A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

Joel Robinson

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.

In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.

The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.

The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments

The site currently comprises three commercial properties.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" />

The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.

The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" />

A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.

Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.

Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.

First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

<a href="https://www.apartments.com.au/new-apartments/otium-parkdale-123-125-como-parade-east-parkdale-vic-3195">Otium Parkdale</a>, the 13-residence boutique development by&nbsp;<a href="https://www.apartments.com.au/developers/huxtable-property">Huxtable Property</a>, has entered its final stages of delivery, with completion expected within the coming month and more than half of the residences sold.

The Como Parade East project is nearing the finish line at a time when opportunities to purchase new apartments in <a href="https://www.apartments.com.au/developments/parkdale-vic-3195">Parkdale</a> remain exceptionally limited. Fewer than 10 per cent of dwellings in the bayside suburb are apartments, making developments like Otium a relatively rare addition to a market traditionally dominated by detached housing.

[smartcode_project:default project_id=134974 project_image_fid=5427]

The three-level development comprises 13 residences, including ten two-bedroom apartments and three larger three-bedroom homes, all positioned above a secure basement car park.

Designed by <a href="https://www.apartments.com.au/architects/almeida-architects">Almeida Architects</a> with a strong connection to its coastal surroundings, Otium combines red brick, exposed concrete and dark metal detailing with integrated landscaping and greenery. Expansive glazing, generous balconies and terraces have been incorporated throughout the design to maximise natural light and reinforce indoor-outdoor living.

Inside, the residences feature engineered European oak flooring, natural and reconstituted stone benchtops, Bosch kitchen appliances, ducted heating and cooling, lift access and secure entry systems. The larger three-bedroom residences on the upper level have been designed with house-like proportions, while the two-bedroom apartments prioritise functionality, flexibility and low-maintenance living.

[smartcode_project:default project_id=134974 project_image_fid=5421]

The project is now in its final stages, with <a href="https://www.apartments.com.au/builders/labco">Labco</a> completing the remaining landscaping and external finishing works following the completion of the residences' interiors.

Otium's location within the heart of Parkdale continues to underpin its appeal. Residents will be just steps from local cafés, restaurants, shops and the newly elevated Parkdale Station, while the beach is less than a kilometre away.

With the project tracking ahead of schedule, buyers can currently secure a residence with a five per cent deposit and benefit from settlement terms of up to eight months. The advanced stage of construction also provides buyers with the opportunity to walk through the near-complete residences and experience the quality and finishes firsthand ahead of completion.

[smartcode_project_cta:default project_id=134974]

Otium Parkdale enters final month before completion as rare apartment opportunity nears sellout

A new boutique apartment development is entering the market in <a href="https://www.apartments.com.au/developments/chermside-qld-4032">Chermside</a>, with Brisbane-based developer <a href="https://www.apartments.com.au/developers/ausdev">Ausdev</a> bringing 33 residences to a well-connected pocket of Brisbane's north.

<a href="https://www.apartments.com.au/new-apartments/parkdrive-apartments-chermside-25-sammells-drive-chermside-qld-4032">Parkdrive Apartments</a>, at 25 Sammells Drive, will comprise a mix of one- and two-bedroom residences positioned within walking distance of Westfield Chermside, The Prince Charles Hospital, and Bradbury Park.

Established in 1989, Ausdev has a long-standing presence across both development and construction, with Parkdrive Apartments representing its latest residential project in Brisbane's northern suburbs.

[smartcode_project:default project_id=152125 project_image_fid=363778]

The development has been designed around open-plan living and natural light, with residences featuring stone benchtops, timber cabinetry, BOSCH appliances, and private balconies that extend the living areas outdoors.

Kitchens are positioned as the centrepiece of the homes, incorporating natural material palettes and integrated appliances, while bathrooms have been designed with a focus on functionality and understated finishes.

Residents will have access to a communal barbecue and entertaining area on Level 3, providing shared outdoor space within the development. Secure parking and lift access are also incorporated into the building.

The project will deliver a limited collection of 33 apartments, with one-bedroom residences priced from $749,000.

[smartcode_project:default project_id=152125 project_image_fid=363782]

Beyond the building itself, the location places residents within easy reach of several of Chermside's key amenities. Bradbury Park is around 350 metres away, while Westfield Chermside is approximately 1.3 kilometres from the site. The Prince Charles Hospital is located within 750 metres, and the Chermside Bus Interchange is around 1.5 kilometres away, providing connections across Brisbane.

Parkdrive Apartments adds to the growing residential pipeline in Chermside, a suburb that continues to evolve as a major retail, healthcare, and transport hub for Brisbane's north.

[smartcode_project_cta:default project_id=152125]

Ausdev introduces boutique Parkdrive Apartments to Chermside's growing centre

<a href="https://www.apartments.com.au/developers/skymark-group">Skymark</a>'s boutique Cronulla development Solis has secured a 10-year Latent Defects Insurance policy through Resilience Insurance, providing buyers of the 16-residence building on Ewos Parade with structural and waterproofing protection that extends a decade beyond the building's completion.

Currently under construction and due for completion in late 2027, <a href="https://www.apartments.com.au/new-apartments/solis-cronulla-8-ewos-parade-cronulla-nsw-2230">Solis</a> is one of a small number of new developments in the Sutherland Shire to carry Resilience LDI coverage, a distinction that carries increasing weight as buyer confidence in the off-the-plan sector continues to be shaped by how developers stand behind their product.

Latent Defects Insurance, which entered the Australian market in 2022 when Resilience Insurance was approved to offer the cover, protects buyers against major structural or waterproofing defects for ten years post-completion. Unlike traditional statutory warranties, it operates as a first-resort policy, if a covered defect arises, the insurer responds directly, without the buyer needing to pursue the builder or developer through a lengthy claims process.

Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.

"The overarching feedback from prospective buyers in the new development space is that they want more confidence and assurances around the quality of the build," Nugent says.

"Resilience Insurance Latent Defects Insurance not only gives them complete peace of mind for 10 years, but it shows the developer they are buying from is standing by their product."

[smartcode_project:default project_id=150499 project_image_fid=370898]

For Solis, the Resilience LDI policy adds a meaningful layer of accountability to an already considered project. The development comprises nine two-bedroom and seven three-bedroom residences, including one dual-level three-bedroom apartment, across a five-storey building on Ewos Parade, positioned between Shelly Beach and South Cronulla.

Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;

All 16 residences include at least one balcony or courtyard, and select apartments on the upper floors feature bar areas and secondary flexible living spaces.

Hiba Sander, Managing Director of Skymark, says Solis offers a rare balance, nestled between the quiet beauty of secluded beaches and the lively charm of South Cronulla's esplanade.

"It's a place to choose your pace and live gracefully, seaside'," Sander says.

[smartcode_project:default project_id=150499 project_image_fid=370900]

The architecture, designed by <a href="https://www.apartments.com.au/architects/ida-design-group">IDA Design Group</a>'s Michael Trinh, draws from the natural erosion patterns of <a href="https://www.apartments.com.au/developments/cronulla-nsw-2230">Cronulla</a>'s sandstone headlands, translating the organic forms of the coastline into soft curves, pavilion-style massing, and a material palette chosen for longevity in a salt-tinged environment.&nbsp;

Textured natural stone, soft renders, and timber-look battens reference the tones of the surrounding cliffs, while the building has been oriented to maximise natural light and passive ventilation, with primary living spaces facing north and east to capture morning sun and sea breezes.

"At Solis, our aim was to create architecture that feels quietly confident, grounded in natural materials like stone and timber, and elevated by light and landscape," Trinh says.&nbsp;

"The buildings are designed to sit gently within their coastal surrounds, with expansive glazing and abundant greenery creating a seamless dialogue between inside and out."

[smartcode_project:default project_id=150499 project_image_fid=370897]

Interiors by <a href="https://www.apartments.com.au/architects/hot-black">Hot Black</a> carry the same material language through to every room. Kitchens feature integrated Gaggenau appliances, sculpted stone benchtops, and Lo &amp; Co joinery, while bathrooms feature natural stone, timber, and brushed metal finishes.&nbsp;

Hot Black Founder and Design Director Sophie Safrin describes the intent as one of considered restraint: "At Solis, every detail has been thoughtfully considered to create a timeless coastal retreat, calm, refined, and effortlessly liveable. From natural finishes to seamless indoor-outdoor flow, Solis offers a quiet elegance that's deeply connected to its surroundings.

The landscape, designed by Julian Brady of <a href="https://www.apartments.com.au/landscape-architect/sitedesignstudios">Site Design Studios</a>, treats green space as an integral part of the resident experience rather than an afterthought.&nbsp;

"Gentle curves and layered native plantings mirror the ebb and flow of the ocean," Julian Brady says, "creating a serene connection between architecture and place."&nbsp;

Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.

[smartcode_project:default project_id=150499 project_image_fid=370899]

Skymark has an established track record in the Sutherland Shire, with a portfolio spanning Cronulla, Woolooware and Burraneer that includes Isla, Sylva, Bask, Shells, Sula and Mist. Securing LDI on Solis reflects a broader shift in how the developer is positioning its buildings to buyers, at a time when Resilience Insurance expects the policy to become mandatory in New South Wales by 2028.

Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.

[smartcode_project_cta:default project_id=150499]

Skymark takes out 10-year Resilience Insurance LDI at Solis Cronulla

Property Forecast

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Martin North, the founder at Digital Financial Analytics has declined to take up the bet proposed by economist Stephen Koukoulas over his 45 percent house price fall forecast possibility.
<a href="/news/45-percent-housing-price-collapse-was-least-likely-scenario-martin-norths-60-minutes-postscript">The forecast</a> was aired on Sunday night's 60 Minutes.
Koukoulas, possibly channelling Rory Robertson's infamous bet with Steve Keen, <a href="/news/stephen-koukoulas-challenges-dfas-martin-north-over-45-percent-property-price-collapse-forecast">made the offer of a bet to North yesterday</a>. 
North quickly advised he's not a betting man, "<a href="http://digitalfinanceanalytics.com/blog/why-i-am-not-betting-with-the-kouk/" target="_blank">ever</a>."
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/18/north2.jpg" alt=""> North is a data scientist.
Although heavily edited on the Channel 9 show, North contemplated house prices falling by up to 45 percent given one scary scenario.
Koukoulas, noting it was gripping viewing and a quite fantastic story, suggested forecasts without any skin in the game are often compromised.
"It is easy to construct a headline grabbing forecast for a significant move in markets, including house prices for example, but when they fade into oblivion, there are no implications for the forecaster.
"Forecasts really only has validity if the forecaster has an interest in the forecast being correct.
"In other words, would the forecaster really make that forecast if they put their money where their mouth is?
"To that end, I would like to offer you the following wager:
"I will offer 6 to 1 ($15,000 to $2,500) that Sydney or Melbourne or national wide house prices will not fall by more than 35 per cent from their peak at any stage before and up to the December quarter 2021."
He suggested the measure be based on the Australian Bureau of Statistics Residential Property Price Indexes, Eight Capital Cities, Catalogue No. 6416.0.
"I am offering very generous odds (6 to 1 which is above your 5 to 1 probability)," he suggested.
Outspoken economist and consistent housing bubble denier Rory Robertson bet Steve Keen in 2008.
In 2008, Keen said house prices would fall 40 percent once the financial crisis had "washed through the system".
In November 2009, he walked up Mount Kosciuszko wearing a T-shirt that said: "I was hopelessly wrong on house prices!" after losing the bet with Macquarie's Rory Robertson.
Keen kept up <a href="/expert-insights/investing/house-prices-will-fall-in-a-slow-bleed-fashion-steve-keen">his abridged forecast</a> for some time, saying the cash splurge undertaken by the Rudd-Swan government could never have been anticipated.
Robertson has retired, but <a href="/expert-insights/investing/no-such-thing-as-an-australian-housing-bubble-rory-robertson">long argued against the doomsayers</a>.
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jchancellor-FAypfDUnLy

Martin North declines to take up 6 to 1 odds bet from The Kouk on house price collapse possibility

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HSBC has cut its house price forecasts for Sydney and Melbourne.
Tighter prudential settings, the pullback in foreign demand and a boost in housing supply triggered the change in its Sydney outlook.
HSBC expect Sydney prices to a fall between 3 percent and 5 percent over 2018, compared with a gain of between 2 percent and 4 percent it last predicted in December.
Brisbane's forecast is down 2 percent and 0 percent instead of a 1 percent to 4 percent gain.
HSBC cut its Melbourne forecast to a gain of between 1 per cent and 3 per cent, down from the 7 percent to 9 percent range previously tipped.
"We continue to expect a soft landing for the Australian housing market," HSBC chief economist Paul Bloxham said. 
"In our view, housing prices are unlikely to fall sharply given continued low interest rates and strong employment growth."
"Although housing price growth has slowed in both cities, the auction clearance rates suggest a more buoyant market than implied by the housing price numbers," he said in the report Australian housing: Expect a soft landing.
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"Indeed, it is quite unusual for price growth to slow as much as it has in these markets and for auction clearance rates to hold at the levels maintained recently."
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"A lift in household income would help to support ongoing servicing of mortgages and help secure financial stability," Fairfax Media reported Bloxham saying.
"A lift in household income growth would also drive further housing purchases, supporting housing price growth."
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j.ballantyne1990-6AQqhLzZaK

Sydney property prices to fall by 5 percent as HSBC cut 2018 capital city growth forecasts

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Currently, auction clearance rates, which have a history of accurately leading dwelling prices, suggest that the downturn in house price inflation may ease in coming months.
Auction clearance rates and the credit impulse, while providing leading information about house prices, are only useful over a matter of months. To accurately forecast housing prices over a longer-term, we need a different approach. 
We have built a model of Australian housing prices to inform our view of the market. 
The model’s forecasts are consistent with our expectation that national housing price growth will continue to slow in 2018 (Figure 1), though only moderately and without falling into negative territory. 
According to the model, housing price growth will trough at around 1% y/y in the second quarter of 2018, growing around 2% y/y for the year as a whole. However, this slowdown is unlikely to persist as the model forecasts that growth will accelerate to around 4% y/y in 2019. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/10/figure1.jpg" target="_blank">to enlarge</a>
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The second half of 2017 saw an easing in housing price growth, compared to the first half of the year in which Sydney and Melbourne had pushed national growth rates into double digits. Tighter macroprudential regulations were the primary cause of that slowdown, further dampened by soft wage growth. 
With the intense scrutiny that movements in Australian house prices receive, we decided to spend the summer building a new model to inform our forecasts1. This provides an additional method of producing projections. 
In 2018, we expect continued deceleration in price growth. Our model is forecasting national dwelling prices to grow 1.9% in 2018, compared to 4.2% for 2017, but then to accelerate to 4.1% in 2019. Significantly, we do not foresee a nationwide decline in dwelling prices in the next two years, although individual cities may see annual falls. 
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There are a couple of leading indicators that provide information about likely changes in house prices. The auction clearance rate is a simple and historically accurate tool for forecasting movements in housing prices in the near term (Figure 2). Interestingly, it has stabilised in recent months (once you seasonally adjust the data), suggesting the worst of the recent slowdown may be over. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/10/figure2.jpg" target="_blank">to enlarge.</a>
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Another tool we have had some success with is the housing credit impulse. This looks at the change in the growth rate of credit as a signal for the change in house prices (Figure 3). 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/10/figure3.jpg" target="_blank">to enlarge.</a>
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These tools work because they effectively summarise the key demand and supply factors in the housing market. The problem is that they only provide short-term signals about the change in house prices – a matter of three to four months in both cases. 
To forecast house prices beyond the near term, we need to consider the likely drivers of supply and demand and anticipate their impact on house prices. 
 
We chose an error correction model (ECM), the advantage of which is that it is simple and it captures the main dynamics of housing price movements then makes the link between prices and economic conditions explicit. 
There are two steps to estimating the model. 
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First we determined the fundamental price – that which would prevail over the long term, without influence from the economic cycle. Population growth emerged as the best predictor there. To measure supply, we looked at other variables but found them to be practically and statistically insignificant. 
Next, we used an equation with three elements to predict shorter-term changes in dwelling prices. These were: 
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The error correction term – the difference between actual dwelling prices and the fundamental value estimated in the first step – because prices tend to revert to their fundamental value over time. 
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The lagged growth rate of dwelling prices – to account for the momentum that typifies housing price movements. 
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Changes in dwelling investment, gross total incomes and the average mortgage rate – to capture the effect of economic conditions, ie demand and supply. 
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Together, these variables are sufficient to capture the main economic drivers of dwelling prices, without over-complicating the model. 
We tested the model’s accuracy by producing two-year forecasts on a rolling basis from 1995 to 2017 and comparing them to actual prices (Figure 4). 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/10/figure4.jpg" target="_blank">to enlarge.</a>
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Our model outperformed benchmarks, such as an AR(1) model and the four quarter moving average of prices. 
IN THE MEDIUM TERM, PRICES WILL KEEP RISING – JUST 
Using our forecasts for the relevant input variables over the next two years, the model predicts that housing price growth will continue to slow in the near term, bottoming out at 0.8% y/y in the second quarter of 2018 and gradually picking up thereafter. 
We found changes in the lending rate to be the largest drag on prices in 2018, particularly in the second half of the year. Underlying this is our expectation that the RBA will hike its policy rate twice in 2018, pushing up mortgage rates. 
GDP growth will, we expect, accelerate to around 3%, and the unemployment rate will edge lower, which would prompt the RBA to take the real cash rate out of negative territory. However, this forecast assumes an uptick in wage growth, so the Q4 wage price index data (out 21 February) will be critical for our view. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/10/figure5.jpg" target="_blank">to enlarge.</a>
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Construction activity will be a drag on prices in the first half of 2018 according to the model. This reflects the lagged effect that 2017’s elevated levels of construction activity are likely to have on prices. Roughly 200,000 dwellings are now under construction, which is enough oncoming supply to dampen price growth. 
Income growth will, we anticipate, have a small positive impact on prices in 2018. As with our interest rate forecast, our confidence in this and in the trajectory of income growth will firm up following the next WPI print. 
BEYOND THE MEDIUM TERM 
Looking further ahead, the model predicts that housing price growth will improve in 2019. For 2019, the forecast is for prices to grow 4.1% y/y. We are not expecting any moves from the RBA in 2019, so the drag on price growth from 2018’s hikes is likely to be short lived. Also, we expect a mild slowdown in dwelling investment in 2018, which will be positive for prices in 2019. 
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Overall, the model supports our view that while nation-wide growth in housing prices will slow in 2018, prices will not fall. 
The main risk to this forecast is from interest rate movements. 
If wage growth disappoints again, it is unlikely the RBA will have enough confidence in the economy to hike rates. In which case, we would expect dwelling prices to rise by more than the model predicts, because of the reduced interest rate drag. 
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Price growth to stay positive with Australian housing prices in 2018: ANZ

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Australia’s housing market will likely record moderated dwelling price rises in 2018, with Melbourne again being the top mainland performer, according to SQM housing expert Louis Christopher in his end of year review.
In 2018, Mr Christopher expects national house prices to rise between four and eight percent.
It will be led on the mainland by Melbourne with a gain of seven to 12 per cent.
Hobart will be even stronger at eight to 13 per cent.
SQM tips Canberra will show five to nine per cent price growth.
 Sydney house prices are forecast to rise four to eight per cent. 
Perth will tick over into mildly positive territory, with small gains tipped in Adelaide and Brisbane.
His SQM tips are unamended from his full October annual report.
His tips of between 4 percent to 8 percent in 2018 represent a fall from a growth rate of what has been around 4.2 percent national growth over the past 12 months with a national median price of $549,000, well below the 5.8 percent rise in values in 2016 and 9.2 percent gain in 2015.
Melbourne’s property market will lose some momentum, according to predictions in Christopher’s Housing Boom and Bust Report. 
Offsetting a slowdown in Melbourne and Sydney will be first-year property market recoveries for Perth and Darwin and the ongoing boom in Hobart’s property market, which is set to record the highest level of price growth of any capital city at between 8 percent to 13 percent, Christopher said.
Click here <a href="https://www.propertyobserver.com.au/images/2017/10/18/Crash1.jpg" target="_blank">to enlarge</a>.
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SQM Research tipped 2017 capital city house price growth to have been between six to 12 per cent - with Corelogic daily index showing a 4 percent rise across its five capital city index for 2017.
The SQM Research boss acknowledges his 2017 forecast for Sydney house prices to surge 11 to 16 per cent was an over-estimate, according to The Australian Financial Review, given APRA moved earlier that Christopher anticipated.
"The Sydney market was picking steam earlier this year. But APRA acted earlier than we forecasted. Our forecast assumed they would step in the market sometime in the third quarter," he said.
Christopher acknowledged the APRA move was "prudent."
"At the end of the year the market was flat with a number of areas recording some price falls," <a href="https://www.propertyobserver.com.au/https://vimeo.com/247084937" target="_blank">he told a Harris Partners Talking property vimeo</a>.
It was March when the Australian Prudential Regulation Authority announced all deposit-taking institutions were to cut back on origination of interest-only loans to a maximum 30 per cent of total lending.
"Sydney was an overvalued market to begin with so was more susceptible," Christopher advised as to why Sydney bore the brunt of the turndown.
SQM's 2017 Boom and Bust Report scenario forecasted an acceleration of dwelling price rises in Sydney and Melbourne with Sydney dwelling prices forecasted to rise 11 percent to 16 percent for the 2017 calendar year, while Melbourne was forecasted to rise by 10 percent to 15 percent.  
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<div>The forecast assumed a stable interest rate environment, a stable exchange rate and no further home lending restrictions by APRA until late 2017. </div>
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<div>"We are a little bit more positive than perhaps some analysts for Sydney (in 2018)," Christopher affirmed.</div>
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House price growth forecast for 2018 across Australia: SQM

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House price growth has continued to slow down, and tighter regulation is having the desired impact, suggests ANZ.
Their research predicts a further slowdown of price growth in 2018, in line with softer auction results and the expectation of higher interest rates 
Housing price growth has slowed through the second half of 2017. Nationwide, prices are now just 5.5% higher than a year ago – much slower than the 11% y/y recorded through the middle of the year.
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The cooling market has been driven by regulatory changes. APRA’s tightening on investor borrowing and interest-only loans has resulted in higher interest rates for those borrowers, and lowered demand for housing.
Weaker auction results point toward further slowing as we move into 2018. Our forecast that the RBA will increase interest rates next year will also work to lower price growth. But if the RBA doesn’t tighten then prices will likely slow less than we forecast. Importantly, there is still nothing to suggest to us that prices are going to enter widespread declines.
Stamp duty discounts in New South Wales and Victoria are driving large numbers of first home buyers into the market. This is likely to provide some support to demand, and therefore prices.
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The deposit burden for FHBs continues to rise, and more people require assistance getting the deposit together. But once they are in the market, low interest rates mean that repayments are affordable, and the interest bill has been falling.
ANZ believe foreign investors have not been the main driver of price growth in recent years, as they account for only a small share of total housing turnover. However, foreigners do make up a significant component of the new housing market, meaning they have more impact in the construction space. 
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No property crash, but slowdown in residential price growth predicted for 2018: ANZ Research

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Sydney’s property market has an interesting year ahead according to a leading real estate CEO.
Douglas Driscoll of the award-winning real estate group Starr Partners is the voice of the NSW market with offices sprawling across the region, as far west as Penrith, as far north as Newcastle and as far south as Campbelltown.
Douglas has forecasted the following 10 property market trends for 2018:
1.       House prices to grow. We saw prices drop slightly at the end of 2015, and we’re seeing this again at the end of 2017, which is possible evidence that prices could rebound once more. Overall, I think we’ll see the median house price grow by around three to five per cent in 2018, but I’m expecting the market to become increasingly nuanced with some areas experiencing as much as 10 per cent growth, while others could go down as much as five per cent. Whilst I anticipate a modest increase in the median house price, I believe that the median unit price will stagnate. 
2.       Rates to remain unchanged. The real estate industry sometimes thinks the world revolves around it, however, although real estate is a significant factor in our economy, property prices are not actually one of the underpinning verticals of the Reserve Bank of Australia’s (RBA) charter – a rate decision is primarily focused on our currency, full employment, and the economic prosperity and welfare of people in Australia. We do have to remember that interest rates are not localised, and we need to avoid parochial insularities as any changes would have widespread ramifications across some of the more vulnerable markets around the country. I don’t expect rates will change over the next few months and anticipate we could even get to the end of next year without an increase. This is a good thing for homeowners, because a lot of people over-stretched themselves in the recent housing boom. A prolonged or continued period of stability allows them a bit more breathing space to restructure their finances.
3.       Rent increases – in some areas. As buyers continue to find it difficult to purchase property, an increase in competition for rental properties could see rents increase in some of Sydney’s more affluent suburbs next year. Higher interest rates on investor loans and harder access to interest-only loans could also see landlords trying to mitigate their increased holding costs.
4.       The arrival of a fifth major bank. In 2018, a new player will emerge and turn the big four banks into the big five. I’m talking about the Bank of Mum &amp; Dad. We are encouraging first home buyers to enter the market, but with escalating prices, it is more difficult than ever. Not to mention first home buyers fall into a higher risk category for lenders, as generally, they don’t have a long job history or established wealth. Parents often have a large amount of equity in their homes and they’re realising it might be better to support their offspring now when they most need it by releasing some of that equity, rather than leaving an inheritance down the track. Unfortunately, the reality is that families can fall-out just as relationships can break-up, and I urge any parent considering this to have a formalised document professionally prepared by a solicitor to protect all involved.
5.       Auction clearance rates of 60%. While clearance rates of 70-80 per cent have been commonplace over the past couple of years, we are starting to transition back to more of a normal environment. I anticipate a subtle shift in the supply and demand dynamic, with auction clearance rates likely to hover around 60 per cent for the best part of next year. Rather than compare current/future clearance rates with the exaggerated levels of late, we should be comparing them with the 10-year average as this provides us with more perspective on market conditions. 
6.       Increase in days on market. Now that the market is less frantic, we are likely to see an increase in days on market from the current 30 days to around 35. Again, 35 days is still relatively short and is considerably lower than the 10-year average, but after the market we have just come out of, sellers will need to adjust their expectations slightly.
7.       Easing of macroprudential measures. As the market continues to settle next year, I wouldn’t be surprised if we see an easing of the recently introduced macroprudential measures. These measures certainly achieved their purpose, but I have an inclination that the guidelines will be relaxed towards the end of next year, and thus making it easier for banks to lend money again.
8.       Build quality. The recent tragic events at Grenfell Tower in London has seen a focus on combustible cladding, but this could be just part of the problem when it comes to build quality. The rush to get apartments built and sold in the housing boom meant shortcuts were taken. I’ve seen firsthand how poorly some of these apartment blocks have been constructed. My fear is that some of them will quickly deteriorate and possibly even become dangerous, and it’s not inconceivable that we will be knocking some of them down within 20 years. I’m not a fan of red rape, but when it comes to people’s lives, it is imperative. There has got to be better regulation around build quality and I predict it’s going to be on the agenda in 2018.
9.       ‘In the box’ thinking. Sydney desperately needs more creative ways of living and we are going to start having more conversations around our city’s future given the population has hit five million and is not showing signs of abating. We have plenty of buildable land in Sydney’s North West and South West, but as affordability hasn’t eased, modular homes might be the best solution. The recent sale of tiny homes in Melbourne has demonstrated an appetite for this style of living, however I see them as nothing more than glorified caravans. Expect more sustainable modular homes to be the longer-term solution.
10.   The rise and rise of regional towns. I think the Newcastle and Wollongong regions will be strong markets for housing due to affordability, the lifestyle these areas offer, and commuting distance from Sydney – even the recent QBE housing outlook report showed affordability is driving migration between the capital and these regional hubs<a name="x__ftnref1" href="x-webdoc://D296945E-FC4F-4436-B306-46D3576D414F#x__ftn1" title="">[1]</a>.
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Property market trend forecast for Sydney in 2018: Doug Driscoll

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New home building activity in Australia is forecast to move back a gear in 2017, from the record highs seen during the previous 12 months, according to the latest forecasts presented in the Housing Industry Association National Outlook.
“2016 will long occupy a special place in the history of Australia’s residential building industry.
"New dwelling starts hit an all-time high of 228,230 during the year – the culmination of the longest housing upturn since the end of WWII,” said HIA senior economist, Shane Garrett.
“Even though we saw new dwelling starts reach record levels during 2016 on a national basis, the geographic pattern of activity is still strikingly uneven.
Four of the eight states actually experienced falls in new home starts last year.”
With taxation accounting for over 40 per cent of the price of a new house in several key markets, the long-term solution to the affordability challenge has to involve root and branch changes to the way is which new housing is taxed.”
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“Even though new dwelling starts will decline over the next couple of years, the annual volume of new home starts is not likely to fall below 173,000 at any stage.
By any standard, this is still a very robust level of activity,” concluded Shane Garrett.
The Summer 2017 edition of the Housing Industry Association National Outlook report discusses how the number of new dwelling commencements nationally is likely to have peaked at 231,803 during 2015/16.
New dwelling starts are projected to decline by 6.9 per cent during 2016/17 with a further fall of 15.3 per cent anticipated to take place the following year.
A smaller reduction of 5.2 percent is expected to bring new dwelling starts to a cyclical low point of 173,169 in the 2018/19 financial year before growth resumes in 2019/20.
According to the HIA National Outlook report, the volume of renovations work is anticipated to grow by 1.6 percent during 2016/17 and by 2.0 percent in 2017/18.
The pace of growth is expected to pick up the following year (+2.7 percent) bringing the value of the Australian renovations market to $34.65 billion during 2018/19.
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Home building forecasted to decline with further reduction next year: HIA

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Property prices are forecast to rise again in 2017, bringing capital gains for home owners and investors who are already in the market.
But experts believe there will also be opportunities for people looking to upgrade or buy for the first time, and for those who plan to make new investments.
The pace of price growth is expected to slow in 2017 from previous years. 
Investors may need to be more discerning about what and where they buy in 2017. 
For your free eBook, The Forecast for Australian Residential Property Markets in 2017, <a href="https://www.propertyobserver.com.au/images/2017/01/investment_ebook/2017_forecast_ebook.pdf" target="_blank">click here</a>.
 
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The forecast for Australian residential property markets in 2017

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Australia’s capital city housing markets generally continued to report robust selling conditions through spring with prices on the rise, especially in Sydney and Melbourne.
There was near double digit national price growth during 2016, which was well above forecast.
Low interest rates, increased investor activity, solid economic performances, high migration and heady confidence fuelled the Sydney and Melbourne markets, according to Dr Andrew Wilson, Domain's senior economist.
"Although signs are increasing of subdued and weakening economic activity, the prospect for housing markets and prices growth – particularly in Sydney and Melbourne – remain positive for 2017," Dr Wilson said.
The auction market ended 2016 on a high note, particularly for inner suburbs.
"This augurs well for 2017," Richard Wakelin, director of buyers' agent Wakelin Property Advisory told the Australian Financial Review.
"Do not be surprised if the [Sydney and Melbourne] markets open strongly in mid-February after the six-week summer holiday break."
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But away from the inner suburbs, CoreLogic's head of research Tim Lawless sees few signs of improvement in the capital cities and mining towns of WA and the NT.
Louis Christopher, of SQM Research, says it is likely 2017 will be the last year of price falls generated by the mining downturn.
Even Adelaide's weak economy has BIS Shrapnel Residential Property Senior Manager Angie Zigomanis seeing more downside than upside.
Forecasts for national capital city price growth range up to 12 percent.
It is property research group SQM Research's forecast of a national price growth of between 8 and 12 percent, assuming the Reserve Bank of Australia cuts the cash rate by 0.25 percentage points in the middle of 2017.
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SQM says if the cash rate remained unchanged in 2017, prices would still rise between 6 to 10 percent. 
"Affluent areas tend to be driven by the prosperity of local economy. And right now, both Sydney and Melbourne have the fastest-growing economies in the nation," SQM managing director Louis Christopher said.
The property analyst says if interest rates were cut again, prices would rise even further, paving the way for a possible correction in 2018.
CoreLogic's Tim Lawless told Fairfax hat the outlook for 2017 was "becoming increasingly challenging to give direction on".
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"On one hand we have dwelling values broadly rising across most capital cities, however, as we look below the surface, it is clear that individual housing markets are at very different stages of the cycle and responding to vastly different economic and demographic conditions," he said.
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Mr Lawless expects Sydney and Melbourne prices to grow between 9 and 10 percent in 2017 while Perth and Darwin would continue to lose value. 
BIS Shrapnel has tipped 1 to 3 percent house price growth across the national markets, mainly held back by falling apartment prices in Brisbane, Melbourne and parts of Sydney. For houses, BIS Shrapnel said prices would rise in all capital cities except Perth and Darwin. Sydney and Melbourne will top the rises at 4 percent.
AMP Capital chief economist Dr Shane Oliver remains bearish on apartments with his prediction Sydney, Melbourne and Brisbane apartment prices will fall as much as 15 to 20 percent because of the "massive multi-dwelling building boom" over the next two years. 
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While Melbourne and Brisbane apartment prices will fall evenly throughout the city, Oliver says Sydney will have pockets where prices will fall include Parramatta, inner west Sydney and Bankstown. 
"There's a [supply] indigestion problem, but Sydney won't have a supply problem for another two years," he said.
Including houses, Oliver thinks national capital city price gains will slow to around 3 to 4 percent.
Domain's Dr Wilson says Sydney and Melbourne will continue to lead the pack and shoot ahead while activity in the other capitals remains “relatively benign."
Wilson is predicting lower interest rates, but doesn't say how many further cuts from the Reserve Bank to stimulate the ailing economy.
He sees Darwin and Perth as set to bottom out next year.   Domain's predictions for capital city house price growth in 2017:
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<li>Sydney (4%)</li>
<li>Melbourne (5%)</li>
<li>Brisbane (4%)</li>
<li>Adelaide (3%)</li>
<li>Perth (0%)</li>
<li>Hobart (2%)</li>
<li>Darwin (1%)</li>
<li>Canberra (5%)</li>
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Domain's predictions for capital city unit growth in 2017:
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<li>Sydney (3%)</li>
<li>Melbourne (3%)</li>
<li>Brisbane (-4%)</li>
<li>Adelaide (2%)</li>
<li>Perth (-3%)</li>
<li>Hobart (2%)</li>
<li>Darwin (-2%)</li>
<li>Canberra (3%)</li>
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Tabcorp's online website Luxbet is taking bets on which capital city will have the biggest capital appreciation for 2017, paying the highest odds for Melbourne at $3. 
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