Apartment developer <a href="https://www.apartments.com.au/developers/martello">Martello™</a> is one of the latest entrants to the Gold Coast development market, with its debut project set to be one of the most boutique offerings on Chevron Island in recent years.

Martello has unveiled <a href="https://www.apartments.com.au/new-apartments/aere-chevron-island-18-20-mawarra-street-chevron-island-qld-4217">Aere Chevron Island</a>, a collection of 33 large-scale two-, three-, and four-bedroom apartments across an 18-storey building on Mawarra Street.

[smartcode_project:default project_id=143932 project_image_fid=367517]

The developer has placed a strong emphasis on wellness, briefing architecture firm Raunik Design to embed this philosophy into the project. It is a direction <a href="https://www.apartments.com.au/developers/martello">Martello™</a> plans to carry through its future developments along the coast.

<a href="https://www.apartments.com.au/developers/martello">Martello™</a> has positioned Aere as a continuation of its human-centric development approach, with a focus extending beyond amenity to the fundamentals of layout, natural light, and spatial planning. Promax Construction has already been appointed to deliver the project, with construction expected to commence in the coming months as part of the group’s broader expansion into South East Queensland.

Rising above the low-rise fabric of Chevron Island, Aere’s design emphasises generous internal proportions and uninterrupted outlooks, with residences oriented to capture coastal, skyline, and waterway views. Interiors prioritise open-plan living, with large-format glazing and carefully considered transitions between indoor and outdoor spaces.

[smartcode_project:default project_id=143932 project_image_fid=365237]

The upper levels are dedicated to larger-format homes, including four-bedroom residences designed as half-floor offerings. These layouts prioritise separation between living and sleeping zones, along with increased privacy and storage, features more commonly associated with detached housing than traditional apartment product.

Aere’s private resident amenity spaces centre on wellness. A rooftop level will incorporate a heated swimming pool, sauna and spa, while the rest of the wellness spaces throughout the building include a&nbsp;residents’ lounge, dining areas and a gym.

The inclusion of both social and quieter retreat spaces reflects a broader shift in higher-end apartment design on the Gold Coast, where developers are increasingly responding to owner-occupier demand for buildings that support long-term living rather than short-stay use.

[smartcode_project:default project_id=143932 project_image_fid=367515]

Aere is positioned within walking distance of Chevron Island’s village centre along Thomas Drive, as well as the HOTA cultural precinct via the Green Bridge, connecting residents to parklands, galleries, and event spaces.

For <a href="https://www.apartments.com.au/developers/martello">Martello™</a>, Aere represents the first in a series of planned Gold Coast developments, with the group also exploring opportunities in other coastal precincts, including Kirra and Palm Beach.

The move north comes as sustained population growth and infrastructure investment continue to reshape South East Queensland, with developers increasingly targeting boutique, design-led projects in established lifestyle pockets. Aera’s relatively small scale and emphasis on spatial quality position it within this emerging segment of the market.

[smartcode_project_cta:default project_id=143932]

Joel Robinson

Martello™ enters Gold Coast market with wellness-led Chevron Island development Aere

Development approval has been granted for Crescent, a boutique waterfront project on one of Palm Beach's most coveted and rarely developed streets.

Launched to market this month, <a href="https://www.apartments.com.au/new-apartments/crescent-palm-beach-34-36-murlong-crescent-palm-beach-qld-4221">Crescent</a> will occupy four combined lots with frontage to both Murlong Crescent and Tallebudgera Drive. The project is among the first new developments to get a green light on the creekside strip, home to only 21 tightly-held properties.

“Murlong Crescent is one of those streets that people discover and never want to leave,” said Andrew Erwin of NPA Projects, who is leading sales and marketing.

“The lifestyle here is genuinely hard to find anywhere else on the Gold Coast.”

Designed by Queensland firm ᴮʸculprit and developed by DCS Property Group, Crescent offers two and three-bedroom residences across four levels, ranging from 119 to 283 sqm and priced from $2.5 million. Builder SNBX Constructions has been appointed, with completion expected in mid to late 2028.

[smartcode_project:default project_id=151399 project_image_fid=366218]

Residences face north to Tallebudgera Creek, with views that extend to Burleigh Headland. Upper levels also capture canal and hinterland views to the west.

“The creek is tidal, so it changes constantly. The colour, the light, the mood of it,” Erwin said.

“That view over the creek to Burleigh Headland is only possibly from this location.”

[smartcode_project:default project_id=151399 project_image_fid=366213]

Crescent devotes two levels, spanning more than 1,100 sqm, to resident amenity.&nbsp; On Level 1, a gym, steam room, infrared and traditional saunas, hot spa, cold plunge, and ice bath make up the private wellness retreat. Entertaining and recreation converge on the rooftop with a resort- style pool and sundeck, alfresco BBQ and dining areas, pizza oven, yoga lawn, fire pit, as well as a herb and zen garden. Residents can also jog or walk along a dedicated loop with views over Tallebudgera Creek.

“The amenity here is genuinely out of proportion to the size of the building,” Erwin said.

“Every resident, regardless of which apartment they choose, gets access to the kind of amenity normally associated with luxury resorts.”

[smartcode_project:default project_id=151399 project_image_fid=366257]

Residences feature natural stone and timber finishes throughout, brushed brass tapware, and New Zealand wool carpet to bedrooms. Two basement levels provide secure parking, with provision for electric vehicle charging.

Beyond calm water swimming, paddling and boating, residents follow the foreshore path to Tallebudgera Beach, local cafes, and Tallebudgera Surf Club, while across the bridge is Burleigh Heads National Park, Burleigh Beach and the vibrant James Street dining and retail hub.

Palm Beach has been among the Gold Coast’s strongest performing suburbs over the past five years, with median house prices having risen by more than 91 per cent and unit values more than doubling in the same period.

[smartcode_project_cta:default project_id=151399]

Crescent Palm Beach approved as sales launch

The Albanese and ACT Governments have struck a deal to unlock nearly 5,000 new homes across Canberra, with more than 1,700 earmarked exclusively for first home buyers.

The agreement marks the second formal partnership under the Federal Government’s election commitment to deliver up to 100,000 homes for first home buyers nationally, working alongside state and territory governments and industry.

At the centre of the deal is a $250 million funding injection from the Albanese Government, targeting enabling infrastructure to bring forward new housing supply across a number of key precincts in the ACT.

That includes funding to unlock 75 homes in the Kingston precinct, support new development in Weston Creek, and deliver estate works across the territory that will facilitate more than 500 homes by 2034. Additional investment will go towards relocating powerlines, water infrastructure in Molonglo Valley, and further expansion of the Ginninderry regeneration precinct.

Housing Minister Clare O’Neil said the agreement was about making it easier for first home buyers to enter the market, particularly in a housing environment that continues to challenge affordability.

“We’re determined to make it easier for young people and first home buyers to achieve the dream of owning a home,” O’Neil said.

“We know the housing market is tough, and we want Australians to know that Labor has got your back.”

The announcement builds on more than $800 million already committed to housing in the ACT since 2022, according to Finance Minister and ACT Senator Katy Gallagher, who said the latest funding would help ensure national housing programs are translating into real supply on the ground.

“We’re working closely with the ACT Government to unlock land and invest in the infrastructure needed to get these homes built sooner,” she said.

For the ACT Government, the agreement aligns with its broader target of delivering 30,000 new homes by 2030, with Chief Minister Andrew Barr pointing to the role of coordinated planning and infrastructure investment in accelerating delivery.

“Now, thanks to our agreement with the Albanese Government, this work is about to reach a new level,” Barr said.

The deal sits within the Federal Government’s broader $45 billion housing agenda, which includes initiatives such as the Housing Australia Future Fund, the Help to Buy shared equity scheme, and incentives aimed at increasing construction capacity and reducing barriers to development.

Canberra set for 4,900 new homes under Federal housing deal

<a href="https://www.apartments.com.au/developments/crows-nest-nsw-2065">Crows Nest</a> continues to be a hive of activity for developers following the opening of the Crows Nest Metro station nearly two years ago.

The latest Transport Oriented Development plans are located directly across the road from the station, which sees around 6,000 commuters pass through during the morning peak.

A new State Significant Development Application, filed by an entity linked to Colin Rahim and Pierre Sukkar, directors at builder Growthbuilt and emerging developer Prosper, proposes a 40-storey mixed-use tower with 254 apartments on a 2,127 sqm site at <a href="https://www.apartments.com.au/new-apartments/402-420-pacific-highway-crows-nest-nsw-2065">402–420 Pacific Highway</a>.

<img alt="Crows Nest" data-entity-type="file" data-entity-uuid="dcc2264f-d701-4493-88e8-d2286770ed20" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-21%20at%209.19.11%E2%80%AFAM.png?VersionId=ZayWJRJQvrngii1roqjR85EvTTmGXq6E" />

The development will comprise 40 one-bedroom apartments, 105 two-bedroom apartments, half of which will include an additional study, 101 three-bedroom apartments, and eight four-bedroom penthouses. These will sit above a four-storey podium, with four levels of basement parking providing 148 spaces.

fjcstudio has designed the building, which it says “embodies the principles of Transit Oriented Development (TOD) by promoting higher-density, mixed-use urban living in close proximity to the Crows Nest Metro Station, consistent with the Crows Nest Precinct Design Guide.”

The practice adds that the development supports economic activity, reduces reliance on private vehicles, and enhances the public realm through active ground-floor uses, public domain upgrades, improved permeability, and fine-grain street activation.

“The proposal aligns with the Precinct Vision by contributing to a vibrant mixed commercial and residential centre that integrates housing, jobs, and services while strengthening the local village character of Crows Nest.”

<img alt="Crows Nest" data-entity-type="file" data-entity-uuid="d87ca5b0-d7d7-4721-b332-8c046afb4577" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-21%20at%209.08.01%E2%80%AFAM.png?VersionId=ZCkGc4neaSZc6EHnsP2d2V0ZhRS2_BCz" />

Crows Nest has become one of the most sought-after suburbs for both apartment developers and buyers since the Metro opened in 2024. Developer Third.i quickly sold out half of the apartments at Elevate Hume Place, located directly above the station.

Deicorp recently launched its debut Lower North Shore project, Falcon &amp; Alexander, while Abadeen and Lindsay Bennelong have completed boutique developments in the suburb.

Prosper is also active in Crows Nest, having recently launched Kora, a boutique development of just 10 apartments on Willoughby Road. Its development pipeline has expanded significantly in recent years, following the completion of its luxury Bellevue Hill project, Splendour, in 2024. The group also has plans for a boutique development on Cowan Road in St Ives, as well as a 55-apartment project in Drummoyne.

&nbsp;

First look: Crows Nest Metro apartments pitched by Prosper

Private equity real estate firm Conquest is upsizing plans for its recently acquired Quadrangle Shopping Centre in Sydney’s Castlecrag.

Conquest purchased the site for just shy of $70 million last year, with existing plans in place for a mixed-use residential and retail precinct comprising 38 luxury apartments.

Those plans have now been significantly expanded, with the developer lodging a State Significant Development Application with the NSW Government’s Housing Delivery Authority for 150 apartments across two 11-storey buildings. The apartments will sit above a four-storey podium, incorporating specialty retail tenancies and five levels of basement car parking, on the 5,166 sqm site at <a href="https://www.apartments.com.au/new-apartments/100-edinburgh-road-castlecrag-nsw-2068">100 Edinburgh Road</a>.

<img alt="Conquest" data-entity-type="file" data-entity-uuid="581d49cf-7f03-4d17-a864-88700bf1fef1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-21%20at%208.24.49%E2%80%AFAM.png?VersionId=K1U7nXEFcwuYHEKJwEKlnmtggRb2XjDQ" />

fjcstudio has designed the shop-top housing development, which it says will “deliver a more efficient and future-focused design outcome.”

“The site occupies a strategically significant position within the Castlecrag Local Centre, situated along Edinburgh Road and surrounded by established low-density residential areas and natural bushland,” the studio said.

“The proposal responds to this context through a carefully considered design that integrates built form, landscape, and public domain improvements, while respecting the suburb’s strong landscape and heritage identity.”

<img alt="Conquest" data-entity-type="file" data-entity-uuid="1c170ad2-0a65-43a3-a5de-8bea82b69b11" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-21%20at%208.25.38%E2%80%AFAM.png?VersionId=gqsRHFKAlG7kH4t4Q9rkFWTMpmEbKmI8" />

The architects say the increased height and density are consistent with the NSW Housing SEPP objectives, supporting greater housing diversity and affordability while achieving high standards of architectural and environmental performance.

The proposal also references the draft Willoughby Local Centres Strategy 2036, which aims to promote a network of thriving, attractive and distinctive village centres across the local government area.

“The current trend shows that Castlecrag’s population is set to increase significantly over the coming years. The site falls within the study area for Castlecrag and is in an ideal location for higher density to meet anticipated urban strategy targets at both a state and local level. Aligning with metropolitan strategies, the proposed development will contribute to a more walkable local centre and help meet demand for an additional 1,500 dwellings across Willoughby’s local centres by 2036.”

Of the roughly 1,000 homes in Castlecrag, only around 11 are apartments, according to the latest ABS Census data.

Conquest has been increasingly active in the development space in recent years. The group acquired the Eastlakes Shopping Centre redevelopment, where it plans to deliver more than 1,000 apartments above a new retail precinct, and has also lodged a $900 million State Significant Development Application for a <a href="https://www.apartments.com.au/news/nsw/conquest-unveils-900m-stanmore-village-vision-for-landmark-inner-west-site">mixed-use precinct in Stanmore</a>.

First look: Conquest targets higher density at Castlecrag shopping centre site

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The expiry of Tasmania's first home buyer incentives for purchasers of established dwellings in 2014 saw first home buyer demand decline, according to QBE’s latest housing report.
First home buyer demand in the state has since bottomed out and is now in a recovery phase, the report said.
Loans to first home buyers increased by an annual 6% in 2015/16 and the rising trend has been accelerating, with loans to first home buyers in June quarter 2016 being 24% higher than the same period a year earlier.
It is likely that some of this demand stems from increased interstate migration. In contrast, purchase activity by upgraders and downsizers has been easing, with loans to non–first home buyers having fallen by 4% in 2015/16.
Demand from investors has also been decreasing, with the total value of loans to investors having fallen by an annual 13% in 2015/16. As with the other states, tightened lending policy by the banks is containing investor demand, although the decline in 2015/16 has been lower than the national decline.
Rental growth has been largely flat and vacancy rates are close to balance at just under 3% through 2015/16.
House prices in Hobart were flat in 2014/15, but picked up in 2015/16, with the median house price increasing by 5.2%. Tasmania’s net interstate migration outflow has been steadily declining since peaking in 2011/12, and interstate migration is on track to record a net inflow in 2015/16.
Part of the driver of this recovery is likely to be increased “tree changers” downsizing from the more expensive mainland capitals, while there are also likely to be many returnees from the mining states who contributed to the higher net interstate migration outflows of recent years.
House price growth has been unevenly spread across the Local Government Areas of Hobart. Median house price growth has been particularly strong in Hobart (10.1%), Clarence (8.4%) and Kingborough (6.9%). Glenorchy (1.1%) and Brighton (2.8%) saw more moderate house price growth while Sorell (–3.3%) experienced a decline in its median house price. The overall Greater Hobart median grew 5.2% over 2015/16.
<a href="/images/2016/10/14/Table%2012.jpg" target="_blank">Click to enlarge</a>
<a href="/images/2016/10/14/Table%2012.jpg" target="_blank"><img src="/images/2016/10/14/Table%2012.jpg" alt=""></a>
The Tasmanian economy has been weak in recent years. A high Australian dollar and slow population growth have added to general economic weakness. However, improved household spending, non–residential building activity and improving exports suggest a stronger economic recovery.
The weakening Australian dollar should support growth in tourism while the agricultural and mining industries should also benefit. The state unemployment rate fell from 7.8% at March 2014 to 6.6% at March 2016. Greater Hobart has a lower unemployment rate than the rest of the state, having fallen from 6.7% to 6.1% over the same period.
Greater Hobart has also been the main destination for migrants from overseas, interstate and the rest of Tasmania, with its population rising by 0.8% in 2014/15 while the population of the rest of Tasmania was flat.
On the supply side, completions at the state level have continued to rise while underlying demand has been slow. This has seen Tasmania’s dwelling surplus climb from 4,800 dwellings to an estimated 5,300 dwellings at June 2016. Given the disparity between population growth, it is likely that the oversupply is greater in regional Tasmania.
Reflecting lower income levels and fewer drivers of employment, Hobart has the lowest median house price compared to the other state capitals. Its relative affordability compared to other capital cities is a significant driver of demand as interstate migrants seek a more affordable market.
The current low interest rate environment is expected to improve affordability and spur purchaser demand, the QBE report said. Poor affordability in Melbourne and Sydney is expected to fuel further migration to Tasmanian cities, a trend already evident with the net interstate inflow forecast to increase further to 1,000 persons in 2016/17 and 2017/18.
Click to open chart in new window
<img src="/images/2016/10/14/Chart%2030.jpg" alt="">
Overall, the gradual recovery in the local economy and interstate migration is expected to underpin price growth, while the presence of an excess dwelling stock at the state level will likely limit price growth to more moderate levels. Hobart’s median house price is forecast to rise from $377,900 at June 2016 to $425,000 by June 2019, reflecting growth of around 4% per annum or a cumulative 12.5%.
With a significantly smaller unit market, and thus a smaller sample of sales volumes to measure the median, movement in the median unit price in Hobart can be much more volatile from quarter to quarter. Overall, however, median unit prices have been in a gradual decline since its peak median price of $420,000 in June 2011.
With falling investor demand, the unit market could experience the greatest impact as investor purchasers have traditionally been more prevalent buying units.
This softness is expected to continue to dampen demand, limiting median unit price growth to a forecast 1%–2% per annum through to 2018/19. This is forecast by QBE to push the median unit price to $315,000 at June 2019; a cumulative growth of 4.5% over the forecast period.
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j.ballantyne1990-6AQqhLzZaK

Hobart first home buyers in recovery stage: QBE Housing Outlook

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Australian global insurer QBE will join anchor tenant ANZ in Victoria Harbour’s 839 Collins Street office building.
QBE will occupy around 6,000 square metres across three floors and will move approximately 400 employees from 628 Bourke Street by mid-2019.
ANZ has already leased 26,500 square metres of the building.
The building was designed by award winning architect Denton Corker Marshall.
All tenants have access to a north-facing outdoor garden and terrace with a multi-purpose sports court, event spaces and BBQ facilities.
Opening as the lobby’s restaurant and café this year is, The Other Brother. 
The 39,000 square metre building is now close to being fully leased and will reach practical completion in March.
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QBE joins ANZ in Victoria Harbour office building

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<div>House prices across Australia are tipped to grow in the next three years, with the exception of Sydney and Melbourne where they will continue falling in 2019, according to QBE’s Australian Housing Outlook 2018-2021.</div>
<div> </div>
<div>It reveals that over the next three years house prices are set to rise in Adelaide by 12.4 per cent, in Brisbane by 11.3 per cent, Canberra by 10.4 per cent, Hobart by 7.9 per cent, Darwin by 6 per cent and Perth 5 per cent after several years of stagnant conditions. </div>
<div> </div>
<div>Providing a 12-month window for first home buyers to pursue the Great Australian Dream, the primary drivers for a strengthening property market in these capital cities are affordability, increased demand and improving economic conditions. </div>
<div> </div>
<div>The report has been quickly labelled "delusional reading."
</div>
<div> </div>
<div>QBE Lenders’ Mortgage Insurance (LMI) CEO, Phil White, said the surge in first home owner lending proved the Great Australian Dream of home ownership was alive.</div>
<div> </div>
<div>“We haven’t seen the first home buyer market this strong since the Australian Government’s 2008 stimulus plan following the Global Financial Crisis, which saw $1.5 billion allocated to first home buyers,” Mr White said. </div>
<div> </div>
<div>“The increases in the volume of first home buyers has been supported by improvements in affordability and first home buyer incentives. </div>
<div> </div>
<div>“Record low interest rates in recent years had seen a surge in investor lending, but this year’s report shows investor lending scaling back, which should also provide further room for first home buyers over the next couple of years.</div>
<div> </div>
<div>“Lenders’ responses to regulatory restrictions have contributed to the softening of the market.  State government incentives have encouraged first home buyers to enter the market after several years of being pushed out by domestic and foreign investors.”</div>
<div> </div>
<div> </div>
<div>Adelaide is forecast to see the strongest growth of any capital city in the country, continuing its steady growth trajectory, but outpacing all other capital cities over the next three years.</div>
<div> </div>
<div>The outlook is less rosy for apartment owners, with unit prices set to fall in Brisbane by 5.1 per cent, Darwin by 4.5 per cent, Sydney by 3.1 per cent and Melbourne by 2.1 per cent. </div>
<div> </div>
<div>This is due to weaker demand from investors and an increase in supply of apartments. </div>
<div> </div>
<div>“We anticipate foreign investment will further dampen in coming years owing to a number of factors such as increased approval fees, stamp duty and land tax surcharges, as well as tighter capital controls from foreign governments, most notably China, which have impacted how much money they can take out of their country,” Mr White said.</div>
<div> </div>
<div>Over the next three years, the overall housing market will be supported by strong population growth, with net overseas migration forecast to remain high in the long-term, averaging 220,000 per annum over three years to 2020-2021, significantly higher than the prior 20-year average of 183,000 per annum. </div>
<div> </div>
<div>This growth will underpin demand for new dwellings and help meet the high level of new supply coming online in some markets. </div>
<div> </div>
<div><a href="https://www.qbe.com.au/lmi/news/reports/housing-outlook"> </a></div>
<div>State-by-state highlights of the QBE Housing Outlook 2018-2021</div>
Sydney
<ul>
<li>Sydney’s house prices are expected to fall in the beginning forecast period and end up 1.2% lower to be at $1,090,000. </li>
<li>The unit market is expected to fall even further for Sydney with a forecast drop of 3.1% to 2021 to reach $745,000. </li>
<li>Affordability and first home buyer incentives are expected to continue to underpin first home buyer activity</li>
<li>After seeing the strongest price growth in the 12 months prior, Sydney’s inner and middle ring suburbs have seen the largest fall in prices over 2017/18 (falling by 8.1% and 10.6% respectively).</li>
<li>Outer Sydney saw a more moderate decline of 2.8% over the same period, which was likely supported by its relative affordability appealing to first home buyers.</li>
</ul>
Melbourne
<ul>
<li>Housing market prices to fall in Melbourne, with house prices expected to drop by 2.5% to $835,000 by June 2021. By means of comparison, Sydney house prices are expected to fall by 1.2% to June 2021.</li>
<li>Unit prices are also expected to decline 2.1% to $545,000 in Melbourne.</li>
<li>Continued population growth is expected to absorb some of the excess supply of units.</li>
</ul>
<div>Brisbane</div>
<ul>
<li>House price growth will continue and be 11.3% higher to $615,000 by June 2021. This is more growth than Canberra (10.4%), Hobart (7.9%), Darwin (6.0%) and Perth (5.0%). Only Adelaide (12.4%) is expected to outperform Brisbane house prices. </li>
<li>Oversupply of units will continue to put downward pressure on rents and prices of units to decline by 5.1% to $405,000. This is the greatest expected decline of all capital cities. </li>
<li>Greater competition for tenants of inner-city apartments is forecast to cause investors to lower rents to try to draw tenants from houses and more affordable city fringe locations. </li>
</ul>
Perth
<ul>
<li>Overall, the Perth market is expected to be at or near the bottom with houses and units expected to experience some growth in price to June 2021. House price growth in Perth will beat Sydney and Melbourne but underperform compared to Adelaide, Brisbane, Canberra, Hobart and Darwin. </li>
<li>Dwelling surplus in Perth looks set to remain in place for some time. </li>
<li>The forecast median house price of $550,000 at June 2021 will represent cumulative growth of 5% over the next three years, with unit price forecast to rise 3.7% to $405,000.</li>
</ul>
Adelaide
<ul>
<li>Adelaide is expected to record similar house price growth as the last three years and is forecast to grow by 12.4 per cent over the next three years, the highest of any Australian capital city. </li>
<li>Median unit prices are projected to rise by a slightly lower 6.3 per cent, making Adelaide the second strongest unit market after Hobart’s 9.3 per cent. </li>
<li>These positive forecasts can be attributed to Adelaide’s ongoing market affordability, coupled with low interest rates, despite South Australia’s generally depressed conditions. </li>
</ul>
Canberra
<ul>
<li>Growth in house prices forecast with median house price to increase 10.4% to reach $745,000. This is more than growth forecast for Sydney, Melbourne, Hobart, Darwin and Perth. </li>
<li>Unit price is forecast to reach $465,000, a cumulative rise of 5.9% to 2021. </li>
<li>Conditions in the house market in Canberra are expected to remain largely positive, driven by population growth, an undersupply of houses and strong employment prospects. </li>
</ul>
Hobart
<ul>
<li>Hobart’s median house price forecast to rise to $520,000, reflecting growth of 7.9% to 2021.</li>
<li>Median unit price in Hobart forecast to reach $420,000 at June 2021; a cumulative rise of 9.3%. </li>
<li>An undersupply of housing and better affordability relative to other capital cities is expected to continue to influence the property market</li>
<li>While all other states across the country saw declines in the value of investment loans, Tasmania’s strong capital gains in recent years meant it was the only state to see increased investor lending, of 9.7 per cent. </li>
</ul>
Darwin
<ul>
<li>This trend is expected to recover with house prices forecast to grow 6.0 per cent over the next three years.  </li>
<li>Unit prices are expected to fall 4.5 per cent over the same period. </li>
</ul>
State-by-state house price forecasts
<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/2018/10/25/QBE%20HOUSE%20.jpg" alt="">
State by-state unit price forecasts
<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/2018/10/25/QBE%20UNITS.jpg" alt=""> 
 
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Great Australian dream once again within first home buyer reach: QBE suggest

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<div class="cq-article-content-paras section">
Melbourne house prices will outpace the Sydney market with 10 percent growth over the next three years, QBE's latest Australian Housing Outlook report forecasts.
Investor lending curbs will hit Sydney more heavily pulling its median house price down 0.2 percent to $1,150,000 by 2020 from the current $1,178,000, according to the report by QBE's Lenders Mortgage Insurance unit produced with consultancy BIS Oxford Economics.
House prices in Melbourne will rise from $852,700 to $940,000 by 2020, the report predicts.
The Sydney dip would be limited to just the two next years, with a 1.1 percent fall in the year to June 2018 and a 2.6 percent decline the next year before recovering to post a 1.3 per cent increase in the year to June 2020, the report predicts.
QBE’s Housing Outlook 2017-20 reveals the majority of Australia’s cities will experience house price growth with Canberra house prices to rise 16%, Hobart to 11%, Melbourne to 10%, Brisbane to 7%, Adelaide to 7% and Perth to 3% over the next three years.
The picture is less rosy for apartment owners, with unit prices set to fall for Brisbane 7%, Melbourne 5%, and Sydney 4%. 
<a href="https://www.propertyobserver.com.au/images/2017/10/25/QBEForecast.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/10/25/QBEForecast.png" alt="">
QBE Lenders’ Mortgage Insurance CEO Phil White said that while unit prices will soften, the sector will play a growing influence on the nation’s property market over the coming decades. 
“With so many Australians priced out of the housing market, the Australian Dream of owning property is increasingly turning to high and medium density apartments,” he said. 
“Units contribute to a greater share of the market as changing lifestyles and affordability dictate property choices. 
“Encouragingly, that dream should become a reality for more Australians, with improving affordability overall.” 
Units now account for 46 per cent of all residential construction across the country. 
The report forecasts Sydney, Melbourne, Adelaide, Perth and Darwin to become more affordable in the next three years. Hobart and Canberra are expected to become less affordable to June 2020. 
“Recent low affordability in Sydney and Melbourne should stop purchasers from taking larger mortgages and bidding up prices even more,” he said. 
“With more lending restrictions impacting investors, it could be good news for owner occupiers as they should find less competition from investors.”
</div>
<div class="cq-article-content-media section">The report also predicts the benchmark cash rate will rise just 25 basis points higher to 1.75 per cent by 2020.</div>
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Sydney prices to fall slightly over next three years with Melbourne's surge continuing

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The underlying demand for new dwellings is driven largely by the increase in households, underpinned by population growth, according to QBE's latest housing report.
The balance between underlying demand and supply has an impact on vacancy rates, rents, prices and construction.
Chart 15 shows the forecast average underlying demand for additional dwellings by state in the next three years compared with current supply, with supply indicated by total new dwelling starts in 2015/16.
<img src="/images/2016/10/14/Chart%2015.jpg" alt="">
New dwelling starts in 2015/16 in all states are on track to be higher than forecast annual underlying demand over the three years to 2018/19.
The boost to new dwelling supply will move all the states into oversupply, with the exception of New South Wales, where the accumulation of a high dwelling deficiency will take some time to be absorbed.
The states where commencements are now highest relative to forecast underlying demand are Australian Capital Territory (86% above), the Northern Territory (69% above) and Western Australia (61% above).
Chart 16 shows dwelling stock deficiency by state as a percentage of forecast annual underlying demand as at June from 2016 through to 2019.
<a href="/images/2016/10/14/Chart%2016.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Chart%2016.jpg" alt="">
A large dwelling stock deficiency has accumulated in New South Wales and is currently the highest of all states at June 2016. This is evidenced by its low vacancy rate. With dwelling starts now eclipsing annual underlying demand; being 49% higher, the dwelling stock deficiency in New South Wales is beginning to be absorbed and is projected to fall below one year’s worth of underlying demand from 2017/18.
Record highrise apartment construction activity in the inner city areas of both Melbourne and Brisbane is taking supply above underlying demand. In Victoria, dwelling starts were 40% above underlying demand, while in Queensland it was 59% higher.
As a result, the small dwelling stock deficiencies in each state at June 2016 are anticipated to erode and become a dwelling stock surplus by June 2017. The stock surplus in each state is forecast to increase with the surplus likely to be most concentrated in the apartment sector.
With Western Australia’s commencements being 61% higher than underlying demand in 2015/16, a small stock surplus has already emerged, which is evidenced by Perth’s high vacancy rate.
With much of Western Australia’s temporary skilled migrants living in camps onsite and in temporary accommodation during periods of not working, it is likely that the surplus dwelling stock is higher than indicated.
As the Western Australian economy continues to slow and temporary migrants return to their country of origin, the oversupply is expected to become more acute over the next three years.
In the Northern Territory the current dwelling surplus is illustrated by Darwin’s high vacancy rates and falling rents, and the surplus is expected to persist throughout the forecast period.
Similarly, in Tasmania and South Australia, based on current and forecast construction levels, the current dwelling surplus in both states is forecast to rise through to 2018/19 and be higher than a year’s underlying demand.
The Australian Capital Territory has been consistently overbuilding, culminating in a growing surplus of dwellings over the next three years. This is characterised by falls in rents, and until recently, high vacancy rates.
There has been a marked shift toward new unit development since 2012/13, which includes villa units, townhouses, semi detached dwellings, terraces, flats and apartments. The rising demand for new units has partly been underpinned by demographic trends, with an increase in preference by some of the population to live in smaller dwellings.
<a href="/images/2016/10/14/Table%204.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Table%204.jpg" alt="">
However, the largest driver of the shift has been the strong investor demand in this period, with units typically favoured by investor purchasers. Units have accounted for 46% of total dwelling approvals in Australia between 2012/13 and 2015/16. This compares with a 33% share in the 10 years to 2011/12.
The largest increase in unit development has been in Victoria (from 30% share in the 10 years to 2011/12, to 47% over the past four years) and Queensland (33% share rising to 46%). While over half of new dwelling approvals in New South Wales, Northern Territory and Australian Capital Territory are units, unit building activity has always accounted for a high share of new dwelling activity in this state and these territories. Gains in unit development have been less pronounced in the other states.
With the increase in unit construction being higher than for house construction over the past four years, it is likely that oversupplies in the states will be most prevalent in the unit sector. In Victoria and Queensland, where the greatest increases in unit dwelling building is occurring, the projected surpluses will be most heavily concentrated amongst apartments in the inner city markets.
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New dwelling supply will result in oversupply: QBE Housing Outlook

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Underlying demand for new dwellings is driven primarily by population growth which, at the state level, is a combination of an increase in births less deaths and net overseas and net interstate migration flows, according to QBE’s latest housing report.
The demand from net overseas and net interstate migration is more immediate because this group typically requires accommodation upon arrival, be it owner occupied or rental. Net overseas migration refers to the balance of arrivals to, and departures from, Australia. To be included in this calculation, an arrival is counted if they are resident in the country for 12 out of 16 months.
Long term arrivals – which predominantly comprise people on student or skilled temporary subclass 457 visas – surged to an annual record of 516,000 in the year to March 2013. Solid employment growth in mining sector related industries resulted in a re-emergence of skills shortages which underpinned the rise in long term overseas visitors.
Although arrivals from overseas were at record levels in March 2013, departures from Australia were also increasing, with the net effect that net overseas migration was below the record levels set in 2008.
Since the second half of 2013, long term arrivals have contracted in response to the slowing conditions in the Australian economy. There has been a decline in work–related visas such as subclass 457 visas as the reduction in the resource sector investment leads to diminished employment opportunities.
Long term departures are on the increase as temporary migrants return to their country of origin upon expiry of their visas. Net migration from New Zealand has also declined in this period because its economy has improved relative to Australia.
With the decline in annual net inflow from long term arrivals, net overseas migration has decreased to an estimated 155,000 at June 2016. Falling arrivals and increasing departures, due to the lack of opportunities for temporary migrants to extend their stay, is forecast to continue, taking net overseas migration to a low of 140,000 in 2017/18 and 2018/19.
While lower than recent peaks, this figure is elevated in a long term sense, being higher than most years through the 1990s and early 2000s. There may be some upside to these forecasts.
Strong growth is occurring in international student enrolments, with the number of overseas students commencing courses in Australia increasing by 42% in the three years to 2015/16, and net overseas migration could be higher if many elect to stay on.
Average annual net overseas migration over the 2016/17 to 2018/19 period is forecast to be lower across all states (with the exception of the Australian Capital Territory) than the long term 1999/2000 to 2015/16 average.
The largest declines are expected to be in the states where net overseas migration inflows have been high as a result of skills shortage generated by booming resource sector investment.
<a href="/images/2016/10/14/Chart%2013.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Chart%2013.jpg" alt="">
The forecast share of national net overseas migration in Western Australia (8.0%), Queensland (12.0%) and Northern Territory (0.5%) over 2016/17 to 2018/19 will be significantly lower than their long term average.
Weak employment prospects as mining investment continues to decline will encourage more overseas migrants to settle in the other states, while overseas migrants employed on temporary working visas are increasingly returning home as projects wind up.
Growth in overseas migration into New South Wales and Victoria lagged that of the resource states during the mining investment boom. As a result, the states are not experiencing rising outflows of temporary workers. Moreover, with the strongest performing state economies, these states are also attracting a greater share of arrivals.
The states are forecast to attract an average 40.1% and 31.3% of Australia’s net overseas migration respectively between 2016/17 to 2018/19; higher than their long term average share. The Australian Capital Territory is also forecast to attract an increased share of national net overseas migration.
Overseas students look to be one of the few components of net overseas migration to increase. Australian National University has a large overseas student population, which has an influence in a smaller city such as Canberra.
As with New South Wales and Victoria, net overseas migration into South Australia and Tasmania was also behind the resource states.
With economic conditions remaining challenging in these states, their share of national net overseas migration over 2016/17 to 2018/19 is forecast to be similar to their recent average since 2007/08 (6.0% and 0.7% respectively).
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Overseas migrants in decline: QBE Housing Outlook

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Yields in the capital cities are below the 15 year average, according to QBE’s latest housing report.
This can be seen in the chart below, which shows movement in indicative rental yields for houses by capital city. The indicative yield is calculated as the median three bedroom house rent divided by the median house price.
<img src="/images/2016/10/13/Chart%2010.jpg" alt="">
The indicative yield slightly understates actual yields, as the median house price is reflective of the whole market (investors and owner occupiers) while rents are reflective of just properties in the investment market.
Investment properties are more likely to be priced below the median house price of all dwellings, although achieve a typical rent. Nevertheless, movement in the indicative yield should correspond with actual yields.
QBE compared the rental return with the cost of financing by using the measurements for indicative rental yield and the standard variable interest rate respectively.
• In Sydney and Melbourne, indicative rental yields for houses are well below other capital cities, with stronger house price growth in these two capitals over the past three years widening the gap. At June 2016, the indicative rental yield for houses in Sydney was 2.4% and in Melbourne was 2.5%. For Melbourne, this was the lowest yield on record, for Sydney, yields are at their lowest level since 2004.
• In Adelaide and Perth, yields at June 2016 were on par at 3.9%. In Canberra, yields were a little higher at 4.2%. Adelaide’s yield has varied over the past 10 years, while sharp falls in rents in Perth have seen its yield decline. In Canberra, yields rose in the year to June 2016 as the fall in rents stabilised.
• Brisbane’s yields have fallen to 3.7% in 2015/16 as house price growth has been above the minimal rise in rents over the year. This is the lowest level recorded.
• In Darwin weaker rental growth has resulted in a continued decline in housing yields in 2015/16, to 4.6%. Darwin has the highest indicative house yield of the capital cities, just edging out Hobart which had yields relatively stable at 4.6% during the year.
Yields in all capital cities are below the 15-year average. Despite the low yields, the corresponding low mortgage interest rates means the gap between rental yields and interest rates in most capital cities remains narrow.
In some instances, selected properties in individual markets are likely to be positively geared, particularly with the current ability of purchasers to obtain a rate better than the current standard variable rate.
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Rental yields in capital cities are below the 15-year average: QBE Housing Outlook

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Median house prices in Sydney began to escalate at the end of 2012 as successive cuts to interest rates and the underlying dwelling deficiency firmly in place released pent up demand into the market, according to QBE's latest housing report.
Sydney’s median house price experienced a considerable increase totalling 58% over the four years to June 2016 to be $1,047,600.
Purchaser demand was initially boosted by improved affordability as variable rates fell below 6.5% in 2012 keeping the ratio of mortgage repayments on a median priced house to just over 31% of average household income, which initiated the upturn before further interest rate cuts fuelled stronger price growth through 2013.
The return of solid price growth drove more investors into the market. At the same time, a strong recovery in the New South Wales economy, attracted surging overseas migration and a record low interstate outflow, which in turn caused Sydney’s dwelling deficiency to escalate.
As prices rose, the next wave of demand was driven by investor buyers attracted by price growth and attractive yields in light of the falling interest rates. The value of residential investor loans in New South Wales surged 153% in the three years to 2014/15. In comparison, the number of loans to owner occupiers were 9% higher in the same period.
<a href="/images/2016/10/14/Table%205.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Table%205.jpg" alt="">
Median house price growth peaked at 24.4% per annum over 2014/15 but has since slowed considerably, estimated to have declined by a marginal 0.4% in the year to June 2016. Investor finance is now contracting after banks tightened access to credit and increased interest rates for investor loans in 2015.
Loans to investors began to fall dramatically in December quarter 2015, being 22% down on the corresponding period a year earlier, while the total annual decline of loans to investors in 2015/16 was 17%. Over the twelve months to June 2016, median house prices in inner and middle Sydney (where prices are significantly higher) were in decline while outer Sydney maintained growth of 3.9%.
This correction, largely driven by the impact of regulatory changes targeted at investor buyers, is in contrast to the strong fundamentals in the house market.
Vacancy rates continue to remain tight at 1.8% in June 2016 while underlying demand is forecast to remain strong due to strong population growth from solid net overseas migration and low net interstate migration.
With investors making room in the market, loans to owner occupiers have accelerated, recording an 11% rise in 2015/16.
This is expected to somewhat offset further expected weakness in investor loans, with Sydney’s median house price forecast to see further price growth of 1.7% in 2016/17 to be $1,065,000 at June 2017.
However, the growing impetus from owner occupiers is likely to slow. New dwelling supply began to exceed demand in 2015/16, with Sydney’s underlying dwelling deficiency finally beginning to ease.
Further expected falls in the deficiency through to 2018/19 is expected to continue to ease pressure on prices.
Together with continued weakening investor demand, this is expected to precipitate a fall in Sydney’s median house price.
Low interest rates should prevent any major flood of forced sales onto the market to drive down prices significantly, with a forecast fall in the standard variable rate to below 5% in 2017/18 also providing some support.
Sydney’s median house price is forecast to pull back to $1,055,000 by June 2018 and $1,050,000 by June 2019, resulting in median house price growth being effectively flat by the end of the forecast period.
New South Wales is the only state that is forecast to maintain its underlying dwelling deficiency through to 2019 despite record levels of dwelling completions coming through. Strong population growth has supported rising underlying demand while the low interest rate environment has supported affordability.
<a href="/images/2016/10/14/Chart%2017.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Chart%2017.jpg" alt="">
Tight vacancy rates and limited rental growth are expected to continue to drive investor demand. Moreover, compared to many other capital cities, aggregate new dwelling supply in Sydney has been characterised by a proportionate increase in both new house and unit supply. As a result, both house and unit markets are likely to remain in deficiency over the forecast period.
Price growth in the Sydney unit market has been below that of the house market. Sydney’s median unit price rose by an estimated 41% in the four years to June 2016. However, price growth has already started to flatten with the median unit price growing by just 3% in 2015/16.
Slowing rental growth and falling yields as well as changes to the regulatory landscape have impacted investor demand. Investors are more prevalent in the unit market than the detached house market and it is expected that the larger falls expected in investor demand mean the unit market will have greater downside in price than the house market over the forecast period.
With higher interest rates and lower loan–to–value ratios for investor lending, capacity for investors to enter the market or pay higher prices is being curtailed. Similarly, the new level of apartment construction taking place may have an impact on vacancy rates and rental growth as the dwelling deficiency is slowly eroded.
Sydney’s median unit price growth is forecast to fall 1.8% in 2016/17 and cumulatively by 6.8% over the three years to June 2019 to a median unit price of $680,000.
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Sydney unit price growth forecast to be flat: QBE Housing Outlook

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The Melbourne house market saw significant growth in the two years to 2014/15, with the median house price growing by 11.4% and 16.9% in 2013/14 and 2014/15 respectively, according to QBE's latest housing report.
Underlying demand has been underpinned by strong population growth over this period.
Net overseas migration into Victoria has averaged 55,400 persons per annum in the four years to 2015/16; above its 15–year average of 49,200 per annum. Net interstate migration has also been improving. Based on published data to December 2015, Victoria is on track to experience a record net inflow of 11,000 persons in 2015/16.
<img src="/images/2016/10/14/Chart%2020.jpg" alt="">
This population growth has continued to maintain a deficiency of dwellings in the Melbourne market despite continued growth in new dwelling supply. This deficiency, together with low interest rates, has driven purchaser demand.
However, median house price growth has slowed in 2015/16 to 4.8%. Further rises in new dwelling supply have taken the market almost back into balance, reducing the pressure on prices. Investor demand has also weakened in 2015/16 due to regulatory pressures, and the net result has been slowing price growth.
The slowing market has been most felt in the Inner and Middle rings of Melbourne, where median house price growth was a minimal 0.7% and 2.8% respectively in 2015/16. In contrast, median house price growth in Outer Melbourne was 10% in 2015/16 as stronger price growth moved into the more affordable regions of Melbourne.
Without experiencing a large benefit in economic activity from the boom in resource sector investment in the prior years, Victoria has been relatively insulated from the tapering off in mining investment compared to the resource– driven states. This should sustain an elevated migration inflow, although the net inflow is forecast to nevertheless weaken.
Many of Victoria’s trade exposed and service industries have benefited from a lower Australian dollar over the past two to three years. However, the dollar has been creeping upwards again through 2016, maintaining pressure on these sectors and preventing further investment.
Moreover, further headwinds will emerge in the short term as the automotive manufacturing sector sees all three remaining locally based car manufacturers close their production facilities across 2016 and 2017. Negative impact on employment across the entire supply chain is likely to weigh heavily on the local economies focused in the outer suburbs.
<a href="/images/2016/10/14/Table%206.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/14/Table%206.jpg" alt="">
Melbourne also faces a significant supply pipeline that will see dwelling completions peak in 2016/17 and tip the market into oversupply. With population growth also expected to ease through the forecast period and lead to weaker underlying demand, this oversupply is forecast to steadily increase through to 2018/19.
While expected to be mainly in the unit sector, there is likely to still be flow on impact in the housing market.
Rising vacancy rates are expected to result in a further retreat from the market by investors, who were already declining in demand due to tightening lending policies by the banks. While there is expected to be enough momentum in the market to drive limited median house price growth of 2% in 2016/17, price growth is forecast to be negative in 2017/18 and 2018/19 as Victoria’s oversupply continues to increase, with a cumulative fall of 3% over the two years resulting in an aggregate 0.6% decline over the forecast period.
The unit market has underperformed in comparison to the house market with median unit prices growing 13% compared to median house price growth of 36% over the three years to June 2016. This reflects the growth in new supply with unit completions far surpassing completions in houses over the same period.
The high levels of unit construction have added significant supply to the market. While a modest aggregate dwelling deficiency is estimated at June 2016, the unit market is estimated to be in oversupply.
Record levels of apartment completions, as well as a strong project pipeline expected though to 2017/18, is likely to continue to impact vacancy rates, rental growth and unit prices. At the state level, the oversupply in dwellings is expected to grow through to 2019 with the excess concentrated in the unit sector.
This excess is also expected to be compounded by changes to investor lending guidelines which have already started to impact investor demand. Melbourne’s median unit price is forecast to decline by a total of 9% over the three year period to $480,000 by June 2019.
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Melbourne's apartment oversupply to impact on entire housing market: QBE Housing Outlook

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Investor purchasers reached a peak in 2014/15, nationally accounting for a high of 51 percent of all residential loan activity, according to QBE's latest housing report.
However, APRA’s guidance on home lending to investors resulted in a number of financial institutions raising interest rates on investor loans by 25 to 30 basis points in July 2015 (despite no change in the RBA cash rate), while also including increased interest rate buffers and tightened loan–to–value ratios in their lending criteria.
These measures effectively limited the supply of investor loans, and the value of loans to investors nationally fell by 17 percent in 2015/16. Moreover, investors’ share of total residential loan activity has fallen back to around long term levels, to 44 percent in 2015/16. Nevertheless, at this level, investors remain a key driver of capital city residential markets.
In contrast, owner occupier demand has risen. While first home buyer activity remained flat in 2015/16, loans to non–first home buyers rose by 7 percent in 2015/16. It may be that with less competition from investors, owner occupiers are stepping in to fill the gap.
As a result, non–first home buyers accounted for 43 percent of total residential finance in 2015/16, back to its 15 year average. Meanwhile, at 13 percent in 2015/16, the share of residential finance to first home buyers remains below its long–term average of 15 percent.
Growth in investment lending has also slowed as a result of APRA’s preference for financial institutions to contain annual portfolio growth in investment lending to below a 10 percent threshold, and lending policy toward investors appears to have eased slightly.
The rate of decline in investor lending has slowed a little toward the end of 2015/16. Monthly loans to investors edged up between April and June 2016, although in June 2016 still remained 15 percent below a year earlier. A return to the 2014/15 peak in investor activity is not expected.
Slowing rental and price growth is likely to contain investor appetite for residential property, while more recent tightening in bank lending policy toward overseas investors will also slow overall investor demand.
Overseas investors have been a key driver of demand for new dwellings, with some demand also flowing into the established home market. Typically, an overseas resident purchaser can only buy a new dwelling, while a temporary resident can purchase an established dwelling that must be sold upon returning home.
Chart 3 shows the number and dollar amount in billions approved and reported by the Foreign Investment Review Board (FIRB) of total residential purchases by temporary residents and people overseas for new dwellings. The “Developer Off–The–Plan” category refers to the number of buildings that have been pre–approved, although not all will have necessarily been purchased by overseas residents.
The total value of overseas investment in residential property (which includes the entire value of buildings where 100 percent of dwellings have been pre–approved for overseas buyers, although all of these may not have been taken up) surged tenfold, from $6.09 billion in 2009/10 to $60.75 billion in 2014/15.
Foreign investors have been attracted to Australian property as a means to geographically diversify out of their own country in a stable and transparent market. A lower Australian dollar is likely to have also assisted the rise in foreign demand in 2014/15.
FIRB approvals are likely to have remained elevated in 2015/16, although a number of forces are now coming into play that are seeing the number of overseas purchasers decline:
• Slowing price growth and low residential yields will encourage investment elsewhere;
• Banks have tightened lending policy toward overseas buyers, such as not accepting foreign income in serviceability assessments, and reducing loan–to–value ratios depending on residency status.
• New South Wales, Victoria and Queensland have imposed a surcharge on stamp duty of 3 percent, 4 percent and 7 percent respectively to foreign purchasers. New South Wales also introduced a 0.75 percent land tax surcharge for foreign residential owners, while in Victoria the 0.5 percent absentee owner (primarily foreign owners) land tax surcharge will rise to 1.5 percent from 1 February 2017.
• Tighter capital controls in China, a key source of foreign investment into Australia’s property market, may limit capital outflow and impact investor activity in Australian markets.
The headwinds for foreign investors are expected to have the greatest impact on the new dwelling market, particularly the apartment sector, where substantial pre–sales are required for a project to obtain development finance for construction.
For those that have already purchased off–the–plan, it will become more difficult for foreign investors to settle, particularly if a lower loan–to–value ratio and potential lower valuation requires a significantly higher equity contribution by the purchaser.
If there is an increase is apartments that do not settle, there is likely to be greater downward price pressure in the apartment market as these apartments are placed back onto the market for re–sale, most likely at a lower price.
<a href="/images/2016/10/13/Chart%203.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/13/Chart%203.jpg" alt="">
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