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 Investors

EXPERT OPINION

It&rsquo;s time we stopped treating first-home buyers as a protected species and considered the importance of other cohorts in the housing market.

It&rsquo;s become a kneejerk response in mainstream media to cry outrage whenever property prices rise, with concern for first-timers as the justification for strident headlines.

Media seems to never tire of the &ldquo;young Aussies have been priced out of the market&rdquo; storylines. I have a database of articles going back decades showing that this theme has been bashed by media constantly over the years.

The current claims that young adults are doomed to lifetime of renting are a replay of the headlines from last month, last year, two years ago, five years ago, 10 years ago and indeed 20 years ago.

[smartcode_project:default project_id=5328 project_image_fid=163914]

Were they justified and accurate, the past 18 months would not occurred. Over the past year and a half, we&rsquo;ve seen record buying activity by first-home buyers.

The spectacular price growth seen in that period has been driven, not by investors, but by first-home buyers and other owner-occupier buyers. Helped by a high level of government assistance, they have pumped up demand at a time of low supply, hence the big price rises.

Rising prices make it harder for first-timers to get into their local markets, but otherwise there&rsquo;s never been a time when they&rsquo;ve had so much in their favour.

There are multiple federal and state schemes provided easy access to finance, cash hand-outs and special concessions on costs like stamp duty. The low level of mortgage rates is a bonus.

[smartcode_project:default project_id=100322 project_image_fid=163024]

Australia is already doing all that it needs to do to smooth the path for budding young buyers.

Beyond that, how about some consideration for other types of buyers.

What about second-time buyers? Consider this scenario: a young couple buys a small apartment as their first home &ndash; it&rsquo;s affordable, well located and suits their lifestyle.

Then they decide to start a family and they need to upgrade to a larger dwelling. For most, this means selling the existing home and buying something more appropriate.

[smartcode_project:default project_id=102256 project_image_fid=163750]

They&rsquo;re still young, aspirational Aussies seeking to navigate the property minefield of high competition, low supply, rising prices and prohibitive buying/selling costs. But what assistance does this country offer them? The answer is: nothing.

Once they&rsquo;ve bought that first home, they cease to be worthy of consideration or assistance. They&rsquo;re on their own.

So, what about down-sizers? Older Australians rattling around in the family home, with the kids grown and out in the world. The family home is now inappropriate to their needs &ndash; it&rsquo;s too big and it costs time, energy and money to maintain. Ideally, that older couple or individual would like to downsize &ndash; sell the big house and buy a comfortable low-maintenance apartment perhaps.

Many older Australians would like to take that step and we keep hearing politicians encouraging them to do so, to free up those big homes for young families.

But many don&rsquo;t take that step. Why not? Because the costs are prohibitive.

[smartcode_project:default project_id=102309 project_image_fid=163974]

Selling a home and buying another can easily cost $50,000, $100,000 or more in stamp duty, agents&rsquo; commissions, legal fees, relocation costs and more. When you&rsquo;re retired or approaching retirement, those costs are deal-breakers.

I&rsquo;ve considered making the downsizing decision myself. I won&rsquo;t be doing it any time soon because the costs are ridiculous.

Politicians urge older Australians to make this move, but how much assistance is provided by them in terms of easing the cost burdens? Exactly zero.

And how about some incentives for investors to get active in the market. We have a chronic shortage of rental properties in most locations across Australia because of a series of measures by politicians and bureaucrats over the past 5-6 years that have massively discouraged investors. Australia needs to change course and encourage investors to buy homes and make them available for rent.

We don&rsquo;t need to stop the world and reorganise how our markets work because potential first-home buyers are having a whinge about how tough things are for them. They already have huge levels of government assistance available to them.

Rather, we should be considering ways to help other cohorts in the housing markets who are equally worthy of assistance. 
&nbsp;

It’s become a kneejerk response in mainstream media to cry outrage whenever property prices rise, with concern for first-timers as the justification for strident headlines

terryryder

The first home buyer conundrum and why other buyer segments matter: Hotspotting's Terry Ryder

Investors and first home buyers have both been attracted to Spring St, the newest mixed-use development slated for Box Hill.

The low price point in the project, the first in Box Hill designed by the renowned architecture firm Elenberg Fraser, has both investors and first home buyers on alert, with the latter given the opportunity to get on the ladder in an apartment tower at the centre of everything.

Prices start from a low $395,000 for one-bedroom apartments and $545,000 for two-bedroom apartments, both well below Melbourne&#39;s median of $610,000, calculated by CoreLogic.

[smartcode_project:default project_id=100675 project_image_fid=162055]

That median value has soared over 2021, having started the year at $576,000. Growth so far in the calendar year has been around 5.6 per cent.

There&#39;s predicted to be continued growth in Melbourne&rsquo;s apartment market, due to its current under-supply in apartments and the return of overseas migration, with both overseas renters and investors playing a major role in driving growth.

Spring St isn&#39;t due for completion until 2024, which gives buyers the opportunity to see the capital gains before the apartment is even finished.

[smartcode_project:default project_id=100675 project_image_fid=170524]

So far the location of Spring St, on the corner of Spring and Nelson Street, has been one of the most attractive aspects for prospective buyers.

Set in a quiet and leafy area in the bustling heart of Box Hill, Spring St provides convenient public transport, with the 109 tram, trains and buses nearby, as well as local shops and cafes. The ground level of Spring St will also home a number of retail and dining options.

Within a few hundred metres is the Box Hill RSL and Bowls Club, which meets Box Hill Gardens, a one kilometre urban park with sports courts, a running track, barbecue areas, ponds, and a playground.

Box Hill Central is a short walk, as are educational institutions for all ages, including Mont Albert Primary, Our Lady of Sion College, and Box Hill High.

The impressive amenity list at Spring St has also attracted those keen to own and occupy.

The development of 312 apartments will feature a 25 metre pool with spa, a sauna, gym, and a yoga room.

[smartcode_project:default project_id=100675 project_image_fid=170527]

There will be a games lounge and two entertainment suites, as well as a private dining room with a kitchen, available to book by residents.

Landscaping was a key part of the design, with Tract Consultants creating two outdoor communal spaces, an outdoor garden on the third level podium, and a rooftop garden on level 26.

[smartcode_project:default project_id=100675 project_image_fid=170528]

The generously sized apartments start from 52 sqm for the one-bedroom apartments, with a further eight sqm of balconies. The average size of one-bedroom apartments in Melbourne is sub-50 sqm.

Spring St&rsquo;s apartments will feature stone bench tops in the kitchen, and floor-to-ceiling glass windows in the living area to maximise the views high above Box Hill Gardens, to the Melbourne CBD, and as far as Mount Dandenong.

Spring St isn't due for completion until 2024, which gives buyers the opportunity to see the capital gains before the apartment is even finished

Why Spring St, Box Hill apartments are attracting both first home buyers and investors

Investor lending went up in May, according to the latest monthly data from the Australian Prudential Regulation Authority, but the growth rate was down on the prior wo months.

Strong growth in owner-occupied lending continued with a jump of 0.9 per cent.

Investor lending increased by 0.1 per cent (or $900 million) in May, down on April&#39;s growth rate of 0.3 per cent ($2.1 billion) and March, when it increased by 0.2 per cent ($1.6 billion).

<img alt="" height="519" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_housing_charts.jpg" width="1200" />

Westpac had the largest rise in the owner-occupied portfolio to $236.9 billion in May but its investor loan portfolio dipped to $177 billion.

The CBA was the next biggest lender to investors with a $161 billion loan book, the the NAB at $100 billion and ANZ at $87 billion. The largest lender outside the big four was Macquarie at $27 billion and Bendigo &amp; Adelaide Band at $15 billion.

[smartcode_project:default project_id=3459 project_image_fid=147572]

APRA said &quot;the recent sustained growth in home lending continues to reflect robust borrower demand&quot; underpinned by record-low interest rates, government measures supporting first home buyers (such as the First Home Loan Deposit Scheme), and new home building, as well as an optimistic employment outlook.

APRA figures for May show a slowing in investor borrowing

jchancellor

May sees reduced growth in property investor lending: APRA

<html><body>
EXPERT INSIGHT

Investors have clearly now joined the stampede of buyers rushing housing markets, but the overall home loan market share of investors remains at record low levels, offsetting any concerns by the RBA and financial regulators of potential market disruption.

The ABS reports that the value of national investor lending seasonally adjusted increased by 9.4% over January to $6.4bn which is the highest monthly total recorded since May 2018.

Despite the sharp increase, the overall home loan market share of investors fell to a new record low 19.1% and well behind the long-term average of 33.1%. Recent growth in investor lending still lags the remarkable increases reported by owner-occupiers and first home buyers.

During the similar strong market conditions in 2014, investor market share exceeded 40% which resulted in actions by financial regulators to subdue activity from this group. 

This reflected concerns that record levels of highly-leveraged investors may cause disruptions to housing markets in the event of an increase in official interest rates pushing down home prices.

WA reported the sharpest increase in monthly investor lending over the past year, rising by 47.2%, followed by QLD up 26.7%, NSW up 17.9% and SA up 0.4%. Monthly investor lending in VIC however fell 1.0% over the past year.

NSW accounted for the most investor activity over January with 40.9% of total national activity with $2.21bn in loans approved followed by VIC well behind with $1.47bn, QLD $0.89bn, WA $0.34bn and SA $0.24bn.

The average NSW investor loan reported over January was the highest of all the states at $658,900 followed by VIC 537,388, QLD $441,037, WA $411,649 and SA $368,232.

Although investor lending is on the rise, the overall residential loan market share remains at record low levels with current strong prices growth clearly driven by unprecedented owner-occupier lending activity.

Any misguided move to raise interest rates to quell strong buyer activity would clearly place in jeopardy the current fragile and nascent economic recovery – something the RBA has clearly acknowledged.”

Dr Andrew Wilson is the chief economist at Archistar
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awilson

investors have joined the stampede of buyers rushing housing markets: Archistar's Andrew Wilson

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Expert Observer

The standout feature of the behaviour of our politicians is the degree to which they are out of touch with their constituents and the impact of the decisions they make.

In the real estate sphere, the most startling recent example was the knee-jerk decision-making of state and territory governments in favour of pandemic-affected tenants, without any regard for the impact on the mum-and-dad households who own an investment property.

Equally, our elected representatives collectively appear oblivious to the rental shortage crisis that exists in most (not all) locations across the nation.

The situation has become dire in many parts of Australia, with queues of prospective tenants showing up at open houses and candidates offering more than the asking rent and/or offering to pay six or 12 months in advance to beat the competition.

Here’s the current situation …

According to the monthly report from SQM Research, vacancy rates in our already-tight rental markets fell in six of the capital cities and were unchanged in the other two in January.

The national average vacancy rate fell from 2.2% in December to 2% in January, but five capital cities – Perth, Adelaide, Canberra, Darwin and Hobart – all have vacancy rates below 1%, while Brisbane sits at 1.7%.

[smartcode_project:default project_id=8240]

Throughout regional Australia, many centres have vacancy rates below 1% in what represents a national rental crisis for people seeking tenancies. It’s common to find regional locations where the vacancy rate is closer to zero than to 1%.

Keep in mind the industry benchmark is that vacancy rates below 3% represent a shortage of rental properties. Below 1% is a dire situation.

The two biggest cities, where vacancies are highest, showed marked improvements in January, with Sydney falling from 3.6% in December to 3.2%, and Melbourne falling from 4.7% to 4.4%.

SQM CEO Louis Christopher says the figures provide more evidence the worse is over for landlords in the Sydney and Melbourne rental markets. 

He says: “The falls in vacancy rates for the month in those two cities, combined with the increased tightness in other cities and regions, has now brought rental vacancy rates down to below where they were prior to the outbreak of Covid19.”

Christopher says the data, overall, suggests that 2021 will remain largely a tenant’s market in the inner-city areas of the biggest cities “but will also very much remain a landlord’s market for regional Australia”. It would add to that the smaller capital cities – as shown earlier, six of them have ultra-tight rental markets. 
He also notes that rents for both houses and units have risen in the capital cities, on average, over the past month.

In annual terms, the national average is a 10% rise in house rents and a 4% increase in apartments rents.

The growth has been higher in regional markets than in the capital cities, with Sydney and Melbourne rents still lower on average than a year ago.

But there have been strong rises in Perth, Canberra and Darwin.

[smartcode_project:default project_id=22017]

In Perth, rents have risen 11.5% for houses and 12.3% for apartments, while in Darwin house rents have increased 27% in 12 months. In Canberra rents have risen around 6% for both houses and units.

The repercussions are spreading well beyond the immediate participants, tenants and landlords. Businesses in regional areas are struggling to find the workers they need because people interested in taking the jobs on offer can’t find anywhere to rent in those areas.

So what are our elected representatives doing about that? Essentially, nothing. They give the impression that aren’t even aware of the problem. This situation is just not part of the national discussion.

Partly mainstream media is to blame. Our major newspapers, especially the Fairfax ones, have been focusing their coverage on the few places in the nation that have high vacancies, specifically inner-city Melbourne and inner-city Sydney and creating the impression that we have an over-supply of dwellings – which is laughable.

[smartcode_project:default project_id=6201]

Federal Labor, if they had their way, would make matters worse by scrapping negative gearing, which would be a huge disincentive to investors.

What we need is the opposite – measures to encourage people to buy investment properties and make them available for rental. Rental vacancies are an outcome of the activity of investor buyers – and their absence in recent years is a chief reason we have this crisis.

HomeBuilder is helping the situation by encouraging the creation of new dwellings, but more needs to be done.

If politicians want to help tenants, they need to encourage landlords – instead of treating property investors (most of them ordinary mum-and-dad households) as a criminal class.

Terry Ryder is the founder of hotspotting.com.au

ryder@hotspotting.com.au

twitter.com/hotspotting
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According to the monthly report from SQM Research, vacancy rates in our already-tight rental markets fell in six of the capital cities and were unchanged in the other two in January.



Mum and dad investors hit by favourable COVID-affected tenant rules: Hotspotting's Terry Ryder

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The lower dollar continues to work away on Arrivals and Departure trends, with a further +1.8 per cent seasonally adjusted increase in the number of short term arrivals in November, and a -2.8 per cent decrease in the equivalent number of departures.  
The monthly ratio of short term departures this continues to decline, which will act as a twin boost for the domestic economy.
<img class="aligncenter img-responsive" src="https://2.bp.blogspot.com/-b73svb4ZFPU/VpUnsI93FyI/AAAAAAAAak0/7_yWcorhIAA/s640/A2.jpg" alt="" width="640" height="320">
The labour market is not presently strong enough to warrant the exceedingly high level of net permanent and long term immigration seen in 2013 of above 400,000.
The rolling annual figure is now seemingly getting set to stabilise – in November the rolling annual total ticked down slightly from 278,200 to 277,600, with the decline being felt most keenly in the resources states and the regions, as opposed to the largest capital cities.
 
<img class="aligncenter img-responsive" src="https://3.bp.blogspot.com/-O7WpgUtq3xE/VpUnsHJlouI/AAAAAAAAaks/zY07p-aR25M/s640/A1.jpg" alt="" width="640" height="322">
 
The most recent <a href="https://petewargent.blogspot.sg/2015/12/students-to-drive-population" target="_blank">forecasts</a> from the Department of Immigration &amp; Border Protection (DIBP) show that the population growth rebound for the remainder of this decade will be driven by international students rather than by immigrants on 457 or permanent resident visas.
<h4>RECORD CHINESE TOURISM</h4>
The annual number of short term arrivals into Australia surged to a new record high of 7.36 million in November.
There have been significant increases in the number of visitors from India (+19 per cent) and the United States (+9 per cent) over the past year, Americans doubtless encouraged by favourable shifts in the exchange rate.
There can no doubting the key trend here, however, which has been the vast +17 per cent increase in the number of visitors from China, Hong Kong and Taiwan to 1.36 million.
The pace and scale of the increase over the past decade has been breathtaking, as documented regularly on this blog.
 
<img class="aligncenter img-responsive" src="https://4.bp.blogspot.com/-7I2RT3jAbrU/VpUns-kh5eI/AAAAAAAAak4/zg5drP4jalk/s640/A4.jpg" alt="" width="640" height="328">
For the first time China alone accounted for more than 1 million visitors in the year to November, and make no mistake, Chinese tourists spend up big when they come to Australia.
<h4>STUDENTS</h4>
A record 3.38 million persons came to Australia for a holiday over the year, while for the first time this year more than 2 million cited there reason for journey as “visiting friends and relatives”, reflective of Australia’s status as a country built on immigration.
 
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The other key trend to watch this year is the explosion in the number of international students, not least because following a streamlining of the acceptance rules so many are expected to go on to become permanent residents on other visas.
This data series confirmed that the rolling annual number of education arrivals jumped by an unprecedented +71,200 or +18 per cent to 464,600 in the year to November.
 
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Most students are projected to be accepted into the large capital cities.
Pete Wargent is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.
 
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How the dollar is driving demographic trends for property investors: Pete Wargent

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Over recent years the level of investor participation in the national housing market has hit historic high levels and at the same time, housing finance commitments to owner occupier first time buyers has shrunk. 
As an example, January 2017 housing finance data shows that based on the total value of housing finance commitments, a record-low 7.1% of commitments were to owner occupier first home buyers while 39.0% of the value of all commitments were to investors.
Click to enlarge
<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/2017/03/24/chart-1-2.jpg" alt="">
The above chart looks at the proportion of the total value of housing finance commitments going to owner occupier first home buyers and investors nationally.  As the level of lending to investors has increased over recent years it has done so at the expense of owner occupier first home buyers. 
Except for briefly in 1992, investors have consistently outweighed owner occupier first home buyers in terms of housing finance demand.  The only time first home buyer lending has got close to that of investors was in 2008 and 2009 during the financial crisis. 
At that time, investors were fearful and first home buyers were receiving substantial stimulus from the Federal Government which led to heightened housing demand to those that don’t already own property.
It is a similar story surrounding first home buyer activity being much lower than that of investors across the individual states and territories.  Furthermore, in 2008 and 2009 the combination of stimulus and investor caution resulted in a lift of first home buyer activity at the expense of investors. 
The data here has been paired between housing finance and lending finance data.  We have multiplied the average first home buyer loan size by their number of loans to determine the value of first home buyer loans and taken the investor loan data from lending finance.  Note that the following figures include refinances.
<a href="https://www.propertyobserver.com.au/images/2017/03/24/chart-2-3.jpg" target="_blank">Click to enlarge</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/2017/03/24/chart-2-3.jpg" alt="">
In January 2017, an historic low 3.4% of all housing finance commitments in New South Wales were to owner occupier first home buyers compared to 46.9% of total lending to investors. 
The 46.9% of housing finance commitments to investors was their highest level since July 2015.
<a href="https://www.propertyobserver.com.au/images/2017/03/24/chart-3-3.jpg" target="_blank">Click to enlarge</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/2017/03/24/chart-3-3.jpg" alt="">
Victorian investors accounted for 37.5% of the total value of housing finance commitments in January 2017 compared to 7.7% of the total value to owner occupier first home buyers.  The level of activity from first home buyers is currently at an historic low level while investor participation is sitting at levels not seen since July 2015.
<a href="https://www.propertyobserver.com.au/images/2017/03/24/chart-4-3.jpg" target="_blank">Click to enlarge</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/2017/03/24/chart-4-3.jpg" alt="">
Owner occupier first home buyers are more active in Queensland than they are in New South Wales or Victoria however, they still only accounted for 10.8% of the value of housing commitments in January 2017 compared to investors accounting for 31.6%.  Housing affordability has not deteriorated in Queensland to the extent it has in New South Wales and Victoria however, first home buyers continue to be well and truly outnumbered by investors.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-5-2.jpg" target="_blank">Click to enlarge</a>
<img class="aligncenter size-full wp-image-8414" src="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-5-2.jpg" alt="" width="1685" height="596">
In January 2017, owner occupier first home buyers in South Australia accounted for 6.9% of the value of housing finance commitments compared to investors accounting for 30.1%.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-6-1.jpg" target="_blank">Click to enlarge</a>
<img class="aligncenter size-full wp-image-8415" src="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-6-1.jpg" alt="" width="1687" height="599">
Owner occupier first home buyers in Western Australia accounted for 14.3% of the total value of housing finance commitments in January 2017 compared to investors that accounted for 27.3%.  Dwelling values are falling across most regions of the state and investor borrowing still far outweighs first home buyers. You would think that falling prices would scare investors away from purchasing and create an opportunity for first home buyers but that hasn’t really occurred in Western Australia over the past few years.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-7.jpg" target="_blank">Click to enlarge</a>
<img class="aligncenter size-full wp-image-8416" src="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-7.jpg" alt="" width="1688" height="603">
In January 2017, owner occupier first home buyers in Tasmania accounted for 10.3% of total housing finance commitments compared to investors that accounted for 27.6%.  The proportion of lending to investors in Tasmania is at its highest level since April 2015.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-8.jpg" target="_blank">Click to enlarge</a>
<img class="aligncenter size-full wp-image-8417" src="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-8.jpg" alt="" width="1706" height="603">
Northern Territory investors accounted for 38.8% of the value of all housing finance commitments in January 2017 compared to owner occupier first home buyers who accounted for 8.3%.  Despite the fact that dwelling values are falling across most of the Northern Territory, fist home buyer volumes remain low and investors remain quite active.  This is probably due to the fact that in Darwin in particular, the population tends to be more transient than in other parts of the country.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-9.jpg" target="_blank">Click to enlarge</a>
<img class="aligncenter size-full wp-image-8418" src="https://blog.corelogic.com.au/wp-content/uploads/2017/03/chart-9.jpg" alt="" width="1687" height="602">
Across the Australian Capital Territory in January 2017, 9.1% of the total value of housing finance commitments was to owner occupier first home buyers compared to 35.5% to investors.
The national and individual state and territory data shows that historically the only way to substantially boost first home buyer participation has been at the expense of investors, as occurred in 2008/09.  At the time this didn’t occur through a policy specifically targeted at slowing investor demand it happened more so organically due to significant first home buyer stimulus and investor fears at the time.  Keep in mind that these policy choices also led to, in certain areas, a substantial increase in dwelling values.
Including in 2008/09, investors have consistently outweighed owner occupier first home buyers in terms of new mortgage borrowing. 
This shouldn’t really surprise anyone given that most investors already have a residential property asset and many of which use at least a portion of the equity in that asset to fund the investment.  First home buyers don’t have the existing foothold in the housing market and are always going to find it difficult to compete with borrowers that already have assets and equity. 
Unfortunately the ABS does not publish data on the number of loans to investors so we can’t see a true picture of loans written rather just the value lent.  Keep I mind that investors that already own homes generally have the ability to borrow more than first home buyers and in-turn may typically take out larger loans than first home buyers.
Based on the data is seems that the way to get more first home buyers entering into the market is to do it at the expense of investors.  If you can increase purchasing by first home buyers there will be, at least initially, less demand for rental accommodation. 
Longer-term though, the population grows and people age so deterring investment may have greater repercussions for the housing market. Keep in mind though that heightened housing market activity from first home buyers that don’t own housing assets and have no housing equity may actually create more instability in the housing market.
There is no easy fix to encourage higher levels of housing market participation from first home buyers but the data indicates a heightened level of activity from this market segment is most likely to occur via a reduction in demand from the investor segment.   While people that don’t already own homes may see this as a great solution we should be cautious as it may have larger long-term effects on housing supply and housing market stability. 
I don’t believe that the balance between first home buyers and investors is currently right and we should look at ways to cool some of the market’s current investment exuberance but we should also be cautious about encouraging excess demand from first home buyers who may find it more difficult to repay mortgages once interest rates start to increase.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Investors historically outweigh first home buyers but gap widens: Cameron Kusher

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There are tax issues for Australians living overseas but who want to buy property back home.
It in important the familiarise themselves with Australian tax obligations to avoid nasty surprises from the ATO.
Among the first things to establish is the tax residency status. They will be treated as tax resident of Australia if they meet certain criteria.
Some of the things that determine residency include nationality, where you were present and for how long, where you have a home, and your economic and business ties with the country. 
If you have stayed in Australia for more than six months of the financial year (1 July to 30 June), you will be a tax resident of Australia.
Then there's the domicile. If your domicile remains in Australia and you do not have a permanent place of residence overseas, you will be treated as an Australian tax resident.
If you are a tax resident of Australia, your worldwide income and capital gains are generally subject to Australian tax.
For non-residents, only income earned in Australia and capital gains on ‘Taxable Australian Property’ are taxable in Australia. Any income or capital gain from a property in Australia will always be treated as having been sourced in Australia, hence taxed.
Also watch out for countries with Double Tax Agreement (DTA) with Australia, where the provisions of the DTA may override the domestic law in both Australia and the other country.
If the other country also taxes the same income or capital gain, Australian tax rules generally provide a foreign income tax offset on any foreign tax paid on the same income or capital gain.
There is no substitute for professional tax advice.
Take the common example of an Australian expatriate who buys a home back in Australia while still resident of another country, including for tax purposes.
The house rented until the expat eventually returns to Australia, when it will become the family’s home.
The capital gains tax (CGT) treatment when the home is eventually sold will be influenced by the length of time when the property was not the expat’s main Australian residence.
An expat’s CGT position after owning the property for 10 years but home for only the final two of those years, would, according to Joe Galea, property tax partner for accountants Deloitte in Sydney, see a fifth of any net capital gain taxable.
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Australian expatriates are to watch their tax obligations

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For your next investment property, no doubt you’ll be researching different locations and property types. But which of these two factors is more important when it comes to property investing? 
Every major Australian city has hundreds of suburbs to research when buying an investment property. 
On top of that, there is a large range of property types to choose from: apartments and flats, villas and townhouses, stand-alone dwellings, development sites, vacant land etc. 
With so many options, it can be hard to figure out what to prioritise: should you focus on a property type and research to find the suburb that maximises returns for your chosen type, or do you research to find the best location and then decide on the best property type for that location? 
The answer to that question is not straightforward and will depend on your property investment goals. For most investors, the end goal is to create substantial personal wealth. 
If wealth creation is the main objective, typically location trumps property type as the most important aspect to consider. However, that doesn’t mean type isn’t important. It means that the type to focus on will be a consequence of the location you’ve selected. After all, a location may only make a good investment if you hold the right property type in that location.
Let us illustrate this. Bart is an investor looking for capital growth, and as such, has focused on location over property type. He found a location that ticks all the boxes, and is now deciding between two types available on the market: an older, stand-alone dwelling on a large block with development potential or a brand new apartment in one of the many apartment complexes that are popping up everywhere in the suburb.   
Generally, the house on the large block of land would make the better investment thanks to its large land component, which will continue to appreciate more and more as land becomes scarcer. If Bart selects the apartment, he would have to deal with increasing competition for this type in the area, which means he’d be competing with other apartments for tenants resulting in lower rentals returns. Further to that, the continued construction of new apartments will mean that there is always a large supply of similar stock on the market, which puts downwards pressure on his apartment’s value. 
If, on the other hand, Bart’s risk appetite was low and he was financially more constrained, he would have prioritised finding a neutral or positive cash-flow property and might have focused on a different type in a different location all together.
The main thing to take away from this is that when evaluating your chosen location and property type, you must always take into consideration your unique circumstances, which will entail your financial capacity, risk tolerance and life circumstances.
For more insight into the do’s and don’ts of property research, download your free copy of our latest ebook: <a href="https://wvw.momentumwealth.com.au/ResearchEbook?utm_source=Property+Observer&amp;utm_medium=Ebook&amp;utm_campaign=Ebooks" target="_blank">”How to find investment-grade properties using professional research principles”. </a>
<a href="https://wvw.momentumwealth.com.au/ResearchEbook?utm_source=Property+Observer&amp;utm_medium=Ebook&amp;utm_campaign=Ebooks" target="_blank"> </a>
 
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jrobinson-rf4aSBido9

Location Vs property type – which is more important?

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<div>The latest <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/3401.0/" target="_blank">Overseas Arrivals and Departures</a> data for the month of June 2015 confirmed that population growth in Australia will be once again be slower in this calendar year. As I argued a year ago, by the third quarter of 2014 it had become evident that the assumption reported widely in the media that the population of Australia would boom by around 2.4 million persons over the next six years was too high - much too high, in fact! <div class="separator"><a href="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s1600/A1.jpg"><img src="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s400/A1.jpg" width="400" height="65"></a></div>
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<div>In the event population growth slowed considerably to be up by an estimated +330,200 in 2014, and population growth will be slower again in 2015. Over the longer term we might indeed expect to see much stronger levels of population growth return for the reasons I have already explored, but for the foreseeable future lower population growth will be the new norm. Let's take a look at the implications of the latest figures in three parts. 
</div>
Part (i) - Slowing immigration nationally 
<div>The number of long term arrivals into Australia has slowed further over the past year, and consequently net long term migration has pulled back to +292,000 on a rolling annual basis, sliding from a recent peak of more than +400,000.</div>
<div> </div>
<div>This suggests that population growth in 2015 will likely slow further perhaps to around +300,000 persons from +330,200 in 2014.</div>
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<div class="separator">One of several key potential drivers of this trend has been the sharp reduction in the number of permanent settlers from New Zealand.</div>
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<div class="separator">Meanwhile the number of permanent settler Brits has slowed to a mere trickle - just 470 settlers in June hailed from the United Kingdom, the lowest monthly figure across the full 25 years of available data.</div>
<div class="separator"> </div>
<div class="separator">Kiwi citizens can move freely between Australia and "home" and as such are theoretically far more sensitive to shifts in labour market conditions.</div>
<div class="separator"> </div>
<div class="separator">And while spare capacity in the labour market has being rising over the past three years in Australia, it had been tightening for some time in New Zealand.</div>
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<div class="separator">With mining construction activity now slowing sharply in Australia - and Christchurch in New Zealand seeing a high volume of reconstruction activity - it is perhaps unsurprising that fewer New Zealanders are making the trans-Tasman trip on a permanent footing (although a record 1.27 million still came to Australian shores on a short-term basis over the past year).</div>
<div class="separator"> </div>
<div class="separator">On the other hand the number of settlers from countries such as China and India continues to slowly but surely break new heights.</div>
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<div class="separator">Indeed, the overwhelming majority of settlers in Australia now hail from Asia, with the middle east the only other region or continent presently in a confirmed uptrend.</div>
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Part (ii) - Record visitors to Australia
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<div>There is a flip side to the softer pace of growth in Australia's economy, and that is that falling interest rates and a correspondingly weakening currency have encouraged the tourism sector to attract a record number of short term arrivals Down Under. </div>
<div> </div>
<div>This year the rolling annual number of short term arrivals blasted past 7 million for the first time to a record 7.12 million in the 2015 financial year (denoted by the blue line below).</div>
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While the corresponding drag on overseas travel by Australians has only been fairly gradual to date (denoted by the red line above), the weaker dollar also means that over time comparatively fewer Aussies will be inclined to make overseas trips, which in turn will act as a further boost for the domestic economy. 
<div>I holidayed on the Sunshine Coast myself in the past week, and it is quite evident that more Aussies are inclined to hang out in locations such as Noosa over the winter than has been the case in recent years. After all, travelling overseas is not quite as much fun as when the dollar was at sky high levels just a few years ago!</div>
<div> </div>
<div>Accordingly the ratio of short term departures to short term arrivals has steadily been trending down for the past two years.</div>
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One trend which is definitely not slowing down is the number of Chinese visitors to Australia with more than 1.25 million visitors from China, Taiwan and Hong Kong over the past 12 months, with the latest figures showing no signs of this emerging mega-trend easing off.
<div>A record 563,800 Americans have also enjoyed the dramatic shift in the exchange rate over the past year.</div>
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Furthermore there has been an explosion in the number of foreign students in Australia - also largely hailing from Asia - another trend which has in part been driven by exchange rate movements. 
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This is an emerging demographic trend which will impact Sydney and Melbourne most keenly. 
<div class="separator">The full impact of the depreciation of Australia's currency has yet to flow through to this data and we will certainly now see further short visitor records broken in the year ahead.</div>
Part (iii) - 3 implications of lower population growth
So what are the impacts of slower population growth in Australia, which could continue for the foreseeable future? 
<div>There will be many impacts, of course, but here are just three of the most prominent observations.</div>
<div> </div>
<div>Firstly, and most obviously, slower population growth will equate to lower demand for goods and services, which in turn over time should result in lower economic and employment growth. Over the next few years there will be a lower than expected requirement for investment in building offices, warehouses, housing, machinery, plant and equipment. </div>
Secondly, with employment growth having tracked at an estimated 2.1% or 243,600 new jobs over the past year - which is considerably faster than the estimated rate of population growth of just 1.4 per cent - the Reserve Bank now <a href="https://www.rba.gov.au/publications/smp/2015/aug/html/index" target="_blank" style="line-height: 1.3em;">believes</a> that the unemployment rate has likely peaked for this cycle. 
<div>Previously it had been forecast that the unemployment rate would continue rising to around 6.5 per cent, but now the unemployment rate is seen as more likely to be falling again from 2017. The darker blue shaded areas represent the Reserve's 70 per cent confidence interval.</div>
<div> </div>
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</div>
<div>However, there are many regions in Australia where unemployment is still elevated or rising, particularly in resources-influenced regions and in South Australia where the trend rate of unemployment has hit 7.9 per cent and rising.</div>
<div> </div>
<div>Thirdly, with the mining investment supernova now set to implode in spectacular style, the strong rates of immigration which benefited the resources areas of regional Western Australia and regional Queensland have now ebbed away.</div>
<div> </div>
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<div>
 <img src="https://2.bp.blogspot.com/-UAU8Pw52o-w/VZsC3PaTSPI/AAAAAAAAWtQ/Ip5KWRT_itE/s640/eng2.jpg" width="640" height="274"> Accordingly population growth has become more capital city focused. The most recently available data showed that Greater Melbourne and Greater Sydney alone accounted for all but half of Australia's total population growth, while Greater Brisbane and Greater Perth accounted combined for close to nearly a quarter of the total. Regional population growth on the other hand has in aggregate been been slow and slowing. As for whether the mining boom will have a second wind? Highly unlikely: that's not the way that commodity cycles typically tend to work. The Reserve Bank's Commodity Index was once again smoked by another 5 per cent on a monthly average basis in SDR terms in July to be a punishing 20.2 per cent lower over the past year. Ouch. In Aussie dollar terms the decline has been a somewhat less dramatic 8.5 per cent year-on-year, but nevertheless Australia's terms of trade (TOT) remain well above their long run average (and TOT booms have historically tended to over-shoot on the downside too).</div>
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<div>Note that it's not just iron ore and coal prices which have been hammered as demand from China and elsewhere has slowed in the face of a glut of supply. Oil, aluminium, copper and gold have all hit half decade lows in recent times, while the price of silver has tracked little better.</div>
<div>
 Slightly bizarrely - given that coal prices are well below the project's notional break even point - the Adani Carmichael Mine is one possible exception to the accelerating decline in mining investment. Some folk with the power to exert material influence evidently has the government's ear relating to this essentially unviable mega-project. Generally speaking, however, mining production is ramping up, there is heavy downward pressure on commodity prices, and ever fewer material projects have been passing viability.</div>
<div>
 Going forward population growth in Australia will follow the employment growth, which has been heavily focused on Sydney and Melbourne, and to a somewhat lesser extent Brisbane and the Gold Coast.</div>
<div>
 Indeed, over the past year more than 80 per cent of employment growth has been found in New South Wales and Victoria, and overwhelmingly in Sydney and Melbourne. </div>
<div> </div>
<div>With the Western Australian economy slowing and net interstate migration going into reverse gear, population growth will is likely to be heavily focused on the three largest capital cities - a trend which will only be exacerbated by the nascent explosion in foreign students. The Reserve Bank added its own outlook for the housing market in the latest SOMP: "Supply constraints, particularly in Sydney, may limit the extent to which new dwelling investment can satisfy growing demand, which raises the possibility that housing prices will grow more quickly than forecast.  Also, housing prices outside Sydney and Melbourne are little changed over the past year or so and may not yet have responded fully to the very low levels of interest rates."
</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
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