For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Property Forecast

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EXPERT OBSERVATION
Within a country of the size and breadth of Australia, where hundreds of marketplaces function independently and simultaneously, it’s no surprise that real estate is a dynamic industry.
The past 12 months have been no exception: Sydney and Melbourne, the largest metropolitan markets, have softened after prolonged growth; activity in regional markets has grown as buyers seek affordability; investor activity has slowed; the banks tightened lending criteria in the wake of the Hayne Royal Commission; and state legislators moved to give tenants more rights in their rental properties.
So, what’s around the corner in 2019?
1) Polling points to a change in government in 2019.
As constituents did in the Wentworth by-election, analysts believe the public will again queue up at polling booths to punish the Coalition for an unstable year of leadership. But, focusing on property, Labor is taking to the election the same negative gearing and capital gains tax policies it proposed at the 2016 election.
Labor wants to restrict negative gearing to new builds and halve the current capital gains tax discount on investment properties.
Over the last three years, opponents to the policy have said it will turn investors away from property, jeopardising the availability of rental stock and making tenants compete for remaining rentals.
Research undertaken by LJ Hooker has shown negative gearing is an important part of the public’s investment strategy with a poll of 1,700 landlords indicating 31% would sell some or part of their property portfolio if negative gearing was abolished or restricted.
Labor’s policy originated in 2015 at the height of property growth in Sydney and Melbourne, where property values grew around 15% and 10% respectively, over a 12-month period.
But over the past year, both cities have seen prices decline by -8% in Sydney and -5% in Melbourne.
Additionally, removing negative gearing creates less demand for real estate-based employment.
The real estate industry would require fewer strata and property managers and rental properties require regular maintenance to be compliant and a fall in demand would impact trades people, handymen and other service providers.
Interfering with how people choose to invest while the market is self-correcting will could pose a major challenge for the wider market in 2019.
2) FHBs march continues
After several frustrating years on the sidelines, First Home Buyers (FHBs) have been a good news story of 2018.
Data from the Australian Bureau of Statistics (ABS) show FHB activity rose 14.9% in the year to October.
Indeed, not since 2009 have more FHBs been involved in the marketplace.
FHBs came to the fore as tighter lending restrictions – a product of the Royal Commission into Banking, Superannuation and Financial Services Industries - made it difficult for investors to compete for the same sort of entry level stock.
Softening house prices in the major metropolitan markets provided the best levels of affordability for FHBs for several years.
The final Hayne Commission report will be handed down in February, with a Federal budget and election following soon after.
Lenders will no doubt be chastised in the final Report, as they were in the Interim volume.
We expect investors will continue to feel the immediate fall-out from the Report which - along with tightened residential yields – will make it harder for them to maintain real estate within their wealth strategy.
Consequently, FHBs will have less competition at auctions around the country enabling more to make the leap from renting to owning.
FHBs are an important part of the real estate ‘food chain’. When FHBs are active, they enable second, third and fourth home buyers to sell their homes and upgrade. Expect to see FHBs out in force again in 2019.
3) Global forces and regulators
Buyers and investors have become accustomed to the monthly Reserve Board of Australia (RBA) meeting passing with no fanfare; it’s been 28 months (August 2016) since the Board changed the official cash rate.
However, the Central Bank’s influence goes only so far with several of the Big Four lifting their variable rates independent of the RBA’s decision making since then.
Global forces – Brexit, the controversial Trump presidency and the ambitions of China – will cause economic reverberations around the world at the same time that Central Banks are increasing cash rates. These two things will combine to push up the costs of financing for banks which will, in turn, increase mortgage expenses.
The Hayne Royal Commission will also conclude and release recommendations which may also see lending criteria tighten and borrowers jump through more hoops to get a mortgage.
4) Users tap the digital marketplace
Technology plays a greater role in our lives every year. 
In 2019, LJ Hooker will overturn the communication channels between the industry and customers. LJ Hooker has released the LJ Hooker Vendor App.
The app is an industry-first product, allowing sellers a birds-eye perspective of the selling process in real time.
The LJ Hooker Vendor App provides sellers with immediate information on how many people attended their open home; the number of impressions their property received online; and even tips on how to best present their property for buyers.
2019 will be the year in which real estate sets a new benchmark in this space.
5) Regional radar
Despite a correction in prices, buyers will continue to look outside the capital cities for better value.
Proximity to Melbourne’s corporate hub, mixed with the coastal lifestyle and its own transition from a blue collar to white collar economy has underpinned Geelong’s fortunes, with the median house price increasing 16.6% to $579,000 over the past 12 months.
The introduction of new infrastructure to support the Commonwealth Games on the Gold Coast this year saw the median house price rise to $655,000 in November, up from $627,000 at the same time last year, according to CoreLogic (a 4% increase), while the Sunshine Coast median increased 7.7%.
Also, government polices encouraging people to relocate to regional centres will increase demand in these areas.
For instance, the Andrews Government’s first home buyer grants encourages renters to make the transition to ownership by building in a regional area with a $20,000 incentive.
In NSW, Premier Gladys Berejiklian has flagged incentivising students which are a part of the state’s $11 billion international education sector to head to universities outside Sydney.
Markets to watch in 2019 will also include the resources regions. In 2018, the mining state of WA posted its first net population growth figures for several years. It had an immediate impact on the rental market in Perth with the Real Estate Institute of Western (REIWA) reporting a 3.4% vacancy rate in the September quarter - the best performance for the state’s investors since March 2014.
Perth is a launchpad for Fly-In, Fly-Out workers in the iron ore hub of the Pilbara. The Pilbara’s median house price has increased 4.3% to October ($240,000). Whilst it has struggled since the mining boom (the median house price has dropped 69.2% over the last five years) the local employment opportunities bode well for a continued property recovery in 2019.
Central Queensland was likewise a former darling for property investors with areas like Moranbah and Dysart returning massive rental returns as mining propelled the Queensland economy. Production is starting up again and the wider Mackay market posted a 12.6% increase in its median house price to $310,000 this year.
Consequently, many regional markets will outperform their capital city counterparts over 2019.
Mathew Tiller is the head of research at LJ Hooker.
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j.ballantyne1990-6AQqhLzZaK

Five 2019 property predictions from LJ Hooker's head of research Mathew Tiller

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There are three leading economists who think that the Reserve Bank will be cutting interest rates this year; AMP Capital's Shane Oliver, Industry Super's Stephen Anthony, and Market Economics' Stephen Koukoulas.
"The Reserve Bank is conflicted. It knows the economy is slowing and that risks are building in asset markets, especially east coast property," Mr Anthony told Nine Entertainment.
"But should that be the official forecast? It also knows that if it can 'manage' sentiment it may also contribute to a softening of activity rather than a bust, especially via property prices and dwelling investment."
It was more likely we had entered "a secular bear market phase" with respect to asset prices, Mr Anthony suggested.
"With the background being declining residential house prices, especially in Sydney and Melbourne, the wealth effects will be significant, likely reducing household consumption growth to at or below 2 per cent in 2019."
<a href="https://www.propertyobserver.com.au/subscribe" target="_blank"><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/2019/1/1/Strip%20ad%20keep%20up%20in%202019.jpg" alt=""></a>
Dr Oliver believes the Reserve Bank's bias is "still slightly hawkish" in that "it has not turned dovish yet but it is getting less hawkish and bit more open to the view that the next move in rates may not be up".
Nine Entertainment did a poll of 38 economists on the direction of the next interest rate move and 35 advised the Reserve Bank will likely put them up in 2020.
The consensus was that the RBA would raise the official cash rate to 1.75 percent by June 2020.
Eighteen months ago most of them were forecasting a rate rise in 2018. Six months later, predictions moved to 2019. Now the general consensus is rates won't go up until 2020 - with some even calling out to 2021.
AMP chief economist Shane Oliver arrived at his view <a href="/expert-insights/finance/rba-to-cut-rates-second-half-of-next-year-shane-oliver">a few weeks back</a> after the September quarter Australian GDP figures (which came in December) showed the rate of growth had slowed to an annualised 2.8 per cent.
Oliver reasons that the RBA won't move to lower the rate in any attempt to head off further falls in the property market but to help households that carry a mortgage.
But the reversal in house values over the past year has promoted a negative wealth effect which is more likely to result in consumers spending less.
To have much impact the RBA would need to cut twice so Oliver said the official cash rate might go down to 1 percent given the slump in the major housing markets of Sydney and Melbourne. 
The Reserve Bank made a policy error in pursuing stability in interest rates in the belief this would encourage confidence, Mr Koukoulas argued.
"The very slight change in tone in recent times is a belated realisation of this error and if, as seems likely, inflation remains outside its target range and its rosy forecasts for growth and unemployment fall flat, it will, pragmatically, change tack."
The wealth effect and its relationship with consumption growth also had been played down, he said, "at its peril".
The RBA will announce its initial 2019 monetary policy decision when the board convenes next month.
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Why the RBA will cut interest rates in 2019

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Short term weakness in 2019 house prices seems assured as the tight credit conditions and restrictive monetary policy settings constrain demand, according to economist Stephen Koukoulas.
"Nationwide prices may drop 5 per cent by the September quarter, with sharper falls likely in Sydney and Melbourne," he forecasts.
"Late 2019 will be the likely trough in house prices as easier monetary policy unfolds, there is a step up from previously frozen out first home buyers and the strength in demographic demand as fresh supply falters in line with the slippage in building approvals are all likely to put a floor under prices.
His call envisages a 5 per cent drop over first half of 2019 and then a 2 per cent rise in the second half.
"2020 might see a 3 per cent house price lift," he speculates.
<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/2019/1/1/Strip%20ad%20keep%20up%20in%202019.jpg" alt="">
He recently wrote on <a href="https://au.finance.yahoo.com/news/dont-look-now-almost-certainly-poorer-year-ago-211934583" target="_blank">Yahoo Finance</a> that if you are a home owner in Sydney, Melbourne, Perth or Darwin and if you have a superannuation nest egg, the odds are you are less wealthy today than you were a year or two ago.
He noted the Australian stock market, where the bulk of superannuation assets are likely to be invested, had slumped 11 per cent since August, reducing the value of stocks by around $200 billion. 
"At the same time, home owners in Sydney, Melbourne, Perth and Darwin are seeing the value of their homes getting crunched.
"Here are some examples. 
"A house in Sydney that was $1 million in July 2017 is now worth around $890,000, a loss of $110,000 in 18 months.
"In Melbourne, a house that was $800,000 in early 2018 has lost around $50,000 in value, to now be worth around $750,000.
"In Perth, the situation is more parlous. Prices have dropped 15 per cent since late 2014, meaning that a property that was $600,000 in 2014-15 has lost close to $100,000 in value to be worth just over $500,000.
"Ouch!"
He suggests as the loss of wealth filters through to more and more householders, or perhaps when they see the house around the corner not sell for months and when if finally does, the price is a shock, consumers will likely scale back their spending, rebuild savings and be generally cautious in their approach to spending in 2019.
"This will undermine growth in the economy."
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Stephen Koukoulas forecasts national house prices to begin small rise in late 2019

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Australia's financial and banking regulators should be prepared for a hard landing in the housing market, according to the Organisation for Economic Co-operation and Development.
It says the housing market poses a risk to the nation's economic growth going forward.
But the Paris-based group said in a report released on Monday that the market is on track for a soft landing.
"Financial supervisors and bank regulators should be prepared in the event of a hard landing in the housing market," the report states.
The agency suggests Australia's long span of economic growth - 27 consecutive years - was likely to continue.
"Life is good, with high levels of well being, including health, and education," the group said in its latest Australian economic survey.
"Robust economic growth is set to continue," it said.
"High indebtedness of households remains a risk.
"Unexpectedly large corrections in house prices could reduce household wealth and consumption, and impact the construction sector.
"New capacity coming on stream in the resource sector will support exports and business investment will pick up.
"Growth of wages and prices will rise gradually, while the unemployment rate will edge lower.
"Output growth will moderate slightly in 2020 as capacity constraints tighten, export-market growth slows and households become less willing to draw down savings to fuel consumption.
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<div class="column">
"Monetary policy tightening will be required as the pick-up in wages and prices gathers pace. 
"Risks from the housing market and high household indebtedness warrant continued vigilance. 
"The government is projected to reach a budget surplus in 2019, giving sufficient room to support activity and protect the incomes of vulnerable groups in the event of an unexpected downturn."
</div>
</div>
</div>
Regulators should also turn their attention to ensuring accountability, transparency and competition among financial institutions after the banking royal commission, the OECD has recommended.
Aside from the housing market, the agency said risks to the growth outlook include uncertainty around export demand - due to rebalancing in China - and the potential escalation of global trade tensions.
Challenges in boosting productivity - which involves increasing the value derived from the work and resources put into the economy - are also a risk.
The OECD, which has 36 member nations, has called for interest rates to be gradually lifted as growth continues and inflation slowly rises.
The Reserve Bank of Australia has kept the official cash rate at its record low of 1.5 per cent since August 2016.
The OECD said if the economy stays robust and avoided a downturn, the RBA should raise the overnight cash rate.
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Property market on track for soft landing in 2019, but regulators should be prepared incase of hard landing: OECD

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<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/2018/11/21/700x425%20price%20falls%20or%20crush.jpg" alt="">
2018 has been a difficult year in some of Australia's major property markets, however it has allowed other areas to thrive.
The outlook for Sydney and Melbourne heading into 2019 isn't that optimist from a vendors' perspective, but buyers might be happier if they secure finance, according to a number of economists.
First home buyers are back in the driving seat in certain areas across the county as prices continue to decline.
Enjoy our free e-book on how the property market has faired in 2018 and what the forecasts are for 2019.
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po-LsXgBTHBmX

Free eBook: Orderly price falls or Australian housing market crash? The 2019 forecasts from the experts

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One of the world's largest fund management groups has disputed suggestions about a collapse of the Australian residential property market.
Vanguard, which has $7 trillion under management globally, claims slowing residential property market is unlikely to turn into a sharp downturn that could derail economic growth. 
Vanguard says there is only a low risk of a sharp correction.
The US funds house conducted an in-depth analysis of four of the world’s largest and most developed housing markets.
It found that Australia and Canada stood out because of their high cost of housing and high levels of household debt, even compared to the US and Britain.
The house price to income ratio in Australia for the quartile is the highest ever, while household debt to GDP is ­approaching an all-time high of 122%.
Vanguard determined that Australia’s housing market rally had “exceeded expectations” ­beyond traditional measures of housing demand versus supply, interest rates and foreign investment.
However, the fund manager’s economists considered there was a low risk of falls causing a ­recession in all markets studied, including Australia.
“A big unknown is how households deal with their high debt given the slow income growth in Australia, however, and this will be a large factor in what transpires in Australia’s housing market,” Vanguard economist Matthew Tufano said.
“However, the large pipeline of housing — mostly apartments — coming into the market in Australia could effect a more gradual moderation in house prices, rather than a sharp ­correction.”
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Property slowdown to be short and shallow, not sharp: Vangaurd

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Macquarie Group now forecasts the current downturn in Sydney's housing market will be larger than it first anticipated, with price declines of between 15 per cent to 20 per cent likely.
The decline will wipe out price gains secured since 2015, putting buyers over the last three years into negative equity.
The report suggests the falls to date have so far "been orderly with little evidence of distressed selling." But it suggests the fear of buying too early by buyers waiting in the wings will send the market into deeper decline.
The report, headed Healthy Correction or Bruising Bust? says without any significant economic downturn the medium term, most likely scenario was several years of flat prices after the fall.
<div class="_1665V undefined">“In June, we revised our expectations to be for a 4 to 6 per cent peak-to-trough fall in national housing prices and for a decline of around 10 per cent in Sydney,” wrote Justin Fabo and Ric Deverell, members of Macquarie Research’s economics team.</div>
<div class="_1665V undefined"> </div>
<div class="_1665V undefined">“Fast forward to now and it’s becoming clear that the extent of price declines is likely to be even larger."</div>
<div class="_1665V undefined"> </div>
<div class="_1lC_G"><img src="https://www.urban.com.au/images/2018/11/8/Graph%202.JPG" alt=""></div>
<div class="_1lC_G"> </div>
<div class="_1lC_G">“The overall decline is now likely to approach 10 per cent… the largest peak-to-trough decline in nominal housing prices in almost 40 years.”</div>
<div class="_1lC_G"> </div>
<div class="_1665V undefined">
<div class="_1lwW_"><source media="(min-width: 1024px)" srcset="https://static.ffx.io/images/$zoom_0.43%2C$multiply_1%2C$ratio_1.776846%2C$width_1059%2C$x_0%2C$y_0/t_crop_custom/w_780/t_sharpen%2Cq_auto%2Cf_auto/663c0ff658bef82614c27caf69134bce6106e9e9"></source></div>
The report noted Sydney average dwelling prices had fallen 9 per cent already and were "currently falling at annualised monthly rates of roughly 10 per cent."</div>
<div class="_1665V undefined"> </div>
<div class="_1ysFk">
<div class="_1665V undefined">“This suggests that Sydney and Melbourne housing prices are now more likely to fall by 15 to 20 per cent from the peak."It acknowledged the fall in Sydney prices "is already one of the largest on record.”</div>
<div class="_1665V undefined"> </div>
<div class="_1lC_G">“Because of the extent of the rise in Sydney and Melbourne housing prices in recent years, even a 20 per cent peak-to-trough decline would merely take prices back to April/May 2015 levels,” they say.</div>
<div class="_1lC_G"> </div>
<div class="_1lC_G"><img src="https://www.urban.com.au/images/2018/11/8/Graph%203.JPG" alt=""></div>
</div>
<div class="_1lC_G"> </div>
<div class="_1lC_G">"With the benefit of hindsight it is now clear that the housing price correction will be deeper. </div>
<div class="_1lC_G"> </div>
<div class="_1lC_G">"Investor demand has moderated significantly amid price falls, and negative sentiment is weighing on both owner-occupier demand for housing (fear of buying too early) and the availability of credit as banks more rigorously apply lending criteria in the face of the risks associated with the Royal Commission (fear of being accused of irresponsible lending)," Fabo and Deverell noted.</div>
They argued recent concerns over a potential credit crunch and Labor's negative gearing potential impact are overblown.
"A significant curtailment of the availability of credit should see declining average loan sizes in addition to weak aggregate lending. We are seeing neither of those." they say.
It also suggest the risk posed by the proposed changes to negative gearing and capital gains tax from any Labor Government "will likely be small"
This article was first published in the Daily Telegraph.
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jchancellor-FAypfDUnLy

Fear of buying too early will send property downturn deeper: Macquarie

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EXPERT OBSERVER
Here’s the hardest thing for real estate consumers doing research: who do you believe?
It’s hard to know who’s worth listening to and who is not. There are so many people pumping out press releases, writing commentary pieces and pontificating on television about our housing markets – and only a small fraction of this mass of white noise is worthy of your attention.
But there are markers which expose the pretenders – clues which allows you to separate the genuine experts.
Here’s how to identify the pontificators you should ignore:-
1. They discuss Australian real estate as a single market
The Federal Treasurer Josh Frydenburg exposed himself as a pretender in a recent column published in The Australian. His opening paragraph stated, as a fact: “Prices in our major capital cities have fallen for 12 consecutive months …” 
In doing so, one of our most senior federal politicians perpetuated one of the worst pieces of misinformation currently out there.
Frydenburg’s statement is outrageous misinformation. One source that is often quoted, CoreLogic, has the average result for the eight capital cities as a negative figure, but at the same time records that nine of the 14 major market jurisdictions (eight capital cities and six regional areas) have prices higher than a year ago.
Other research sources have different figures. SQM Research, for example, records the national average results as a 1.7 percent rise in annual terms, while the latest ABS figures record quarterly price rises in five of the eight capital cities.
So the claim that prices have been falling everywhere for 12 months is unsupported by any of the research evidence. The Federal Treasurer is simply parroting misleading media headlines.
But Frydenberg is not alone in his ignorance. Indeed, he has lots of company, when it comes to extrapolating the Sydney/Melbourne situation into a national downturn. Economists, in particular, are prone to misinforming Australians by discussing the nation as a single market and often getting their analysis wrong by generalising about prices.
We’d all be better off if they simply shut up.
Contrast that with these recent comments from someone with real credentials, veteran adviser and commentator Noel Whittaker:
“The problem is that most media commentary focuses on that elusive animal they call the ‘property market’. We might be told that Australian property is overheated, or that the property market has fallen by 5.6 per cent in the last year (in Sydney), or that Perth values have fallen by 12.6 per cent after peaking in 2014.
“But the fact is there is no such a thing as a single property market – not for Australia, not even for a single capital city – there are myriad property markets all doing their own thing. How can you compare a townhouse in Cairns with a mansion in Point Piper? All over Australia some markets may be rising, other markets may be falling, and some may be flat.”
Whittaker has encapsulated exactly how I see it.
Next time you hear/read a commentator discussing “the Australian property market” or claiming that “Australian house prices have fallen 5 percent”, turn the page or change channels because the talking head/writer is a charlatan pretending to be an expert.
2. They’re not real estate specialists
The problem with Josh Frydenberg is that, while he may prove to be a capable Treasurer, he’s not a real estate expert. Residential property is not his specialty.
This is the core problem with many of the prolific pontificators. Economists frequently make the mistake of thinking they can extrapolate their financial knowledge and economic theories to the real estate market. After 35 years as a real estate specialist, I’m still waiting to encounter an economist who understands the peculiar dynamics of real estate markets.
Last week I wrote about my Top 20 Worst Predictions About Australian Real Estate. Most of the people who made that list by getting their predictions horribly wrong were economists who strayed outside their area of speciality.
True real estate experts who are worthy of your attention are those who are genuine specialists for whom researching markets is a daily routine. They’re also people who don’t treat real estate data as a vehicle for free publicity, but as a means to inform the public by presenting well-considered and balanced analysis.
They include people like Louis Christopher of SQM Research and Simon Pressley of Propertyology. These are genuine experts who specialise in residential property. I don’t suggest they’re right about everything but they have earned the right to be heard by being real, independent, devoted experts.
3. They believe it’s all about interest rates
Most of the pretenders talk about the level of interest rates as the prime determinant of real estate markets and their cycles.
Ask your average economist why Sydney boomed and they’ll tell you it was “record low interest rates”.
This is a ridiculous for several reasons. If the level of interest rates was the catalyst, why no boom in Brisbane? Or Adelaide, Canberra and most of regional Australia. Why have prices fallen in Perth and Darwin during this period of record low rates?
It’s false logic to assume, as many economists do, that low rates = boom and rising rates = downturn. The two big nationwide property booms of the past 30 years (late Eighties and early Noughties) both occurred during periods of high and rising interest rates.
The end of the Sydney/Melbourne booms occurred with interest rates still at these very low levels.
The profile of the person you should ignore is an economist who rants about “the Australian property market” in the context of national factors like interest rates and APRA decisions – and generally tends to feel that everything that happens in real estate markets is an outrage because it doesn’t fit with their economic models of what prices should do and where values should be.
The genuine expert will discuss individual markets, include different sub-markets within each of our major cities, and will understand the fundamental importance of the underlying local economies, influenced by population trends, infrastructure spending, jobs creation and supply-demand factors.
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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terryryder-YECXbqmri2

How to identify a misinformed property forecaster: Hotspotting's Terry Ryder

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EXPERT OBSERVER
Two years ago I researched media predictions about residential property and compared the forecasts with subsequent outcomes.
It showed the remarkably bad track record of spruikers, economists and attention-seekers in forecasting what will occur in our markets nationwide. 
Over the past 15 years or so, it’s become trendy to make doomsday forecasts about real estate. A popular number is 40 percent - i.e. the standard scary prediction is a 40 percent drop in our property values, usually tipped to take place in the next 12 months.
Every single one of these forecasts has been proven spectacularly wrong – not surprisingly, because most of them have been fanciful in the extreme and I’m quite certain that the forecasters themselves did not believe what they were saying. The goal has been to achieve some quick and easy publicity. 
Out of this research exercise I compiled a list entitled “Top 20 worst predictions about Australian property markets”.
No.1 on this list was a US spruiker called Jordan Wirsz (don’t feel bad if you’ve never heard of him) who visited Australia in 2012 and forecast a 60 percent fall in home values in a “bloodbath” to take place in the next year. He also tipped that land values would decline 90 percent.
Can you imagine that? He was claiming that our residential land would be virtually worthless. 
Nothing remotely like that has ever occurred in the history of planet Earth and it’s difficult to comprehend why anyone would think it could happen in Australia.
The most amazing thing was that Australian media gave these predictions credibility and gave the touring spruiker exactly what he wanted – lots of free publicity.
What followed this prediction was five years of major price increases in our two biggest cities and mostly steady markets in the rest of Australia.
Another US pontificator, Harry S Dent, has visited Australia several times in the past seven years and each time – including in 2011 and 2014 – has warned that our property prices would crash in the next 12 months.
Each time Australian media has treated him as a credible commentator, with oodles of free profile, notwithstanding his growing track record of getting his forecasts about our real estate markets utterly wrong. I’m sure that next time he visits the same will happen again.
My Top 20 list also includes local economists who have made similar predictions within specific time frames, with the same success rate.
Some have claimed that our homes are over-valued according to their favoured economic model and therefore prices must fall. Others have stated that, back in the days of rising interest rates, that the higher cost of money would cause a collapse of property values.
The head of one of our major banks said in 2011 that the sovereign debt crisis in Europe would force down our property values, only to be followed by several years of strong price rises.
One high-profile and much-quoted Australian economist declared in 2005 that there would be no growth in our home values for the next 10 years. Ouch.
Also on the Top 20 list are commentators who rushed – in 2013 and 2014 - to be the first to declare the end of the price boom in Sydney and Melbourne. 
One of them was a senior official at the Reserve Bank, while another was a Morgan Stanley analyst who famously said, about three years too early: “If you’re an investor, you’ve missed the boat.”
So now we have the notorious 60 Minutes debacle, with yet another forecast of property values falling 40 percent, based on nothing but a pre-conceived notion to boost ratings.
I note that virtually every independent commentator who has reacted on the 60 Minutes program has said that the forecast scenario was highly unlikely or plain silly. Even the key analysts featured on the Channel 9 program have claimed that their views were misrepresented through selective editing. I spoke to one of those who was featured on the program and he was horrified at the outcome.
I was approached by 60 Minutes in mid-August to take part in the program. But they dropped the planned interview when I told them I disagreed with their basic premise of collapsing property markets.
This is not how journalism is meant to work. In true journalism, you do your research and conduct your interviews - and then you come to some conclusions and decide your headline. 60 Minutes did it backwards by deciding the headline and then seeking comment that supported it.
I complained to the ABC television program Media Watch and last week they did a segment pointing out the many flaws in the 60 Minutes segment.
I’m sure the 60 Minutes program will feature prominently next time I update my Top 20 Worst Predictions list, with the same level of success as the many doomsday forecasters who have preceded them.
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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The 20 worst crash predictions about the Australian property market: Hotspotting's Terry Ryder

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The NSW Government’s unveiling of its 20-year vision for a thriving regional NSW spells good news for the property market, RiskWise Property Research CEO Doron Peleg said.
Peleg says anyone seeking long-term capital growth would be wise to investigate buying property in the region especially given an extra 185,000 new residents were expected, on top of the population growth already predicted, by 2038. 
The Government’s 20-year vision focuses on connectivity and water security to industry and community leaders in Bathurst in the State’s Central West and sets out a framework for investment that will guide the allocation of resources from the new $4.2 billion Snowy Hydro Legacy Fund.
The goal is to promote regional development and job creation, unlocking the potential in the region by providing the infrastructure, the services and the support it needs to thrive. 
According to Premier Gladys Berejiklian, at the centre will be “a new generation of nation-building projects enabled by the $4.2 billion Snowy Hydro Legacy Fund” creating an additional 260,000 new jobs between now and 2038.
The vision also brings together the NSW Government’s long-term planning strategies including the Future Transport Strategy 2056 and the NSW State Infrastructure Strategy, with plans to attract an extra 185,000 new residents. 
Studies and planning works will also be undertaken for an inland port and investment precinct in Parkes, known as The Parkes National Logistics Hub, which is expected to attract major employers, drive local economies and create jobs across the Central West.
Peleg said population growth, job creation, an improved economy and good infrastructure would draw more people to the area and therefore increase demand for property.
"Also regional NSW has become a more attractive property destination," he said.
"While the Sydney market has cooled - and in some areas prices have actually dropped - the city is still ranked 9th in the world when it comes to poor housing affordability of family suitable units.
"The gap between the household income people need to buy a Sydney inner-city unit of just 105sqm, suitable for families, to the income they really have is so huge a household with the median income would really struggle to afford one.
"It comes down to undersupply of suitable dwellings that force the price up and make them completely unaffordable. But that is not the case in regional NSW where house sizes and blocks are more than adequate for a growing family."
For example, in Bathurst the median house price is $422,949 and for a unit $301,644 compared to Greater Sydney which has a median house price of $1,100,355 and a median unit price of $768,142.
Bathurst also enjoys a house price-to-income ratio of 6.2 which is well below that of Greater Sydney (at 12.1) and the rest of Australia (8.4).
In Parkes, the median house price is $251,353 and the unit price $227,832, with a house price-to-income ratio of 4.4.
Peleg said there was also an increasing trend of ‘mobile professionals’ who were prepared to work from home to maximise lifestyle and avoid the daily city commute.
"The bottomline is regional NSW is a great alternative location to Sydney for those looking for affordable housing with the long-term goal of solid capital growth," he concluded.
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