<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Pete Wargent

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<p>EXPERT OBSERVATION </p>
<p>Average loan sizes took a knock back in September 2018, both for investors and owner-occupiers, although the average loan size remained higher than a year earlier (substantially so for first-time buyers), so perhaps this in itself isn't all that surprising under tighter lending conditions.</p>
<p class="separator"><a href="https://3.bp.blogspot.com/-bxxzaICFUWk/W-dWLQiV_iI/AAAAAAAAsyE/LZZIlGnEfz0aTGbUPXMg9XKFHBKyGuutACLcBGAs/s1600/A1.jpg"><img src="https://3.bp.blogspot.com/-bxxzaICFUWk/W-dWLQiV_iI/AAAAAAAAsyE/LZZIlGnEfz0aTGbUPXMg9XKFHBKyGuutACLcBGAs/s640/A1.jpg" width="640" height="364" data-original-height="785" data-original-width="1380"></a></p>
<p><span>It doesn't matter if you're borrowing at a rate of 4 per cent or even lower today, you'll still be assessed at 7¼ per cent, so there's oodles of headroom, but mortgage processing seems to have become a painstaking process and transaction volumes have crashed.</span></p>
<p><strong>Frozen fever</strong></p>
<p>The weak ABS housing finance figures - <a href="http://petewargent.blogspot.com/2018/11/housing-finance-smashed" target="_blank">see here</a> - don't pick up the full extent of this yet, especially since there are still thousands of apartments settling from off-the-plan purchases, but the apartments pipeline has shrunk quite dramatically of late so the line in the chart below will continue to fall through 2019.</p>
<p class="separator"><a href="https://3.bp.blogspot.com/-NSCHgfvGr1w/W-dWLzhUQGI/AAAAAAAAsyI/2pcJj36ptkwCZXstlXjoC_LxGT9q288eQCLcBGAs/s1600/A2.jpg"><img src="https://3.bp.blogspot.com/-NSCHgfvGr1w/W-dWLzhUQGI/AAAAAAAAsyI/2pcJj36ptkwCZXstlXjoC_LxGT9q288eQCLcBGAs/s640/A2.jpg" width="640" height="376" data-original-height="798" data-original-width="1354"></a></p>
<p>It's not all doom and gloom for realtors, or property owners, especially around some of the regional markets. </p>
<p>And the urban services economy is buzzing with people and employment, so some properties with a scarcity value are still faring well with mortgage rates so much lower than they used to be. </p>
<p>There was an auction just across the street from our place <a href="https://www.realestate.com.au/property-apartment-nsw-pyrmont-129585290" target="_blank">in Sydney yesterday</a> with Cooley's auctioneers reporting a whopping 41 bids and a thumping price tag of $2.675 million, implying that borrowers with equity and of high credit quality are being treated with reverence by increasingly twitchy lenders.</p>
<p>I don't go to Melbourne much unless I have to (kidding lol...I'm down there next week), but the <a href="http://www.catebakos.com.au/sundayblog/the-correlation-between-property-scarcity-and-auction-result/" target="_blank">experts in the know down there</a> will doubtless report a similar story about demand and scarcity value. </p>
<p>Make no mistake, though, many parts of the housing market are being smoked, volumes have been crunched, and they'll be plenty of real estate agents seeking alternative forms of employment in 2019, if they aren't already. </p>
<p>Non-bank lenders have alleviated some of the pressure, though volumes were down here too in September. </p>
<p class="separator"><a href="https://1.bp.blogspot.com/-jCv9kDxCafs/W-deCU2gi2I/AAAAAAAAsyg/sz8G6eOtlV89m1Ty6lnVc_-VnK6LjcHRQCLcBGAs/s1600/Nonbanks.jpg"><img src="https://1.bp.blogspot.com/-jCv9kDxCafs/W-deCU2gi2I/AAAAAAAAsyg/sz8G6eOtlV89m1Ty6lnVc_-VnK6LjcHRQCLcBGAs/s640/Nonbanks.jpg" width="640" height="378" data-original-height="803" data-original-width="1357"></a></p>
<p>The Treasurer has evidently become a tad agitated, requesting that banks keep their lending channels open to prevent money growth from seizing up more than it already has. </p>
<p>Financial markets haven't been unduly fazed, on the whole, presumably adopting a benign stance in the belief that an engineered slowdown in lending could be relaxed.</p>
<p>Meanwhile bank stock valuations have largely followed international leads through reporting season, following an initial relief rally after the draft Royal Commission report was released. </p>
<p class="separator"><a href="https://2.bp.blogspot.com/-I-qru6R6i7Y/W-dg9oi5hMI/AAAAAAAAsys/dsfNvbv7jyYnVcWNF_ebCQEh41_rQwhIACLcBGAs/s1600/CBA2.jpg"><img src="https://2.bp.blogspot.com/-I-qru6R6i7Y/W-dg9oi5hMI/AAAAAAAAsys/dsfNvbv7jyYnVcWNF_ebCQEh41_rQwhIACLcBGAs/s640/CBA2.jpg" width="640" height="382" data-original-height="799" data-original-width="1338"></a></p>
<p>Finally, spare a thought for those that bought units off-the-plan in some of the big inner-city tower block developments, with settlement valuations often coming in way short of purchase prices as valuers look nervously over their shoulders. </p>
<p><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></p>
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pwargent-M4siyDbqQY

Loan sizes trimmed in September: Pete Wargent

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>Very cagey auction activity in Sydney, with a preliminary clearance rate of only 44.5 per cent (more like somewhere in the thirties come final). </div>
<div> </div>
<div>The median auction price of a sold house was well down from a year earlier at $1,285,000, reflecting reduced borrowing capacity (mainly for investors rather than homebuyers). </div>
<div> </div>
<div>For units the median price of property sold at auction was up from $900,000 a year earlier to $940,250.  </div>
<div> </div>
<div>But still very muted activity levels overall.<br><br>
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<br><div>Melbourne's clearance rate is also now well under 50 per cent. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">ALP in the ascendancy</span></strong></div>
<div> </div>
<div>With the Coalition roundly punished by the electorate in the Wentworth by-election for their machinations and tanking to a minority government in the process, property market participants will need to weigh up the potential impacts of changes to negative gearing legislation.</div>
<div> </div>
<div>I'll post an online workshop on this very subject this week, so keep an eye out for that. </div>
<div> </div>
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<div><strong><span style="text-decoration: underline;">Tightening</span></strong></div>
<div> </div>
<div>Thanks for the thousand or so Tweets, messages, and pingbacks about record underutilisation and the like - a pleasure as always! </div>
<div> </div>
<div>Yes, it's a problem.</div>
<div> </div>
<div>No, it's not been getting worse.</div>
<div> </div>
<div>Volume measures - reported quarterly on an original basis - have consistently improved year-on-year since 2014...through 2015, 2016, 2017, and 2018 year-to-date.</div>
<div> </div>
<div>All publicly available information from the ABS:</div>
<div> </div>
<div class="separator"><a href="https://4.bp.blogspot.com/-8PwnBImzULE/W8ogJ9Ym19I/AAAAAAAAse4/wNu6at2drA8ml6ZCrU3QPZTz8kDzBRKOQCLcBGAs/s1600/ABS1.jpg"><img src="https://4.bp.blogspot.com/-8PwnBImzULE/W8ogJ9Ym19I/AAAAAAAAse4/wNu6at2drA8ml6ZCrU3QPZTz8kDzBRKOQCLcBGAs/s640/ABS1.jpg" width="640" height="388" data-original-height="805" data-original-width="1322"></a></div>
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<div>Yes, there is more work to be done (literally so in this case!).</div>
<div> </div>
<div>The Reserve Bank has noted the same patterns, but still believes that the unemployment rate is the key measure, and that's at the lowest level since 2012.</div>
<div> </div>
<div>No, this won't be reported in left-leaning media<em>, </em>nor for that matter whichever 'recession' blogs you may care to mention.<br><br><em>C'est tout. </em>
</div>
<div> </div>
<div>Cheers!<br><br>Very low preliminary auction clearance rates this weekend, under 50 per cent for Melbourne, and just 44 per cent for Sydney.<br><br>It'll be a long, slow run into Christmas from here this year. </div>
</div>
</div>
</div>
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Auctions fizzle out for 2018

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<p>EXPERT OBSERVER</p>
<p>Total housing finance was lower as expected back in August at $30.67 billion in seasonally adjusted terms, well down from the peak of above $34 billion a year earlier.</p>
<p>The Reserve Bank of Australia posted some useful insights on household finances, financial stress (or rather the lack of it), and the impact of tighter lending standards on loan sizes.</p>
<p>The RBA doesn't always help itself when citing very old data, but made some handy insights on borrowing capacity, specifically noting how most loans are made significantly below borrowing capacity.</p>
<p>In the surveyed figures only about 13 per cent borrowed 90 per cent or more of the maximum amount potentially available, while some two-thirds borrowed only 70 per cent or less of their capacity (thereby implying that tighter lending standards only impact some borrowers).</p>
<p>This was to some extent borne out by the housing finance data, with average loan sizes having continued to rise for owner-occupiers to be significantly higher than a year earlier, including in all three of the most populous states.</p>
<p>The borrowers most likely to be materially impacted by tighter lending standards include portfolio investors, and this is also reflected in the totals for investment loans.</p>
<p>The monthly trend result for investment loans has fallen from $14 billion at the 2015 peak to $10 billion, suggesting that the best performing properties are likely to be those actively sought by homebuyers (and the worst, investment units designed primarily for leasing).</p>
<p>More interest-only loans were reset in the third quarter.</p>
<p>Non-banks have been picking up more business, as expected.</p>
<p>With construction loans and the number of new dwellings financed now in decline new supply will be dropping off in time.</p>
<p>First homebuyers continued to account for about 18 per cent of new home loans, partly driven by incentives.</p>
<p><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></p>
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Housing finance squeezed in August: Pete Wargent

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<div>EXPERT OBSERVER </div>
<div> </div>
<div>The latest available ABS figures show Australian capital city house and apartment prices 1.4 per cent below their December 2017 peak, albeit they've actually increased in Brisbane, Canberra, Adelaide, and Hobart. </div>
<div> </div>
<div class="separator"><img src="https://3.bp.blogspot.com/-Ya6Qb4aMVDo/W7zbQNm3zeI/AAAAAAAAsTE/y8JxatkGg3w13NZvQs7m5BCv0gMbGAgKQCLcBGAs/s640/A3.jpg" width="640" height="366" data-original-height="801" data-original-width="1394"></div>
<p> </p>
<div>One market - Sydney - did experience a wild buying frenzy in the first quarter of 2017, forcing some (required) action from the regulator, since which time house prices have declined by 4 per cent and apartment prices 3 per cent on the ABS index, with further declines set to follow in H2 2018.</div>
<div> </div>
<div>I was an agog observer at some of those Q1 2017 Sydney auctions, and concluded at the time that the successful frenzied bidders could only be cash buyers or downsizers, as there's no way the bank vals could've passed otherwise. </div>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-2ntZXNGLaWs/W7zbQJSQIGI/AAAAAAAAsTI/BZ1aa3jjXJMq3wxKbudU9W-oJmswhO2vwCLcBGAs/s640/A4.jpg" width="640" height="350" data-original-height="798" data-original-width="1459"></div>
<p> </p>
<div>Very few leveraged buyers would've bought in that narrow window before the froth was blown off, then, but if there's a cohort that will feel the pain of the market responding the tighter lending standards signal it's off-the-plan buyers of new CBD apartments. </div>
<div>
<br>Although not overly familiar with Western Sydney I also witnessed some wild prices being paid for weatherboard renovators and fibro shacks, although all that seems to have calmed down now. </div>
<div> </div>
<div><em><span>PETE WARGENT </span>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></div>
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Australian housing off the peaks: Pete Wargent

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<p>EXPERT OBSERVATION</p>
<p>Years ago I lived up in Darwin.</p>
<p>It's a cool place - at least figuratively, if not literally - and certainly very different from the sometimes drab sameness of suburban life in the big smoke.</p>
<p>One of the things I liked about it was how almost everyone turns out when there's an event in town, such the V8 Supercars and INXS playing live (or whatever). </p>
<p>Mindil Beach Sunset Markets quite rightly attract a buzzing crowd every weekend too.</p>
<p>Meanwhile, the National Parks of Kakadu and Litchfield are a must-see-to-believe, especially in the Big Wet (although most Aussies talk of there being two seasons - wet and dry - Kakadu's traditional owners recognise six different seasons, understanding the subtle transitions between them). </p>
<p>The odd earthquake aside, Darwin has the best winter climate of any city I've experienced, perfect dry heat in the low 30s all day every day, and never a cloud to be seen.</p>
<p>The summer weather, on the other hand, can range from harsh humidity to downright brutal and Cyclonic. </p>
<p>Although I love the place, I think it would be fair to say that a lack of diversity of choice is a net negative for the Top End, including within the labour force. </p>
<p>There were stacks of jobs in resources and in the public sector during my time up north, but not very much else. </p>
<p>Employment rates and full-time salaries are high, and official unemployment rates remain very low.</p>
<p>But the mining boom years have faded and people are steadily drifting back where they came from.<br><br> Actually, not that steadily now...quite quickly!</p>
<p>I also recall simple things like going for a takeaway or a coffee being phenomenally expensive, although for all I know maybe that's changed as the mining sector has cooled. </p>
<p><strong>From boom to bust</strong></p>
<p>From 2003 dwelling prices soared relentlessly in Darwin for a decade, rising by <a href="http://petewargent.blogspot.com/2018/09/aussie-housing-prices-roll-over-in" target="_blank">more than 180% </a>by the middle of 2014, by far the biggest increase of any of Australia's 8 capital cities over that period. </p>
<p>Since the peak of the resources construction boom time prices have dropped back by 18%, including by 6% over the 2018 financial year alone. </p>
<p>During the boom years thousands of Aussies were relocating from interstate up to the Top End lured by the high wages on offer.</p>
<p>But although the sector experienced a second wind post-financial crisis as China stimulated its economy, even the mighty $54 billion (hello overruns!) Inpex/Ichthys LNG project hasn't been enough to stem to the inevitable downturn.</p>
<p>And now the NT is losing residents interstate in droves, with more than 3,500 upping sticks on a net basis over the year to March 2018. </p>
<p><a href="https://2.bp.blogspot.com/-UgdR-OAUOdY/W6f2q74OalI/AAAAAAAAsDg/jmUlCLdlbjYUkkQQ-iR_IUK6LAK2lntLwCLcBGAs/s1600/NT.jpg"><img src="https://2.bp.blogspot.com/-UgdR-OAUOdY/W6f2q74OalI/AAAAAAAAsDg/jmUlCLdlbjYUkkQQ-iR_IUK6LAK2lntLwCLcBGAs/s640/NT.jpg" width="640" height="388" data-original-height="792" data-original-width="1303"></a></p>
<p>With life expectancy increasing, you typically see more births than deaths these days, so the population of Australia increases naturally even without its prevailing strong immigration program.  </p>
<p>But in the NT the outflow of residents interstate is overwhelming both net overseas migration and the natural increase, to the extent that the population of the territory has actually declined by 1,000 persons over the past six months to 246,700. </p>
<p>There are few weaker dynamics for a housing market than an outright decline in the population, if sustained. </p>
<p>No doubt the local authorities will be putting in place incentives to entice families to move up north. </p>
<p>In short, arguably no state or territory presently has a more concerning range of metrics in its economy or housing market. </p>
<p><strong>In arrears</strong></p>
<p>Last week I looked at how each of the most populous states is faring with regards to 30+ day <a href="http://petewargent.blogspot.com/2018/09/is-mortgage-stress-at-record-highs" target="_blank">mortgage arrears</a>.</p>
<p>In short, not great in Western Australia, pretty comfortable elsewhere. </p>
<p>Let's now consider the other four states and territories.</p>
<p>As you might expect the NT had the highest rate of prime and non-conforming 30+ day arrears at 2.67% as at July 2018, although this had declined just a little over the preceding two months of available figures from 2.82%. </p>
<p><a href="https://2.bp.blogspot.com/-rvAjhgRkFvc/W6gIxt_GYhI/AAAAAAAAsDs/edpctyzujWY88YikjxsPXwprdIMDiPkCgCLcBGAs/s1600/S%2526P1.jpg"><img src="https://2.bp.blogspot.com/-rvAjhgRkFvc/W6gIxt_GYhI/AAAAAAAAsDs/edpctyzujWY88YikjxsPXwprdIMDiPkCgCLcBGAs/s640/S%2526P1.jpg" width="640" height="368" data-original-height="799" data-original-width="1389"></a></p>
<p>Elsewhere arrears rates were reasonably low in South Australia at 1.50% following a marked improvement, very low in thriving Tasmania at 1.31%, and extremely low in the Australian Capital Territory at 0.74%. </p>
<p>Generally mortgage arrears are a little higher than a year earlier across the board, despite falling unemployment rates, in part due to interest-only mortgages being reset.</p>
<p>Hopefully the NT can turn itself around soon! </p>
<p><em><strong>PETE WARGENT </strong>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></p>
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Bottom falls out of Darwin in the Top End: Pete Wargent

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<p>EXPERT OBSERVATION </p>
<p>Job vacancies surged to record highs in both New South Wales (82,400) and Victoria (72,000) last month as those states get set to enjoy an extraordinary hiring boom.</p>
<p>There were broad-based gains across a raft of industries, including professional and technical services, financial and insurance services, healthcare and social assistance, mining, construction, accommodation and food, transport, postal and warehousing, arts and recreational, administrative and support roles, education, and more. </p>
<p>The ongoing resurgence in the mining sector helped to lift job vacancies in Western Australia (27,600) to the highest level in half a decade, while Queensland (35,100) and South Australia (11,900) have improved significantly over the past couple of years. </p>
<p><a href="https://1.bp.blogspot.com/-6geqbjFj3UA/W6yM3FQR4AI/AAAAAAAAsGE/54OOUZjxE14_ja7T2vU30Z1_XN4AB1z4wCLcBGAs/s1600/A2.jpg"><img src="https://1.bp.blogspot.com/-6geqbjFj3UA/W6yM3FQR4AI/AAAAAAAAsGE/54OOUZjxE14_ja7T2vU30Z1_XN4AB1z4wCLcBGAs/s640/A2.jpg" width="640" height="372" data-original-height="804" data-original-width="1376"></a></p>
<p>The Tasmanian economy is also firing, with the Northern Territory potentially the one serious laggard. </p>
<p>The trend in private sector vacancies scorched more than 20% higher over the year, while the trend annual increase in all sectors was 19.3%, taking the total number of vacancies to the highest ever level at 240,900. Goodness!</p>
<p><a href="https://4.bp.blogspot.com/-gdCGqYzu_-I/W6yM3BmmiBI/AAAAAAAAsGI/dMb4fYx8X9srOOEhSXW_JYIocugEDvWIACEwYBhgL/s1600/A1.jpg"><img src="https://4.bp.blogspot.com/-gdCGqYzu_-I/W6yM3BmmiBI/AAAAAAAAsGI/dMb4fYx8X9srOOEhSXW_JYIocugEDvWIACEwYBhgL/s640/A1.jpg" width="640" height="376" data-original-height="801" data-original-width="1357"></a></p>
<p><strong>More hiring ahead</strong></p>
<p>There will be some half-hearted attempts to talk down the result by the Opposition, but the facts don't lie: at under 3% the number of unemployed persons per job vacancy now has a two-handle for the first time since the mining boom...which is surely great to see.</p>
<p><a href="https://1.bp.blogspot.com/-56f7SXAgf4Q/W6yP0fiWpbI/AAAAAAAAsGY/8jK0R-zOCSkuox3KTC6QpuiIIm_IkvujACLcBGAs/s1600/A4.jpg"><img src="https://1.bp.blogspot.com/-56f7SXAgf4Q/W6yP0fiWpbI/AAAAAAAAsGY/8jK0R-zOCSkuox3KTC6QpuiIIm_IkvujACLcBGAs/s640/A4.jpg" width="640" height="384" data-original-height="805" data-original-width="1341"></a></p>
<p>Of course, the labour force has expanded significantly too as discouraged workers come back into the fold alongside record high female participation (the rise in dual income households being an under-appreciated boon for housing markets).</p>
<p>But even accounting for this the figures point to an ongoing decline in the unemployment rate towards 5%, and lower still for New South Wales and Victoria.</p>
<p><a href="https://1.bp.blogspot.com/-RrYk-jXZNc0/W6yM3I7DnPI/AAAAAAAAsGA/aKvYfIpUEkIpVVyiFjZtw7Wub3DVim-DgCLcBGAs/s1600/A3.jpg"><img src="https://1.bp.blogspot.com/-RrYk-jXZNc0/W6yM3I7DnPI/AAAAAAAAsGA/aKvYfIpUEkIpVVyiFjZtw7Wub3DVim-DgCLcBGAs/s640/A3.jpg" width="640" height="370" data-original-height="801" data-original-width="1384"></a></p>
<p><strong>Hirin' now!</strong></p>
<p>Overall, this release was very positive news, with the economy continuing to improve in the two most populated states, and the resources states generally now on the up too.</p>
<p>All this means that Australia has never had as many jobs to be filled as it does right now.</p>
<p>Good stuff.</p>
<hr>
<p>The Hometrack UK 20 Cities House Price Index increased by a further 3.9% over the year to August 2018. </p>
<p>It's been a wild week of bickering for Australian housing market commentary thanks to yet another (now-traditional) <em>60 Minutes </em>beat-up.<br><br> But in the background the fundamentals of the economy quietly continue to improve: exports, tourism, government revenues and the Budget balance, hiring, engineering construction, and so on (resulting in a risk rating upgrade to AAA neutral). </p>
<p>One of the neat things about our mortgage broker liaison is that since brokers take 'snapshots' in time, we can take a mortgage application from today and re-run it against the lending standards of yesteryear.</p>
<p>While the results do vary quite a bit, typically a home buyer applicant might see their borrowing capacity cut by about 10% from where things were a year ago due to tightened lending standards, while for some portfolio investors the equivalent figure can be much greater.<br><br> In fact, many portfolio investors simply won't be able to borrow at all in the present environment. </p>
<p>On its own this probably won't have as big an impact on the housing market as some people think (cf. the United Kingdom, where tighter mortgage lending criteria have failed to stop house prices from rising to fresh highs in nominal terms).</p>
<p>Firstly, that's because home buyers don't always borrow the maximum amount permissible.</p>
<p>And secondly, it's because most investors don't own more than one or two properties - thus portfolio investors are only one small part of the pie, albeit an important one at the margin.<br><br> In fact, the average loan size is still being written at or around record highs, but in lower volumes now.</p>
<p>ANZ updated its somewhat more sober house price forecasts today, expecting prices to decline by just 2% in 2019 - a mere 20-fold improvement on the lame<em> 60 Minutes</em> offering - with a market peak-to-trough fall for Sydney and Melbourne expected of no more than 10%. </p>
<p>ANZ also noted that it was more upbeat for the housing market prospects of Brisbane, Adelaide, and Canberra, as well as many of Australia's regional housing markets. </p>
<p>Looking forward, the sheer strength of the hiring figures makes it hard to disagree with that assessment. </p>
<p><em><strong>PETE WARGENT </strong>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></p>
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Expect an ongoing decline in the unemployment rate: Pete Wargent

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<div><strong>EXPERT OBSERVER</strong></div>
<div><strong><span style="text-decoration: underline;"> </span></strong></div>
<div><strong><span style="text-decoration: underline;">Investor credit plumbs lows</span></strong></div>
<div> </div>
<div>The crackdown on investor credit growth has been ruthlessly effective since 2015, the 12-month growth rate falling from 10.8 per cent to the lowest level on record in August 2018, according to the latest Reserve Bank financial aggregates.</div>
<p> </p>
<div class="separator"><a href="https://1.bp.blogspot.com/-w8yO-BOCDk4/W7EvndY7C0I/AAAAAAAAsI4/RZSfkmG55FAyiPY7VMSuMDHult0HfjSSQCLcBGAs/s1600/RBA1.jpg"><img src="https://1.bp.blogspot.com/-w8yO-BOCDk4/W7EvndY7C0I/AAAAAAAAsI4/RZSfkmG55FAyiPY7VMSuMDHult0HfjSSQCLcBGAs/s640/RBA1.jpg" width="640" height="364" data-original-height="800" data-original-width="1405"></a></div>
<p> </p>
<div>With the Royal Commission Interim Report finally and conveniently landing just before the long weekend, the major banks will be relieved to see that there'll be no heavy-handed regulation coming their way, and Treasury quite clearly keen to avoid any further tightening of household credit. </div>
<div> </div>
<div>Since the 10 per cent cap on investor credit growth is now removed there's plenty of headroom for investment lending to pick up from here. </div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-vKuBWpIIMPg/W7EyAdYRs8I/AAAAAAAAsJM/UQhUB6tlvXM2NRBL_3iQaAqta7w9xSZMACLcBGAs/s1600/A1.jpg"><img src="https://1.bp.blogspot.com/-vKuBWpIIMPg/W7EyAdYRs8I/AAAAAAAAsJM/UQhUB6tlvXM2NRBL_3iQaAqta7w9xSZMACLcBGAs/s640/A1.jpg" width="640" height="366" data-original-height="800" data-original-width="1392"></a></div>
<div> </div>
<div>There were some bogus claims last week that Westpac is 'calling in' risky investor loans via a mythical letter.<br><br>Perhaps the letter in question was dated April 1, but a thousand posts on the gossip forums and multiple global headlines later, it transpired that one tiny fragment of evidence was missing - a copy of the fabled letter itself - before unsurprisingly Westpac finally got around to stating that no such action had been taken. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Chasing business again</span></strong></div>
<div> </div>
<div>If anything, the major banks will now be looking to attract new business from housing market investors.</div>
<div> </div>
<div>Don't take my word for it, by the way.<br><br>Instead, take Westpac itself as an example since we're on the subject, who won't waste any time in hitting up the investor market now the Interim RC Report has been issued by immediately bringing back its refinance rebate, effective today.</div>
<div> </div>
<div>In fact, as soon as everyone's had a chance to recover from the Grand Final double-header weekend, brokers will kick off this week by swamping customer inboxes with a refinance rebate blitz.</div>
<div> </div>
<div>Westpac will re-introduce a rebate offer of $1,250 for every standalone property loan refinanced. So, for example, a client that refinances 10 properties to Westpac can qualify for $12,500 in rebates, and so on.</div>
<div> </div>
<div>The loans must be <em>de minimis</em> $250,000 to qualify for the deal with the rebates to be deposited into the loan account within a couple of months from settlement, while brokers can seek additional pricing off the packaged rates. </div>
<div> </div>
<div>Furthermore, eligible new investment property or owner-occupier buyers may receive 200,000 to 500,000 Velocity reward points per loan, for loans above $250,000 and $1,000,000 respectively. For some context a $60 tank of fuel at BP costs about 10,000 points, so this is also a non-trivial incentive.</div>
<div> </div>
<div>Doesn't sound much like they're chasing investors away to me, but alas I'll never jag a global headline with such a middling observation. </div>
<div> </div>
<div><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></div>
<p> </p>
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Banks set to give chase for investors: Pete Wargent

<html><body>
<div>There's an old tradition when it comes to job numbers that goes something like this: if the numbers are crap we're doomed; and if the numbers are good then they must be wrong.</div>
<div> </div>
<div>The technical term for this is <em>confirmation bias</em>.</div>
<div> </div>
<div>As ever this month's <a href="http://petewargent.blogspot.com/2018/09/enormous-jobs-growth-in-nsw" target="_blank">booming jobs numbers</a> were treated with anything from scepticism to outright derision.</div>
<div> </div>
<div>And yet the solid results have kept on coming, especially in the two most populous states. </div>
<div> </div>
<div>There's another bias that tends to impact people: when things have been bad, they expect bad things to continue.</div>
<div> </div>
<div>And quite understandably we're seeing a lot of this in relation to weak private sector wages growth.</div>
<div> </div>
<div>After all, soft nominal wage price growth has been around since 2015, so it's becoming quite hard to imagine that pay packets could soon begin to swell again. </div>
<div> </div>
<div>But take note, because in some states this may be about to change...</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Private sector wages to lift</span></strong></div>
<div> </div>
<div>Although it never seems to get reported anywhere, I've shown <a href="http://petewargent.blogspot.com/2018/07/statistical-buggery" target="_blank">several times before</a> that while the underutilisation <strong><em>rate </em></strong>is high, in volume measures terms things have been very steadily improving for the past few years. </div>
<div> </div>
<div><span>That is to say, lots of people still want more hours of work, but the numbers of extra hours wanted has been declining over the past four years.</span></div>
<div><span> </span></div>
<div class="separator"><a href="https://2.bp.blogspot.com/-1YQRG8zAXOg/W51tO98q9RI/AAAAAAAAr6M/vjMLPeIRSGQWCmjRozgEk1kmQtCf41EOACLcBGAs/s1600/UU.jpg"><img src="https://2.bp.blogspot.com/-1YQRG8zAXOg/W51tO98q9RI/AAAAAAAAr6M/vjMLPeIRSGQWCmjRozgEk1kmQtCf41EOACLcBGAs/s640/UU.jpg" width="640" height="376" data-original-height="799" data-original-width="1355"></a></div>
<div> </div>
<div>Where is wages growth going to show up first?</div>
<div>
<br>The answer is Victoria, with construction firing up across the state <a href="http://petewargent.blogspot.com/2018/07/state-of-victoria-getting-under" target="_blank">on an unprecedented scale</a>.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-UwNPSL_X5r4/W51uLZYH0sI/AAAAAAAAr6U/DSEyyKW3gQ0gBKzC7K9tuLxpeXKi0KoPACLcBGAs/s1600/VIC.jpg"><img src="https://1.bp.blogspot.com/-UwNPSL_X5r4/W51uLZYH0sI/AAAAAAAAr6U/DSEyyKW3gQ0gBKzC7K9tuLxpeXKi0KoPACLcBGAs/s640/VIC.jpg" width="640" height="364" data-original-height="799" data-original-width="1402"></a></div>
<div> </div>
<div><span>And sure enough this week's figures showed that the underutilisation rate in Victoria has dived from a seasonally adjusted peak of 16.1 per cent to 12.5 per cent, with the trend pointing straight down. </span></div>
<div><span> </span></div>
<div>If you listen to the brilliant Business Insider <em>Devils &amp; Details</em> podcasts you'd be well across the following point thanks to the awesome deep-dive analysis of Justin Smirk at Westpac.</div>
<div><span> </span></div>
<div><span>Even allowing for potentially rogue seasonally adjusted figures, the trend improvement points to private sector wages growth in Victoria returning to 3<span>½</span> per cent in due course. </span></div>
<div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-DcFqWNH18Q8/W52J62RyndI/AAAAAAAAr6k/tu5-dobkPmcAaQNOa42LmWHMsPB3W6ozgCLcBGAs/s1600/A1.jpg"><img src="https://4.bp.blogspot.com/-DcFqWNH18Q8/W52J62RyndI/AAAAAAAAr6k/tu5-dobkPmcAaQNOa42LmWHMsPB3W6ozgCLcBGAs/s640/A1.jpg" width="640" height="382" data-original-height="798" data-original-width="1331"></a></div>
</div>
<div>The recent improvement in New South Wales has been a little shallower, but the trend is quite similar, and in fact the unemployment rate in the state is now down to just 4.7 per cent in seasonally adjusted terms. </div>
<p> </p>
<div>Here's the paradox of immigration: of course, it adds to the supply of labour, but it also creates demand in the economy. </div>
<div> </div>
<div>Indeed, as Smirk has demonstrated previously, the underutilisation in the labour force has not been behaving in a way consistent with it being solely caused by immigration. </div>
<div> </div>
<div>And these numbers confirm that he's right, with the tightening labour markets being those where most immigrants are heading to.</div>
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<div>The numbers in Victoria and New South Wales keep on improving.<br><br>This certainly won't stop the calls for lower immigration, of course, or indeed the predictions of a recession, but these numbers suggest that wages growth should pick up from here. </div>
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Wages growth in NSW and Victoria is coming: Pete Wargent

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<div>EXPERT OBSERVER</div>
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<div>OK, first things first. </div>
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<div>I am indeed a so-termed vested interest: I would like to see full employment, stronger wages and household income growth, the Aussie economy growing at least at trend or ideally above trend, and I don't want to see the housing market getting zinged unnecessarily. </div>
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<div>Yep, you got me on that one. </div>
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<div>With these formalities out of the way, I saw APRA's latest ADI exposures today described as 'red alert lending data', very 'concerning', a 'loosening' of lending standards, that should be 'ringing alarm bells' to APRA due to lenders 'breaking their own rules', among various other remarks (source: Digital Finance Analytics). </div>
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<div>For the record, while blog-flaming isn't really my bag, I must wholeheartedly disagree on each and every point!<br><br>Whatevs, I'll post a few deets and you can make your own mind up...</div>
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<div><strong><span style="text-decoration: underline;">Stock of IO loans plunges</span></strong></div>
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<div>Firstly, the flow of new interest-only (IO) loans in Q2 2018 was a meagre 16.6 per cent of residential term loans, absolutely miles below the initially proposed cap of 30 per cent (and a world apart from the 45.6 per cent record high of Q2 2015). </div>
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<div>With far fewer loans written overall from a year earlier in spite of a strong increase in the Aussie population, this represented a modest increase in percentage terms from the preceding quarter.</div>
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<div>However, the actual number of interest-only loans was some 52 per cent lower than in the corresponding quarter of the prior year - and almost 70 per cent lower than the number written at the peak of IO lending in 2015.</div>
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<div>A 'loosening'? Hardly.<br><br>But even if more IO loans were to be written henceforth I personally don't believe that would be <span>a bad thing.</span>
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<div><span>The last thing<span> we need <span>is $½ trilli</span>on of IO</span> mortgages being reset with undue haste - unless you actually want to see the housing market get stiffed, which of course many people do - and some breathing space would surely be welcomed by a portion of existing IO borrowers. </span></div>
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<div>Regardless of your views on that, there was another enormous decline in the stock of IO loans in the June quarter, with IO loan balances outstanding now having plunged some $119 billion lower over the past five quarters. </div>
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<div>The share of IO loans outstanding through June 2018 was thus by some margin at the lowest level across the entire data series at about 29 per cent, down from close to 40 per cent in late 2015. </div>
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<div>Note that these numbers only run to the end of the 2018 financial year; at the current trajectory the share of IO loans will likely be around 26.9 per cent by the end of this month, a figure that was truly unthinkable only last year, and the lowest level in decades. </div>
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<p><br><span>A loosening...very droll.</span><br><br></p>
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<strong><span style="text-decoration: underline;">Less and less and less high-LVR lending</span></strong><br><br>Secondly, in relation to DFA's 'red alert' on lending standards, the loan-to-value (LVR) ratios on new loans have been tightening incrementally for the better part of half a decade now.</div>
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<div>Loan volumes are down, there was a miniscule change in Q2 for the share of new loans written at 80 per cent LVR or above, while loans written above 90 per cent LVR or above have never been as low as they are today since the available records began.</div>
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<div>'Red alert'? You must be having a giraffe, surely - we've literally never seen lending standards remotely like it!</div>
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<div>Thirdly, low-doc and other non-standard loans are also tracking at the lowest level on record. </div>
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<div>Fourthly, the quarterly flow of new investment loans plunged by the best part of $5 billion year-on-year, so how you conclude a sudden loosening of standards from that I can't fathom (automatic red card for anyone directly comparing volumes from Q1 to Q2). </div>
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<div>And fifthly, a word that is devilishly hard to spell at the best of times, DFA cites loans approved outside serviceability, noting that these should be ringing 'alarm bells' to the regulator.</div>
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<div>Fair suck of the sauce bottle, mate, but this almost certainly represents a timing issue and reflects <em><strong>tighter</strong> </em>lending standards, not looser.</div>
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<div>You can't tell me with a straight face that banks are blithely waving through marginal or borderline applications and then willingly reporting them as such in the current lending environment. Not happenin'.</div>
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<div>'I could go on...', as Jon Culshaw's impersonation of Russell Crowe might drily observe.</div>
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<div>Due apologies for the apparent curtness, but this stuff has a tendency to be uncritically reported by rote, so someone needs to chime in with a few of these inconvenient actualities.<br><br>Much obliged. As you were :-)</div>
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Interest-only loans running at 70 per cent down on 2015 peak: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER </p>
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<div>Across the 2018 financial year the total value of securitised residential mortgages increased by 8.9 per cent to $108.8 billion according to the Australian Bureau of Statistics. </div>
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<div>The ABS reported some disaggregation issues within the various classes of securitised assets, but the trend is clear enough, with the total value of assets up by about 8 per cent over the financial year. </div>
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<div>The recent increase has been driven by securitised residential mortgages as lending standards have been tightened by the mainstream lenders.  </div>
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<br><div>With major lenders having tightened up lending criteria in the residential space some non-banks have picked up mortgage business, and there has clearly been an increase in securitisation lately. </div>
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<br>While there may be less regulatory oversight, non-bank lending may provide an escape valve for some housing investors having difficulty rolling over an interest-only loan - or for some other non-standard borrowers - which could help to minimise the flow of forced sellers.<br><br>
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<div>Little detail is provided in the corresponding liabilities data, although it is noteworthy that the assets are overwhelmingly owned by Australian resident investors, while asset backed securities issued overseas have decreased as a proportion of total liabilities. </div>
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<div><strong>The wrap</strong></div>
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<div>Overall the total assets of Aussie securitisers have steadily increased over the 1½ years to June 2018, following a period of half a decade which reflected little change. </div>
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<div>Whether more widespread securitisation of residential mortgage assets increases or decreases risk in the system depends upon your perspective.</div>
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<div>The total value of securitised residential mortgages is still tracking only at about half of the levels seen at the June 2007 peak - and as a share of total residential mortgages is markedly lower - but arguably this in itself says little about the quality of the underlying assets. </div>
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<div><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></div>
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