IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Joel Robinson

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

First look: Vinnies files for 20-storey Lavender Bay apartment tower as North Sydney housing pocket heats up

When the opportunity arose for South Australian developer Palumbo to return to Kent Town, where it had previously delivered East Park Apartments and the East 
Rundle Apartments, it wasn't one the longstanding developer-builder was going to pass up.

The decision was quickly vindicated, with more than 30 apartments sold within the first month of launching <a href="https://www.apartments.com.au/new-apartments/royal-apartments-kent-town-2-8-north-terrace-kent-town-sa-5067">Royal Apartments</a> to the market.

The 206-apartment development, which will bring significant new supply to Adelaide's tightly held eastern city fringe, also gives <a href="https://www.apartments.com.au/developers/palumbo">Palumbo</a> the opportunity to bring new life to one of Kent Town's most recognisable watering holes.

[smartcode_project:default project_id=6109 project_image_fid=376073]

Royal Apartments incorporates the historic Royal Hotel, a venue Palumbo Managing Director Daniel Palumbo said has a longstanding connection with the local community.

"Everyone in the area has history with the Royal Hotel," Palumbo told Apartments.com.au.

"It was quite an active pub and social gathering place for locals. We want to bring it back to its former glory."

[smartcode_project:default project_id=6109 project_image_fid=376072]

The wider development will comprise two residential towers alongside the restored hotel, sitting on North Terrace opposite the Adelaide Park Lands.

For Palumbo, the project also marks a return to familiar territory.

The developer completed East Park Apartments next door more than a decade ago and jumped at the opportunity to develop in Kent Town again when the Royal Hotel site became available.

"The opportunity emerged, and we moved to secure the site," Palumbo said.

"We were approached by the previous landowner, who said they had extensive commitments in Sydney and weren't in a position to deliver the project.

"We took over the site and within six months recut the design scheme to be more in keeping with the type of development we want to bring to Adelaide.

"Now we're on the market and those changes have really resonated with local buyers."

That has translated into a strong start to sales, with 33 apartments transacting in the project's first 35 days.

Palumbo said the early purchaser profile had been consistent with the group's traditional focus on owner-occupiers rather than investor-led apartment stock.

"Local owner-occupiers have always been our market," he said.

"There are always some investors, but we've never developed what would be called traditional development stock. Owner-occupiers are very much our market."

[smartcode_project:default project_id=6109 project_image_fid=376068]

The buyer mix has been diverse so far, with downsizers and younger professionals both accounting for a significant portion of early sales.

South Australia's current stamp duty settings, which allow&nbsp;eligible homeowners in South Australia aged 60 savings of up to $103,830 on stamp duty when they downsize to a new property valued at up to $2 million,&nbsp;have helped encourage downsizer activity, while younger buyers in their late 20s and early 30s have been attracted to the opportunity to live immediately outside the CBD while still being able to walk into the city.



Location has been a major part of the proposition for both buyer cohorts.

[smartcode_project:default project_id=6109 project_image_fid=376075]

Royal Apartments sits on North Terrace directly opposite the Adelaide Park Lands, with residents able to walk through the parklands toward the East End, Rundle Street and Rundle Mall.

Apartments have been positioned to capture views across the parklands, Adelaide skyline, Botanic Gardens and Adelaide Hills.

Palumbo believes the scarcity of developable land along this section of the Park Lands makes the site particularly difficult to replicate.

"There's very few allotments on that side that can be developed," he said.

"If this location was in New York and you were sitting on Central Park, you'd be talking about a $60 million apartments."

Royal Apartments will offer a broad mix of residences, ranging from one-bedroom apartments through to four-bedroom sub-penthouses and penthouses.

Current listings include one-bedroom apartments from $680,000, while larger three and four-bedroom residences are priced around $2.5 million.

Residents will have access to a swimming pool, gym, barbecue and recreation areas, residents' lounge and dining space, and a communal deck.

[smartcode_project:default project_id=6109 project_image_fid=376067]

The apartments will feature generous balconies, while secure parking, bicycle storage and storage cages will also be provided.

A porte-cochère-style arrival and drop-off area has also resonated with buyers, particularly those attracted to being able to walk into the CBD during the day while retaining secure vehicle access at home.

Palumbo is acting as developer, architect and builder on Royal Apartments, continuing the vertically integrated model it has used across its South Australian portfolio.

The group was also behind the $150 million Sofitel Adelaide, the 251-room five-star hotel and residential tower which opened in 2021.

Palumbo said Royal's launch had come at an interesting time for the broader Adelaide apartment market.

Buyer confidence had initially been impacted by uncertainty surrounding the Federal Budget and broader economic conditions, but Palumbo believes sentiment is beginning to improve against a backdrop of significant investment flowing into South Australia.

He pointed to increased activity across defence and resources, including Olympic Dam, as potential long-term drivers of the state's economy and housing market.

"Money is starting to flow into Adeliade, significant amounts as Adelaide bucks the trend of the rest of the country.," Palumbo said.

"There's a lot of activity in the economy over the next decade. I think more investment will come into this market."

Early works on Royal Apartments are expected to commence this year, with major construction activity and cranes anticipated on site from early next year.

[smartcode_project_cta:default project_id=6109]

Palumbo's return to Kent Town strikes early chord with buyers

Go-to builder-developer <a href="https://www.apartments.com.au/developers/graya">GRAYA</a> is continuing to bulk out its already impressive and diverse apartment portfolio across South East Queensland. Their latest milestone is securing development approval for Silk, its boutique riverfront apartment development in St Lucia.

The approval clears&nbsp;the way for the team to begin construction planning for the 22-residence project.

<a href="https://www.apartments.com.au/new-apartments/silk-st-lucia-16-18-sandford-street-st-lucia-qld-4067">Silk</a> will rise 15 levels from an 810 sqm site at 16-18 Sandford Street, occupying a prominent bend of the Brisbane River with a prized northern aspect across Orleigh Park toward the Brisbane CBD.

The approved scheme will comprise 16 split-floor and six full-floor residences, continuing GRAYA's move into larger-format apartment developments targeting Brisbane's prestige owner-occupier market.

The project has been designed around the site's broad river frontage and dual-direction views, with GRAYA prioritising larger residences, privacy and outlook over apartment yield.

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="aa5c2349-f96c-4914-a812-1f2cd6827af8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.44%E2%80%AFAM.png?VersionId=WY0vEU_7vYjeRJKQHiCwFdMxu8PvFh52" />

GRAYA Co-founder and Chief Executive Officer Rob Gray said the project had been shaped around local homeowners wanting to remain in St Lucia without maintaining a traditional family home.

"St Lucia is one of those suburbs people do not want to leave," Gray said.

"They know the river, the trees, UQ, the golf course, Toowong and Indooroopilly, and that familiarity is hard to replace.

"True riverfront opportunities here are exceptionally scarce. What we have designed at Silk is a way to stay in the suburb people love, with the scale and privacy of a private home and far less to maintain.

"This is not typical apartment product. It is a proper home on the river, and that is exactly what this market has been missing."

The approval comes as new apartment development continues to increase across the St Lucia and neighbouring Toowong corridor, although direct riverfront sites remain considerably more tightly held.

GRAYA Co-founder and Managing Director Andrew Gray said securing the approval had removed a significant element of development risk from Silk.

"Genuine riverfront sites of this quality in St Lucia are not something that comes up regularly," Gray said.

"The approval removes a substantial layer of execution risk, and the location underwrites demand in a way very few inner-city sites can.

"The fundamentals here are as strong as anything we have assessed in Brisbane."

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="d0f3d734-65e1-48e8-8ed3-2e0715ffcdd9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.56%E2%80%AFAM.png?VersionId=sOLSs_jdHkXLWbBKzRyayf5BfTb2vPsD" />

Silk will see GRAYA return to a stretch of the Brisbane River where it already has recent construction experience. The vertically integrated group recently completed ARC in neighbouring Toowong as builder for developer Spyre, delivering the riverfront project on a constrained site.

GRAYA will take a different role at Silk, controlling the project from design and development through construction and aftercare under its vertically integrated model.

The development will include a gym and resident leisure areas at ground level, integrated with the river's edge.

Silk joins a growing pipeline for GRAYA across Brisbane and the Gold Coast, which includes Enclave, The Gallery, Coral and Ripple.

The developer-builder has also recently lodged plans for its largest project to date, <a href="https://www.apartments.com.au/new-apartments/the-silo-19-chester-street-newstead-qld-4006">The Silo</a>, a proposed <a href="https://www.apartments.com.au/news/qld/graya-buys-frasers-newstead-site-plans-the-silo-between-james-street-and-gasworks-precincts">$700 million mixed-use development</a> in Brisbane's James Street precinct.

Silk is expected to predominantly target local owner-occupiers and prestige buyers seeking a permanent riverfront home in Brisbane's inner west.

Registrations of interest are now open, with further details on the project and construction program to be released as it progresses.

<hr />
<h2>SILK PROJECT FACTS</h2>

Developer-builder: GRAYA

Project: Silk

Location: 16-18 Sandford Street, St Lucia

Apartments: 22

Built form: 15 levels

Site: 810 sqm riverfront holding

Mix: 16 split-floor and six full-floor residences

Status: Development approved

Next step: Construction planning underway

[smartcode_project_cta:default project_id=152168]

GRAYA greenlit for riverfront St Lucia apartment development, Silk

Abadeen has released the whole-floor penthouse crowning its recently completed <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences</a> development in Cremorne, bringing the near-300 sqm residence to market for the first time.

Occupying the entire top floor of the boutique Lower North Shore development, the penthouse includes 221 sqm of internal living and a 74 sqm wraparound terrace, with a prized north-facing aspect taking in views across Middle Harbour.

The residence has been completed and fully furnished following a collaboration between Abadeen Executive Chairman Justin Brown and internationally recognised interior designer Jack Freeman, Founder and Managing Director of FREEMAN &amp; CO.

<a href="https://www.apartments.com.au/developers/abadeen">Abadeen</a> and Freeman approached the penthouse as a finished home, sourcing furniture, artwork, lighting and objects from Australia and overseas.

[smartcode_project:default project_id=114246 project_image_fid=378718]

Pieces from Parisian design house Pierre Augustin Rose sit alongside contemporary artworks and bespoke lighting, with Freeman drawing on recent visits to PAD Paris and Salone del Mobile Milano for the final collection.

Brown said the aim was to create a penthouse that felt more like a large-scale private home than a traditional apartment.

"The experience begins the moment the lift doors open. You're welcomed into an elegant dining room before the home opens into an extraordinary living space framed by sun-drenched harbour views.

"Every time someone walks through the front door they pause. It's not just the view, it's the incredible sense of space, the warmth created by the northern sunlight that fills the interiors, and the way every room connects so effortlessly.

"It has all the proportions of a luxury home, while delivering the effortless lifestyle and personalised experience of living in a world-class six-star hotel, combined with the simplicity and convenience of apartment living."

[smartcode_project:default project_id=114246 project_image_fid=378713]

A secure lift provides exclusive access to the penthouse level, opening to a dedicated arrival foyer and dining area before the residence expands into its main living and entertaining spaces.

Floor-to-ceiling glazing runs across the northern side of the home, connecting the interiors with the terrace and Middle Harbour outlook.

The penthouse also features a fireplace and substantial chef's kitchen, while the wraparound terrace has been designed to accommodate both everyday outdoor living and larger-scale entertaining.

[smartcode_project:default project_id=114246 project_image_fid=378720]

Freeman said the interiors had been deliberately kept restrained to complement the scale, natural light and outlook already established by the architecture.

"The penthouse is a serene study in quiet luxury," Freeman said.

"The interior pairs soft, sculptural forms with warm timber, pale stone and a restrained neutral palette. Curated artwork and metallic accents add depth, while abundant natural light creates a calm, effortlessly refined atmosphere. In my world, less is always more."

Freeman said the approach was centred around collecting individual pieces rather than simply decorating the apartment.

"Every material, every object and every piece of furniture has been curated with intention. I am a true believer in collecting versus decorating.

"The architecture already provided extraordinary natural light, remarkable volume and an uninterrupted connection to Middle Harbour. Our role was to complement those qualities with unique one-of-a-kind pieces of fine art and collectible design sourced from recent travels around the world."

[smartcode_project:default project_id=114246 project_image_fid=378694]

Among the collection are solid bronze sculptures by Lorenzo Quinn, alongside a curated crystalware collection and pieces sourced from international design fairs.

Park Residences sits opposite Cammeray Golf Club, Cammeray Croquet Club and Grand Slam Tennis Cammeray, around 300 metres from Neutral Bay Village and its established collection of restaurants, cafés and retail.

Brown said the combination of a whole-floor floorplan, northern aspect and proximity to Neutral Bay was becoming increasingly difficult to find on the Lower North Shore.

"Completed whole-floor penthouses with a sun-drenched north-facing aspect and sweeping Middle Harbour views are exceptionally rare," Brown said.

"Add a quiet position opposite golf, croquet and tennis facilities, a level walk to Neutral Bay Village and only minutes to the CBD, and you have a lifestyle that's incredibly difficult to replicate.

"This is a home that offers the privacy and generosity of a luxury residence together with the convenience of one of Sydney's best-connected harbourside locations."

The penthouse will be exclusively marketed by SRM Residential.

[smartcode_project_cta:default project_id=114246]

Abadeen unveils penthouse at Park Residences in Cremorne

Mortgage Rate

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The Australian Securities and Investments Commission has released a handy guide to interest-only loans for property investors.
According to ASIC, one in four loans are interest-only for owner-occupiers and two in three loans are interest-only for investors.
<a href="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%209.59.00%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%209.59.00%20AM.png" alt="">
According to ASIC, before applying for an interest-only mortgage, potential investors need to understand if they can afford the higher repayments when the interest-only period ends, will the short-term benefits outweigh the long-term costs and if you can be trusted not to dip into the offset account?
<a href="/images/2015/10/09/interest-only-loans-infographic-part-1_942x2142.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/interest-only-loans-infographic-part-1_942x2142.jpg" alt="">
 
<a href="/images/2015/10/09/interest-only-loans-infographic-part-2_940x1292.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/interest-only-loans-infographic-part-2_940x1292.jpg" alt="">
 
<a href="/images/2015/10/09/interest-only-loans-infographic-part-3_944x1793.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/interest-only-loans-infographic-part-3_944x1793.jpg" alt="">
 
ASIC has also released a calculator to help potential investors work out three key factors behind an <a href="/expert-insights/finance/asic-releases-interest-only-mortgage-calculator">interest-only mortgage</a>, as well as a a checklist for property investors considering <a href="/expert-insights/finance/are-interest-only-mortgages-in-your-interest-asic">interest-only payments for mortgages</a>.
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mick.cee-iDmgDDAmu8

ASIC's interest-only guide for property investors

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GUEST OBSERVER
Following the most anticipated and hotly debated Fed meeting in years the Fed has decided to leave interest rates on hold. More importantly, the commentary around the decision was relatively dovish. After all the hoopla in the run up to the Fed meeting it was all a bit of a non-event really…just as well I didn’t get up at 4am for it! 
The case for the Fed to raise interest rates is well known: the US economy has been growing around 2-2.5% and the labour market has strengthened with unemployment falling to 5.1%. And since inflation normally turns up with a lag after the jobs market there is an argument for the Fed to start hiking interest rates before that actually happens.
As a result a few months ago it was widely expected the Fed would move to start hiking at its September meeting. In the interim though uncertainty about Chinese and emerging market growth has increased and inflation expectations have fallen and so the Fed has rightly responded to this by leaving interest rates on hold. This was in line with US fixed income market expectations that had only priced in a 30% chance of a hike at this meeting.
More importantly though the commentary from the Fed was relatively dovish.
While the so called “dot plot” of Fed meeting participants interest rate expectations is still pointing to a rate hike this year, several participants have moved their view of the first hike into 2016 or 2017, one is now arguing for a rate cut into negative territory and the whole profile of Fed interest rate expectations is  0.25% lower.
On top of this, the Fed is clearly conscious of the risks posed by recent “global and financial developments” (read China and the emerging world) and the downside risks posed by this to US inflation.
The clear message from the Fed is that is that it is aware of what is going on globally and is not going to do anything to threaten global growth at a time when US inflation is below target.
There was no recognition from the Fed that it is any closer to satisfying the conditions for a rate hike. While the Fed is likely comfortable that it has seen enough improvement regarding the jobs market it still seems to lack “confidence that inflation will move back to its 2% objective over the medium term.” And this lack of confidence partly stems from the uncertainty regarding Chinese and emerging market growth, along with the impact of the stronger $US.
While Fed Chair Janet Yellen has indicated that the Fed’s October meeting remains “live” for a rate hike, it’s hard to see enough changing by then to justify lift off. As such December is more likely for a move but there is a reasonable risk that lift off could be pushed into 2016.
In terms of market implications, the move by the Fed to leave rates on hold and indications that it won’t do anything to upset global growth are positive and should help allay some of the upwards pressure on the $US and downwards pressure on emerging market currencies in the short term. However, a Fed rate hike is likely still out there somewhere and uncertainty around it will likely return at some point. It’s likely to come at a time though when there is less global uncertainty and so hopefully should mainly be a constraint on US shares as opposed to global shares.
For Australia, the Fed’s decision is a mixed blessing. On the one hand it would have been better to have seen the Fed able to raise interest rates as it would signal greater confidence in global growth and ongoing downwards pressure on the value of the $A. As it is there is a risk that an on hold for now Fed sees the $A bounce a bit higher. Ultimately though the downtrend in the $A is likely to resume – as the Fed is still likely to hike at some point, the RBA is likely to remain under pressure to cut and commodity prices remain weak – so there is no change to my view that the $A will fall to around $US0.60 in the next 12 months or so.
Finally, perhaps anticipating talk of a “Yellen put” it was of interest to hear Janet Yellen pointing out that the “Fed should not be responding to the ups and downs of markets” but rather to considering “what is causing them” which in this case has been “concerns about the global economic outlook”. It’s hard to argue with that.
 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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Aussie dollar to fall to 60c: AMP Capital's Shane Oliver

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GUEST OBSERVER
As lenders seek to wind back their level of investment lending, competition in the owner occupied space has started to heat up. 
Many lenders were starting to offer some “very competitive” owner occupied home loans in a bid to pick up more of this business. 
Over the past few months, many of Australia’s lenders have made significant changes to their investment product pricing and policy in a bid to curb their level of investment lending growth. 
But just because many of Australia’s lenders are actively trying to reduce their level of investment activity, doesn’t mean to say they are not hungry for business – quite the opposite.
Australia’s lenders are just as hungry for business as they ever were and because the Australian Prudential Regulation Authority has told them to limit their level of investment lending growth, the lenders have been forced to turn their attention to owner occupiers.
Many of Australia’s lenders are currently offering owner occupied borrowers a raft of incentives including, interest rate discounts, cash back offers and fee waivers. 
In the 20 years I have worked in financial services, I have never seen the level of lender competition we are witnessing now. Regardless of whether people are looking to buy a home or refinance their current property, they can be guaranteed of securing an incredibly competitive home loan deal.
For those borrowers who have been in the same home loan product for a while, now may be a good time for them to give their mortgage a much needed spring clean. A good de-clutter never goes astray and often borrowers uncover financial aspects of their life that need some reassessment or to be changed altogether. 
Borrowers who give their home loan a spring clean may realise that they are in the perfect position to refinance their mortgage.
Refinancing may allow borrowers to repay their home loan sooner and ultimately achieve their next financial goal sooner. 
Further, refinancing can be a great way for borrowers to lower their mortgage repayments, consolidate their debt and even access equity in their home.”
John Flavell is chief executive officer <a href="https://www.mortgagechoice.com.au/" target="_blank">Mortgage Choice</a>.
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Competition for owner occupied business heats up: Mortgage Choice's John Flavell

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GUEST OBSERVER
A wise investor once said: “People’s expectation of the future is set by their experiences in the immediate past.” No truer is this phrase than the phenomena of the Sydney market over the past 2-3 years. It’s also unfortunately why I think there is pain ahead for those still contemplating a residential property investment in Sydney or Melbourne.  
Think about it; with between 62% (all NSW mortgages, July 2015 CoreLogic) and 68% (Nationwide: AFG) of mortgages being investment loans, an investor should realise that with only 32% of participants potentially buying property for its underlying utility value (ie: to live in!), investors will happily shun a location if it presents no potential for meaningful growth in the near future.  Investors certainly don’t need to live there! Now, I am certain of the direction of these changes, but of course the timing is open for debate. 
At Oasis Property we maintain our bias towards a correction of between 7-15% in the Sydney market. In Melbourne...less so (5-8%). My expectation is that this play out over the next 2-3 years. In almost every extended discussion I have with people about this, I find disagreement. But the startling thing about this is the disagreement is not because they necessarily disagree with our experience OR the fact that Sydney and Melbourne prices have outperformed on every metric. No. They are disagreeing only because of sentiment and psychology. No sound reasoning, just emotion built on expectation, based on recent performance.  As I have cited many times publicly...and almost ad nauseum for 12 months now, the fundamental reason for owning property in Sydney and Melbourne has been exhausted. That is, the baseline amenity (a house) being built for a consumer (owner or tenant) that is ready to live in it...is too expensive. Expensive to the point that a homeowner finds it more logical to rent (at 2-3% yields...this is entirely rational) OR the bank will not extend them the finance to lend. (rational or not...the buyer doesn’t have a choice in this!) 
All this brings me to a tried and trusted logic that has served me well as an investor. From the mouth of legendary investor Rick Rule. “The cure for low prices...is low prices.” And similarly the inverse of this...the cure for high prices...IS high prices.” 
Before you think that notion sounds absurd… hear me out. Rick is a billionaire. You are probably not. Using this narrative below to example this notion, allow me to expand: 
If a developer cannot buy land, build a property and make a profit – they will not build that property. There MUST be an incentive to do it. Or building will stop. It is called a market clearing price. 
For example. If land can be purchased in Lane Cove for $1m, and a new dwelling costs $600k to build (=$1.6m), yet the market price is only be $1.4m, the dwelling will simply not get built. Why would they? Would you?
Exacerbated over an extended period of time, if this incentive is not achieved...the will be no properties built over an extended period of time. Demand will build up (like it has). It’s a predictable outcome.    Eventually, the market will realise that there is a housing shortfall.    Now, with that situation in place as ‘tinder’ for the market, it only took the dovetailing of the low interest rate environment to light a fire under the property. The rest is modern history. 
Hence the saying: “the cure for low prices...is low prices.” It is that simple.
Taking that example of that Lane Cove property I referred to.  We see that at $1.4m the maths doesn’t work. In fact, even at $1.6m it doesn’t; what with stamp duties, borrowing and holding costs. In reality, most developers I know wouldn’t even start the project if it returned a market price of $1.9m. (~12% after costs) Developers will roughly work off a model of 30% and often include contingency in this plan to scale downward or upwards from here. They’d want to see $2.2m to get them started on this project. 
And now we’ve got ourselves a market clearing price! And that’s exactly where Sydney and Melbourne have been over the past 3 years.  Now we’re well past it.    
The problem is of course, that this effect works the same way at the other end of the market...the top! Many more properties are being constructed and have been constructed now that this incentive has been created. This has had the effect of inflating the cost of property well and beyond the affordability of the everyday property owner, which is the benchmark we all must base our assumptions on. 
Do not base it off the overseas/Chinese investor. They will (eventually) only pay what is necessary to beat the next highest bidder. Do not base it on the wealthy investor, they will be subject to, and more likely price in higher interest rates. Do not base it on the self managed super fund purchaser. NO. Base it on the home owner. The person that needs a home and can either afford to pay for it or not. (Hint: do some research...[lack of] affordability is now through the roof!)
What we are finally left with is too much stock on the market and elevated prices for those buyers that are left. I think we are almost there. You do not want to be holding that parcel when that music stops! 
So eventually, the “cure for high prices” is the high prices themselves that make them unaffordable for those that want and need to live in them. 
To combat the claim that people believe that Sydney prices will still keep surging, I cite a most recent, but now almost daily occurrence whereby people actually argue with me that they do not believe that Sydney prices will ever go backwards. After convulsing in a fit of laughter, I then reply, with a cheeky grin on my face;
“If that occurred (non-stop growth), it would be the only time in history, in any region, in any mature market - that this has occurred. Ever. Let me repeat...EVER!”
On that note, I’ll leave you with one last reminder. “the cure of high prices...IS high prices!” 
 Gavin McPherson is chief executive officer of Oasis Property Buyers Agency and author of "Value Investing in Property: What would Warren Buffet do if he was investing in property in Australia?" He can be contacted <a href="https://www.oasisproperty.com.au/oasis-buyers/oasis-property-buyers.php" target="_blank">here</a>.
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Is Sydney now the rotten apple for investors? Oasis' Gavin McPherson

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Mortgage broker AFG has announced it has secured a new white label agreement with Macquarie Bank.
AFG managing director Brett McKeon said the agreement will see a new product range, AFG home loans ICON, added to AFG’s existing white label offering.
ICON will complement AFG’s existing product range with features such as a global limit facility, a self managed super fund product and a family guarantee offering.
 Mr McKeon said the addition of the white label product range is part of a key growth strategy for the company.
"We will continue to work with AFG brokers and lenders to provide mortgage products tailored to suit their clients." 
For more information on AFG, <a href="https://www.afgonline.com.au" target="_blank">click here</a>.
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AFG expands white label suite‏

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Mortgage Choice's annual results for the financial year ending June 30 showed the company's loan book climbed 4.6% to reach $49.5 billion.
Approvals for home loans increased 10.5% to $13.4 billion, with settlements up 10.6% to $11.5 billion and the company paying a fully franked dividend of 15.5 cents per share. 
Mortgage Choice chief executive officer John Flavell said solid growth in loan writer and franchise numbers ultimately helped the core business.
“Throughout the 2015 financial year, we appointed 41 loan writers taking our total loan writer count to 575. In addition, we sold 23 greenfield franchises and 14 existing franchises to reach a franchise footprint of 422,” he said.
"There is still more that we can do to grow the core broking business. Heading into FY16, recruitment will become a focus for the business as the more feet we have on the ground, the better placed we will be to help more Australians make informed financial decisions.
“Looking forward, we have a very positive outlook for FY16. The property market remains strong, with dwelling values on the rise and auction clearance rates continuing to hover at solid levels. Further, the value of the home loan market and the number of home loan approvals being written each month continues to rise, which bodes well for Mortgage Choice’s core broking business."
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Mortgage Choice loan book hits $49.5 billion

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GUEST OBSERVATION
NAB has announced it will reprice its interest‑only loans and line of credit facilities by 29bps. While this change follows the lead from ANZ and CBA, NAB’s decision appears to impact a greater share of its owner‑occupied customers (~47% of NAB’s Australian housing portfolio is affected vs ~29% of lending to investors). While positive for NAB’s near‑term earnings, we see higher attrition risk as peers may target NAB’s owner‑occupied customers. 
In the short term, we expect NAB to offer retention discounts to its owner‑occupied customers affected by this change and, in the longer term, address this issue by introducing new products. Also, while reducing interest‑only loans should be positive from a quality perspective and potentially favourable to capital, we believe it will encourage a higher level of repayments and may have an impact on NAB’s home lending volume growth.
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Earnings benefit of 3-4% 
Assuming NAB reprices 47% of its housing portfolio by 29bps, it implies a 3-4% benefit to FY16f earnings. We estimate ~30% of customers that have been affected by this change will be offered price offsets and, therefore, we expect ~33% of NAB’s housing book will be repriced. This should provide ~3% FY16f earnings uplift. 
<a href="/images/2015/07/28/Screen%20Shot%202015-07-28%20at%2011.48.01%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/28/Screen%20Shot%202015-07-28%20at%2011.48.01%20AM.png" alt="" width="849" height="506">
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Banks are using their market power 
While in a normal competitive environment repricing changes of this nature may potentially lead to customer attrition in the investor segment, in this instance we believe the regulator has largely removed that risk. This repricing thematic is consistent with our thesis outlined in ‘Risk weights on returns – Part II’, and following recent changes we believe the sector is now ~30% through our estimated mortgages repricing. 
Regionals set to benefit 
We believe recent pricing changes are favourable for the regionals. As the table above highlights, we see 4-5% earnings benefit from potential repricing. However, given their recent subdued volume growth in the investor lending segment, we see scope for the regionals to grow their book before introducing repricing measures. 
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Victor German is Senior Equities Analyst at Commonwealth Bank. He can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/victor-german/21/821/874" target="_blank">here</a>.
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Same, same… but a little bit different: Victor German on the big banks and their investor loan book

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Nearly half of respondents to a new survey believe interest rates might rise over the coming year.
Some 45% of people polled for the CoreLogic RP Data Nine Rewards Consumer sentiment survey consider a rate hike possible over the next year. 12% of respondents believe interest rates will move lower over the six months and 13% over the next year.
63% expect a stable mortgage rate environment over the next half year and year.
<a href="/images/2015/07/24/Screen%20Shot%202015-07-25%20at%201.02.58%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/24/Screen%20Shot%202015-07-25%20at%201.02.58%20AM.png" alt="" width="749" height="183"> 
<a href="/images/2015/07/24/Screen%20Shot%202015-07-25%20at%201.03.03%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/24/Screen%20Shot%202015-07-25%20at%201.03.03%20AM.png" alt="" width="688" height="195">
Source: CoreLogic RP Data Nine Rewards Consumer sentiment survey
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