<p data-end="445" data-start="321">Gold Coast developer Drew Group is fast approaching sell-out at its Main Beach apartment development, Lagoon Main Beach.</p>

<p data-end="675" data-start="447">In the last nine months, Drew Group and sales partner Pezet Matheson have secured 31 sales totalling over $75 million, as the two-tower development advances towards completion under the expert eye of Hutchinson Builders.</p>

<p data-end="772" data-start="677">“Today's buyers are more discerning than ever," Drew Group Managing Director Jon Drew says.</p>

<p data-end="901" data-start="774">"It's essential to provide something truly unique that sets a development apart, and we believe Lagoon has achieved just that."</p>

<p data-end="973" data-start="903">[smartcode_project:default project_id=108747 project_image_fid=193023]</p>

<p data-end="1158" data-start="975">Just over 50 per cent of recent&nbsp;sales have been to local buyers, reflecting the deep trust and connection within the Gold Coast community that Drew Group has developed over the years.</p>

<p data-end="1397" data-start="1160">Demand has been particularly robust at the top end, with two of the three exclusive penthouses already sold, alongside five sub-penthouses. Only seven apartments remain in Lagoon's Signature Series — one&nbsp;penthouse and six sub-penthouses.</p>

<p data-end="1469" data-start="1399">[smartcode_project:default project_id=108747 project_image_fid=284864]</p>

<p data-end="1786" data-start="1471">Drew Group has also removed the much-maligned sunset clause from all contracts at Lagoon. The sunset clause — although rarely invoked, yet on occasion known to have been — allows developers to take back contracts on apartments should the building not be completed within the timeframe specified in the contract.</p>

<p data-end="1952" data-start="1788">Pezet Matheson Co-Director Jayde Pezet says the fact Lagoon is&nbsp;within a year of completion, and has no sunset clause in contracts, provides certainty to buyers.</p>

<p data-end="2008" data-start="1954">"This is paramount in the current market," Pezet says.</p>

<p data-end="2279" data-start="2010">Drew Group has committed to providing the highest level of security inclusions — none more impressive than the Ubiquity Access Control System, a cutting-edge facial recognition technology that is one of the most state-of-the-art keyless entry systems on the market.</p>

<p data-end="2351" data-start="2281">[smartcode_project:default project_id=108747 project_image_fid=190743]</p>

<p data-end="2428" data-start="2353">One of the biggest drawcards to Lagoon has been the size of the apartments.</p>

<p data-end="2567" data-start="2430">"It is unlikely that any future new development in Main Beach will be able to offer such spacious living at this price point," Drew says.</p>

<p data-end="2850" data-start="2569">"Today's buyers are more discerning than ever, carefully evaluating amenities like gyms, spas, workspaces, and beach lockers, along with quality finishes. It's essential to provide something truly unique that sets a development apart, and we believe Lagoon has achieved just that."</p>

<p data-end="2907" data-start="2852">Lagoon is set to complete construction in mid-2026.</p>

<p data-end="2958" data-start="2909">[smartcode_project_cta:default project_id=108747]</p>


Joel Robinson

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

<p>National apartment developer Abadeen has topped out its debut Gold Coast apartment project,&nbsp;<a href="https://www.apartments.com.au/new-apartments/villea-palm-beach-26-mawarra-street-palm-beach-qld-4221">Villea Palm Beach</a>.</p>

<p>Buyers will move into the $120 million development in early 2026, with builder Emicon now focusing its attention towards the fitout stage of the apartments.</p>

<p><a href="https://www.apartments.com.au/developers/abadeen-group">Abadeen</a>’s Executive Chairman and Founder, Justin Brown, said topping out at Villea represented an exciting step forward for the company’s national growth and the delivery of a benchmark coastal development.</p>

<p>“Villea Palm Beach represents everything Abadeen stands for — design-led living, premium quality, and the convenience we are bringing for residents to feel part of a perfect beachside community," Brown said.</p>

<p>"It is a particularly special project for us, being our first with spectacular ocean views, just metres from the water and with the addition of ground-floor retail. To reach the top floor is a proud moment, and I am incredibly proud of the Abadeen and Emicon teams for the way they are bringing this project to life for future residents.”</p>

<p>[smartcode_project:default project_id=106840 project_image_fid=336444]</p>

<p>Pierre Saab, Director of builder <a href="https://www.apartments.com.au/builders/emicon">Emicon</a>, said topping out was an exciting milestone and the team is now focused on interiors and detailing.</p>

<p>“This is a fantastic milestone to reach. With the final roof pour complete, we’ve moved into the fit-out stage where the detailing will truly bring Villea to life,"&nbsp;Saab said.</p>

<p>"Standing on the top floor, the team was struck by the stunning 180-degree views of the ocean and all that <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a> has to offer — a daily reminder of the exceptional lifestyle this project will deliver.”</p>

<p>[smartcode_project:default project_id=106840 project_image_fid=336441]</p>

<p>Nick Clydsdale, Director of SRQ, who is managing sales and marketing for Villea, said the milestone marks the next phase of the sales campaign.</p>

<p>“With construction now at its highest point, we are excited to kick start the next phase of the campaign off the back of strong sales momentum driven by the local market,"&nbsp;Clydsdale said.</p>

<p>"Villea is a prized offering in the popular suburb of Palm Beach— ideally suited to owner-occupiers and downsizers seeking a convenient and beautiful coastal lifestyle. At the same time, with forecasts pointing to further price growth across the Gold Coast in 2025, Villea offers investors the opportunity to enter early in the upswing cycle."</p>

<p>[smartcode_project:default project_id=106840 project_image_fid=336442]</p>

<p>&nbsp;</p>

<p>Designed by acclaimed architects <a href="https://www.apartments.com.au/architects/bda-architecture">BDA</a>, Villea comprises 69 two- and three-bedroom residences with light-filled layouts, premium finishes including timber flooring, Fisher &amp; Paykel appliances, and high-performance glazing to maximise comfort.</p>

<p>Many residences capture ocean views, while all benefiting from generous open plan designs and access to shared amenities like a&nbsp;pool, gym, barbecue facilities, and outdoor entertaining spaces, all just 400m from the beach.</p>

<p>A ground floor retail leasing campaign is also underway, with Abadeen set to handpick a curated mix of tenants to enhance the experience for both residents and the wider community.</p>

<p>[smartcode_project_cta:default project_id=106840]</p>


Abadeen tops out Villea Palm Beach

<p data-end="316" data-start="219"><a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has officially unveiled its vision for a landmark development in Little Bay.</p>

<p data-end="493" data-start="318">The vertically integrated developer-builder is set to launch <a href="https://www.apartments.com.au/new-apartments/este-jennifer-street-little-bay-nsw-2036">ESTE</a>, a collection of low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis Architects</a>, comprising 94 apartments.</p>

<p data-end="762" data-start="495">Targeted at local downsizers, upgraders, nature lovers, and golf enthusiasts, ESTE offers close proximity to Kamay-Botany Bay National Park, Little Bay Beach, and the renowned St Michael’s Golf Club — widely considered one of New South Wales’ top courses.</p>

<p data-end="889" data-start="764">Many of the apartments, with interiors by Richard Stanisich, boast uninterrupted ocean views — a rare offering in Sydney.</p>

<p data-end="961" data-start="891">[smartcode_project:default project_id=112343 project_image_fid=210130]</p>

<p data-end="1158" data-start="963">Residents will enjoy exclusive access to a private rooftop amenity level featuring a heated infinity pool, a fitness centre equipped with the latest TechnoGym technology, and a sauna.</p>

<p data-end="1382" data-start="1160">Urban Property Group has taken a careful and considered approach to the design and planning stages, ensuring ESTE delivers an architecturally appropriate and sensitive addition to a suburb that rarely sees new development.</p>

<p data-end="1527" data-start="1384">Plans were first submitted to Randwick City Council in late 2022, following concept approval from the NSW Government earlier that year.</p>

<p data-end="1662" data-start="1529">Construction commenced in November 2024, with the project expected to top out in Q4 2025 and reach completion in Q3 2026.&nbsp;</p>

<p data-end="2064" data-start="1664">Urban was one of the first developers in New South Wales to adopt the sought-after 10-year <a href="https://www.apartments.com.au/news/resilience-latent-defects-insurance">Latent Defects Insurance policy from Resilience Insurance</a>. The policy — that can only be taken out by developers or builders and not by individual apartment buyers — covers any structural or waterproofing defects for a full 10 years post-completion, providing buyers with the most comprehensive protection available when purchasing off the plan.</p>

<p data-end="2064" data-start="1664"><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/what-is-latent-defects-insurance-and-is-it-bringing-confidence-to-the-off-the-plan-apartment-market">What is Latent Defects Insurance and is it bringing confidence to the off the plan apartment market?</a></em></p>

<p data-end="2064" data-start="1664">SRM Residential will be launching ESTE in the coming months.</p>

<p>[smartcode_project_cta:default project_id=112343]</p>


Urban Property Group unveils ESTE Little Bay apartments

<p data-end="256" data-start="76">For the first time, prospective off the plan apartment buyers in Sydney's <a href="https://www.apartments.com.au/developments/homebush-nsw-2140">Homebush</a> can purchase with the confidence of a 10-year defect protection for their new apartment building.</p>

<p data-end="480" data-start="258"><a href="https://www.apartments.com.au/new-apartments/bridge-road-residences-homebush-3-5-bridge-road-homebush-nsw-2140">Bridge Road Residences</a>, the latest development by <a href="https://www.apartments.com.au/developers/ventus-group">Ventus Group</a>, is the first new apartment complex in the area to offer the highly sought-after 10-year Latent Defects Insurance, provided by Resilience Insurance.</p>

<p data-end="701" data-start="482">This policy, which applies to all 80 apartments in the new building on Bridge Road, covers homeowners against&nbsp;structural or design defects defects that may arise within the first 10 years after the building's completion. It can only be taken out by the developer or builder of the new development, and not by individual apartment owners.</p>

<p data-end="1107" data-start="703">Half of the apartments in the building have already been quickly snapped up. Buyers have been attracted by the insurance policy, along with the guarantee of a quality build, thanks to the insurance's Technical Inspection Service. This service involves third-party experts visiting the construction site at least once a month to ensure the building is being properly constructed, making defects highly unlikely.</p>

<p>[smartcode_project:default project_id=6989 project_image_fid=2132]</p>

<p>Located on Bridge Road, the development offers a mix of apartment configurations, from studios to three-bedroom apartments.</p>

<p>Apartments have been designed&nbsp;by MX Architects with liveability in mind, featuring open-plan layouts, engineered timber floors, wool-blend carpet in bedrooms, and either ducted or split-system air conditioning depending on configuration.&nbsp;</p>

<p>Many apartments also include north-facing aspects or oversized balconies, enhancing natural light and outdoor usability.</p>

<p>The development includes landscaped communal gardens with a central lawn, shaded seating, and barbecue areas. A rooftop terrace offers views across the city and Sydney Olympic Park. These amenities are designed to provide outdoor spaces for both relaxation and socialising, without increasing maintenance burden.</p>

<p>[smartcode_project:default project_id=6989 project_image_fid=2135]</p>

<p>Bridge Road Residences is less than 10 minutes’ walk from Homebush Station and close to major road links including the M4 and M8.&nbsp;</p>

<p>Residents will have immediate access to Rochester Street’s cafes, grocers, and restaurants, as well as retail and dining hubs at North Strathfield’s Bakehouse Quarter, Strathfield Plaza, and DFO Homebush.&nbsp;</p>

<p>The area is also well-served by schools and tertiary institutions, including Homebush Public School and the University of Sydney.</p>

<p>Construction is being led by <a href="https://www.apartments.com.au/builders/one-way-dc">One Way Development &amp; Construction</a>. They are expecting to complete the build in Q3 2026.</p>

<p>[smartcode_project_cta:default project_id=6989]</p>


Bridge Road Residences brings 10-year defects guarantee to Homebush

<p><a href="https://www.apartments.com.au/developers/romano-property-group">Romano Property Group</a> has appointed AG Construct to deliver their boutique new Fitzroy apartment development, Napier 235.</p>

<p>Half of the apartment in the architecturally-striking block of 14 have already been snapped up.</p>

<p>Located just 150 metres from Brunswick Street, <a href="https://www.apartments.com.au/new-apartments/napier-235-235-napier-street-fitzroy-vic-3065">Napier 235</a> will bring a mix of two and three-bedroom residences to the tightly held inner-city neighbourhood, including a full-floor penthouse and one townhouse.</p>

<p>[smartcode_project:default project_id=144904 project_image_fid=3217]</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> with landscaping by <a href="https://www.apartments.com.au/landscape-architect/florian-wild">Florian Wild</a>, Napier 235 presents a sculptural, low-rise form that aligns with Fitzroy’s heritage character while introducing contemporary detailing.&nbsp;</p>

<p>Residences are all north-facing and feature large private terraces, with living areas that connect to the outdoors via floor-to-ceiling sliding glass.</p>

<p>Inside, kitchens are anchored by 3.5-metre stone island benches and include walk-in pantries, Miele and Gaggenau appliances, and built-in bars with wine fridges in most apartments.&nbsp;</p>

<p>Customisable floor plans allow buyers to tailor internal layouts to suit their needs.</p>

<p>[smartcode_project:default project_id=144904 project_image_fid=3220]</p>

<p>Sustainability has been prioritised from the outset. Napier 235 ranks in the top five per cent of Victorian developments under current planning policy benchmarks, reflecting efficient energy use and environmentally responsible design.</p>

<p>Napier 235 places residents within walking distance of <a href="https://www.apartments.com.au/developments/fitzroy-vic-3065">Fitzroy</a>’s food and retail precincts, including Marion, Morning Market, and Bentwood Café. Fitzroy Gardens, Carlton Gardens, and tram connections to the CBD are also nearby. Despite its proximity to major amenity, the development sits within a quieter residential pocket.</p>

<p>Pricing for two-bedroom apartments at Napier 235 starts at $1,225,000.</p>

<p>[smartcode_project_cta:default project_id=144904]</p>


Construction to commence at Napier 235 in Fitzroy as Romano appoints builder

Mortgage Rate

<html><body>
<p class="Body">Media coverage of the Westpac decision to lift mortgage rates 0.2 percentage points has been typically sub-standard.</p>
<p class="Body">Many articles, inspired by economists suffering from limelight deficit syndrome, have portrayed this as a death knell for property markets.</p>
<p class="Body">As someone who has studied the relationship between interest rates and price movements, I can tell you that this is a not a reasonable conclusion.</p>
<p class="Body">Economists and journalists, with their simplistic thought processes, tend to believe that <em>low interest rates = property boom</em>, and <em>rising interest rates = property decline</em>. This contradicts both common sense and historical precedent.</p>
<p class="Body">Falling interest rates usually coincide with subdued property markets. The RBA cuts interest rates when the economy is struggling, consumer confidence is low and unemployment is rising – i.e. conditions which are least likely to produce property booms.</p>
<p class="Body">This is why most of Australia does not have booming property markets. Only Sydney, which is the centre of the one economy (NSW) that is really pumping, has had a boom. Melbourne, the capital of a state with an okay economy, has displayed some buoyancy but nothing approaching the dizzy heights of Sydney.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Most of the state and territories have struggling economies and their capital city property markets – Perth, Hobart, Canberra, Darwin, Adelaide – have been stuck in neutral or reverse. Years of very low interest rates have been utterly irrelevant in all of these places.</p>
<p class="Body">Regional Australia is dotted with markets that have dropped sharply and others that have gone nowhere in terms of price movements. The exceptions are relatively few and most of them are located amid that one strong state economy, New South Wales.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">The bottom line is that interest rates usually are irrelevant. Economists appear to think they’re the only thing that matters and the sole determinant of outcomes in real estate. In truth, they have little or no bearing.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Other factors have much greater influence. Sydney had its boom because a change of State Government in 2011 returned sanity and competence to governance, the economy started pumping again and infrastructure spending was revitalised. Money started circulating, businesses started spending, consumers started feeling good about things and the property market, which had been largely dormant for a decade, burst to life.</p>
<p class="Body">It would have happened whether the official interest rate was 2%, 4% or 6%.</p>
<p class="Body">Conversely, interest rates are most likely to be rising when the national economy is strong, with lots of jobs being created, confidence high and businesses spending big. These are the conditions that drive property booms – and the RBA will lift interest rates to dampen things down.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Often it requires a long period of multiple rises to quell the buoyancy. Therefore, genuine national property booms – unlike what we have at the moment - usually coincide with periods of high or rising rates.</p>
<p class="Body">In the late 1980s, interest rates were lifted repeatedly without dampening the boom - and mortgage rates went as high as 17% before the bull run ended.</p>
<p class="Body">To suggest that a 0.2 percentage point rise by one lender will kill the (Sydney) boom shows a low level of understanding.</p>
<p class="Body">The reality is that the one major boom in the nation, Sydney’s, has been slowly deflating since the start of the year. APRA didn’t need to take action because the market was taking care of the situation without any interference from self-important bureaucrats.</p>
<p class="Body">And Westpac’s tiny nudge to interest rates will have no bearing on the situation.</p>
<p class="Body"> </p>
<p class="Body"><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
</body></html>

terryryder-YECXbqmri2

Interest rates usually are irrelevant: Terry Ryder

<html><body>
<div>The latest AMP.NATSEM Household Debt report showed that the average household debt in Australia has increased to a new high of $245,000, continuing a prolonged run-up which has seen the average debt per household increase by a factor four since 1988, up from $60,000.</div>
<div> </div>
<div>While the bulk of the rise in mortgage debt has been driven by 30 to 50 year olds, the over 65s cohort also accounts for a fair proportion of the increase in household debt, with more Australians than ever before taking liabilities into retirement.</div>
<div> </div>
<div>Despite this, the latest Australian National Accounts implied that interest serviceability has continued to become easier.</div>
<div> </div>
<div>There are a thousand possible ways to measure this, nine of which is satisfactory: the blue points on the chart below denote interest paid on dwellings as a percentage of total employee compensation minus income tax, while the red points show total interest paid inclusive of consumer debt (excluding unincorporated enterprises) as a percentage of gross household income.</div>
<div> </div>
<div><a href="/images/2015/12/14/Interest.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/Interest.jpg" alt=""></div>
<div> </div>
<div>
<div>You could spend forever debating what should or should not be included in household income (imputed interest on dwellings, benefits receivable etc.) or backed out of gross household income (e.g. other taxes, transfers, insurance premiums etc.) but the results tend to be broadly similar. </div>
<div> </div>
<div>Of course the results generally appear to be "too low" due to the significant number of debt free households. The important thing to note is the trend, which shows that while the mining boom was in full swing the aggregate mortgage interest repayment burden was tending towards excruciating levels by September 2008 (when the official cash rate was still as high as 7 per cent). but since that time serviceability has become relatively speaking very easy.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Buffers at record highs</span></strong></div>
<div> </div>
<div>The Reserve Bank of Australia (RBA) has noted in its Financial Stability Review that indicators of household financial stress are presently low, with households pushing ahead on repayments to the extent that aggregate mortgage buffers - as measured by balances in offset and redraw facilities - remain at around 16 per cent of outstanding loan balances, or the equivalent of well over two years of scheduled repayments at current interest rates. </div>
<div> </div>
<div><a href="/images/2015/12/14/Buffers.gif" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/Buffers.gif" alt=""></div>
<div> </div>
<div>
<div>Loan arrears and mortage delinquencies data are also tracking at historically low levels, with favourable delinquency developments having cascaded lower since the 2008 book year. </div>
<div> </div>
<div>A crude comparison the aggregate interest paid to the total stock of outstanding housing credit implies that the average mortgage rate is well under 5 per cent, suggesting in turn that Australians have taken advantage of the very generous fixed rates available through 2015.</div>
<br><div class="separator"> </div>
<strong><span style="text-decoration: underline;">The outlook</span></strong><br><br><div>The first chart above shows the sensitivity of household finances, and especially mortgage repayments, to the unpredictable changes in interest rates. Mortgage repayments are on average clearly very affordable now, but may not be so if interest rates rise sharply.</div>
<div> </div>
<div>The AMP.NATSEM report found that the highest typical debt repayment burdens are to be found in the outer suburbs of our capital cities.</div>
<div> </div>
<div>If interest rates were to rise by 2.5 percentage points - essentially the equivalent of ten interest rate hikes - then the most indebted households could see mortgage repayments rise from 42 per cent of household income to a stress-inducing 58 per cent, while perhaps unsurprisingly the most indebted low income households would be the hardest hit of all.</div>
<div> </div>
<div>An increase in interest rates of 2.5 percentage points would also see repayments for the typical first homebuyer rising from 21 per cent to 30 per cent of household income, or a shade over an extra $8,000 per year.</div>
<div> </div>
<div>There are few indications that the official cash rate is set to move materially higher any time soon, although shifts in capital requirements and funding costs may be another matter. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Fragile markets</span></strong></div>
<div> </div>
<div>Unemployment rates have generally been trending down since January 2015, although unemployment rates in Western Australia and the Australian Capital Territory are in an uptrend, and the housing market in Darwin looks exceptionally fragile.</div>
<div> </div>
<div><a href="/images/2015/12/14/UERATE.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/UERATE.jpg" alt=""></div>
<div> </div>
<div>
<div>Although household financial stress is currently low, it seems likely that there will be some vulnerable housing markets in 2016, which may include;</div>
<div> </div>
<div>-resources regions and markets, with the terms of trade crunch likely to result in multiple mass lay-offs to add to the winding down of capital investment;</div>
<div> </div>
<div>-suburbs and sub-regions which are experiencing extensive over-building of apartments. particularly inner city high-rise stock, and those areas with already elevated and rising vacancy rates; </div>
<div> </div>
<div>-off-the-plan developments which will be adversely impacted by APRA's tougher deposit measures; and</div>
<div> </div>
<div>-outer suburban fringe locations in Sydney which saw a massive spike in investor activity and rapid price growth in 2015.</div>
<div> </div>
<div>I'd include a generic entry here for "mining towns", but many have been so utterly smashed already, leading to investor defaults and bankruptcies, since not only were prices unsustainable, so too were rents, and even tenancies. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Auctions</span></strong></div>
<div> </div>
<div>Sydney's preliminary auction clearance rate rebounded a bit to 55.2 per cent this week, with outer suburban markets looking particularly dormant, The strongest auction market was a resurgent inner west, with a strong preliminary auction clearance rate of 74.6 per cent (<em>CoreLogic-RP Data</em>).</div>
<div> </div>
<div>This month's Labour Force data showed that New South Wales economy has generated a seasonally adjusted +176,000 jobs over the past year, for an outrageous employment growth rate of +4.9 per cent (trend +160,000 jobs, or +4.4 per cent). The Detailed Labour Force figures, which provide more colour by city, region and industry will be released on Thursday. So stay tuned for that and more this week. </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>
</div>
</div>
</div>
</div>
</body></html>

pwargent-M4siyDbqQY

Record household debt of $245,000: Pete Wargent

<html><body>
<div>A couple of things happened in 2016 that changed the outlook for interest rates in Australia. </div>
<div> </div>
<div>Swaps had been seeking out lower and lower rates, yet fairly abruptly around September time someone or something called time on that particular party.</div>
<div> </div>
<div>Well, what happened?</div>
<div> </div>
<div>It wasn't that the economy suddenly became stronger. Hardly! </div>
<div> </div>
<div>In fact, GDP growth was actually negative for the third quarter of the calendar year, while employment growth went backwards in the months of both August and September too.</div>
<div> </div>
<div>And all measures of inflation are actually below the target 2 to 3 per cent range.<br><br>Then, what? </div>
<div> </div>
<div>Change of Governor</div>
<div> </div>
<div>While we should be wary of imposing simplistic narratives over historical trends (with hindsight giving the supposed benefit of 20/20 vision), it appears that the change in Reserve Bank Governor may have been a factor.</div>
<div> </div>
<div>During the month of September, Philip Lowe began suggested that interest rate cuts are losing their power, and seemed to infer that further cuts would only be delivered reluctantly, if at all.</div>
<div> </div>
<div>From the first meeting he chaired in the first week of October, the <a href="https://rba.gov.au/media-releases/2016/mr-16-26" target="_blank">wording</a> of the Monetary Policy Statement concluded that policy was consistent with growth and inflation returning to target over time. </div>
<div> </div>
<div>Since the day of that October meeting, 6-month OIS rates have trended only in an hawkish direction, from 1.42 per cent back up to 1.50 per cent.</div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/01/03/RBA1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div>
<div><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/2017/01/03/RBA1.jpg" alt=""></div>
</div>
<p> </p>
<p>The Reserve Bank of Australia now has a duty to "keep consumer price inflation in the economy to 2 to 3 per cent, on average, over the medium term", apparently implying no immediate need to cut rates.</p>
<div> </div>
<div>Trump bump</div>
<div> </div>
<div>The other significant event in 2016 was Donald Trump's election victory in the US, which promptly changed the inflation outlook.</div>
<div> </div>
<div>Australia's bond yields had already starting ticking back up before Trump's election triumph, with the yield on government bonds with a 10-year maturity recovering from a low of just 1.83 per cent in August to 2.31 per cent.</div>
<div> </div>
<div>But then, after an initial post-election blip, the 10-year bond yield increased sharply to 2.87 per cent, before settling down a bit to finish the year at 2.78 per cent.</div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/01/03/RBA5.jpg" target="_blank">Click to enlarge</a></div>
<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/2017/01/03/RBA5.jpg" alt=""></p>
<div> </div>
<div>Easy, tiger!</div>
<div> </div>
<div>Through November the indicative standard variable rate (SVR) for owner-occupier mortgages was 5.25 per cent, although of course by shopping around you can get much better deals than this (the indicative discounted rate was reported at 4.50 per cent, for example). </div>
<div> </div>
<div>The reported 3-year fixed rates for both owner-occupiers and investors were lower again at 4.10 per cent and 4.25 per cent respectively. </div>
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Can you comfortably afford to repay a mortgage in a 6% or even 7% scenario?: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>Over the past few weeks three of the four major banks in Australia have announced that they are going to be increasing variable mortgage rates. </p>
<p>While there has been a lot of adjustments to mortgage rates over recent years, the big difference with the latest announcement is that the higher mortgage rates are going to affect owner occupiers. </p>
<p>Most of the previous mortgage rate changes announced by the major banks have only affected investors and those with interest only mortgages.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH1.jpg" target="_blank">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/2018/9/7/KUSH1.jpg" alt=""></p>
<p>Many of the smaller regional banks have pushed mortgage rates for owner occupiers higher over recent months citing higher short-term funding costs. </p>
<p>Although until now the major banks had resisted making an adjustment to mortgage rates it seems they too have had their hand forced by higher funding costs.  The above chart highlights the cost of short-term funding to banks (the three-month bank bill swap rate) and it clearly shows that the cost of short-term funding has increased.  It currently sits at 2.26% compared to the official cash rate which remains unchanged at 1.5% since August 2016.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH2.jpg" target="_blank">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/2018/9/7/KUSH2.jpg" alt=""></p>
<p>Short-term funding costs have certainly risen recently however, it is also interesting to look at the composition of funding to Australia’s banks. Short-term funding is not an insignificant part of the funding profile (slightly more than 20%), although the share of funding from short-term debt has fallen over recent years as domestic deposits have increased. </p>
<p>There are other ways to handle higher short-term funding costs rather than lifting mortgage rates but that would likely mean cutting dividends which lenders seem reluctant to want to do or reducing deposit interest rates which would likely see a further reduction in the primary funding source: domestic deposits.</p>
<p>From a housing market perspective the timing of the announcement of higher interest rates is an interesting one. </p>
<p>After many years of strong value growth, Sydney and Melbourne housing is now well embedded in a downturn.  Tighter credit conditions, higher mortgage rates for investors and interest-only borrowers and reduced affordability have already led to the falls of -5.6% from the peak in Sydney and -3.5% from their peak in Melbourne.  This has occurred so far without higher interest rates for owner occupiers paying off principal and interest however, that is about to change.</p>
<p>The timing of the hikes to mortgage rates is also interesting in that it has been announced right at the beginning of the Spring Selling Season.  Although spring, in my mind and according to the data, is somewhat overhyped as a good time to sell, more stock does typically become available for sale over the period and buying activity typically increases. </p>
<p>The other usual occurrence at the beginning of spring is that lenders offer enticing mortgage rates to the market to jostle for market share.  By contrast this year, major lenders are announcing higher mortgage rates.</p>
<p>Higher mortgage rates have already driven a slowing of demand for investors over the past year.  Although the magnitude of the mortgage rate increases announced is fairly small (around 15 basis points by each lender) it is likely that the higher mortgage rates will impact on housing market sentiment. Furthermore it may end up further exacerbating the declines which are already occurring in Sydney, Melbourne, Perth and Darwin and the slowing of value growth being experienced elsewhere. </p>
<p>Overall this move seems likely to lead to a continuation of the currently weak housing market conditions over the coming months and may weaken the market further.  From the lenders perspective, clearly they realise that the housing downturn is becoming entrenched (particularly in Perth and Darwin, but more recently in Sydney and Melbourne) and they are doing what they can to maintain profitability in the face of lower mortgage volumes.</p>
<p><em><span>CAMERON KUSHER</span> is a property research analyst for CoreLogic</em></p>
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ckusher-ujnxiKuFQs

Higher mortgage rates likely to prolong the housing market weakness: CoreLogic

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<div>Having recently listed on the securities exchange, Australian Finance Group (AFG) now opts to release its aggregate mortgage data on a quarterly basis, having previously released monthly figures.</div>
<div> </div>
<div>The figures for the September 2015 quarter, which are not seasonally adjusted, revealed a +16% year-on-year increase in mortgage volumes.</div>
<div> </div>
<div><a href="/images/2015/10/15/AFG1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/10/15/AFG1.jpg" alt=""></div>
<div> </div>
<div>
<span>Mortgage volumes have increased by more than +68% over the past three years, which may be partly reflective of changes in market share. </span><br><br><strong><span style="text-decoration: underline;">Average mortgage size soars</span></strong><br><br><div>Significantly the average new mortgage size in Australia has soared further from $433,000 to $471,000 over the past year.</div>
<div> </div>
<div><a href="/images/2015/10/15/AFG2.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/10/15/AFG2.jpg" alt=""></div>
<div> </div>
<div>
<div>Unsurprisingly, the main driver of the gains has been the average size of mortgages sold in New South Wales which has jumped by more than $60,000 over the past year, and has soared from $454,000 to $584,000 over the past three years. </div>
<div> </div>
<div>Over the past year the average mortgage size also increased significantly in Victoria (+$34,000), Queensland (+$24,000), South Australia (+$30,000).</div>
<div> </div>
<div>There were also increases over the last year in Western Australia and the Northern Territory, but these resources states saw declines in their respective average mortgage sizes in Q3 2015.</div>
<div> </div>
<div><a href="/images/2015/10/15/AFG3.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/10/15/AFG3.jpg" alt=""></div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">Investor market share declines</span></strong></div>
<div> </div>
<div>Perhaps the most significant aspect of this release was the very sharp drop in investor market share.</div>
<div> </div>
<div>According to AFG the investor share appears to have stabilised in recent months at around 32 to 33% of the mortgage market.</div>
<div> </div>
<div>Notably investor market share for Q3 2015 of just 33% was well below the 3 year average of 38%.</div>
<div> </div>
<div><a href="/images/2015/10/15/AFG4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/15/AFG4.jpg" alt=""></div>
<div> </div>
<div>
<div class="separator">This once again implies that APRA's advisory speed limit of +10 per cent annualised credit growth in relation to invetsment loans will be comfortably met in due course, and the housing market story going forward will largely be one of to what extent owner-occupier loans pick up the slack.</div>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Westpac taps the market with raising</span></strong></div>
<div class="separator"> </div>
<div class="separator">This morning Westpac went into a trading halt and announced that it would be tapping investors for a $3.5 billion renounceable entitlement offer in order to bolster its capital position, while noting in a separate announcement to the ASX that it will be whacking 20bps onto its home loan and investment loan rates, effective from November.</div>
<div class="separator"> </div>
<div class="separator">It is widely expected that the other retail banks will follow suit in due course in respect to mortgage rates.</div>
<div class="separator"> </div>
<div class="separator">This move seems likely to be a game changer for cash rate futures markets, with another interest rate cut from the Reserve Bank as soon as next month already considered by some to be an each way bet.</div>
<div class="separator"> </div>
<div class="separator">If Thursday's employment data is weaker than expected then a rate cut in November may become more likely than not.</div>
<div class="separator"> </div>
<div class="separator">AFG noted in its release that many borrowers consider further rate cuts to be increasingly likely, with fixed rate mortgages declining to just 11.3% of total loans processed for the quarter, which is the lowest level for more than three years. </div>
<div class="separator"> </div>
<div class="separator">
<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>
</div>
</div>
</div>
</div>
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Average mortgage size soars: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>Mortgage rates in Australia have fallen sharply from around 8 to 10 per cent since 2008.</p>
<div>So it's reasonable to expect that housing rental yields would be considerably lower too.</div>
<div> </div>
<div>At the nadir, though, gross rental yields across the combined capital cities had sunk to below 3½ per cent, which is clearly far too low (and that's a gross figure). </div>
<div> </div>
<div>Here's an interesting chart from CoreLogic today, showing combined capital city yields tracking back quite quickly towards a rather more sustainable 4 per cent. </div>
<div> </div>
<div>Sydney has done some of that lifting, but with more pressure on its rental market the main driver has been Melbourne, with gross rental yields rising from near-record lows of 3.1 per cent in February 2018 to 3.6 per cent. </div>
<div> </div>
<div>Click <a href="https://2.bp.blogspot.com/-e8HYLNBoDoE/XHh_JygJXNI/AAAAAAAAuxY/aMPH6jBgzuQpI94mLAipxCfUG5l1kkXGACLcBGAs/s640/Yields.jpg" target="_blank">here</a> to enlarge</div>
<div> </div>
<div><img src="https://2.bp.blogspot.com/-e8HYLNBoDoE/XHh_JygJXNI/AAAAAAAAuxY/aMPH6jBgzuQpI94mLAipxCfUG5l1kkXGACLcBGAs/s640/Yields.jpg" width="640" height="414" data-original-height="538" data-original-width="829"></div>
<p> </p>
<div><em>(Source: CoreLogic)</em></div>
<div><em> </em></div>
<div>There has been a wide variation of results across markets, with demand largely coming from the bottom up thanks to first home buyer stimulus, but the upper quartile of the market seeing far fewer transactions on tight lending standards.<br><br>Negative equity hasn't featured too much in Australian housing in recent years, but with tighter credit holding down markets in Perth, Darwin, and some other regions, this is starting to become a factor of concern, especially as some borrowers are forced off interest-only mortgages.<br><br>Noted CoreLogic on the second wind for the Perth and Darwin downturn:<br><br>'This renewed downwards pressure on home values coincides with a softening in labour market conditions, with weaker housing market results likely compounded by credit scarcity.'</div>
<div>
<br>Perth's median price has fallen by about 20 per cent over a downturn now spanning more than 4½ years.<br><br><div><img src="https://1.bp.blogspot.com/-5wxI9592SwI/XHjwAsnWzuI/AAAAAAAAuyM/074mg4IqR4o3KHA-SG1XvyuEwjozIgyxQCLcBGAs/s640/Perth.jpg" width="640" height="408" data-original-height="842" data-original-width="1316"></div>
<br><div><em>(Source: CoreLogic)</em></div>
<div><em> </em></div>
<div><em><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></em></div>
</div>
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Rental property yields recovering: Pete Wargent

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<p><span><img src="/images/2016/06/22/D819360E-D22F-45A0-950B-1527D8EA443823.png" alt=""></span></p>
<p>SPONSORED POST</p>
<p>Property owners can claim a tax deduction for interest paid on a loan used to buy an investment property, but not on a mortgage used to buy their own home.</p>
<p>Boutique lender CSC Home Loans has developed Mortgage Down to help investors maximise tax deductions and minimise non-tax deductable interest by optimising the way their property debt is structured.</p>
<p>“Mortgage Down allows the property investor to pay off their home loan sooner and create equity in their own home faster. This gives the property owner more opportunity to create additional investments,” says Mortgage Down group marketing director Venn Williams.</p>
<p>Under a tax ruling from the Australian Taxation Office PR2015/2, the loan structure allows investors to reduce the interest rate on their non-deductable principal and interest home loan and increase the interest rate on their deductable interest-only investment loan.</p>
<p>“If you own your own home and have an investment property, then you could qualify for a home loan rate beginning with a 2,” Williams says.</p>
<p>The average interest rate for a standard variable owner-occupied mortgage from a bank was 5.4 percent in May 2016, according to the Reserve Bank of Australia.</p>
<p>A 1 percent reduction in the interest rate charged on a $250,000 home loan taken over 25 years would save the borrower $43,468 over loan’s term and cut the time to repay the debt by 4 years. A 2 percent drop in the rate would save $84,640 and let the borrower repay the loan 6 and a half years sooner.</p>
<p>The higher interest rate charged on the investment loan means the investor may be able to claim a larger tax deduction.</p>
<p>The innovative loan structure is available to Australian residents who own their home and either already have an investment property or are about to buy one.</p>
<p>The product offers other features such as an o set account, redraw facilities and debit cards. Usual borrowing conditions apply. </p>
<p><span>To download a free ebook on new financial year taxation tips for property investors,</span><a href="http://propertyobserver.com.au/forward-planning/tools/ebooks-and-webinars/55208-new-financial-year-tax-planning-tips-for-property-investors" target="_blank"> click here</a><span>.</span></p>
<p><span> </span></p>
</div>
</div>
</div>
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po-LsXgBTHBmX

Optimise the way your property debt is structured

j.ballantyne1990-6AQqhLzZaK

Steady decline in average mortgage interest rate to continue: RBA's Guy Debelle

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<p>Aussies want the best of both worlds when it comes to their home loan interest rate, according to new research by Finder.</p>
<p>Finder recently surveyed 1,000 Australians about how they would structure their mortgage if they were to refinance.</p>
<p>The data revealed that 1 in 5 (20%) would opt for a split mortgage, dividing their loan into fixed and variable portions.</p>
<p>Around 19% would refinance to a variable loan, while 17% would prefer to lock in their rate for a set period of time with a fixed-rate mortgage. The remaining 43% said they were unsure if they’d opt for fixed or variable.</p>
<p>Graham Cooke, insights manager at Finder, said that fixed-rate loans come with both risks and benefits.</p>
<p>“With the cash rate set to remain at 0.25% for some time, it’s unlikely the big banks will lower their standard variable mortgage rates any further for now."</p>
<p>“This means fixed-rate loans are back in vogue. For some homeowners, locking in their rate for a year or more may offer greater savings than a variable rate would."</p>
<p>“We’re currently seeing rock-bottom rates across the board with fixed rates as low as 1.95% from Easystreet, and the lowest variable rate even lower at 1.89% from Reduce Home Loans,” he said.</p>
<p>The research found that it’s the younger generations who place the most value on flexibility when it comes to their loan.</p>
<p>Over a quarter of Gen Z (27%) would split their mortgage – more so than any other generation – while Millennials are the most likely to choose a variable loan (23%).</p>
<p>Baby Boomers were more likely to refinance to a fixed rate (19%).</p>
<p>By state, Victorians (23%) are the most likely to choose a variable loan, followed by 1 in 5 NSW residents (20%).</p>
<p>Queenslanders are the most likely to choose either a split loan (25%) or a fixed-rate loan (21%), but the least interested in a variable one (12%).</p>
<p><span><span><strong>Would you opt for a fixed rate home loan if you were buying or refinancing?</strong></span></span><span><span><strong> </strong></span></span><br><img src="https://mcusercontent.com/cc5e9bce699fa1d71a67cf499/images/5e8a692e-f073-4f7e-ba22-75595725eea4.png" data-imagetype="External"></p>
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Aussies prefer split rate mortgages: Finder

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<p>The home loans fintech Athena have launched AcceleRates, a dynamic pricing model where customer rates are automatically dropped when they enter the new LVR tier.</p>
<p>It essentially rewards customers with lower rates as they pay down their home loan.</p>
<p dir="ltr"><span>Accele</span><span>Rates</span><span> will have three price bands based at a LVR of &lt;80%, &lt;70% and &lt;60%. </span></p>
<p dir="ltr"><span>As a customer pays down their home loan to reach a new tier, Athena will automatically put customers onto the lower rate.</span></p>
<p dir="ltr">Nathan Walsh, chief executive and co-founder of Athena, says they want to motivate, encourage and reward customers for paying off their home loan</p>
<p dir="ltr">“Aussie borrowers are so frustrated by the painful negotiations with their current lender in order to get a fair rate", Walsh says.</p>
<p dir="ltr">"On average we are saving customers who switch to us $60,000 over the life of their loan.</p>
<p dir="ltr">"With our new AcceleRates pricing model, many of these customers will now sav<span style="color: #000000;">e $70,000."</span></p>
<p dir="ltr"><span style="color: #000000;">If Athena customers start out at the 80 per cent LVR tier and pay the minimum on a P&amp;I loan, they would hit the 70 per cent LVR tier in foru years and two months.</span></p>
<p dir="ltr"><span style="color: #000000;">They would hit Athen'a lowest rate three years and nine months later.</span></p>
<p dir="ltr">All existing customers will receive the rate drop on 30 Sept 2020. New customers who apply today will settle with the new rates.</p>
<p dir="ltr"><span>Athena is also known for its innovative “Automatic Rate Match” which promises that existing customers will always be given the same rate as new customers on a like for like loan.</span></p>
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