager's office, mail room and parcel facilities, providing an active everyday use that supports its long-term conservation rather than preserving it as a static display. The heritage strategy also maintains landscaped space around the building, allowing it to remain visually distinct beneath the new tower.</p>

<p><img alt="First look: Zephyr Group's Banksia to wrap new Kangaroo Point tower around 1880s Alpha Cottage" data-entity-type="file" data-entity-uuid="43b027e1-576e-4624-a66c-7cc54ea8b7be" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/banksia%20tower.png?VersionId=2W6E2yfkj2AQlWlLeV986grA5zB9f817" /></p>

<p>The Heritage Impact Assessment concludes that "the proposal secures the ongoing occupation, maintenance and conservation of Alpha Cottage," finding the development would result in "no more than a minor impact on the cultural heritage significance" of the building while ensuring its long-term future.</p>

<p>Joe Adsett Architects have designed the tower to sit above the heritage building rather than overwhelm it, creating a clear visual separation between old and new. The development's flowing balconies, integrated planting and organic façade respond to Brisbane's subtropical climate while complementing the restored cottage below.</p>

<p>Banksia occupies a prominent corner in Kangaroo Point within walking distance of the Kangaroo Point Bridge, Brisbane River, ferry services, QUT, the CBD and the Woolloongabba precinct. The site also benefits from direct access to active transport infrastructure and sits within an area earmarked for continued higher-density residential growth.</p>


Zephyr Group's Banksia to wrap new Kangaroo Point tower around 1880s Alpha Cottage

<p>Buying into a masterplanned community often means committing to a vision still years from taking shape. At <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a>, that vision is already visible.</p>

<p>Residents have moved into the completed first stage, landscaped spaces are established, and the next chapter is now underway. Stage 1 has been completed and settled, with Stage 2 now selling off-the-plan.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a>, <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> combines attainable apartment living with sustainability initiatives rarely seen at this price point, including rooftop solar, battery storage and a resident EV-sharing program.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/6RNt3AvtBpI?si=JUhuCV2ZRXsYaoJZ" title="YouTube video player" width="560"></iframe></p>

<p>Located on Schofi​elds Road, just moments from Tal​lawong Metro Station and Schof​ields Train Station, <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> has been designed to appeal to a broad mix of buyers, from first-home purchasers looking for a foothold in Sy​dney's property market to downsizers seeking a connected, low-maintenance lifestyle.</p>

<p><a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> has been conceived as a thoughtfully planned masterplanned community that will evolve over multiple stages, with buyers now able to secure one, two and three-bedroom apartments within a neighbourhood that is already beginning to establish its identity.</p>

<p>One of the project's defining features is its focus on sustainability. Solar energy systems, battery storage and future EV charging infrastructure have been incorporated throughout the development, reflecting a long-term approach to both environmental performance and everyday convenience.</p>

<p>Sustainability sits at the centre of the development's vision, with solar energy systems, battery storage and future EV charging infrastructure integrated throughout the community.</p>

<p>That emphasis on future-ready living extends beyond the technology. Landscaped communal gardens, outdoor gathering spaces and plans for a future retail precinct aim to create a neighbourhood where residents can access daily conveniences without travelling far from home.</p>

<p>[smartcode_project:default project_id=149637 project_image_fid=351027]</p>

<p>The apartments themselves have been designed with liveability front of mind. Rather than chasing maximum density, the focus has been placed on creating practical homes with generous natural light, usable layouts and strong connections to outdoor space.</p>

<p>Importantly, these design principles have been applied consistently across the one, two and three-bedroom apartment offerings.</p>

<p>The appeal of <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> is also closely linked to its location within Syd​ney's rapidly evolving north-west growth corridor. Over the past decade, major infrastructure investment has transformed the area, with new transport links, business precincts and community facilities reshaping suburbs like Talla​wong and Schofiel​ds.</p>

<p>The agent says buyers are increasingly recognising the area's long-term potential.</p>

<p>"Typical buyers that we're finding across <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> especially are your first-home buyers, your investors, your upsizers as well as your downsizers," Hawes says.</p>

<p>Connectivity remains one of the project's strongest drawcards. Residents have access to both Tallaw​ong Metro Station and Schofi​elds Train Station, providing links to the Sydn​ey CBD, Norw​est Business Park, Macquari​e Park and other major employment hubs. Retail centres including Rous​e Hill Town Centre and Sch​ofields Village are also nearby, alongside schools, parks and future healthcare infrastructure.</p>

<p>[smartcode_project:default project_id=149637 project_image_fid=351031]</p>

<p>For Stage 1 resident Roji, it is the balance between convenience and comfort that has defined the experience of living at Kew.</p>

<p>"For me, it's a balance of quality and convenience," she says. "Everything I need is right here."</p>

<p>"If I wanted to catch the train, Scho​fields Station is just around the corner. Tallaw​ong Metro connects me to the city."</p>

<p>More importantly, she says, the development has delivered something that cannot be measured in floorplans or specifications.</p>

<p>"<a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> feels like home."</p>

<p>[smartcode_project:default project_id=149637 project_image_fid=351024]</p>

<p>As Stage 2 enters the market, that lived experience may be one of the project's strongest selling points. Buyers are not purchasing into an untested concept or a future promise. They are joining a community that is already taking shape.</p>

<p>Ongoing investment in transport, retail, healthcare and public open space continues to strengthen the appeal of Syd​ney's north-west growth corridor, while <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a>'s established first stage provides buyers with a tangible sense of the community's future direction.</p>

<p>For a limited time, buyer can secure a new home at <a href="https://www.apartments.com.au/new-apartments/kew-tallawong-23-27-schofields-road-tallawong-nsw-2762">Kew Tallawong</a> with just a $10,000.</p>

<p>[smartcode_project_cta:default project_id=149637]</p>


Kew Tallawong: A growing community taking shape in Sydney's north-west

<p><a href="https://www.apartments.com.au/developers/freecity">Freecity</a> has received development approval for its 51-storey mixed-use tower at 153-157 Walker Street, North Sydney, set to be one of the tallest mixed-use residential-led buildings in one of Sydney’s most sought-after commercial and residential addresses.</p>

<p>Lodged as a State Significant Development Application (SSDA) through the Housing Delivery Authority (HDA) pathway and approved by the NSW Department of Planning, Housing and Infrastructure following a comprehensive public exhibition and submissions process, <a href="https://www.apartments.com.au/new-apartments/153-walker-street-north-sydney-nsw-2060">the project</a> will deliver 296 apartments, alongside a 170-room, luxury hotel, activated retail and significant public domain improvements.</p>

<p>Situated just 200 metres from Victoria Cross Metro Station, on one of the largest developable sites in North Sydney, the development will rise to 234 metres, making it one of the tallest buildings in the suburb. With an end value of approximately $1.5 billion, the project responds directly to the NSW Government’s mandate to accelerate housing delivery in well-located, transit-connected areas.</p>

<p><img alt="Freecity gets green light for mixed-use residential and hotel tower in North Sydney" data-entity-type="file" data-entity-uuid="192ec455-94bf-4e01-83ef-922b1b269d67" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Freecity%20-%20Walker%20Street%20North%20Sydney%201%20RESIZED%20.jpg?VersionId=Bzqp0SBHCDvLAHjA4QXkjuGoOEIh73Jl" /></p>

<p data-end="1160" data-start="703">The apartment mix will cater to a broad range of buyers, with 65 studio and one-bedroom apartments, 139 two-bedroom residences, 35 three-bedroom apartments, 48 four-bedroom homes, and nine penthouses. Residents will have access to a dedicated amenity level on Level 33, featuring a swimming pool with views towards the Harbour Bridge, Sydney Opera House and North Sydney CBD, as well as a gym, library, shared kitchen, lounge and outdoor entertaining areas.</p>

<p data-end="1394" data-start="1162">The hotel will occupy the lower six levels of the building and include meeting and function spaces, a wellness centre with gym, yoga studio, swimming pool and sauna, further strengthening North Sydney's growing hospitality offering.</p>

<p data-end="1767" data-start="1396">At ground level, the development has been designed to improve pedestrian connections through the precinct. More than 700 sqm of retail space will activate the street frontage, while a landscaped through-site link connecting Walker Street, Little Walker Street and Doris Fitton Park will provide new public open space with seating, paving and extensive native landscaping.</p>

<p data-end="1936" data-start="1769">Freecity Group Co-Founder and Joint CEO Tony Sun said the project represents one of the most significant development opportunities currently available in North Sydney.</p>

<p data-end="2070" data-start="1938">"This is one of the most significant development sites in North Sydney and it comes at a pivotal moment for the precinct," Sun said.</p>

<p data-end="2230" data-start="2072">"North Sydney is undergoing a genuine transformation, and this project will contribute housing the city urgently needs while creating a landmark destination."</p>

<p data-end="2397" data-start="2232">Executive Director of Development Michael Romano said demand for both residential and hotel accommodation would continue to strengthen as the Metro precinct matures.</p>

<p data-end="2600" data-start="2399">"The structural demand for high-quality housing and hotel accommodation in North Sydney is compelling, and will only grow as the precinct continues to evolve around the new Metro station," Romano said.</p>

<p data-end="2805" data-start="2602">Architectus has designed the tower, orientating the apartments to maximise views towards Sydney Harbour while introducing a sculpted façade intended to respond to light, wind and the surrounding skyline.</p>

<p data-end="2942" data-start="2807">Architectus Principal Marko Damic said the design sought to create a tower that contributes to the public realm as much as the skyline.</p>

<p data-end="3078" data-start="2944">"We wanted to design a tower that doesn't just sit in the skyline but actively participates and contributes to city life," Damic said.</p>


First look: Freecity gets green light for mixed-use apartment and hotel tower in North Sydney

<p><a href="https://www.apartments.com.au/developers/abadeen">Abadeen</a> and <a href="https://www.apartments.com.au/developers/perifa">PERIFA</a> have celebrated the topping out of <a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf,</a> marking a significant milestone in the delivery of one of Syd​ney's most anticipated waterfront communities.</p>

<p>Located on Sydney's harbourfront at <a href="https://www.apartments.com.au/developments/putney-nsw-2112">Putney</a>, the project has now reached its highest structural point, with construction progressing strongly towards completion in 2027.<br />
&nbsp;<br />
The milestone was celebrated on-site with project partners Phoenix Property Investors, Mitsubishi Estate Asia, Versatile Construction, <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, consultants and stakeholders, to recognise the collective effort behind the transformation of the historic waterfront site into a vibrant new residential, marina and lifestyle destination.</p>

<p>[smartcode_project:default project_id=13962 project_image_fid=362240]<br />
&nbsp;<br />
<a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf</a> will deliver a mix of waterfront residences and terraces, complemented by a private 36-berth marina, waterfront dining opportunities and a revitalised foreshore designed to reconnect the community with the river's edge.<br />
&nbsp;<br />
Abadeen Executive Chairman and Founder Justin Brown said the project represented a rare opportunity to create the next chapter in Sydn​ey's long history of successful waterfront precincts.<br />
&nbsp;<br />
"Throughout Sydney, some of the city's most sought-after addresses have emerged from carefully considered waterfront precincts such as Woolloom​ooloo Wharf, Walsh Bay and Breakfast Point," Brown said.</p>

<p>[smartcode_project:default project_id=13962 project_image_fid=362566]<br />
&nbsp;<br />
"What makes these places so successful is that they become much more than residential developments," Brown said.</p>

<p>"They bring together homes, hospitality, marina facilities, public spaces and a strong sense of community in locations where future supply is incredibly limited."</p>

<p>Brown has long described absolute waterfront land in Sy​dney as "finite."</p>

<p>"Once these opportunities are developed, they are rarely replicated. That's why Syd​ney's waterfront precincts have consistently demonstrated strong demand and long-term value growth over many decades.<br />
&nbsp;<br />
"<a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf</a> is one of the few remaining opportunities to secure a residence within a masterplanned waterfront community that combines direct water access, marina ownership opportunities and a genuine village lifestyle just moments from the Sy​dney CBD."</p>

<p>[smartcode_project:default project_id=13962 project_image_fid=362564]<br />
&nbsp;<br />
PERIFA Founder and Managing Director Fabrizio Perilli said the project reflected a shared commitment to delivering exceptional places that create long-term value for residents and the broader community.<br />
&nbsp;<br />
"The topping out milestone is a significant achievement for the Versatile Group and a testament to the collaboration between all project partners, consultants and contractors involved," Perilli said.<br />
&nbsp;<br />
"Beyond the residences themselves, <a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf</a> will establish a new waterfront destination that celebrates the history, character and lifestyle of this unique location while creating a lasting legacy for future generations."</p>

<p>[smartcode_project:default project_id=13962 project_image_fid=291195]<br />
&nbsp;<br />
Construction is being delivered by <a href="https://www.apartments.com.au/builders/versatile">Versatile Construction</a>, with structural works now substantially complete across the precinct. Attention will progressively shift to the construction of the waterview terraces, apartment façades, services and interior fit-out works over the coming months.<br />
&nbsp;<br />
With limited residences and marina berths remaining, <a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf</a> continues to attract strong interest from owner occupiers and downsizers seeking a premium waterfront lifestyle within close proximity to Putne​y Village, Rh​odes, Top Ry​de and the Syd​ney CBD.<br />
&nbsp;<br />
As one of the last opportunities to secure a residence within a new masterplanned waterfront community on Sy​dney Harbour, <a href="https://www.apartments.com.au/new-apartments/putney-wharf-harbourfront-precinct-20-waterview-street-putney-nsw-2112">Putney Wharf</a> is expected to remain a highly sought-after address for years to come.</p>

<p>[smartcode_project_cta:default project_id=13962]</p>


Abadeen, PERIFA, top out Putney Wharf harbourfront precinct

Investor Lending

<html><body>
<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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<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><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>
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<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>
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<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>
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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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Investor lending cools: 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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<p>Policies seeking to increase home buyers’ purchasing power when supply is insufficient will serve only to drive up prices and reduce housing affordability, according to the Australian Bankers Association Inc (ABA).</p>
<p>"The buying power of most home purchasers is determined ultimately by the amount of money they can borrow. </p>
<p>"The average loan size is now $357,500 or 8.7%higher over the past year, and not surprisingly the highest on record."</p>
<p>Finance providers are maintaining high lending standards, claimed ABA in the submission to the House of Representatives Standing Committee on Economics.</p>
<p><span style="line-height: 1.3em;">"The proportion of new loan approvals to high LVR borrowers, i.e. LVRs more than 90% has fallen since 2009 for all borrowers and remains below 10% for investor loans.</span></p>
<p>"Low doc loans have fallen to very low levels for both owner-occupiers and investors. The proportion of interest only loans has been gradually rising since 2009, with investors showing a greater propensity to use this form of financing compared with owner-occupiers. The share of housing loans which are impaired has been falling since 2011." </p>
<p>Australia needs to progressively increase its housing stock to shelter its growing population. </p>
<p><span style="line-height: 1.3em;">"Over the year ending September 2014 Australia’s population is estimated to have increased by 354,600.Of this, 150,700 was natural increase and 203,900 was net overseas migration. </span></p>
<p>"There is a danger that policy prescriptions that seek to address issues in particular markets – such as excess demand in Sydney and Melbourne – but which are applied across the nation may have unintended consequences in other areas of Australia where such issues are less pressing or absent." </p>
<p><span style="line-height: 1.3em;">ABA believes that there is significant opportunity for reform in policies to increase land release for housing construction. </span></p>
<p>"The supply side of the housing industry is now beginning to lift. Approvals to build new dwellings have been trending up since mid-2012 and over the year to April 2015, 214,000 approvals were issued for the construction of dwellings. </p>
<p><span style="line-height: 1.3em;">Building approvals </span></p>
<p>"The close relationship between interest rates and housing construction approvals does not mean that interest rates can be used as a policy tool to address issues of housing shortages. </p>
<p>"Interest rates influence the short term cycles in construction, but do nothing to address the longer term structural imbalance between demand and supply."</p>
<p>In terms of structural issues a persistent complaint is that development is hindered by a shortage of green field sites, reflecting insufficient land release by state governments, and by excessively restrictive council regulations and developer levies. </p>
<p>"Demographia supports the assertion that higher land prices are a major factor and that a key reason for expensive land is inadequate release of new land for development." </p>
<p>Around two thirds of households own or are purchasing their home and about one third are renting. Australia’s home ownership rate is around the middle of many of its peers in the Organisation for Economic Co-operation and Development (OECD). </p>
<p>"More recent data on housing finance commitments suggests that investors are increasing their share of the housing stock. This is not a uniform trend across Australia but is particularly marked in Sydney and to a lesser extent in Melbourne."</p>
<p>Banks are the predominant suppliers of finance for housing in Australia and housing loans comprise the major part of most banks’ assets. </p>
<p><span style="line-height: 1.3em;">"Loans outstanding for the purchase and construction of houses total $1.46 trillion. Of this, banks lend $1.35 trillion, with the remainder spread among building societies, credit unions and finance companies. </span></p>
<p><a href="/images/2015/09/10/Screen%20Shot%202015-09-10%20at%201.21.51%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p><span style="line-height: 1.3em;"><img src="/images/2015/09/10/Screen%20Shot%202015-09-10%20at%201.21.51%20PM.png" alt="" width="533" height="434"> </span></p>
<p>"Housing loans comprise 62 per cent of the total lending assets of banks and about two- thirds are loans to owner-occupiers and the remaining third to investors. </p>
<p>"Over the past two years or so the growth rate [of borrowing for housing] has gradually accelerated and has now reached 7.2 per cent over the year ending April 2015. </p>
<p>"The growth rate over recent months has been the highest since late 2010, but it is well below the average rate of growth in the pre GFC era. The last historical high point was in March 2004 at almost 22 per cent."</p>
<p><a href="/images/2015/09/10/Screen%20Shot%202015-09-10%20at%201.23.32%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p><span style="line-height: 1.3em;"><img src="/images/2015/09/10/Screen%20Shot%202015-09-10%20at%201.23.32%20PM.png" alt="" width="421" height="287"> </span></p>
<p>Interest rates on home loans are at multi-generational lows. The average advertised standard variable mortgage rate was 5.45 per cent in May 2015, the lowest since 1968. </p>
<p>"Today’s discounted rate is even lower at less than 5 per cent. These low rates compare to the 17 per cent peak recorded between June 1989 and March 1990.</p>
<p><span style="line-height: 1.3em;">"These low rates charged to home borrowers are in part a reflection of the intense competitive environment faced by bank and non-bank lenders. Mostly however, they are a product of the globally low interest rate environment. The RBA’s cash rate was reduced to 2.00 per cent in May 2015 - the lowest in a generation. </span></p>
<p>"Interest rates on fixed rate loans are also very low at below 5 per cent. The proportion of loans which are fixed rate is now falling. Around 10 per cent of new loans are fixed rate, which is about half the proportion in 2013. </p>
<p>"Household finances are in good shape. Dwellings are the single largest component of household wealth at $5.1 trillion, with superannuation at $1.9 trillion. </p>
<p><span style="line-height: 1.3em;">"The ratio of housing debt-to-housing assets is around 28 per cent, with every $1 of debt being matched by over $3 in house value."</span></p>
<p><span style="line-height: 1.3em;">Although households are increasing their borrowings for housing, they are also prepaying their loans to a greater degree. As a result of this, households are now on average the equivalent of 28 months, or more than two years, ahead on their mortgage repayments </span></p>
<p><span style="line-height: 1.3em;">A change in the mix of property taxes away from stamp duty, and with greater emphasis on land tax would likely improve turnover in the housing market, improving the efficiency of the use of the existing stock of housing</span></p>
<p>The ABA supports the recommendation of the Committee (recommendation 9.70) that Treasury should prepare and publish a study on the influence of negative gearing on the housing market.</p>
<p><span style="line-height: 1.3em;">ABA also believes there is not enough evidence to support that current CGT arrangements combined with negative gearing encourage speculative investment as deductions are made at the taxpayers’ marginal tax rate, but gains are taxed at half of that rate. </span></p>
<p><span style="line-height: 1.3em;">"Removal of stamp duty on housing transactions would simplify taxation arrangements. It would improve efficiency by increasing the level of beneficial transactions and by improving the allocation of resources. </span></p>
<p>"Abolishing stamp duty would result in a more efficient allocation of housing, as it would no longer act as a barrier to downsizing or moving to a more suitable property. It would also cease to act as a barrier to workers seeking to move for better employment opportunities. </p>
<p>"An abolition of stamp duty would be expected to result in an increase in property values, particularly in an environment of constrained supply. </p>
<p>"For banks this would improve (reduce) the LVRs of existing borrowers, with a concomitant reduction in the riskiness of the existing housing book. It would lift the effective available deposits for new borrowers although the effect of this on improved housing affordability may be offset by higher purchase prices. </p>
<p><span style="line-height: 1.3em;">"Land tax is a more efficient form of property tax than stamp duties, particularly when it is broad-based. </span></p>
<p>"Broadening the scope of land taxes provides an opportunity to lower the rate of tax. </p>
<p>The revenue implications of changing the rate of land tax vary markedly depending on its scope. </p>
<p><span style="line-height: 1.3em;">"The only argument in favour of higher rates of land tax is to increase government revenue. Due to the low excess burden of land tax, changing the rate of land tax to increase government revenue would be one of the least distortional methods to boost receipts. </span></p>
<p>"However, a change in rate by itself does not address the issues of complexity or fairness."</p>
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Finance providers maintaining high lending standards: ABA

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<p>GUEST OBSERVER</p>
<p><span>As always, a plethora of information on lending for housing-related purposes. The headline number, which is the value of total lending over July, rose by 1.5%. The detail reveals that loans to owner-occupiers (O-Os) rose by 2.2% and loans to investors were 0.5% higher. </span></p>
<p><span>O-Os: There has been pretty reasonable growth in lending to O-Os over the past year. By value lending is up 14.0% through the year and by number it’s up 3.9%. The difference between the two largely reflects the strong lift in dwelling prices which means that the average loan size has risen quite 5 solidly. Today’s data shows that the average new loan size for an O-O was 365k in July – up 9.8% through the year. Clearly, interest rate cuts have helped contribute to a lift in average loan size because the capacity to borrow rises when borrowing costs fall.</span></p>
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<p><span>Investors: For much of the past two years, lending to investors has been the dominant driver of housing-related lending growth. </span></p>
<p><span>But in the last few months lending to investors has cooled a little. It’s still early days, but there are some tentative signs that some of the measures introduced by a number of banks to slow investor-related lending growth are having the desired impact. A gradual decline in rental yields is also playing its part in moderating the rate of lending growth to investors. We expect this trend to continue over coming months. </span></p>
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<p> </p>
<p><span>Construction: Total lending for dwelling-related construction fell slightly over July to leave annual growth at 12.9%. The solid growth in construction lending mirrors the lift in building approvals and residential construction surge currently underway. This story still has a way to run and the latest building approvals data shows that the pipeline of residential construction to come is deep. Dwelling construction generates jobs and the multiplier effect benefits other sectors of the economy. It will also help to alleviate some of the supply/demand imbalances in the property market, particularly in Sydney where dwelling prices have been running riot. </span></p>
<p><span style="line-height: 1.3em;">States: The data on O-Os by State in July shows that annual growth in the number of loans is strongest in NSW (+11.0%), followed by QLD (+4.3%) and Vic (+3.6%). Unsurprisingly, the capital cities of these States have had the strongest house price growth over the past year. Other State results were Tas (+2.0%), SA (+0.4%) and WA (-6.8%). An update on lending to investors by State will be in Friday’s Lending Finance publication.</span></p>
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<p><span>First home buyers: The number of loans to first home buyers fell by 1.0% in July to be down 1.1% through the year. First home buyers represent just 15.4% of all dwellings financed – close to record lows. </span></p>
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<p><span><em><span>Gareth Aird is e</span><span>conomist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905" target="_blank">here</a>.</span></em></span></p>
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Housing-related lending up in July: Gareth Aird

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<div class="column"><span style="line-height: 1.3em;">GUEST OBSERVER</span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">The latest economic data highlights the balancing acts being played out in the Australian economy. Mining is in transition from booming investment activity to the production phase of the cycle. As a result mining profits and sales fell in the latest quarter. But while mining profits are retreating, profits in other parts of the economy are rising, in fact hitting record highs.</span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">There is also the balancing act in the housing sector. Financial authorities want to see less frothy growth in investor housing lending, but at the same time want to maintain lending growth in business and owner-occupier home lending. The good news is that this is also happening.</span></div>
<div class="column"><span style="line-height: 1.3em;"> </span></div>
<div class="column"><span style="line-height: 1.3em;">So from the Reserve Bank’s standpoint there is nothing to do but to monitor the transitions to ensure that the process moves as smoothly as possible. </span></div>
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<p style="line-height: 1.3em;"><strong><span style="line-height: 1.3em;">What do the figures show?</span></strong></p>
<p style="line-height: 1.3em;"><strong><span style="line-height: 1.3em;">B</span><span style="line-height: 1.3em;">usiness indicators</span></strong></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">Company operating profits </span><span style="line-height: 1.3em;">fell for the fifth straight quarter, dropping by 1.9 per cent in the June quarter. Profits fell in 10 of the 15 industry groups. Profits fell by 9.9 per cent in </span><span style="line-height: 1.3em;">Mining, </span><span style="line-height: 1.3em;">fell by 0.8 per cent in </span><span style="line-height: 1.3em;">Manufacturing </span><span style="line-height: 1.3em;">and fell by 4.7 per cent in </span><span style="line-height: 1.3em;">Construction. </span><span style="line-height: 1.3em;">But profits rose by 3.3 per cent in </span><span style="line-height: 1.3em;">Retail Trade.</span></p>
<span style="line-height: 1.3em;">In the year to June (2014/15 year)</span><span style="line-height: 1.3em;">, profits totalled $255.8 billion, down 5.4 per cent over the year and the biggest annual decline in just over two years. Non-mining profits rose by 2.2 per cent to a record $184.7 billion in 2014/15.</span>
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<span style="line-height: 1.3em;">Unincorporated gross operating profits </span><span style="line-height: 1.3em;">actually rose by 5.1 per cent in the June quarter after rising by 6.8 per cent in the March quarter. </span><span style="line-height: 1.3em;"><span style="line-height: 1.3em;">Business gross operating profits  </span></span><span style="line-height: 1.3em;">fell by 0.9 per cent in the June quarter after rising 0.6 per cent in the March quarter. </span><span style="line-height: 1.3em;">Company profits before tax </span><span style="line-height: 1.3em;">fell by 11.3 per cent in the June quarter after rising 13.7 per cent in the March quarter.</span>
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<span style="line-height: 1.3em;">Inventories </span><span style="line-height: 1.3em;">rose by less than 0.1 per cent in the June quarter after rising by 0.6 per cent in the March quarter. Inventories rose in </span><span style="line-height: 1.3em;">Manufacturing </span><span style="line-height: 1.3em;">(up 0.9 per cent) and in </span><span style="line-height: 1.3em;">Electricity, gas, water and waste services </span><span style="line-height: 1.3em;">(up by 2.6 per cent). Inventories fell in </span><span style="line-height: 1.3em;">Mining </span><span style="line-height: 1.3em;">(down by 0.3 per cent), </span><span style="line-height: 1.3em;">Wholesale Trade </span><span style="line-height: 1.3em;">(down 0.4 per cent) and in both </span><span style="line-height: 1.3em;">Accommodation &amp; food services </span><span style="line-height: 1.3em;">and </span><span style="line-height: 1.3em;">Retail Trade </span><span style="line-height: 1.3em;">(both down by 0.2 per cent).</span>
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<span style="line-height: 1.3em;">Sales rose in 8 of the 15 industry sectors in the June quarter</span><span style="line-height: 1.3em;">. Sales rose the most in </span><span style="line-height: 1.3em;">Transport, postal and warehousing </span><span style="line-height: 1.3em;">(up 3.1 per cent) followed by </span><span style="line-height: 1.3em;">Rental, hiring and real estate services </span><span style="line-height: 1.3em;">(up 2.6 per cent). Sales fell most in </span><span style="line-height: 1.3em;">Mining </span><span style="line-height: 1.3em;">(down 2.5 per cent) and </span><span style="line-height: 1.3em;">Construction </span><span style="line-height: 1.3em;">(down 0.8 per cent).</span>
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<br><span style="line-height: 1.3em;">The value of all sales by industry </span><span style="line-height: 1.3em;">fell for only the first time in nine quarters, down by 0.2 per cent in real terms in the June quarter to be 1.4 per cent higher than a year ago. In the March quarter sales were growing at the fastest pace in 31⁄2 years.</span>
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<br><span style="line-height: 1.3em;">In current prices, sales </span><span style="line-height: 1.3em;">rose in five states and territories in the June quarter: NSW &amp; Queensland (both up 1.5 per cent), Tasmania (up 1.1 per cent) and Victoria &amp; South Australia (both up 1.0 per cent).</span>
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<br><span style="line-height: 1.3em;">Sales fell </span><span style="line-height: 1.3em;">in Western Australia (down by 3.7 per cent), ACT (down by 1.1 per cent) and Northern Territory (down 0.4 per cent).</span>
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<br><span style="line-height: 1.3em;">Wages &amp; salaries </span><span style="line-height: 1.3em;">rose by 1.1 per cent in the June quarter to be up 1.6 per cent over the year, weaker than the 2.3 per cent annual growth in the Wage Price Index.</span>
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<br><span style="line-height: 1.3em;">Private sector credit (lending) </span><span style="line-height: 1.3em;">rose by 0.6 per cent in July after a 0.4 per cent gain in June. Annual credit growth</span><br><span style="line-height: 1.3em;">rose from 5.9 per cent to 6.1 per cent.</span>
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<br><span style="line-height: 1.3em;">Housing credit </span><span style="line-height: 1.3em;">grew by 0.6 per cent in July after a similar rise in June. Housing credit is up 7.4 per cent on a year ago – the strongest annual growth since October 2010.</span>
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<br><span style="line-height: 1.3em;">Owner occupier housing </span><span style="line-height: 1.3em;">credit rose by 0.5 per cent in July to stand 5.3 per cent higher than a year ago – the fastest annual growth since April 2012. </span><span style="line-height: 1.3em;">Investor housing </span><span style="line-height: 1.3em;">finance lifted 0.6 per cent in July – the slowest growth in almost two years (equal the rate in October 2013). Investor housing credit was up by 10.8 per cent over the year, down from 11.1 per cent annual growth in June.</span>
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<br><span style="line-height: 1.3em;">Personal credit </span><span style="line-height: 1.3em;">was unchanged in July after rising 0.3 per cent in June. Personal credit was up 0.9 per cent over the year.</span>
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<br><span style="line-height: 1.3em;">Business credit </span><span style="line-height: 1.3em;">rose by 0.7 per cent in July – the biggest rise in six months. Business credit is 4.8 per cent higher than a year ago.</span>
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<br><span style="line-height: 1.3em;">Term deposits </span><span style="line-height: 1.3em;">held with banks rose for the first time in six months, up by $4.7 billion in July to $511.3 billion. But term deposits are down 5.0 per cent on a year ago – the sharpest decline in 12 years. Term deposits have been regularly falling in annual terms for 20 months – the longest period in records going back almost 30 years.</span><br><p style="line-height: 1.3em;"><strong>What is the importance of the economic data?</strong></p>
<p><span>The quarterly </span><span>Business Indicators </span><span>publication by the Bureau of Statistics contains measures such as inventories, company profits and income from sales. Higher inventory (stock) levels can be either intentional or unintentional. If stocks are low and sales are expected to rise in the future, businesses will seek to build up stocks. However an unintentional build-up in stocks is where sales fall short of expectations, leaving more goods on the shelves than desired. If profits are increasing then this may point to increased capital spending and employment in the future. Rising profits are also a sign of favourable business conditions. </span></p>
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<span style="line-height: 1.3em;">Private sector credit </span><span style="line-height: 1.3em;">figures are released by the Reserve Bank on the last working day of the month. Credit is separated into three categories – housing, other personal and business. Private sector credit is effectively the amount of loans outstanding in the economy. If growth in lending is strong then it suggests that credit from financial institutions is freely available, underlying demand for assets such as cars and houses is firm and that the price of credit (interest rates) is attractive.</span>
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<br><span style="line-height: 1.3em;">The </span><span style="line-height: 1.3em;">Housing Industry Association </span><span style="line-height: 1.3em;">releases data on the </span><span style="line-height: 1.3em;">sales of new homes </span><span style="line-height: 1.3em;">each month. The HIA collects the data each month from a sample of Australia's largest 100 home builders. The survey covers around 14 per cent of the home building industry.</span>
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<br><strong><span style="line-height: 1.3em;">New home sales</span></strong>
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<br><span style="line-height: 1.3em;">New home sales fell by 0.4 per cent in July. Sales of multi-units fell by 4.2 per cent while detached house sales rose by 0.7 per cent.</span>
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<br><span style="line-height: 1.3em;">The Housing Industry Association reported: </span><span style="line-height: 1.3em;">“In the month of July 2015 detached house sales increased by 4.2 per cent in New South Wales. Detached house sales fell by 2.3 per cent in Victoria and by 4.9 per cent in Western Australia. Sales were close to flat for the month in Queensland (-0.6 per cent) and South Australia (-0.2 per cent).</span>
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<br><span style="line-height: 1.3em;">The annual peak for detached house sales has passed. Over the three months to July this year detached house sales fell by 2.8 per cent to be 3.4 per cent lower when compared to the three months to July 2014.</span>
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<div class="column">'<span style="line-height: 1.3em;">Multi-unit’ sales peaked in May this year and fell by 4.2 per cent in July following a decline of 2.9 per cent in June. Over the three months to July this year multi-unit sales increased by 8.3 per cent, but it was the strength of the May result that drove the quarterly outcome.</span>
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<div class="column"><strong><span style="line-height: 1.3em;">What are the implications for interest rates and investors?</span></strong></div>
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<br><span style="line-height: 1.3em;">The Australian economy is evolving as best as can be expected. There is no need for the Reserve Bank to either lift rates or cut rates in the current environment.</span>
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<div class="column"><span style="line-height: 1.3em;">Our review of the profit-reporting season showed that Corporate Australia remains in good shape. While profits are understandably down in mining and engineering sectors, they are up in consumer and housing-dependent areas. Bottom-line earnings are generally improving despite the fact that a large number of companies have taken the opportunity of favourable financials to write down the value of assets such as intangibles.</span></div>
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<br><span style="line-height: 1.3em;">Over the last seven years the Australian economy has experienced the biggest structural swings in a century. Mining investment and prices soared; resource prices retreated; mining investment was completed; mining production has ramped up to record highs; interest rates fell to record lows; and home building approvals hit record highs. Major swings and transitions have already occurred and the process is a long way from over.</span>
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<br><span style="line-height: 1.3em;">The Reserve Bank can feel justifiably happy about how the process has gone so far. </span>
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<div class="column"><span style="line-height: 1.3em;"><span><em>Craig James</em></span><em> is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em></span></div>
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Investor home lending slows: Craig James

Banking on housing: APRA's Wayne Byres

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<p><span style="line-height: 1.3em;">GUEST OBSERVER</span></p>
<p><span style="line-height: 1.3em;">The minutes of the RBA August board meeting revealed a marginally more positive tone to the commentary. Given that the Board meeting pre-dates the release of the comprehensive Statement on Monetary Policy (SoMP), </span><span style="line-height: 1.3em;">they don’t provide </span><span style="line-height: 1.3em;">significantly new detail, but </span><span style="line-height: 1.3em;">the tone suggests that interest rates are firmly on hold.</span></p>
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<span style="line-height: 1.3em;">Does this mean the Bank has moved to ‘neutral’? We don’t really think so. </span><span style="line-height: 1.3em;">Whil</span><span style="line-height: 1.3em;">e the RBA is certainly wishing and hoping that it won’t have to cut rates again, </span><span style="line-height: 1.3em;">over the next 18 months there is still a greater risk of a further cut in the cash rate than a hike.</span><br><p style="line-height: 1.3em;">The points of interest in the minutes were:</p>
<span style="line-height: 1.3em;">The Board noted that downside risks to the outlook for China growth have receded. The improvement in housing markets and stimulatory policy steps taken were noted. Keep in mind though that the meeting pre-dates the release of the patch of very weak data last week (especially for exports) as well as the devaluation of the RMB.</span><br><p style="line-height: 1.3em;">On the domestic economy, the minutes had a decidedly ‘glass half full’ feel about them, despite the fact that the forecasts presented to the board included a downgrade for GDP forecasts. They noted the improvement in labour market outcomes, and were relatively positive about consumption noting that “the most recent data on retail sales and liaison information were consistent with the momentum in consumption growth being sustained”.</p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">The minutes also noted the improvement in business conditions, but highlighted the fact that the pick-up was concentrated in household and business services, which are generally less capital intensive than goods-related sectors.</span></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">On the currency, the minutes reiterated the points made by Governor Glenn Stevens in a recent speech and the SoMP, that the lower exchange rate was supporting net services exports</span></p>
<span style="line-height: 1.3em;">Board members discussed APRA’s measures targeting investor hou</span><span style="line-height: 1.3em;">sing lending, but noted that it was too early to gauge the impact</span>
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<div class="column"><em><span style="line-height: 1.3em;">Felicity Emmett co-head of Australian economics, ANZ Research and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/felicity-emmett/5a/3ba/256" target="_blank">here</a>.</span></em></div>
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The RBA's 'glass half full' outlook: ANZ's Felicity Emmett

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<div>The Lending Finance data released yesterday for the month of June 2015.</div>
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<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>
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<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>
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<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>
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<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>
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<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>
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<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>
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<div>My information is that we should start to see investor loans slowing in the July and particularly August figures.</div>
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<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>
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<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>
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<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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<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>
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<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>
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<br>Recall that foreign buyers without Australian residency are generally granted permission to buy new residential property.</div>
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<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>
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<div>This permission may be granted in some instances, such as for development projects.</div>
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<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>
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<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>
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<div>On a 12mMA basis investor loans in New South Wales rose to a record high $5.4 billion.</div>
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<br><div>Low interest rates and expectations of future price growth have also impacted investor loans in Victoria. </div>
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<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>
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<div>There may be a material price correction in time too, especially for new and off-the-plan builds.</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>
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<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>
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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">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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