Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

Reserve Bank

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The ABS have release figures showing unemployment rate dropping from 6 percent to 5.8 percent from January to February.
Nine News finance editor Ross Greenwood said it takes real pressure off the Reserve Bank when it comes to considering interest rate cuts.
New South Wales unemployment rate has dropped to 5.3 per cent.
South Australia's unemployment rate increased for 6.6 percent to 7.7 percent from January to February.
Finance expert <a href="https://twitter.com/PeteWargent" target="_blank">Pete Wargent took to Twitter</a> to show the unemployment rates across the country, highlighting the southern states struggles
 
<img src="/images/2016/03/17/Screen%20Shot%202016-03-17%20at%2011.56.02%20am.png" alt="" width="572" height="379">
 
 
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jrobinson-rf4aSBido9

Property 101: March unemployment numbers drop from 6 percent to 5.8 percent

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GUEST OBSERVER
A new monthly uncertainty index has been constructed by the Reserve Bank of Australia (RBA) to track the cost of different factors such as international events and government policy decisions on the economy.
Uncertainty is widely recognised as being a drag for the economy. Workers who become more uncertain about their future wages typically reduce what they buy to save for the future and face events like, say, a pay cut.
Entrepreneurs unsure about the economic environment, such as fiscal incentive or the availability of technology, reduce their investment and wait until the uncertainty dissolves. Research has found in spikes of uncertainty, in a given country, overall demand for goods falls, at least temporarily.
While these sorts of predictions are common among economists and policy makers, it’s a lot harder to quantify the impact of uncertainty. What is needed is a way to measure the consequences of events that cause shocks of uncertainty in the economy. Unfortunately, economic uncertainty is not directly observable.
Economist Angus Moore from the RBA combined information from news (in particular, keywords such as “uncertainty”, “budget”, “policy” and so on), financial indicators (mainly, financial market volatility), and measures of disagreement among forecasters for key economic variables like firms' earnings and real GDP growth, to document the evolution of the Australian economic uncertainty from 1986 to 2014.
The RBA’s index appears to correlate with domestic events, like Paul Keating’s “recession we had to have” speech in November 1990, and even more clearly with external events such as<a href="https://theconversation.com/9-11-fostering-connections-after-the-horror-3105"> </a>the 9/11 terrorist attacks and Lehman Brothers' bankruptcy. Some events, as the Greek debt restructuring in March 2012, actually correspond to decreases in the index because they work in favour of reducing uncertainty.
<a href="https://www.propertyobserver.com.au/images/2016/03/11/image-20160308-15308-1z0kkpl.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/03/11/image-20160308-15308-1z0kkpl.jpg" alt="">
<h4>
Major events and economic uncertainty Angus Moore, Reserve Bank of Australia 
</h4>
One test of this index is how is might relate to key macroeconomic indicators such as unemployment. If an increase in uncertainty is one of the reasons for slow growth, the labour market should show signs of slowdown in the presence of high uncertainty.
A comparison of the employment rate with the uncertainty index shows that economic uncertainty does seem to move hand-in-hand with unemployment in Australia. In particular, the economic uncertainty index is on average 20 points higher when unemployment is rising.
<a href="https://www.propertyobserver.com.au/images/2016/03/11/image-20160308-15291-1bksyr2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/03/11/image-20160308-15291-1bksyr2.jpg" alt="">
<h4>Unemployment and economic uncertainty Angus Moore, Reserve Bank of Australia</h4>
It may be that major external shocks - like 9/11 - may induce variations in the business cycle and, consequently, generate uncertainty. It’s difficult to factor in the business cycle in the data that used to create an uncertainty index.
The RBA’s model found that increases in uncertainty of a fairly modest amount - such as 30 basis points - are associated with a downturn characterised by lower employment growth, weaker retail sales growth, and a fall in consumer confidence.
However, the size of the impact appears to be small. Uncertainty shocks are found to have a noticeable effect on the level of the cash rate, which decreases by about 20 basis points. This may explain why the impact of uncertainty on real activity is modest, for example, the RBA would have promptly intervened when needed in order to tackle the effects of spikes in uncertainty.
Does this mean that uncertainty is unimportant? No. In fact, the results point to the fact that, in absence of an adequate systematic policy response by the RBA, uncertainty could have more markedly slowed down the Australian economy.
Olivier Blanchard, former chief economist of the International Monetary Fund, famously wrote in the aftermath of the collapse of the US financial markets in 2009 that there was “(nearly) nothing to fear but the fear itself.” Policymakers should aim at reducing uncertainty as much as possible by clearly communicating credible fiscal and monetary plans. This is crucial because, as the US case proves, economic uncertainty is more often than not driven by policy uncertainty.
In light of this relationship, Prime Minister Malcolm Turnbull should bear in mind that carefully managing Australian’s expectations on future economic policy reforms is a delicate task, and that backpedalling does not appear to be an option.
 
Efrem Castelnuovo is principal research fellow, Melbourne Institute of Applied Economic and Social Research, associate professor, Faculty of Economics and Business, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/efrem-castelnuovo-145615" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Economic uncertainty; nothing to fear but fear itself

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GUEST OBSERVER
The Westpac/Melbourne Institute index of consumer confidence fell by 2.2 per cent in March to 99.1. A reading of 100 is the dividing line separating optimism from pessimism.
Wisest place for savings: “Banks” was the wisest place to put new savings according to the survey.
Overall 27.4 per cent believe the wisest place for savings was in “banks”, up 1.2 percentage points over the quarter.
Next highest was “Pay debt” (24.4 per cent – 4-year high, up 6.6 percentage points), which overtook “real estate” (14.7 per cent, down 8.7pp). A total of 7 per cent of respondents were unsure of what to do with additional savings – the highest reading in records going back over 20 years.
Home loans: The number of loans (commitments) for people who are buying or building homes to live in (owner-occupiers) fell from 7-year highs, down by 3.9 per cent in January. Refinancing of home loans fell from record highs, down by 4.4 per cent in January.
The housing finance data has implications for banks, building material suppliers and retailers. The consumer confidence data is important for retailers and consumer-facing businesses.
<a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.20.14%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.20.14%20AM.png" alt="">
What does it all mean?
The monthly consumer confidence data is now merely useful as a check against the timelier weekly survey. The ANZ-Roy Morgan survey has the same number of survey respondents as the monthly series, has been running over the same number of years and covers the same questions, but is conducted each week. And what is clear from both surveys is that confidence levels seemingly consolidated over the month.
According to the Westpac/Melbourne Institute survey, consumer sentiment eased marginally in the latest result. The Roy Morgan weekly reading indicated similar volatility over the month with consumer sentiment lifting in the past week. The improvement in the global outlook, stronger domestic economic data and the recent strength in the Australian dollar should support confidence levels over the medium-term.
Where is the wisest place to put new savings?
According to the latest survey it’s in the bank, which strengthened its ascendancy in the latest quarter. Interestingly the major loser in the quarter was “real estate”. This was surpassed by “pay debt” as the second best option for additional savings. It was the first time in 3ó years that “paying down debt had surpassed real estate. In fact only 14.7 per cent of respondents believed real estate was the best option for additional savings – the weakest reading in over four years. It is quite a turnaround for “real estate” given that just six months ago it was considered the most attractive savings option with the highest reading in 12 years.
No doubt the run up in house prices, tighter home lending criteria by the banking sector and recent consolidation in the housing sector are prompting more households to focus on alternative asset classes to property. Interestingly the low interest rates on offer and volatility in stock markets has seen a substantial lift in the number of respondents that do not know what to do with additional savings. A total of 7 per cent of respondents claimed not to know what to do with additional savings – the highest reading in records going back over 20 years.
Despite the recent pullback the home loan market remains in good shape. Especially when you consider that loans to home owners eased from a 7-year high. Where the weakness is more paramount is in investor loans which have fallen substantially over the past six months. The value of investor loans is now down almost 15 per cent on a year ago. The result is a positive for the housing sector given over-lending to the sector last year. More prudent lending policies should ensure that the housing sector continues to remain resilient, contrary to the discussion of a substantial downturn.
The Reserve Bank is comfortably on the interest rate sidelines. Refinancing may have eased in the past month from record highs but the low interest environment is likely to prompt more home owners to shop around for the best home loan rates in coming months.
<a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.21.18%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.21.18%20AM.png" alt="">
What do the figures show?
Housing finance - number
The number of new owner-occupier housing loans (commitments) fell by 3.9 per cent in January after rising by 2.7 per cent in December. Excluding the refinancing of dwellings, the number of loans was down by 3.6 per cent.
Loans by owner-occupiers for the construction of homes  down by 2.8 per cent in January; loans to buy newlyerected dwellings  fell by 3 per cent; and loans for the purchase of established dwellings  (excluding refinancing) fell by 3.8 per cent. The number of refinancing transactions  fell by 4.4 per cent.
Housing finance - value
The value of new housing commitments (owner occupier and investment) fell by 3.4 per cent in January after a 0.1 per cent fall in December. Owner-occupier loans fell by 4.3 per cent while investment loans fell by 1.6 per cent.
The value of loans by owner-occupiers and investors to build new homes  fell by 0.9 per cent in January after falling by 1.2 per cent in December. The value of loans to build new homes stood at $2.77 billion, weakening further from the record high of $2.93 billion in December 2014.
Consumer sentiment:
The Westpac/Melbourne Institute index of consumer confidence fell by 2.2 per cent in March to 99.1 after lifting by 3.9 per cent in February. The confidence index is down 0.4 per cent on a year ago. The current conditions index fell by 7.3 per cent while the expectations index rose by 1.7 per cent.
Three of the five components of the index fell in March:
The estimate of family finances compared with a year ago was down  by 8.2 per cent;
The estimate of family finances over the next year was up  by 0.2 per cent;
Economic conditions over the next 12 months was up  by 8.2 per cent;
Economic conditions over the next 5 years was down by 2.5 per cent;
 The measure on whether it was a good time to buy a major household item was down by 6.6 per cent.
Gender &amp; demographics: Men (index reading of 104.6, up 2.3 per cent) were more optimistic than Women (94.4, down 6 per cent). The sentiment index for young people fell by 17.1 per cent to 99.9 in March. Across the other demographics: 25-44 years (index 103.1, up by 0.4 per cent); 45 years plus (index 96.3, down 0.7 per cent).
Housing outlook: A good time to buy a dwelling? – Index up 5.5 per cent in the quarter and although still down 13.1 per cent on the year.
Wisest place for savings: “Banks” was the wisest place to put new savings according to the survey. Overall 27.4 per cent believe the wisest place for savings was in “banks”, up 1.2 percentage points over the quarter. Next highest was “pay debt” (24.4 per cent, up 6.6pp), followed by “real estate” (14.7 per cent, down 8.7pp), “shares” (7.6 per cent, down 2.3pp), and “dont know” (7 per cent, up 4.1pp) “superannuation” (4.9 per cent, up 0.4pp).
State sentiment levels: NSW (up 1.6 per cent), Victoria (down 5.3 per cent), Queensland (down 2.6 per cent), Western Australia (up 1.2 per cent) and South Australia (down 10.6 per cent).
<a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.22.27%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%2010.22.27%20AM.png" alt="">
What is the importance of the economic data?
Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.”
Confident consumers may be more inclined to spend, especially on major items.
What are the implications for interest rates and investors?
From a broader sense, confidence levels are OK without being great. Looking forward, a period of calm on share markets and the recent strength in the Australian dollar could be key factors supporting household confidence.
For Aussie consumers, a stronger Aussie dollar means increased purchases on the internet and trips abroad, so the recent strength in the Aussie dollar will support confidence.
The Reserve Bank will be comforted by the more stable conditions in the investor housing market.
CommSec expects no change to interest rate settings for the foreseeable future.
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Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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“Pay debt” at a four year high: Commsec's Savanth Sebastian

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GUEST OBSERVER
There have been no surprises from the RBA which left interest rates on hold at its March meeting. This marks the tenth month in a row with the cash rate remaining at 2 percent.
In its Statement accompanying the decision, the RBA made very little changes: continuing to sound less upbeat on the global economic outlook, acknowledging the volatility in financial markets, continuing to see inflation remaining low and seeing property price gains 
in Sydney and Melbourne as having moderated.
The RBA also indicated that it is continuing to wait for more information in order to be able the impact of financial turbulence on the Australian economy and to assess the labour market. 
However, it did make too substantive changes to its post meeting Statement. In removing a reference to above average levels for survey measures of business conditions and in saying that “continued low inflation would [as opposed to “may” in the February Statement] provide scope for easier policy, should that be appropriate…” the RBA appears to have strengthened its easing bias somewhat.  
Our view remains that the RBA will cut interest rates again this year reflecting the risks around the global economy, weaker than expected commodity prices, still subdued growth in Australia at a time when the contribution from housing construction is slowing, a more dovish Fed threatening a higher Australian dollar and continued low inflation. However, this may not come till May. Given the RBA’s focus on inflation the March quarter CPI to be released in late April will be worth watching.
However, whether there is another rate cut or not from the RBA, it remains very hard to see rate hikes any time soon. So the period of low interest rates is set to continue.
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<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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RBA on hold as expected, but signals a slightly stronger easing bias: AMP Capital's Shane Oliver

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Consumers continue to be hawkish about interest rates hikes, though the percentage expecting mortgage rates to rise has fallen in the last six months, reveals a recent survey.
The February results from the Westpac–Melbourne Institute Consumer Sentiment Index shows a majority (52 percent) expecting rates to rise, down from 57% in August, while 41 percent expect no change and 7 percent said rates could fall.
Though the majority figure has fallen, it is still a hawkish mix given the RBA’s mild easing bias, says the Westpac report. While official rates look to be ﬁrmly on hold, the RBA Governor’s decision statements have noted the “potential scope for easier policy, should that be appropriate”.
Even allowing for an apparent ‘upward bias’ to consumers’ rate expectations, this is a signiﬁcantly more hawkish view than economist forecasts and market expectations. "In other words, even though rates have declined more often than they have risen, consumers have rarely expected them to fall. Indeed, there is only one period – June 2012 – when the ‘net balance’ was for rates to fall," says the report.
There has been a modest rise in mortgage rates since August, with banks increasing their standard variable rates by an average of 20bps in November, citing increased capital requirements due to regulatory changes.
Prior to this, banks had already increased rates on investor loans by an average of 27bps.
The change in standard variable rates is broadly consistent with surveyed consumer expectations back in August with the median expectation at the time was for a 19bp increase. The median expectation from this month’s survey implies a further 7bp rise and a year ahead point estimate for mortgage rates of 5.72 percent.
The apparent ‘upward bias’ to consumers’ mortgage rate expectations makes it a little difficult to compare them with other benchmark measures of interest rate expectations, says the report.
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Consumers still hawkish on rates, at odds with market expectations: Westpac Red Book

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The RBA held rates steady at its December meeting at 2 per cent at its last board meeting of the year.
<div>Borrowers disappointed by the RBA’s decision to keep interest rates on hold can still get an early Christmas rate cut on their home loan by haggling their lender for a better deal, according to <a href="https://mozo.com.au/" target="_blank">Mozo.com.au</a>. 
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<div>In a recent mystery shopping exercise, Mozo staff posing as borrowers were able to haggle huge discounts of up to 1.25% off the standard variable home loan rate, simply by calling up the banks and asking. “The Big 4 are competing more fiercely for owner occupiers in the wake of the crackdown on investor lending, with discounts on offer to these borrowers the biggest we’ve seen,” said Mozo Director Kirsty Lamont. Mozo data shows that by haggling 1.25% off the average standard variable rate, borrowers could save $223 a month on their repayments on a $300,000, 30-year loan. “When pushed banks are prepared to offer better discounts beyond their advertised home loan deals which can lead to savings of $2676 each year for borrowers,” said Lamont.</div>
The REINSW President John Cunningham said the announcement was largely expected.  “This decision adds weight to a good stabilisation of the market into the New Year,” Mr Cunningham said.
Slower housing market conditions were likely a topic of conversation when the Reserve Bank board met today to deliberate on the cash rate setting. 
CoreLogic RP Data reported today a 1.5% fall in capital city dwelling values over the month of November and a 0.5% fall over in values over the past three months. 
"While the cash rate remained on hold, a less buoyant housing market is likely to provide the Reserve Bank with a greater degree of flexibility in adjusting interest rates without as much risk of over stimulating the housing market as what they have faced over previous months.
"While the Reserve Bank is likely to welcome a slowdown in the rate of home value appreciation, the overriding objective would be to avoid a significant downturn in the housing market, which would act as a weight on economic growth and potentially impact financial system stability," CoreLogic RP Data research head Tim Lawless said.
" Despite the stable rate setting, mortgage rates remain close to record lows which should continue to act as an incentive for home buyers and investors considering a property purchase," he added.
While today’s RBA decision to leave interest rates on hold has surprised no-one, Laing+Simmons managing director Leanne Pilkington said the cash rate is one of few steady elements in a housing market that has otherwise undergone recent change.
“The market for residential property has undergone a noticeable shift in recent months, with conditions moving toward a greater equilibrium between buyers and sellers, as opposed to the vendor favourable conditions earlier in the year,” Ms Pilkington said.
“The record clearance rates, low stock levels and rapidly increasing prices which characterised the first half of 2015 have now subsided somewhat as buyers exercise greater caution.
 “Demand remains robust, but we do not expect the double digit price growth of 2015 to be repeated in the year ahead,” she said.
The Reserve Bank of Australia (RBA) will continue to walk the interest rate tightrope over the summer as it considers a mixed bag of economic data, says mortgage broker John Kolenda adding it was no surprise to see the RBA following its final deliberation of 2015 leave official rates at the record low of 2.0 per cent.
But Mr Kolenda said a further rate cut is highly likely in the first half of 2016.
“The RBA has been a walking a tightrope leaving rates on hold since May this year due to the mixed economic data,” he said.
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RBA holds rates steady at December meeting

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GUEST OBSERVER
How are Australia’s states and territories performing? Each quarter CommSec attempts to find out by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling  commencements.
Just as the Reserve Bank uses long-term averages to determine the level of ‘normal’ interest rates; we have done the same with key economic indicators. For each state and territory, latest readings for the key indicators were compared with decade averages – that is, against the ‘normal’ performance.
There has been little change in the latest rankings. NSW has retained top spot as the best performing economy while Victoria has consolidated second spot, with both states pushing further ahead of the other states and territories.
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The next grouping of economies is the Northern Territory and Western Australia which now share third spot in the performance rankings. 
And there is little to separate economies in the third grouping of state and territory economies. Queensland is fifth ranked, ahead of the ACT (sixth) followed by South Australia (seventh) and Tasmania (eighth). 
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NSW has retained its top rankings on population growth, retail trade and dwelling starts but now adds housing finance to the list. NSW is still second placed on unemployment and is also second strongest on equipment investment. The other rankings are: construction work (fourth) and economic growth (fifth). 
Victoria has consolidated second spot on the economic performance rankings. Victoria’s main strengths are population growth, housing finance and dwelling starts (second ranked on each indicator.) 
The Northern Territory remains the third ranked economy, but has fallen further behind Victoria and now shares the third ranking with Western Australia. 
Northern Territory is top ranked on economic growth, business investment and construction work done. But the ‘top end’ economy is last ranked on population growth, housing finance and dwelling starts. 
Western Australia is second on retail trade, economic growth and construction work, but higher unemployment (eighth ranked) has impacted housing activity. 
Queensland retains fifth position on the economic performance table but it is clear that it is now in a third grouping of economies with the ACT, South Australia and Tasmania. Queensland is middle ranked on most indicators. 
The ACT economy has retained sixth position on economic performance. The territory ranks third on economic growth and housing finance but is seventh ranked on three indicators. 
South Australia has held seventh spot on the economic performance rankings but Tasmania is showing better momentum. South Australia does best on population growth and equipment investment (both third ranked) but is seventh ranked on three indicators. 
Tasmania remains at the bottom of the Australian economic performance table. But importantly Tasmania is now top ranked on unemployment and third ranked on housing finance. 
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Ideally gross state product (GSP) would be used to assess broad economic growth. But the data isn’t available quarterly. Rather, state final demand (household and business spending) is added to exports less imports to act as a proxy for GSP. Exclusion of the trade sector would provide an incorrect assessment of growth for economies such as Western Australia and Queensland. 
There have been no changes in the rankings on economic activity. The Northern Territory continues to lead the way, up 26 per cent above its ‘normal’ or decade- average level of output. 
Next strongest is Western Australia, with output just over 18 per cent higher than the decade average level of output. Then follows ACT (up 16.5 per cent) from Victoria (up 11.6 per cent) and NSW (up 10.8 per cent). 
At the other end of the scale, economic activity in Tasmania in the June quarter was just 0.6 per cent above its decade average, while South Australian activity was up almost 7 per cent on its ‘normal’ or average output over the past decade. Queensland economic activity was up by around 10 per cent on the decade average. 
The ACT now has the fastest annual economic growth rate in the nation, up by 4.0 per cent on a year ago, ahead of Victoria with 3.9 per cent and NSW (1.4 per cent). 
By contrast, the Northern Territory economy is down 7.4 per cent on a year ago, while Western Australian economic activity is down 2.0 per cent on a year ago with the Queensland economy down 0.2 per cent on a year ago. 
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 Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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State of the States: CommSec's Craig James

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GUEST OBSERVER
When a couple of gloomy reports are produced on the housing market, it is always good to get a calm, reasoned view from the Reserve Bank. Reserve Bank Deputy Governor Philip Lowe believes we are at the point “where supply is kicking in” in the Sydney housing market.
In other words, demand for homes has been strong, exceeding supply, and resulting in strong growth of home prices. But now Lowe believes that more homes are being built to meet the strong demand and that should lead to more modest growth in home prices.
The Reserve Bank Deputy Governor does warn that “people need to be careful” when it comes to the housing market – and that is always useful advice. But the Deputy Governor has clearly distanced the RBA from some of the housing market ‘gloom and doom’ stories.
The Reserve Bank Deputy Governor dismissed assertions that business and consumer confidence were weak (“that is just not right”). And with exquisite timing, consumer confidence lifted 5.1 per cent in the latest week while business confidence also improved. But we shouldn’t be under any illusions – consumers like a stronger Aussie dollar and the dollar soared last week. We can wrap it up in different ways, but the dollar no doubt had a lot to do with boosting sentiment levels.
The latest business survey was solid. Business sentiment rose and operating conditions are well above “normal” – in fact the smoothed measure of business conditions hit 5-year highs. In addition, the employment component of the survey hit a 4-year high and there were more signs of inflationary pressures.
The one area of concern is that businesses still aren’t keen to borrow. Almost 80 per cent of firms indicated that no borrowing was required in September. This may mean that businesses are living within their means. But with interest rates at record lows, the absence of borrowing is surprising.  
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What do the figures show?
National Australia Bank Business Survey:
The NAB business conditions index eased slightly from +9.2 points to 9.1 points in September but the rolling annual average hit a 5-year high. The business confidence index rose from +0.8 points to 5.1 points. The survey was conducted from September 24 to 30. 
NAB noted: “There remains, however, a notable divergence in business conditions across industries. Services industries continue to outperform, while the mining industry trails well behind. It is promising though that mining and manufacturing were the only industries to report negative conditions – just the second time only two industries have been negative since mid-2011.”
“Not all industries saw a lift in confidence, however, with the improvement largely concentrated in transport/utilities (up 14) and personal services (up 12). Both these industries are enjoying the highest confidence levels (at +13 and +16 points respectively); while unsurprisingly mining firms were least confident (at -14).
Components. The index of trading conditions fell from +19.1 to +15.4; employment rose from minus 0.8 points to a 51-month high of +4.5 points; profitability eased from +10.4 points to +7.6 points; forward orders fell from +4.6 points to +2.8 points.
Inflationary indicators were higher in September. The monthly reading of labour costs rose at a 0.6 per cent quarterly rate in September, up from 0.5% in August. Purchase costs rose at a 1.0% quarterly rate in September, after a 0.8% rise in August. Final product prices were up 0.2% in September. And retail prices were up by 1.2%t in September after a 0.7% rise in August.
Capacity utilisation rose from 81.2 to a 44-month high of 81.3%, matching the result in June. Capacity use is above the long-term average of 81.0%.
The proportion of firms reporting that they did not require credit rose from 52% in August to a record high of 79% in September.
Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating rose by 5.1% to a 15-week high of 115.6 in the week to October 11. Confidence is up 1.6% over the year and above the average of 111.4 since 2014.
All of the five components of the index rose in the latest week:
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<li>The estimate of family finances compared with a year ago was up from +4 to +9;</li>
<li>The estimate of family finances over the next year was up from +22 to +30;</li>
<li>Economic conditions over the next 12 months was up from -4 to -1;</li>
<li>Economic conditions over the next 5 years was up from +2 to +13;</li>
<li>The measure of whether it was a good time to buy a major household item was up from +26 points to +27 points.</li>
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Speech by Reserve Bank Deputy Governor
Reserve Bank Deputy Governor, Philip Lowe, delivered a speech “Fundamentals and Flexibility” 
“I would like to focus on a different set of fundamentals: that is, the fundamentals of the Australian economy. My central message is that these fundamentals are strong and that they provide us with the basis to be optimistic about the future.” 
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In terms of economic fundamentals, Lowe highlighted five factors: the institutional framework; “our people”; mineral resources; agricultural assets; and “our links with Asia and our expertise in delivering high-quality services.” 
“Together, this combination of fundamentals should provide us with confidence that we can continue to experience advances in our living standards. It is a combination of fundamentals that few other countries enjoy.”
Philip Lowe highlighted a number of areas that affect flexibility such as exchange rates; and the financial system.
Philip Lowe highlighted four factors outside central bank control that improve flexibility of the economy: the competitive environment in which firms operate; incentives to innovate and to start new businesses; operation of the labour market; and the nature of our education system.
What is the importance of the economic data?
The monthly National Australia Bank business survey is valuable in providing a timely reading about the health of Corporate Australia. Key indicators of business conditions such as orders, employment, profitability and capacity use are covered together with a gauge on confidence levels.
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
What are the implications for interest rates and investors?
The Reserve Bank Deputy Governor has admitted that interest rates are less effective than they used to be. So the Reserve Bank won’t be rushing to change interest rate settings. The good news is that the Reserve Bank Deputy Governor remains very positive on the outlook and that is backed by the latest economic data. In short, there are simply no reasons to be touching rates.
The environment remains positive for businesses selling consumer goods and services. The outlook for family finances – the part of the consumer sentiment survey that the Reserve Bank tracks closely – hit a 20-month high in the latest week.
No one should get too complacent on inflation. The NAB business survey notes “Consumer price pressures building” with retail prices lifting at the fastest quarterly rate for over three years.
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Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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RBA says Sydney supply kicking in: CommSec's Craig James

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Policy should not advantage property investors at the expense of prospective owner-occupier home buyers, according to the Reserve Bank of Australia.
In the submission to the inquiry into Home Ownership, the Reserve bank stated that financial stability considerations would suggest that tax and regulatory frameworks should avoid encouraging over-leveraging into property, whether by owner-occupiers or investors. 
"In considering opportunities for reform, the Bank believes that it is worth bearing in mind that there are both benefits and costs of owner-occupation. 
"The broad policy objective of ensuring that all Australians can access suitable housing at reasonable cost need not translate into an objective that all households should purchase their home early in life, let alone that they should all be able to purchase their first home in their ideal location. 
Home ownership in Australia increased considerably over the past century, but has been stable at around 70 per cent since the 1960s. 
"The increases were concentrated in the periods immediately after the two world wars, particularly World War II (WWII), as a result of significant government assistance including War Service Homes programs."
According to the latest Census, around 68% of Australian households owned their own home in 2011.
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"The general stability in home ownership in Australia over recent decades has masked some marked changes in home ownership among different age groups. 
"In particular, there has been a pronounced decline in home ownership among younger households, particularly in the 25–34 and 35–44 age groups. Home ownership rates have generally been more stable among older households. 
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Factors contributing to lower home ownership rates among younger households include the following.
"An increase in income inequality over recent decades, in part reflecting the simultaneous rise of two-income households with increasing workforce participation by women as well as the rise of single adult households (with or without dependents). 
"This led to increased borrowing capacities for households with high home ownership propensities, which will tend to have advantaged older households over younger ones. Accordingly, the decline in home ownership rates over the past decade or so has been concentrated in the third and fourth income quintiles, while that of the top income quintile has been little changed.
"Financial innovation in the 1990s and the 2000s arguably led to greater relaxation of restrictions on borrowing for higher-income households than for lower-income households. 
"Increased labour market flexibility, accelerated technological change and other factors may have increased employment and income insecurity and so reduced the willingness of some households to take on the long-term financial commitment of owning a home (or the ability to service a loan) and the capability of some to remain in home ownership."
The home ownership rate in most states remains above levels. While all states had home ownership rates between 65 and 75 per cent as at the latest Census, there is still considerable variation across states, with home ownership ranging from a low of around 65 per cent in Queensland to a high of almost 72 per cent in Tasmania and Victoria. 
"The transition to a low-inflation regime, implying lower nominal interest rates, has significantly increased households’ borrowing capacities relative to their current incomes, and therefore their capacity to service debt on owner- occupied housing. 
"Survey evidence suggests that total housing costs of owner-occupiers have not moved much relative to incomes over the past couple of decades. 
"Alongside the other demand drivers, one fundamental determinant of housing demand will be the rate of new household formation, which is in turn dependent on the interaction between population growth and developments in average household size. 
"After relatively stable growth from the early 1990s through to the mid 2000s, Australia’s population growth stepped up significantly owing to higher net immigration and, to a lesser extent, a slightly higher rate of natural increase.
"The composition of population growth can also influence housing demand. Much of the fluctuation in population growth rates over the past decade has been driven by fluctuations in net arrivals of people on student visas."
Recent rule changes have made it easier for students to remain in Australia after graduation, including by becoming permanent residents. 
"Over the shorter term, fluctuations in interest rates can be expected to affect the demand for housing. By reducing the burden of debt repayments relative to income, lower interest rates may ease cash-flow constraints and increase borrowing capacity at the margin. This effect applies both to owner-occupiers and investors. 
"Lower interest rates also encourage households to save less and borrow more in the present, thereby shifting consumption from the future. 
"However, prudent buffers on the minimum interest rates that lending institutions use to calculate allowable mortgage loan sizes imply that this effect might be smaller when interest rates are already low. 
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"The Australian Prudential Regulation Authority (APRA) has recently provided guidance to lenders that the interest rate used in these serviceability tests should be at least 7% (APRA 2014). The Bank estimates that the lower limits on interest rates used in these calculations are probably binding at present, or close to binding. 
"Thus, households that already planned to borrow as much as lenders would permit would not see an increase in borrowing capacity from a decline in interest rates at present. 
The proportion of the housing stock owned by investors looks to have risen over recent decades, offsetting the decline in the prevalence of public housing. 
The investor share is also likely to have risen a little further over the past few years, as investors have accounted for an increasing share of property purchases since 2012.  
"While the incidence of property investment increases with the level of income, the Household, Income and Labour Dynamics in Australia (HILDA) Survey also suggests that most investor households are in the top two income quintiles. 
"These households hold nearly 80 per cent of all investor housing debt, and appear well placed to service their debt: they typically use less than 25 per cent of their income to service their total property debt, and around half are ahead of schedule on all their mortgage repayments.
It would be counterproductive to try to encourage more home ownership by making it easier for marginal buyers to borrow more. Both for this reason and in the interests of financial system stability, the Bank would not support measures that expanded credit supply to households at the expense of prudent mortgage lending standards. 
The Bank believes that there is a case for reviewing negative gearing, but not in isolation. Its interaction with other aspects of the tax system should be taken into account. 
"The ability to deduct legitimate expenses incurred in the course of earning income is an important principle in Australia’s taxation system, and interest payments are no exception to this. To the extent that negative gearing induces landlords to accept a lower rental yield than otherwise (at least while continued capital gains are expected), it may be helpful for housing affordability for tenants. 
"It is worth noting, however, that the interaction of negative gearing with other parts of the taxation system may have the effect of encouraging leveraged investment in property. 
"In particular, the switch in 1999 from calculating CGT at the full marginal rate on the real gain to calculating it as half the taxpayer’s marginal rate on the nominal gain resulted in capital gain-producing assets being more attractive than income-producing assets for some combinations of tax rates, gross returns and inflation. 
"This effect is amplified if the asset can be purchased with leverage, because the interest deductions are calculated at the full marginal rate while the subsequent capital gains are taxed at half the marginal rate. 
"Since property can usually be purchased using higher leverage than other assets that produce capital gains, property is especially affected by this feature of the tax system. 
"Another change in the landscape since 2003 is that superannuation funds are now able to borrow. Some self-managed superannuation funds have taken advantage of this by adding geared property into the fund portfolio, both residential and, in particular, commercial property. 
"The Bank has previously observed that leverage in superannuation funds may increase vulnerabilities in the financial system and therefore supports limiting the scope for leverage in these funds.
"Additional housing supply ought to dampen housing prices, and more probably will reduce the growth rate of housing prices that occurs in response to increases in demand for housing. 
"There is no example in Australia or internationally where supply expansion on its own generated housing price declines of a similar order of magnitude to the increases in prices seen in some Australian cities in recent years; some academic work on this issue suggests that removing supply constraints in a single population centre might not reduce prices significantly (Aura and Davidoff 2008)." 
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Housing Debt Serviceability
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Tax, regulations should avoid encouraging over-leveraging into property: RBA

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<div>An extraordinary speech in Sydney from the Reserve Bank's Luci Ellis which could almost be an advertorial for what experienced property investors already know - when it comes to property investment, location really is everything.</div>
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<div>The supply of prime location land, explains Ellis, is essentially fixed, yet with a growing population in Australia the demand for it grows by the year.</div>
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<div>The inevitable result therefore has been that inner ring land values and therefore house prices continue to rise faster than those in the outer suburbs, and not only by a small margin. </div>
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<div>Ellis explains that even releasing more land around the capital city fringes may not be effective at bringing down inner ring house prices since the prime location land which everyone seems to want to get their hands on remains fixed in both place and supply.</div>
<div> </div>
<div>Research by the Reserve Bank shows that place is nearly always more important than spacewhen it comes to driving property prices, and buyers will always pay a premium for inner suburban housing.</div>
<div> </div>
<div>Moreover, significant increases in demand cannot be absorbed by new supply of prime location land, quite simply because there is none.</div>
<div> </div>
<div>In the words of Ellis: "The newly buily supply is simply not the same as the existing stock, because it is somewhere else".</div>
<div> </div>
<div>Indeed. I wrote about this very same issue - "substitutability" - some time ago. </div>
<div> </div>
<div>There is nothing particularly new about this idea, of course, but the Reserve Bank provides the research to prove the point by comparing the growth in "prices of inner ring properties to those further out, particularly in Sydney".</div>
<div> </div>
<div>The gap in the relative price action performance is both material and ongoing, with the data from 2006 to 2014 proving the point and ending any arguments.</div>
<div> </div>
<div><a href="/images/2015/09/09/RBA4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/09/09/RBA4.jpg" alt=""></div>
<div>
<div>Within the above framework if outperformance is what you are seeking it obviously helps to find suburbs which are set to improve in some way (for example, a gentrifying location, or set to benefit from a new light rail link). Over recent cycles, house prices have also outperformed apartment prices in most capital cities, although with initial rental yields often 1 per cent or more lower on average for inner suburban houses generally the growth needs to be stronger to compensate for the weak initial cash flow. The old adage is true. When it comes to property, it really is first and foremost about "location, location, location".</div>
 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
</div>
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