Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Rba Rate Decision

<html><body>
A survey of 16 economists and experts undertaken by Finder.com.au has found that the Reserve Bank of Australia is unlikely to change their rates in their June meeting tomorrow.
Of course, the question remains as to when the rate will next be increased – with the majority of experts believing we have reached the bottom of the rate cycle.
According to those surveyed, nine forecast an increase next year. This included AMP, ANZ, Bank of Sydney, ING Direct, RAMS, UBS, Heritage Bank, Moody’s Analystics and ME Bank.
Meanwhile, five respondents, from Commonwealth Bank, Commsec, Urbis, HSBC and St George Bank, pointed to a cash rate increase this year.
Of the experts, 10 believed that reactions to the federal budget cuts will delay any change. Nine noted that more stability needs to be seen in the economy before any changes.
Results from Finder survey:
<table style="width: 460px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="215">
Economist/expert, organisation
</td>
<td valign="top" width="426">
Snap shot of comments
</td>
</tr>
<tr>
<td valign="top" width="215">
Shane Oliver, AMP
</td>
<td valign="top" width="426">
“...Nothing's really happened. The Reserve Bank has cut interest rates to these record lows, and that has had an impact on the economy...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Warren Hogan, ANZ
</td>
<td valign="top" width="426">
“...There’s no inflation pressure on the economy just yet so they can keep the rates low, and there's no need to cut them...”
</td>
</tr>
<tr>
<td valign="top" width="215">
John Symond, Aussie
</td>
<td valign="top" width="426">
"...We don't think there will be a change to rates, as the economy continues to send out mixed signals..."
</td>
</tr>
<tr>
<td valign="top" width="215">
Steven Pambris, Bank of Sydney
</td>
<td valign="top" width="426">
“...The current record low interest rates will have to continue for some time...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Michael Blythe, CBA
</td>
<td valign="top" width="426">
“...What will be interesting to see is how the budget's reception will impact household consumption...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Craig James, Commsec
</td>
<td valign="top" width="426">
“...There's been a lot of huffing and puffing about the budget, but really it's people's perception. There's no reason for the reserve Bank to be cutting rates...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Paul Williams, Heritage Bank
</td>
<td valign="top" width="426">
“...The rba will be keeping an eye on the trends in unemployment, developments in key offshore economies, inflation levels and rising tensions in south east asia and europe...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Paul Bloxham, HSBC
</td>
<td valign="top" width="426">
“...The economy is showing signs of rebalancing but inflation is fairly contained at this stage...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Michael Witts, ING Direct
</td>
<td valign="top" width="426">
“...Although consumers appear to reacted adversely to the measures announced in the budget it is too early tell what the lasting impact will be...”
</td>
</tr>
<tr>
<td valign="top" width="215">
John Caelli, ME Bank
</td>
<td valign="top" width="426">
“...Inflation is within the target zone so the RBA can afford to wait and see the recovery unfold…”
</td>
</tr>
<tr>
<td valign="top" width="215">
Glenn Levine, Moody’s Analytics
</td>
<td valign="top" width="426">
“...The RBA will leave interest rates on hold, but this competing dynamic between a below-trend economy and a warming housing market will shape monetary policy in the next 12 months...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Jonathan Chancellor, Property Observer
</td>
<td valign="top" width="426">
“...Other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issues their monthly minutes this June...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Nathan McMullen, RAMS
</td>
<td valign="top" width="426">
“...Monetary policy settings remain mildly expansionary relative to long run averages and are appropriate given the current outlook...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Hans Kunnen, St. George Bank
</td>
<td valign="top" width="426">
“...The economic recovery isn't deep enough for them to be raising money this soon...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Scott Haslem, UBS
</td>
<td valign="top" width="426">
“...It's pretty clear the RBA is expecting the economy to only slowly improve over the next couple of years...”
</td>
</tr>
<tr>
<td valign="top" width="215">
Nicki Hutley, Urbis
</td>
<td valign="top" width="426">
“...Consumers opened their wallets a little wider in the first few months of the year and the housing cycle is in full swing...”
</td>
</tr>
</tbody></table>
Property Observer’s editor at large, Jonathan Chancellor, who took part in the survey, noted that <a href="/expert-insights/finance/last-months-price-growth-dip-the-first-since-may-2013-so-rba-will-be-content">the RBA will be interested that national house values have fallen in May</a>, as they have in each of the past three May months.
“But May's fall is the first monthly fall in values since May 2013.
“Meanwhile construction is coming along nicely, with NSW taking the rightful crown from Victoria as the national's busiest new home market. That means, other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issues their monthly minutes this June.”
Last week, Property Observer reported that the <a href="/news/no-australian-housing-bubble-but-negative-gearing-induced-affordability-issues-former-rba-governor-ian-macfarlane">RBA's former governor Ian Macfarlane noted that there is no housing bubble</a>, but that affordability is an issue. Part of the affordability issue, he said, is negative gearing's effect.
For more predictions of when the next rate increase will be, you can see <a href="/expert-insights/finance/what-will-happen-to-interest-rates-next-week-and-when-will-the-next-increase-be">a summary of economists' thoughts here</a>.
</body></html>

jduke-EHk3XBmHkn

16 experts predict “no change” from RBA tomorrow

<html><body>
The RBA will be interested that national house values have fallen in May, as they have in each of the past three Mays.
But May's fall is the first monthly fall in values since May 2013. It was down by 1.9% in May – the biggest fall since December 2008.
Meanwhile construction is coming along nicely, with <a href="/news/victoria-loses-residential-building-crown-to-nsw-hia">NSW taking the crown from Victoria as the national's busiest new home market</a>.
That means, other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issue their monthly minutes this June.
But Luci Ellis, the head of the RBA's financial stability department, was spot on when she told the CITI Residential Housing Conference last month that there will be more periods where prices are falling a little in absolute terms in future property market cycles.
<a href="https://www.finder.com.au/rba-cash-rate" target="_blank">My RBA cash rate forecast</a> gets published every month on finder.com.au.
Today's RP Data Rismark Index indicated a national fall in combined capital city dwelling values by 1.9% over the month. Only Darwin and Canberra went up in May.
<img src="/images/2014/06/02/rp-data-june-2-one.gif" alt="">
According to RP Data research director Tim Lawless, the dip can likely be attributed to both seasonality and more moderate housing market conditions.
Across most of the individual capital cities, dwelling values were also down over the month, led by Melbourne with a 3.6% reduction in values.
Sydney, which has been the stand-out performer, experienced a 1.1% fall in prices in May. Prices were up 2.2% over the past quarter.
Since the market low of May 2012, Sydney’s values have climbed 21.1%.
Over the past three months national capital city dwelling values are up 0.7% the lowest rolling quarterly rate of dwelling value appreciation since the three months ending June 2013.
In the May quarter Darwin was the strongest performer, up 5.5%. Melbourne was the weakest over the quarter. Brisbane prices were down 1.7% for the month but rose 2.2% in the quarter.
Prices in Perth and Canberra prices remain flat with little change over the May quarter.
<img src="/images/2014/06/02/rp-data-june-2-two.gif" alt="">
CommSec chief economist Craig James said after the latest data that "house prices couldn’t lift forever."
"At some point there had to be a correction and it seems the Federal Budget caused people to pause and take stock. 
"But the Reserve Bank will take the latest data on home prices in its stride. 
"Auction clearance rates were still healthy over the weekend, so the drop in home prices may just be the pause that refreshes. 
"In addition interest rates are low and there is evidence that the job market is improving. 
"The Reserve Bank can still afford to stay on the interest rate sidelines – perhaps to late 2014 or early 2015," James said
</body></html>

jchancellor-FAypfDUnLy

Last month's price growth dip the first since May 2013, so RBA will be content

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Ian Macfarlane, the governor of the Reserve Bank of Australia from 1996 to 2006, doesn’t think there's an Australian housing bubble.
"We do have an affordability problem, it makes it tough for young people to acquire a house in a desirable area.
"This is characteristic of every major city in the world that has desirable job opportunities. London, Paris, Berlin, New York, Hong Kong, Singapore," he told the recent Morningstar Investment Conference where he was asked his views on a potential residential property bubble in Australia.
"I think we faced a risk in 2003, not 2014. In 2003, we had lending for housing and prices rising at 20%, half of it speculative lending, negatively geared. 
"There were seven prime time television programmes on how to get rich in property.  Since then, on average, house prices have risen at the same rate as household income.
"For that reason, I don’t think we have a bubble," he said as reported by the <a href="https://cuffelinks.com.au" target="_blank">cufflinks </a>website.    He said the affordability problem was partly due to negative gearing making it tough for young people to acquire a house in a desirable area.
"Some of our policies make that worse, such as the extreme leniency we show towards negative gearing, but I don't think there is a bubble." 
</body></html>

No Australian housing bubble, but negative gearing-induced affordability issues: Former RBA governor Ian Macfarlane

<html><body>
Reserve Bank of Australia analysis recently put the national residential property market at just 1.9% off prior records set in the 2007 and 2010.
The RBA supplied the Australian Financial Review columnist Christopher Joye with its price-to-income ratio estimates after an information request.
The data was as at 31 March, with Joye noting that since March, home values across the capital cities have corrected modestly by 0.9%, according to RP Data-Rismark’s index.
"While this apparent improvement in affordability is welcome news, it does not necessarily mean alarm bells should stop ringing," Joye advised.
Some optimistic pundits claim that the softening in auction clearance rates and prices heralds a moderation in activity where capital gains will not exceed Australia’s 3% household income growth rate (to avoid heading into bona fide “bubble” territory)."
Joye says Australian household debt relative to incomes is 28% above the level that prevailed in December 2002 (based on the RBA’s numbers).
"And the dwelling price-to-income ratio is 15% more expensive than it was a decade ago."
Joye says there are some reasons to think that the current May slowdown is a "seasonal air pocket".
He says analysis shows that during the months of April through June, inclusive, house price growth is normally about 1% weaker than it is over the rest of the year.
"If there are no rate hikes this year and the marginal buyer supposes (irrationally) that the record low 4.8% mortgage rates they can get are here to stay, there is scope for them to bid up prices another 5 to 10%," he tipped.
"My own perspective is that we are unlikely to see any real correction in prices until borrowing rates normalise.
"That in turn requires hikes from the RBA, which is currently entrenched on the sidelines."
His concern is that when the RBA does recalibrate rates, home values could decline "sharply."
"Investors must therefore focus maniacally on getting value for money."
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RBA housing bubble alarm bells should be ringing despite May price correction: Christopher Joye

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The country’s housing market remains a source of economic strength, according to the Reserve Bank of Australia’s (RBA) May board meeting minutes.
Indicating strong growth in housing investment in the first half of 2014, dwelling approvals and commencements remain at high levels despite a recent decline. The RBA noted that housing price inflation had eased in past months from its recent “rapid pace”, citing softening auction clearance rates and stabilising housing loan approval numbers.
Demand for both established and new housing remains strong according to other indicators, including turnover, first home owner grants and loan approvals.
The board noted a lower than expected inflation outcome for the March quarter. This followed on from a “surprisingly high” quarterly inflation figure for December of 0.8%. Underlying inflation in the March quarter was around 2.5-2.75% in year-end terms. The board's forecast for underlying inflation remained consistent.
According to the RBA, the price increase for tradable goods was consistent with the depreciation of the exchange rate over the past year. Price inflation for non-tradables had softened to 3% in year-ended terms, markedly down from the 4% average of the past decade. The board cited declining wage growth over the preceding two years as a key factor in the decline.
Following late 2013’s pick-up in economic activity, indicators for labour market conditions showed some improvement. The unemployment rate was down for March, though it is unclear whether this is due to monthly volatility. However the board also noted strengthening employment growth and an apparently stabilising participation rate over the past few months.
Driven by strong export growth, economic activity increased over the previous six months. Economic growth is unlikely to continue at the same pace over the next few quarters, given that export growth is not expected to remain at the same high levels.
Growth in retail sales seems to have stabilised following strong increases at the beginning of the year. Household consumption remains supported by low interest rates and rising housing prices, with consumer sentiment staying around long-run average levels.
According to a number of surveys, business sentiment remains at average levels after climbing from mid-2013 lows. The board noted that business investment in construction could pick up, despite declines in non-residential building approvals in recent months.
Gross Domestic Product (GDP) growth over 2014-2015 is expected to be slightly below trend, given the decline in mining investment and planned budgetary tightening. However, economic growth is expected to “pick up to an above-trend pace” in 2015-16 due to the contributions of non-mining business investment and liquefied natural gas exports.
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jrichardson-uRX5hFdKfN

RBA notes strong housing market in May board minutes

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The first Coalition budget was always to going to be a fiasco – should the Coalition significantly reduce the budget deficit this would put the ALP in the untenable position of being seen as incapable of managing the nation’s finances given their past track record.
So when it goes to the Senate it will be rejected given the Coalition simply don’t have the numbers to get it through. In the meantime let’s have a look at what I perceive as a major housing affordability issue – actually it’s horrendous.
In a nutshell, the budget forecasts economic growth to be 2.5% in 2014-15 and moving to 3.5% in 2017-18. Unemployment to sit at 6.25% in 2014-15 then falling to 5.75% in 2017-18 and inflation sitting around 2.25% in 2014-15 rising to 2.5% in 2017-18. The big mover is debt which will reduce from $667 billion to $389 billion over the next 10 years.
All very good, but what are the Reserve Bank of Australia’s (RBA) cash rate projections as this is the sleeping elephant in the china shop.
Cue the Australian Bureau of Statistics (ABS) who released this week what many are saying is the real debt crisis in Australia and we should be very afraid about these statistics. Australian household debt at the end of 2013 came in at approximately $1.84 trillion which then calculates out at approximately 180% of disposable household income. Little wonder we are now starting to see household debt slowing – this should come as a major concern. Government debt is currently sitting at around 30% of GDP – Australian household debt today is sitting at around 120% of GDP.
Household debt is today at the highest level for 25 years and when you deduct 25 from 2014 you come up with 1989. Whilst the vast majority may not remember what happened in 1989, I clearly do as I <a href="/expert-insights/why-property-bubbles-are-like-the-loch-ness-monster">recently wrote about it</a>.
Now to put these statistics into greater context it needs to be remembered that back in 1989 the cash rate was sitting between 17.5% and 19% as against 2.5% today. The cash rate is crucial to the Australian housing industry given once the RBA starts to raise it there will be collateral damage along the way as “some” households will not be able to meet their repayments given our high cost of living. The areas that have been over heated in recent times are a natural example where previously they witnessed dramatic property value corrections.
<a href="https://www.rwm.com.au/files/2014/05/14-05-2014-10-15-49-AM.jpg"><img class="aligncenter size-full wp-image-8543" src="https://www.rwm.com.au/files/2014/05/14-05-2014-10-15-49-AM.jpg" alt="14-05-2014 10-15-49 AM" width="614" height="401"></a>
Source: Digital Finance Analytics
<a href="https://www.rwm.com.au/files/2014/05/14-05-2014-10-18-14-AM.jpg"><img class="aligncenter size-full wp-image-8544" src="https://www.rwm.com.au/files/2014/05/14-05-2014-10-18-14-AM.jpg" alt="14-05-2014 10-18-14 AM" width="689" height="387"></a>
Source: Digital Finance Analytics
So the ABS has released in its March 2014 data that Australia’s total housing stock is estimated currently at $5.1 trillion which equated to a rise of $105,348.0 million over that quarter – with the total number of residences calculated at 9.33 million.
The June housing numbers will make for compelling viewing given so many Australians see their homes as an appreciating ATM that can easily be borrowed against – which is fine so long as homes are in capital appreciation mode. In recent times we have seen areas posting annual capital appreciation of around 30% plus which signals dangerous debt loading.
<blockquote>
Until household debt starts showing signs of improvement the RBA could well be forced to lower the cash rate further to say 2.00%.
</blockquote>
Historically what we see next is the banks tightening their loan ratios which many would agree is long overdue given their recent ‘lend at all costs’ mandate to increase their respective market shares. We would all remember that as we entered the global financial crisis the first thing expected of the government is to guarantee bank deposits – to stop a run on the banks.
What is assured is that until household debt starts showing signs of improvement the RBA could well be forced to lower the cash rate further to say 2.00%.
When one takes a moment to seriously consider the economic ramifications we are presently observing in the housing industry, it makes a mockery of all the political bickering of what is currently being argued in Canberra.
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robertsimeon-hRNTwJyXkQ

Household debt is the sleeping elephant in the china shop

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Luci Ellis, the head of the RBA's financial stability department, hopes Australians can see an upswing in housing prices in the larger metropolitian centres and say, ‘I don't have to buy into that. I don't have to stretch my finances’.
Not that Australian household finances are looking too stretched at the moment.
"And we'd like to see it stay that way," Luci Ellis said.
Her speech to the CITI Residential Housing Conference noted that the 15 years to 2005 saw housing prices rise noticeably faster than incomes.
"This was in large part a transition to a new equilibrium of lower inflation and interest rates, and thus higher debt and housing prices relative to incomes. That transition is over now. Housing prices are therefore going to be cycling around a slower trend than they did in the past. There will be more periods where prices are falling a little in absolute terms," she said.
The means that there was "less scope for rising markets to cover mistakes if you fall in love with a property and overpay for it".
"It means there is little room for another round of property exuberance of the type we saw just over a decade ago, in 2002 and 2003. Australia managed to have its housing boom end without a major disaster. Plenty of other countries weren't so lucky.
"Usually it's the property developers that are the source of loan defaults and financial instability, not the households with mortgages. But an overstretched household sector is hardly a good environment to have if something should go wrong elsewhere in the economy.
"That is why the Reserve Bank and the Australian Prudential Regulation Authority (APRA) have emphasised loan serviceability so much of late."
She commented that lenders had become more sophisticated in the ways they assess households' capacity to repay mortgage loans.
"Most of them have moved beyond a crude approach of applying a blanket repayment-to-income test, more likely to take people's actual living expenses into account, not just some version of the Henderson Poverty Line. After all, it doesn't seem reasonable to expect people to have a poverty-level lifestyle to pay off a million-dollar home.
"Importantly, lenders are now more likely to apply an add-on to current interest rates when calculating the repayment they use in their serviceability tests. 
"It's fair to say that serviceability calculations are binding for first home buyers and less binding for trade-up buyers and investors. So it's no surprise that as interest rates have fallen, it's the trade-up buyers and investors whose demand has increased.
"Meanwhile first home buyers will feel squeezed out. This is probably more a cyclical phenomenon than a structural one. It is still probably quite disheartening for potential first home buyers.
"As such, it would not be a good outcome if they responded by overstretching themselves to try to get into the market during upswings."
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Disheartened FHBs warned not to overstretch home loan borrowings: RBA's Luci Ellis

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The Reserve Bank of Australia has noted that the strong established housing market has stimulated consumption in its latest Statement of Monetary Policy.
In its outlook for 2014-15, the Reserve Bank predicts that low interest rates will continue to support the housing market. Low rates are also expected to boost the construction of new dwellings and household consumption.
According to the Reserve Bank, a “pronounced increase in dwelling investment is underway”, with growth higher than was forecast three months ago. Increasing housing turnover is expected to stimulate renovation activity, which the Bank notes has “to date been quite subdued.”
The market for new housing remains strong, with building approvals also surpassing previous expectations. Forward looking indicators such as loan approvals and first home owner grants for new dwellings are also showing strong growth.
The Reserve Bank cites low interest rates, rising housing prices, average rental yields and first home owner grants for new dwellings as key drivers for housing investment.
Nationally, house price inflation has moderated somewhat in recent months. The Reserve Bank also notes that auction clearance rates have declined from their recent highs, while loan approvals remain stable. According to the Reserve Bank, "it remains to be seen whether these signs of tempering conditions represent a shift to a more sustainable growth rate for housing prices."
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RBA’s May 2014 statement: Dwelling investment increasing

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Aussie Home Loans executive chairman John Symond fears an overly tough budget could "knock the wind out of the sails" of consumer confidence.
"We have seen consumer confidence only very slowly improve.
"We don't want a kick in the guts with a budget that is too tough,"
"It could slow the economy down," he told Ross Greenwood on <a href="https://www.2gb.com/article/money-news-ross-greenwood-may-6th#.U2l-xFxK4Us" target="_blank">2GB MoneyNews</a>.
John Symond says he foresees more of the same when it comes to interest rates.
"I am not convinced there was a bias either way," he said on the RBA thinking.
"There are mixed signals in the economy and in the global economy."
"There may be stable rates for months to come," he suggested.
His comments on consumer confidence followed the weekly ANZ-Roy Morgan consumer confidence pulse which was down around 8% over the past two weeks.
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John Symond fears fallout from overly tough federal budget

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The Reserve Bank has kept the cash rate at a record low of 2.5% for another month. 
Today’s decision marks another month of historic lows for Australia’s interest rates, while many speculate that the Reserve Bank will move to increase rates by the end of the year as price growth stabilises and housing construction expands.
Reserve Bank governer <a href="/expert-insights/finance/strong-expansion-in-housing-construction-expected-rba-governor-glenn-stevens">Glenn Stevens said of today's decision</a>, "financial conditions overall remain very accommodative. Long-term interest rates and most risk spreads remain low. Equity and credit markets are well placed to provide adequate funding."
"In Australia, the economy grew at a below-trend pace in 2013. Recent information suggests moderate growth is occurring in consumer demand and foreshadows a strong expansion in housing construction. Some indicators of business conditions and confidence have improved from a year ago and exports are rising. But at the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative, as firms wait for more evidence of improved conditions before committing to expansion plans. Public spending is scheduled to be subdued," he said.
Australians can expect interest rate stability in the current inflationary climate.
"Looking ahead, continued accommodative monetary policy should provide support to demand, and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years," said Stevens.
"In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates." 
Michelle Hutchinson, money expert at comparison website finder.com.au, says that a drop in the cash rate is unlikely in the near future.
"While the <a href="https://finder.com.au">finder.com.au</a> Monthly Reserve Bank Survey found all 12 leading economists and money experts were correct with their prediction of no rate change today, most are expecting to see the cash rate rise by the end of the year or next year,” she said. According to Hutchinson, the current interest rate climate has seen some lenders fail to pass on rate cuts to borrowers.
"With no more rate drops on the cards, we found that lenders have kept on average 0.24 percentage points since rates began to fall in November 2011 by not always passing on the full cuts to their customers,” said Hutchinson.
LJ Hooker deputy chairman L Janusz Hooker predicts that a rate increase by the Reserve Bank could be as far away as December.
“There is still a chronic shortage of housing in areas such as Sydney and with this simple supply and demand imbalance continuing, it’s hard to see how the bottom can drop out of the market,” said Hooker.
Low interest rates have seen housing construction approvals pick up in many markets, while residential sales are strengthening in Hobart and even Adelaide, despite concerns about unemployment.
“Sensible buyers are factoring in future rate increases when doing their calculations but I also think there is an acceptance that the rate of growth the market has been enjoying will slow down,” he said.
According to RP Data national research director Tim Lawless, the latest housing market results showed that capital gains across the nation’s housing markets were slowing to more sustainable levels, which would have provided the RBA with some comfort.
“The April results showed a slowdown in dwelling value appreciation, up just 0.3% over the month, which is likely to be a welcome result after such previously strong conditions,” said Lawless.
“The ongoing low interest rate environment is likely to encourage higher levels of housing market activity which provides a fantastic multiplier for the Australian economy; however we anticipate that natural affordability barriers and low rental yields will continue to dampen the exuberance that has been very much evident in Sydney and Melbourne,” he said.
<img src="/images/2014/05/06/quotes-may-6-on.jpg" alt="">
 Source: Finder.com.au
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