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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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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<div>
"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). 
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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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<li>
The lagged growth rate of dwelling prices – to account for the momentum that typifies housing price movements. 
</li>
<li>
Changes in dwelling investment, gross total incomes and the average mortgage rate – to capture the effect of economic conditions, ie demand and supply. 
</li>
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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). 
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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. 
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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>"I think the odds are reasonably high that APRA is going to remain relatively quiet over the course of 2018, and indeed we are aware the banks are now under the required threshold set by APRA for investor credit growth and interest only loans, so the banks actually have a buffer to expand their lending book next year," Christopher said last month.</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.”
<a href="https://www.propertyobserver.com.au/images/2017/03/08/Screen%20Shot%202017-03-08%20at%205.11.28%20pm.jpg" target="_blank">Click to enlarge</a>
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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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