Brisbane-based <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co Developments</a> has officially launched its $250million COMO apartment development in Varsity Lakes, while simultaneously commencing construction.&nbsp;

Building work is now underway at COMO following the appointment of <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a> as contractor to deliver the boutique development which will rise on a 2857 sqm site overlooking Lake Orr at 22 Lake Street.

When completed, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels located in the heart of Varsity Lakes.

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The project, which will sit alongside Bond University, will deliver a diverse array of apartment designs comprising one-, two- and three-bedroom residences that have already attracted interest from local and interstate investors as well as an array of owner occupiers looking to gain a foothold in the precinct.

Red &amp; Co, which has largely focused on the Brisbane market in recent years where it has delivered more than 500 apartments and townhouses across 26 projects, has designed COMO to combine tranquil, lakeside living with the vibrant urban convenience of the vibrant Varsity Lakes village.

“We’re thrilled to announce a start to construction of COMO in conjunction with the official launch of the project, our first for the Gold Coast,” said Red &amp; Co Director and Co-Founder David Laverty.

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“COMO is superbly positioned to capture the essence of the Varsity Lakes village lifestyle and its thriving café and dining precinct, while delivering a much-needed diverse supply of premium residences for the local market.

“Pre-launch inquiries have been strong among both local and interstate investors and owner-occupiers, including downsizers and upgraders who appreciate the value proposition that COMO represents.”

Prices at COMO start from $1,000,050.

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Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the COMO development incorporates an extensive range of amenities for residents including a 25-metre rooftop lap pool, sundeck, barbecue and dining areas, as well as multiple rooftop pickleball and paddleball courts, a wellness and activity centre, gym, sauna, plunge baths and landscaped gardens.

“COMO presents a rare opportunity to secure a stylish, lifestyle-focused home in one of the Gold Coast’s most sought-after neighbourhoods,” added Laverty.

“The rooftop will be the epicentre of fun for residents with an array of amenities for residents that are quite unique for a boutique project such as this, all while offering spectacular vistas across the Gold Coast as far north as Southport and south to Burleigh.”

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&nbsp;

Red &amp; Co has chosen the Varsity Lakes site for its proximity to top-tier schools, major shopping hubs, such as Robina Town Centre and its CBD offering, as well as key Gold Coast transport links, including Varsity Lakes Train Station.

COMO will be located just a short walk to shops, cafes and restaurants in Varsity Lakes and just a 10-minute drive to the Burleigh Heads beachfront.

With construction currently underway, Red &amp; Co anticipates COMO will be completed in 2028.

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Joel Robinson

Red & Co to launch debut Gold Coast development Como Varsity Lakes as construction commences

Longstanding Gold Coast developer Raptis has acquired a prime development site on Surf Parade for its next Broadbeach apartment project.

Progressing towards completion of <a href="https://www.apartments.com.au/new-apartments/the-sterling-broadbeach-6-8-george-avenue-broadbeach-qld-4218">The Sterling Broadbeach</a>, 90 apartments on nearby George Avenue, <a href="https://www.apartments.com.au/developers/raptis">Raptis</a>, led by second-generation family man Evan Raptis, has picked up a block on the corner of Surf Parade and First Avenue.

The site had been earmarked for a luxury apartment project with 33 full-floor apartments across a 37-storey tower. Raptis will go back to the drawing board and create a building more appropriate for the site. The development application will be lodged later this month.

Evan Raptis told Apartments.com.au the site ticks all the boxes.

"Broadbeach is a suburb we've developed several buildings over the years. Surf Parade ticks all the boxes for the type of apartment development we want to deliver."

Raptis had several pre-lodgement meetings with council to ensure they are aligned in the development.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="f0d58573-07a4-47a8-9f5e-fbf35fb03dc3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-03-05%20at%204.58.23%E2%80%AFPM.png?VersionId=iczZEd_4_o4UL0PHMPJGfy_q3tv96J5i" />

Surf Parade has emerged in recent years as one of the most popular streets in Broadbeach for development.

South East Queensland developer Mosaic Property Group kicked it off with Marella by Mosaic. Bassar Group sold out Infinity on the street, while for its&nbsp;first Gold Coast development, Polycell grabbed a Surf Parade site for <a href="https://www.apartments.com.au/new-apartments/the-rochester-broadbeach-143-surf-parade-broadbeach-qld-4218">The Rochester</a>, which is nearly sold out.

Melbourne-based developer Hirsch &amp; Faigen recently launched its fourth Gold Coast project on the exclusive strip. The Eveleigh Broadbeach will have 100 apartments across a 31-storey building designed by Rothelowman.

GV Property Group site development specialists Antonio Mercuri and Luke Reaby, who both amalgamate sites and sell shovel-ready sites to developers up and down the Gold Coast, sold Surf Parade to Raptis.

Raptis secures prime Surf Parade site for next Broadbeach apartment development

Less than two years after breaking ground, Gardner Vaughan Group is celebrating the topping out of Bask, its second development in the exclusive coastal enclave of Bokarina on Queensland’s Sunshine Coast.&nbsp;

Located only minutes from the beachfront, the two seven-storey luxury apartment towers, known individually as Mydas and Caretta, offer a selection of one-to-four-bedroom residences with views of Lake Kawana, the Glasshouse Mountains, and Bokarina Beach.&nbsp;

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Gardner Vaughan Group Commercial Director Sam Gardner said the milestone marks the home stretch for construction, with first residents expected to be able to move in from Spring 2026.&nbsp;

“This is a significant milestone in bringing this development to life and represents our confidence in this region’s long-term growth and appeal,” Gardner said.&nbsp;

“With 85 per cent of apartments already sold, buyers are joining an established, coastal village that offers the very best of the Sunshine Coast – seasonally patrolled surf beaches, renowned restaurants, and links to established health and retail.&nbsp;

“The final collection of three- and four- bedroom apartments range in size from 127sqm to 300sqm, each with two or three secure car parks and storage, and with construction fast approaching completion we don’t expect the last few apartments to remain on the market for long.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333362]

Local restaurateur Luke Stringer, who co-owns and manages the award-winning Bocca Italian and Playa Mexican restaurants in Bokarina, has lived in the beachside suburb for 18 months and worked there for more than three years, and said the beachside suburb was thriving.&nbsp;

“It’s fair to say Bokarina is finally stepping into the sun and there’s a lot to love about the place,"&nbsp;Stringer said.

"It’s such a great community, where you see the same smiling faces every morning and everything’s within easy reach – it’s the perfect hub in the middle of the Sunshine Coast.

“When we first opened Bocca Italian, we were the lone restaurant, but it’s been amazing to see how the area has grown. The more venues that open, the busier it gets for everyone. When Playa Mexican opened its first Saturday night, Bocca had a record night and Playa was packed too, which blew us away how everyone is thriving.&nbsp;

“There’s a great energy around the place now, and people are really embracing Bokarina as a food and lifestyle destination.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363368]

Stringer joined other buyers at Bask Bokarina and the Gardner Vaughan Group team to celebrate the topping out at a special event in February.&nbsp;

Located in Kawana Waters, midway between Caloundra and Maroochydore, Bokarina locals enjoy scenic walking paths around Lake Kawana, playgrounds, beachfront boardwalk and parklands, alongside all the convenience of a masterplanned beachside community.&nbsp;

“You see people jogging or swimming in the morning, then grabbing coffee at the cafes, people are really embracing the area and all this growth is bringing more people to Bokarina,” Stringer added.&nbsp;

To take advantage of the vistas, each of the 135 apartments at Bask is designed with full size windows and high ceilings that provide an abundance of natural light.&nbsp;

Prices for the remaining three-bedroom apartments start at $1,599,000 and four-bedroom apartments start at $3,149,000.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363369]

The mixed-use development also features ground-level retail space for cafés, dining options and boutiques, including the soon-to-be-opened ‘Corner Shop’, by the team behind Noosa’s well known ‘Organika’.

Sam Gardner said Gardner Vaughan Group’s 37-year history building and developing across South East Queensland has contributed to the success of its second development in Bokarina, which follows the recently completed Zinc Apartments.&nbsp;

“We care how people live and this is reflected in the way we approach the design and delivery of every development,” he said. “Furthermore, as a builder-developer we have full control over the construction program and our 100 per cent completion rate is something people can draw confidence from.”&nbsp;

Founded by civil engineers Guy Gardner and Darryl Vaughan in 1989, the family-owned business has evolved from a consultancy firm to an award-winning builder-developer, with projects across the Sunshine Coast, Moreton Bay, Brisbane and the Gold Coast.

[smartcode_project_cta:default project_id=141609]

Gardner Vaughan Group tops out Bask Bokarina apartments

Prolific Melbourne developer <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> has launched its fourth new Gold Coast development in as many years.

<a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a>, led by Daniel Faigen and backed by Eddie Hirsch, co-founder of United Petroleum, has unveiled The Eveleigh, on a prime 1,100 sqm site at 7-9 Surf Parade in the heart of Broadbeach.

<a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a> will deliver 100 apartments across 31 levels, making it the company’s largest Gold Coast project to date. It builds on the success of its three earlier developments, <a href="https://www.apartments.com.au/buildings/hemingway-1267-1273-gold-coast-highway-palm-beach">The Hemingway in Palm Beach</a> and <a href="https://www.apartments.com.au/buildings/emerson-kirra-100-musgrave-street-coolangatta">The Emerson at Kirra</a>, both completed, and <a href="https://www.apartments.com.au/new-apartments/yves-mermaid-beach-7-9-mermaid-avenue-mermaid-beach">Yves Mermaid Beach</a>, which is nearing completion.

[smartcode_project:default project_id=149670 project_image_fid=360966]

The announcement of The Eveleigh affirms the company’s sustained confidence in the Gold Coast market which continues to remain undersupplied. It also increases the value of Hirsch &amp; Fa​igen’s Gold Coast development portfolio to more than $700 million since the company first entered the market in 2021 with Hemingway.

The company has enlisted its preferred architecture firm Rothelowman to design The Eveleigh, which will offer a thoughtfully curated lifestyle, including a substantial wellness precinct, communal recreation areas, children’s play spaces, work-from-home facilities, and shared lounge and dining areas.

[smartcode_project:default project_id=149670 project_image_fid=360965]

Designed for the prime market demographic of downsizers and interstate lifestyle investors in mind, The Eveleigh has been crafted to offer an increasingly rare blend of affordable luxury in a tightly held market. Uniquely positioned in the heart of the Gold Coast’s most sought-after lifestyle suburb of Broadbeach, the project will also boast uninterrupted beach and hinterland views.

The Surf Parade site is just a short walk to the bustling Broadbeach dining and retail precinct, Pacific Fair, The Star Gold Coast and convention centre, and an easy stroll to Kurrawa Beach and the recreational amenity of Pratten Park on the Broadbeach foreshore.

[smartcode_project:default project_id=149670 project_image_fid=360975]

“We’re excited to be proceeding with our fourth project on the Gold Coast in what is certain to become the new luxury precinct in Broadbeach,” says Anthony Bueti, the CFO of Hirsch &amp;a​mp; Faigen and a shareholder of the group.

“With the likes of Mosa​ic and Abedian &amp;a​mp; Co also launching quality projects in the area, the transformation will cement Broadbeach as the premier lifestyle and amenity suburb on the Gold Coast.

"After four years in the Gold Coast market, and with three successful projects completed, The Eveleigh is the product of everything we have learned to love about the Gold Coast and it will be an incredible addition to our growing portfolio in one of the most vibrant property markets in the country. We continue to remain very confident in the high-end Gold Coast property market.”

Urban Activation Director Matt George is handling sales for The Eveleigh, having sold out The Emerson, The Hemingway, and Yves, all before construction was completed.

Melbourne builder MAXCON has already commenced construction on The Eveleigh. They are forecasting a mid-2028 completion.

[smartcode_project_cta:default project_id=149670]

Hirsch & Faigen unveils The Eveleigh in Broadbeach

Two years after securing development approval for the final stage of its award-winning Thornton Precinct on the doorstep of Penrith Station, Urban Property Group is set to launch <a href="https://www.apartments.com.au/new-apartments/mayfair-on-penrith-172-lord-sheffield-circuit-penrith-nsw-2750">Mayfair on Penrith</a>, around 400 apartments designed to reflect two of Sydney’s most iconic structures.

The builder-developer has continued refining the design plans for the two-building development on a significant 8,280 sqm site on Sheffield Circuit, recognising the importance of the prime parcel as one of the closest developable sites to the station.

UPG enlisted architecture firm SJB to design the project. The team said they drew inspiration from both the General Post Office in Martin Place and East Circular Quay to help shape the design. The two-level colonnade, in particular, reflects the famous GPO building, which dates back to the 1860s.

[smartcode_project:default project_id=136726 project_image_fid=362014]

There will be one-, two-, and three-bedroom apartments on offer, with interiors by Cox Architecture. Residences will sit above a retail podium featuring hospitality and lifestyle operators such as One Playground and Volcano’s Steakhouse, contributing to an activated ground plane within the broader Thornton precinct.

A communal rooftop with a pool and views towards the Blue Mountains will provide shared open space for residents. The development is positioned between Ron Mulock Oval and Westfield Penrith, with the Nepean River and Great River Walk also nearby, placing daily amenity and green space within walking distance.

&nbsp;

[smartcode_project:default project_id=136726 project_image_fid=362015]

Mayfair is being delivered by Urban Property Group, a family-owned developer and builder with nearly 40 years’ experience across Sydney. The project will be the first in Penrith to be offered with Resilience Insurance’s 10-year Latent Defects Insurance (LDI) policy, which Urban Property Group has adopted across a number of its recent developments. The developer also has a 4.5-star iCIRT rating, one of the best ratings in market providing further confidence to buyers.

Urban Property Group CEO Patrick Elias said providing additional assurance to off-the-plan buyers has become increasingly important.

“Anything we can do to give confidence in our product is a plus,” Elias told Apartments.com.au.

“Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. They’re making their single large investment, which is their home, and providing confidence is something that we feel is paramount.”

[smartcode_project:default project_id=136726 project_image_fid=362020]

The LDI policy provides a 10-year warranty covering structural defects, with independent inspections carried out during construction and protection for owners if defects arise post-completion.

Mayfair represents Urban Property Group’s sixth and final development within Thornton, consolidating the masterplanned precinct immediately east of the station.

The developer, which builds its own projects, has already commenced construction. SRM Residential is handling the sales campaign.

[smartcode_project_cta:default project_id=136726]

Urban Property Group to close the curtain on award-winning Thornton precinct with Mayfair on Penrith release

Prices Bottomed

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The decline in property prices continued in the June quarter and will most likely mark the bottom of the cycle, according to the latest research from the Real Estate Institute of Australia. 
REIA president Adrian Kelly said REIA Real Estate Market Facts for the June 2019 quarter show weighted average median prices decreased by 1.0 per cent for houses and by 0.6 per cent for other dwellings.  
“This is a continuing decline since June 2018 for both houses and other dwellings, but the decline is slowing,” Kelly said.   “The weighted average median price for houses for the eight capital cities decreased to $720,041 over the quarter, with prices decreasing in all capital cities except for Canberra and Hobart.  “The weighted average median price for other dwellings decreased to $565,753 over the quarter, with prices decreasing in all capital cities except for Melbourne, Hobart and Darwin.”  Kelly said whilst the total number of new finance commitments for the quarter were down 15.1 per cent over last year, including first home buyers down 7.6 per cent it needs to be remembered that the Federal election was held in the middle of the quarter. “There was considerable uncertainty regarding the outcome and concern about changes to property taxation and its impact should there be a change in Government. 
“With the post election boost in confidence in the real estate market as evidenced by higher levels of enquiry, two cuts in interest rates and changes in APRA’s requirements, the June quarter will most likely mark the bottom of the cycle. “Lending figures for the month of June 2019 show, in seasonally adjusted terms, that the number of owner occupied finance commitments excluding refinancing increased by 0.4 per cent.
"The value of investment housing commitments, excluding refinancing, increased by 0.5 per cent in June with the rise driven by the first rise in New South Wales since April 2018.” 
 
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wdavis-8cCN98p7xp

Market hit the bottom in the June quarter: REIA

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EXPERT OBSERVER
The Sydney housing market has bottomed out. Many leading indicators now suggest the current September quarter will record about a 2% rise in Sydney dwelling prices and we are expecting a rise of another 4% for the December Quarter. That should take the full year to about a 1% gain compared to 2018.   But let it be known Sydney has bottomed out at an overvalued point. The data suggests the Sydney housing market remains 21% overvalued despite the two year correction. For reference, the average overvaluation (since 1986) in Sydney is 19% with a low point of 5.9% ‘undervalued’ in June 1987 and a high point of 55.5% overvalued in December 2003.  The most recent overvalued point was 51.6% in the June Quarter 2017. The most recent undervalued point was 1.6% undervalued in September 2012.   This is all based on our view that there is a relationship between nominal GDP and house prices. And when you read this chart we think the evidence is there. Logically there should be a relationship. Housing price rises cannot outpace income growth forever. And the more the gap between the two, the more housing prices have to be supported by cheaper and easier access to credit.   Historically, the Sydney housing market has rarely been undervalued. There has nearly always been some sort of premium attached.
To enlarge, <a href="https://gallery.mailchimp.com/9badbd870addb4af72206c2eb/images/4c539bd2-4f54-4a6b-8cad-28e2a88d92d8.png" target="_blank">click here</a>.   <img src="https://gallery.mailchimp.com/9badbd870addb4af72206c2eb/images/4c539bd2-4f54-4a6b-8cad-28e2a88d92d8.png" width="800" height="444">
Effectively the current point suggests, that, left unchecked, we could soon be heading towards yet another historic overvaluation point similar to levels recorded in 2003 and 2017.
The key word though in this is “unchecked”. How will the regulators respond when they read newspaper headlines of a new booming Sydney housing market recording annualised double digit percentage price growth?     Our initial thinking is they are unlikely to respond well and may introduce more lending restrictions once again. Then again, if the powers that be feel cornered due to perhaps rising unemployment pressure or the need to hit inflation targets, etc., they may well let the market run.   And then finally consider what happens if we have another rate cut?
Louis Christopher is the managing director of <a href="https://sqmresearch.com.au/" target="_blank">SQM Research</a>.
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jrobinson-rf4aSBido9

Sydney housing market has bottomed out: SQM's Louis Christopher

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The ANZ Bank has revised its forecast and now sees the bottoming of the housing market "in the coming months" following the policy turnaround. 
Economists Felicity Emmett and Adelaide Timbrell have forecasted prices will rise modestly through to the end of 2019.
They expect a three percent growth in 2020.
"After a period of significant weakness, house prices appear to be stabilising," their latest Australian Housing Update read.
"Sydney prices have fallen 15%, while Melbourne’s are down 11%," they advised.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/Monthly%20housing%20prices%20ANZ.jpg" alt="">
"Brisbane prices have fallen only modestly, while Adelaide prices have been broadly stable.
"Perth remains weak, but Hobart has been a standout.
They cite the election result, back the back RBA cash rate cuts and APRA loosening their lending serviceability have all contributed to the quickening of the end of the downturn.
"All of these factors have helped to shift sentiment from one of pervasive negativity to cautious optimism," Emmett and Timbrell said.
They warned however against a property boom that we saw from 2012 to 2017.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/Capital%20city%20prices%20v%20auction%20results%20ANZ.jpg" alt="">
"While the outlook definitely looks more positive, we do not expect a V-shaped recovery for prices," the report noted.
"Our view for some time has been that the tightening in credit has been the major driver of weakness, and while there has been some easing at the margin, changes to the use of Household Expenditure Measure (HEM) and the introduction of comprehensive credit reporting will offset some of the impact.
"Moreover, there is still a substantial amount of supply coming on stream, particularly in Sydney where the rental vacancy rate is at a 15-year high.
"This all suggests that the recovery is likely to be a fairly modest one.
 
 
 
 
 
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ANZ sees bottoming of the housing market in coming months

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EXPERT OBSERVER
The residential downturn is expected to reach bottom in most Australian markets by as early as the end of 2019 or early 2020 – much sooner than previously predicted.
In the February release of CBRE’s Real Estate Market Outlook 2019 report we identified the Banking Royal Commission and the federal election as the two ‘unknown’ factors influencing Australia’s residential market outlook.
Signs are now emerging that a controlled relaxation of credit constraints was being managed and forecast interest rates cuts would help stabilise property prices.
The strong likelihood of further rate cuts by the RBA over the remainder of 2019 is expected to boost the prospects of an earlier than anticipated market recovery.
The results of the Banking Royal Commission and federal election would provide some comfort across the remainder of the year, increasing the number of buyers looking to enter residential markets, providing stronger support for prices and bringing forward the cyclical market bottom into 2019.
The federal election’s unexpected result and the relaxation of certain credit market constraints have provided a catalyst for market change.
The Coalition victory means proposed taxation changes impacting investment property, including negative gearing and capital gains tax changes, are off the agenda, while first home buyers have received a modest additional assistance package. The residential markets in general are expected to continue working through their adjustment cycle, with credit availability remaining the key constraint at present.
The results of the Banking Royal Commission were creating a more sustainable credit environment underpinning residential markets, resulting in an arguable credit market overcorrection, with banks appearing to have adjusted their requirements to reflect ‘responsible lending’ practices.
CRAIG GODBER is the Head of Residential Research for CBRE
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j.ballantyne1990-6AQqhLzZaK

Slowing residential headwinds bring market bottom forward: CBRE's Craig Godber

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EXPERT OBSERVER
The negatives weighing on Australian residential property prices remain significant but the past few weeks have seen a number of developments that suggest that prices could bottom earlier and higher than we have been expecting.
The election outcome removed a key threat, but several other factors also help. 
The biggest home price fall in the last 40 years
According to CoreLogic data, capital city dwelling prices are down 9.7% from their September 2017 high, which is their worst decline in the last 40 years.
Of course, there is a huge range here with prices down from their top by 15% in Sydney, 11% in Melbourne, 28% in Darwin, 18% in Perth, 2% in Brisbane, less than 1% in Adelaide and at record highs in Canberra &amp; Hobart
Drags on house prices remain significant…
The decline in prices reflects a range of factors, most notably, a “correction” to the huge surge in prices into 2017 in Sydney and Melbourne that left prices very overvalued relative to income, rents and their long-term trend and affordability very poor and household debt very high. 
The end of the mining investment boom impacting prices in Perth and Darwin since their peak in 2014. 
 <img src="https://www.urban.com.au/images/2019/5/23/shallow%201.JPG" alt="">
A tightening in lending standards that initially cracked down on lending to investors but since 2017 moved on to interest only loans and then a more fundamental focus around credit quality which made it harder to get loans. 
A surge in the supply of units to record levels which has led to rising rental vacancy rates in Sydney. 
An 80% collapse in foreign demand. 
A big pool of interest only borrowers switching to principal and interest loans driving higher debt servicing costs. 
Price falls feeding on themselves – just as the boom in prices was accentuated by a fear of missing out (FOMO), falling prices are driving falling price expectations &amp; leading to reduced demand and FONGO (fear of not getting out). 
Investors started to factor in some probability that Labor would win the election which would have meant that negative gearing would be restricted and the capital gains tax discount halved – with estimates that this could have knocked another 5-10% from property prices.
The negatives weighing on the housing market remain significant. In particular, credit conditions are still tight with housing finance still falling with a brief bounce in February giving rise to further falls in March and the start-up of Comprehensive Credit Reporting which will see banks crack down on borrowers with multiple undeclared loans. And the pipeline of units to hit the Sydney and Melbourne markets is still huge as reflected in a still high crane count.
<img src="https://www.urban.com.au/images/2019/5/23/Shallow%202.JPG" alt="">
Meanwhile, auction clearance rates in Sydney and Melbourne have risen from their December lows but this looks largely seasonal with clearances still weak at pre-boom levels just above 50% as are sales volumes.
What’s more the number of capital cities seeing monthly price falls has gone from three out of eight a year ago to now seven out of eight. Given all these considerations we have been reluctant to read too much into the slowing in downwards momentum in monthly property price falls in recent months, particularly given that Perth and Darwin have seen several phases where price declines slowed then sped up again during their five-year slump. And Australian housing still remains expensive.
Real house prices have fallen from 27% above their long-term trend to 7% above now, but housing is still expensive compared to incomes and rents. Sydney home prices may have fallen 15% from their 2017 high but this was after a 75% gain since 2012 when wages rose just 14%. And household debt remains very high.
…but some positives are starting to creep in
However, while the drags remain significant several positives have become apparent over the last few weeks. First, financial support for first home buyers is now on the way with the Government’s First Home Loan Deposit (underwriting) Scheme.
On its own it’s not a game changer particularly given that it’s capped in terms of numbers, the borrowers will be taking on bigmortgages, which will come with a higher risk of negative equity, borrowers will still have to meet the tougher credit standards of recent times and it won’t kick in until next year.
That said, with the Federal budget looking even healthier and probably already in surplus thanks to the surging iron ore price, I suspect that the deposit scheme will morph into a far more attractive home buyer grant at some point. Second, APRA is looking to relax the 7% mortgage rate serviceability buffer.
This was inevitable given APRA’s move to focus on more fundamental credit standards and 7% is way out of whack with current interest rates. Again, on its own it’s not a game changer - it wasn’t the main driver of the property downturn and borrowers still have to meet tougher credit standards. And don’t forget that relaxation of the 10% cap on growth in investor loans and the 30% limit on interest only loans last year had little impact. But it may help at the margin.
Third, RBA Governor Lowe has all but confirmed that rate cuts are on the way with his comment that “at our meeting in two weeks’ time, we will consider the case for lower interest rates” after observing that it needs lower unemployment to get inflation back to target.
We expect 0.25% rate cuts in June and August and that the bulk of these will be passed on to borrowers given the recent reduction in bank funding costs. This would be a bit earlier than the August and November rate cuts we were assuming back in January when we last reviewed our house price forecasts.
House prices bottomed around three months after the first cuts in 2008 and 2011. It may take longer this time as debt is now much higher, rates are already very low and lending standards are tougher. But they will still help. Finally, the threat of changes to negative gearing and CGT is gone with Labor’s defeat.
So a big negative for property is gone. Given the difficulty in predicting the election our house price forecasts had allowed for a 50% probability (ie 50/50 Labor would win) of an 8% additional drag on prices in Sydney and Melbourne from this, ie 4%. In other cities it was a bit less. Now it’s zero and we need to remove this from our forecasts.
It’s also worth noting that we have not seen much evidence of panic selling or forced selling by the banks despite rising (but still low) levels of negative equity. Mortgage delinquency rates remain relatively low – even in Perth where prices have fallen 18% and unemployment has spiked.
<img src="https://www.urban.com.au/images/2019/5/23/shallow%203.JPG" alt="">
Meanwhile, strong population growth of around 1.6% pa is still driving strong underlying demand for housing at a time when supply is likely to start slowing again next year (given falling building approvals). And vacancy rates while very high in Darwin and above trend and rising in Sydney are actually benign to low in most capital cities and have collapsed in Perth.
So taking all these things together – some of which are minor but are still positive – it’s likely that we are going to see house prices bottom out a bit earlier and higher than we had expected.
What about the risk of higher unemployment?
The main risk is that Australia slides into a downwards spiral as the housing downturn - maybe in concert with a global slump - triggers a surge in unemployment which triggers rising defaults and a further plunge in house prices ultimately causing 30% plus falls in national property prices.
This is still a risk, but we remain of the view that it will be avoided. The housing cycle downturn will lead to the loss of around 60,000 jobs on our estimates. But there are a number of other things that will keep growth going – albeit at a slower pace than the RBA and Government are assuming – but which should be enough to stop unemployment surging beyond 6% and feeding back to become a bigger threat to house prices.
Infrastructure spending is strong, resources investment is close to the bottom, non-mining investment is looking healthier, tax cuts for low and middle income earners next quarter (whether paid upfront or backdated a few weeks later when passed by Parliament) will provide some help, fiscal stimulus is likely to be increased helped by the windfall from the surging iron ore price and rate cuts will provide some help fo households with a mortgage.
Yes, the trade war could spiral out of control – but this probably means more stimulus from China which provides an offset for global growth and explains why the iron ore price keeps rising. The other big risk is that investors decide to exit in the face of low net rental yields &amp; diminished capital growth expectations.
Revised house price forecasts
Our forecasts for national average prices have been for a price fall of 15% top to bottom (of which we have done 10% so far) and for Sydney and Melbourne it’s been for a price fall of 25% top to bottom (of which Sydney has already done 15% and Melbourne 11%) and for prices to bottom in 2020.
Reflecting the considerations discussed above – notably the removal of the threat of changes to negative gearing and capital gains tax, imminent rate cuts, assistance for first home buyers and APRA’s relaxation of the 7% serviceability test - we are revising the estimate for Sydney home prices to a 19% top to bottom fall, Melbourne to 15% top to bottom (partly because it has been holding up much better likely reflecting stronger population growth) and the national average to 12% top to bottom with prices likely to bottom by year end.
However, given still poor affordability, still very high debt debt levels, tighter lending standards and rising unemployment a quick return to boom time conditions is most unlikely.
More likely is a lengthy period of constrained range bound house prices after they bottom later this year (although I thought the same around 2011-12 – but things are different now!).
DR SHANE OLIVER Head of Investment Strategy and Chief Economist AMP Capital
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Australian house prices approaching the bottom, it looks shallow: Shane Oliver

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Darwin property owners seeking a sale in the first quarter of 2018 should recognise the city’s housing values have bottomed, according to leading real estate group, Raine &amp; Horne. 
“Investment firm AMP Capital l<a name="x__ednref1" href="x-webdoc://DC3B27C2-F28F-4666-9E47-11992185BC89#x__edn1" title=""></a>ast week indicated that the Darwin real estate market has bottomed, which means that local owners should feel less pressure to take the first offer from a buyer,” said Glenn Grantham, general manager at Raine &amp; Horne Darwin.
“The Darwin property market in fact reached the bottom of the price cycle a few months ago, yet there still seems to be many owners believing they must take the first offer that comes their way.”
The failure by owners to recognise that prices have bottomed can be as costly as paying too much at the top of the market cycle, advised Grantham.
“We have heard of instances where some owners at the end of 2017 were accepting auction bids that were considerably lower than the going market rate.
“With the Darwin property market now at the bottom of the cycle, it’s critical that owners work with real estate agents, such as Raine &amp; Horne, who will put their interests first, and secure them the best price possible.”
Markets such as apartments in central Darwin and houses in Palmerston are set to be major buying hotspots in 2018.
“If you recognise that Darwin has reached the bottom of the price cycle, then you need to look at the sub-markets where prices have been most affected,” said Mr Grantham.
“In this regard, it’s hard to go past apartments in the centre of Darwin and houses in Palmerston.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/17/darwin3.jpg" alt="">
The median 3-bedroom house price in Palmerston is $300,000 and mid-$400,00s for a four-bedroom house, according to Raine &amp; Horne Darwin.
“Inner city, two-bedroom apartments start from around $300,000, and this is the market where we’re seeing more investor activity,” said Mr Grantham.
The wet season which extends to April coincides with an influx of interstate workers moving to Darwin for government and defence work.
“Many of the transient workers buy a Darwin property to live in, before transitioning it to the rental market when they leave,” noted Mr Grantham
“Almost 90% of investors are from interstate who move to Darwin for short to medium periods and recognise its property market offers the prospect of immediate price affordability and long-term growth. 
“Workers from interstate often purchase Darwin properties with an understanding that when they leave, they’ll keep it as an investment asset that can produce growth and income yields significantly higher than the southern capitals.”
Raine &amp; Horne Darwin has 66 properties on their books.
Their priciest is an apartment in the <a href="https://www.realestate.com.au/property-apartment-nt-darwin+city-119146115" target="_blank">Evolution on Gardiner</a> building in the city which has views of the water (top and above).
Agents Glen Grantham and Dan Campbell are asking for $985,000 for the three bedroom, two bathroom apartment.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/17/darwin2.jpg" alt="">
Grantham and Campbell are also marketing an off the plan townhouse in the <a href="https://www.realestate.com.au/property-townhouse-nt-the+gardens-123840718" target="_blank">Terrace Gardens project</a> (above).
The three bedroom, two bathroom townhouse is priced at $825,000.
There has only been one Darwin sale by the Raine &amp; Horne Darwin team this year. That was an <a href="https://www.realestate.com.au/sold/property-apartment-nt-darwin+city-120654785" target="_blank">apartment in the Marrakai complex</a> (below) which sold for $350,000.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/17/marrakai.jpg" alt="">
The ninth level apartment with two bedrooms and two bathrooms last traded for $245,000 in 2000 and had been on the market for over two years.
It initially sought a price between $520,000 and $550,000.
A unit Raine &amp; Horne sold in Cullen Bay went back in price late last year when it sold for $485,000.
The two bedroom apartment overlooking Cullen Bay Marina last sold for $620,000 in 2008, and even $500,000 in 2007, still above its price today 10 years later.
 
 
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