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

Rental Yield

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Hobart suburbs Rokeby and Glenorchy led the country in highest gross rental yield within 10 km of the CBD in 2016 among Australia’s capital cities, according to CoreLogic.
Rokeby led in houses with a median value of $193,291 and gross rental yield of 7.2 percent, while Glenorchy topped in units with a median value of $123,144 yielding 6.4 percent, says CoreLogic’s Best of the Best 2016 report.
Hobart suburbs dominated the top 10 list for houses with the top nine spots. The tenth slot went to Franklin in the Unincorporated ACT region. 
The list for units was more mixed with Oxley in Brisbane at no. 2 and Carlton in Melbourne at no. 3 respectively.
Property Observer found a three-bedroom house at 4 Benboyd Court Rokeby, TAS, 7019, (below) which sold for $186,500 in 2016 and was offered for rent at $270 pw, according to RP Data. The rental yield works out to 7.5 percent, close to the gross rental yield of 7.2 percent for Rokeby.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/Hobart10kmpic1.jpg" alt="">
For units, a two-bedroom unit at <a href="https://www.realestate.com.au/sold/property-unit-tas-glenorchy-122596726" target="_blank">2/20 Balmain Street Glenorchy, TAS, 7010</a> (below) sold for $162,000 in September 2016 and was listed for rent at $240 pw, according to RP data. The yield works out to be 7.7 percent, above the 6.4 percent gross rental yield for units in Glenorchy.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/Hobart10kmpic2.jpg" alt="">
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prateek24-ezbwHMbNAk

Hobart suburbs Rokeby and Glenorchy lead in rental yield within 10 km of CBD

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When it comes to rental yields on a property, there’s no beating Cairns when it comes to apartments.
The Queensland city occupies eight spots in the Top 10 highest gross rental yields compiled by CoreLogic, including the top four.
The southern suburb of Woree in Cairns tops the list with a rental yield of 8.7 percent on a median unit value of $137,358, according to CoreLogic’s Best of the Best 2016 report that tracks various housing indicators up to the 12 months to September 2016. 
The only other suburbs not from Cairns are Elizabeth East and Davoren Park in Adelaide’s Playford, occupying fifth and sixth places, respectively.
 <img src="https://www.urban.com.au/images/2016/12/23/CairnsUnitRentYld.png" alt="">
According to the latest RP Data, the median asking rent for Woree is $255 per week.
Property Observer looked around for units around the median value of $137,358 on RP Data to see what their current yields were. 
A two-bedroom unit at <a href="https://www.realestate.com.au/sold/property-unit-qld-woree-116149035" target="_blank">3/10 Girralong Street Woree, QLD, 4868</a>, which last traded owners in 2014 for $136,000 was last rented out for $260 pw, which gives a rental yield of 9.94 percent.
<img src="https://www.urban.com.au/images/2016/12/23/CairnsNo1.png" alt="">
Another two-bedroom unit at <a href="https://www.realestate.com.au/sold/property-unit-qld-woree-122550290" target="_blank">2/1 Sandown Close Woree, QLD, 4868,</a> which sold in June 2016 for $133,000 was last leased for $260 pw, implying a solid yield of about 10.16 percent. 
 <img src="https://www.urban.com.au/images/2016/12/23/CairnsNo2.png" alt="">
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Cairns is undisputed king of rental yields for units

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The question always remains on how to find a property that will deliver yield and growth.
Often a property with a high rental yield for its purchase price has a reason and usually because of the area it’s in.
The area may experience periods of rapid value growth, but just as quickly can decline often too quickly to exit the market resulting in a poorly performing asset.
While it is important for investors to at least have enough yield to cover costs without growth in value there’s little point in continuing to hold onto it.
A low yielding property is just as bad since a situation can arise that results in holding costs become too high or when the investor cannot afford to improve the property.
Therefore it is clear that investors need to be have the skill to pick assets that have a suitable yield now and potential future growth. In addition they also need to know depreciation, understanding deductions and capital work allowances which can all substantially improve net cash flow.
To do that there are a few important points that needs to be pointed out:
Present hotspots are likely to have already achieved their peak period of growth
The common saying that the closer to the city a property is the better the growth is incorrect. Many outer areas have performed exceptionally well and often beat inner-city properties.
Key growth drivers includes a fast-growing population, plenty of infrastructure planning, employment opportunities and a median household income that grows faster than inflation.
Blue-chip areas may have been good investments in the past, but now they are not so good in the present.
Family demographics is also an important part of the driving force as they tend to anchor in one area and simply upgrade when need be This also results in less supply as properties become scarcer however this only happens in areas with highly affordable properties.
Areas to look for include Geebung, Bracken Ridge, Acacia Ridge and Forest Lake as well as Altona Meadows, Sunshine West and Coburg North.
Have a property question?  <a href="mailto:news@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
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mlomas-KC9MUPZ6Ca

How to find a property that will deliver yield and growth: Margaret Lomas

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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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j.ballantyne1990-6AQqhLzZaK

Rental yields in capital cities are below the 15-year average: QBE Housing Outlook

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An oversupply of new apartments in some regions in Australia over the next two years will pressure both real estate prices and rental returns from investment properties in these areas, says Moody's Investors Service.
The conclusions were contained in Moody’s report titled Apartment Construction Boom Poses Moderate Risk to Australian RMBS, which is based on the data in its supplementary excel report, Australian RMBS Exposure to Apartments in High-Density Regions. 
Around 230,000 new apartments are due to be completed across all the capital cities of Australia by 2018, according to Corelogic. This figure is more than double the annual average sales of apartments over the five years to April 2016. And more than half will be built in regions where there is already a large supply of existing apartments.
"Such a development will in turn raise the risk for residential mortgage-backed securities (RMBS) exposed to these 'high-density regions', but for Moody's-rated RMBS portfolio overall, the rise in risk will be moderate," says Natsumi Matsuda, an analyst at the credit rating firm.
"Specifically, with the Australian RMBS that we rate, there is a moderate overall exposure of 5.6% to mortgages on apartments in high-density regions," said Matsuda. 
"Furthermore, the risk posed to RMBS is mitigated by the level of equity that is available to absorb losses if borrowers default, as highlighted by the low weighted average loan-to-value (LTV) ratio of mortgages on apartments in high-density regions.” 
Exhibit 1 shows the exposure of the Australian RMBS portfolio to regions where, according to Corelogic, the largest number of new apartments is due to be completed over the next two years. The RMBS portfolio's largest exposures to apartments in these high- density regions are in the Sydney Inner City and Melbourne City regions, which are ranked first and third in terms of the areas with the most new apartments due to be completed over the next two years. 
<a href="/images/2016/10/13/Exhibit1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/13/Exhibit1.jpg" alt="">
On LTV on mortgages in high-density regions, the current level is 62.5 percent, which drops to 47.6 percent after considering the increase in apartment prices.
Exhibit 2 below shows the five deals with the largest exposure to mortgages on apartments in high-density regions. In all of these deals, mortgage loans have low LTVs on weighted average basis, which means there is a material level of equity to absorb losses if borrowers default. 
<a href="/images/2016/10/13/Exhibit2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/13/Exhibit2.jpg" alt="">
Exhibit 3 below lists the five deals with the lowest exposure to mortgages on apartments in high-density regions. These deals face the least risk from the increase in the supply of apartments in high-density regions.  
<a href="/images/2016/10/13/Exhibit3.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/13/Exhibit3.jpg" alt=""> 
Melbourne suburbs have least additional equity to absorb losses
Of the high-density regions to which the Australian RMBS portfolio is exposed, mortgages in inner Melbourne have the least additional equity (7.6%) for absorbing losses, owing to the relatively low level of apartment price increases, says Moody’s.
Prices in the Melbourne City region have risen by just 5% over the last five years, compared with the 40% rise in Sydney apartment prices over this period.
<a href="/images/2016/10/13/Exhibit4.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/13/Exhibit4.jpg" alt="">
A relatively high proportion of mortgages on apartments in high-density regions are investment (46.5%) and interest-only (31%) mortgages, which adds to the risk, says Moody. 
Investment and interest-only mortgages are typically riskier than owner occupier and principle and interest mortgages, because, among other factors, borrowers typically repay loans slower and will therefore build equity more slowly. 
In the RMBS portfolio, the slower repayment of housing investment and interest-only mortgages is evident in the higher LTVs of these loans when compared with the overall portfolio, as Exhibit 5 shows. 
<a href="/images/2016/10/13/Exhibit5.jpg" target="_blank">Click to enlarge</a>
 <img src="/images/2016/10/13/Exhibit5.jpg" alt="">
Furthermore, the large supply of new apartments due to be completed in high-density regions will put downward pressure on apartment rents in these areas and drive up vacancy rates, lowering the return for investors who rely on rental income to repay their housing investment loans. 
Rental yields on apartments in Sydney and Melbourne are already at the lowest levels in a decade. Such developments will in turn pressure mortgage performance.
 
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Rising supply of apartments in Australia to pressure prices, especially inner Melbourne: Moody’s

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Rental rates fell over July by 0.3 percent to be 0.6 percent lower over the 12 months to July 2016 according to the CoreLogic July Rent Index.
According to CoreLogic research analyst Cameron Kusher, rental rates continue to ease as supply ramps up.
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He said potentially, the changing rental market conditions will have a flow on effect for older stock, particularly units given we’re seeing so much new unit supply being added to the rental market, much of which is located in inner city locations.
“It is anticipated that the rental market weakness will persist and that on an annual basis rents will continue to fall over the coming months,” he said.
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"Combined capital city median weekly rents are currently $483 and at their lowest since December 2015. 
"In contrast, this time last year, capital city rental rates had increased by 0.9%. Combined capital city rental rates are $485/week for houses and $467/week for units. 
"Over the past 12 months, rental rates have increased in Sydney (+0.4%), Melbourne (+2.0%), Hobart (+6.2%) and Canberra (+1.9%). Rental rates have fallen over the past year in Brisbane (-1.0%), Adelaide (-0.5%), Perth (-9.2%) and Darwin (-15.7%). Hobart and Canberra are the only capital cities to have recorded stronger rental growth over the past year compared to the previous year.
 
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Rental rates fell 0.3 percent over July: CoreLogic

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SPONSORED POST
As an investor, you’ll want to minimise the amount of tax you pay on your rental property and ensure the process of completing tax returns run as smoothly as possible. Here are some tips to help.
1. Keep paperwork in order from the start. Record all up-front expenditure when buying your investment as initial expenses form part of the property’s cost base and can help cut capital gains tax when you sell. Carefully file all investment-related receipts throughout each year to minimise headaches at tax time.
2. Pre-pay interest and other expenses if it makes sense for you.
3. When considering whether to repair or replace an appliance or fixture, remember repairs can be claimed in the tax year in which they were incurred while replacements often need to be depreciated over the item’s lifespan. This could make a difference to your investment’s costs and your annual tax bill.
4. Consider obtaining a depreciation schedule. These do cost but they may allow you to claim deductions for capital works and assets such as appliances that save thousands in tax over the time you own the investment. 
5. Handle tax in the same way as the names on the property title: if the property is held equally in joint names, for example, you both need to declare half the income and claim half expenses in your tax returns.
6. Beware of redrawing on your investment property mortgage for personal use. This changes the amount of interest you can claim as a tax deduction and may affect whether your property is positively or negatively geared.
7. Try to time the sale of your investment property so it settles in a year when your taxable income will be lower. This might mean waiting until you retire, take a break from work or start a business, for example.
8. If you plan to dispose of a loss-making investment, try to sell in the same year as a profit-making investment property so you can use the loss to reduce your net capital gain, and therefore your tax bill. Remember to offset capital losses from previous years against current-year gains.
9. Seek advice before buying property through a self-managed superannuation fund. There can be tax advantages but there are fewer benefits to negative gearing through super. There are also restrictions on what you can do with your rental property that don’t apply to investments you directly own – such as renovating and renting to relatives or friends.
10. Seek professional tax advice to ensure you’re claiming all you’re entitled to. 
To download a free ebook on new financial year taxation tips for property investors,<a href="http://propertyobserver.com.au/forward-planning/tools/ebooks-and-webinars/55208-new-financial-year-tax-planning-tips-for-property-investors" target="_blank"> click here</a>.
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Minimise the amount of tax paid on rental property investment

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Investors or first-home buyers can still find dwellings around $500,000 in Sydney if they venture a little further from the CBD area, according to valuation firm Herron Todd White’s residential property market report for July.
Two such areas are East Sydney and the Inner West.  
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East
After strong growth over the past 18 months, there is little property in the eastern suburbs that can be found in the $500,000 price range other than small studios within the CBD and smaller one-bedroom units around the city fringe suburbs of Potts Point, Chippendale, Elizabeth Bay and Surry Hills, according to HTW's property report.
With low vacancy rates and strong yields, they still represent good investments with rental yields on average around 5%. 
As an example, an art deco style studio unit with no car accommodation, updated kitchen and bathroom, timber flooring and combined living/ bedroom with a rental estimate of $450 per week, sold in Greenknowe Avenue, Elizabeth Bay in May 2016 for $452,000. 
Property Observer found another sale in nearby Potts Point — a studio at <a href="https://www.realestate.com.au/property-studio-nsw-potts+point-122657674" target="_blank">6/16 Macleay Street</a> for $450,000.
Inner West 
Similar to the eastern suburbs, this price point is limited to studio, one-bedroom units and very modest older style two-bedroom units with no car accommodation, according to HTW.
A semi-modern studio unit on Parramatta Road, Camperdown with car space and currently rented for $425 per week sold in May 2016 for $490,000. 
Following the railway line, Ashfield, Summer Hill and Haberfield have old style one-bedroom, one-bathroom units that are near to the $500,000 range and still providing good rental returns and low vacancy rates with the opportunity for capital appreciation if the purchaser has access to funds to fully renovate in the future.
Property Observer found a one-bedroom apartment at <a href="https://www.realestate.com.au/property-unit-nsw-ashfield-122830018" target="_blank">2/74 Alt Street Ashfield NSW 2131</a> for $472,000, according to CoreLogic RP Data.
 
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Good yields characterise cheap units in eastern and Inner West Sydney: HTW  

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The average gross rental yield across the combined capital cities hasn’t been this low since 1996 when CoreLogic began collecting relevant data, according to the June Hedonic Home Value Index.
The average gross yield on a house is 3.2 percent and units 4.1 percent.
CoreLogic research director Tim Lawless said Despite low mortgage rate settings, the low yield profile implies that the majority of recent investors will be experiencing a cash flow loss on their property after expenses are taken into account.
Rental yields are generally low across all of the capital cities, however, it is only in Sydney and Melbourne where yields for both houses and units have dropped to new record lows. Melbourne remains the lowest yielding market for houses, averaging 2.9%, whilst unit yields are now lowest in Sydney and Darwin, averaging 3.9%. 
“Overall, the strong housing market conditions in Sydney and Melbourne are being reported in-line with high auction clearance rates and resilient levels of mortgage related activity and are also supported by a robust level of consumer confidence.”
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Average gross rental yield lowest since 1996: CoreLogic

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Hawthorn East is the fastest growing rental suburb in Victoria, according to Investar's latest suburb report.
The suburb seven kilometres East of Melbourne's CBD has had a one year change of 16.66 percent on its studios or one bedroom units.
It's closely followed by St Kilda, whose two bedroom houses have seen a change of 16.16 percent.
  
1. Hawthorn East, VIC - Studio and one bedrooms - Median rent: $350 - One year change: 16.66 percent
2. St Kilda, VIC - Two bedroom house - Median rent: $575 - One year change: 16.16 percent
3. Brunswick West, VIC - Two bedroom townhouse - Median rent: $430 - One year change: 13.15 percent
4. Geelong, VIC - Two bedroom unit - Median rent: $360 - One year change: 12.5 percent
5. Sale, VIC - Two bedroom unit - Median rent: $250 - One year change: 11.11 percent
 
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