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Reflecting an increasing shift in home buying preferences in Melbourne, townhouse construction approvals are increasing at a faster rate than houses in growth suburbs.

ABS (Australian Bureau of Statistic of Statistics) figures show there is a 26% increase in townhouse approvals over and above last years figure, for Melbourne’s growth areas. 1834 building approvals were made.

However, in the same period house building approvals in the growth areas increased by only 6%, to 12,498.
There are several reasons behind the increase in townhouses in the outer suburbs. Although medium density development is increasingly encouraged in Melbourne inner-city locations have more restrictions, which pushes many townhouse developments further out.

A surging population wants more choice

Danni Addison, Victorian chief executive of the Urban Development Institute of Australia says Melbourne’s outer growth suburbs present developers with more options to produce the range of dwelling choices our burgeoning population needs and aspires to. According to Addison, “Townhouses located in Melbourne’s middle and outer regions are performing very well, with definite consumer demand there, which is the second factor driving growth”.

Addison says buyers are moving to townhouses because new, low-maintenance homes are what many people want, and the rising popularity of townhouses is expected to continue. Ms. Addison claimed “In coming years dwellings other than stand alone houses will be the majority of commencements across Victoria”.

Surging population growth is underwriting the demand, in a market dominated by local owner occupiers.

ABS figures for 2016 showed Melbourne growth suburb South Morang is the fastest expanding suburb in the nation, while Craigieburn, Cranbourne East and Point Cook are also in the national top five.
And the locations are proving to be good investments. Homes in South Morang and Craigieburn in the northern growth corridor actually outperformed the Melbourne median in home value gains across 2016 (CoreLogic).

Many priced out by house and land cost

Jon Atchison, Director at development group Wolfdene said they had been adding more townhouses to house and land sites. “Several years ago when we first started doing it, home buyers were still getting around the idea of townhouse living in urban growth areas, but now it’s far more accepted”.
Buyers can be priced out of house and land packages in places like Point Cook. “Our Saratoga townhouses were very popular aspect of the development there” according to Atchison, “with many Melbourne house and land packages breaking the $500,000 mark there’s a vacuum for buyers with $300,000 to $400,000 budgets that can be filled with medium-size products’.

Mr. Atchison said as land price growth keeps heading skyward and with council density requirements bringing the size of allotments down for houses, even at the urban fringe of the city, townhouses will increasingly aim to compete with detached homes. The result will be rising quality of the builds, the fixtures and fittings and architectural style.

The demand for townhouses in inner Melbourne is growing. The new category of buyer are higher earning professionals who want that particular location, but with the additional sense of security and privacy.
The size of inner urban apartment blocks can make inhabitants feel like they are just one of many. High-rise blocks lack some elements of privacy and personality can get lost in the scale of the buildings. Not so with the townhouse. Built on a personal scale with a more limited number of dwellings, townhouses can offer better security, extra outside living space whether its courtyard or rooftop, and usually better parking facilities.

As boom-time levels of CBD high-rise apartment supply (often bought by investors) eases off, developers are increasingly turning to a growth area that is dominated by owner occupiers. And townhouses fit what city professionals and downsizing baby boomers are looking for.

The demand has been ramping up. A YarraBend development in Alphington just 6.5km from the CBD, sold 55 townhouses in 3 hours last November at prices ranging from $770,000 to $1.2M. Suprisingly, these weren’t investors, 52 of the 55 dwellings were bought by local residents. Mostly young professional couples and young families.

Higher earners are the target

Rather than maximising the number of units they can fit on an inner urban site, developers are choosing to increase the size of the dwellings, to attract deeper pockets. In 2016, developer Tim Gurner cut the number of units he had planned for a Stanley Street Collingwood site from 47 down to 40, allowing him to increase the home sizes.
Gurner said the larger dwellings were the first to sell with many people actually buying 2 dwellings and then customising the space to fit their lifestyle.
Across town in Coburg, Melbourne developers Future Estate had planning approval for 120 apartments at the old Pentridge prison site but then revised their thinking and opted for just 38 bigger townhouses instead with prices between $700,000 and $1.2M.

A changing market

According to Future Estate Managing Director Ben Anderson, the market has changed. ”We are shifting our focus towards increased townhouse product over the next year or two,” Anderson said.
“The townhouse revenue might be less but development time and costs are lower. Plus they will sell more quickly. In up to 3 months, in comparison with about 6 months usually needed for a typical one hundred and fifty apartment development. So financing costs come down.”

In the much discussed middle ring suburbs, 5 kilometres to 20 kilometres from the CBD, swelling population and the inevitable development that must follow has to find acceptable solutions.  Both councils and existing residents regard a lower rise townhouse development much more acceptable than 5 or 6 storey apartment buildings appearing in their streets. Townhouse developments are better suited to these urban infill locations.
It appears townhouses are coming back to where they started. Downtown.

Without some seriously careful planning Melbourne is on track to lose its place as the one of world’s most liveable cities, according to a new report from Infrastructure Australia.

The report warns the plan to add two or three million extra people will radically change Melbourne and the city is likely to lose the liveability it’s famous for.
As the infrastructure advisor to the Federal Government, Infrastructure Australia claims both Melbourne and Sydney are pushing into a new era where they will resemble megacities like today’s Los Angeles and London, or New York.

The blights of gridlocked traffic, high-rise canyons and crowded CBD sidewalks where the sheer crush of pedestrians at rush hour pushes people out into the gutters, are all coming. With current rates of growth, is this is where Melbourne is headed?

Projections show another 2.8 million people will be added to Melbourne’s population by 2046, taking it to 7.3 million. That’s just 28 years from now.

Mega-Melbourne is coming soon

The growth is barreling towards us, so how do we plan for it?
Infrastructure Australia’s report, ‘Future Cities’ outlines 3 potential models for Melbourne: the centralised version with high rise growth concentrated in the city and on major transport corridors much as it is today; a sprawling model with continuous low density growth in outer suburbs; and a medium-density model involving more concentrated development in Melbourne’s middle suburbs.

According to Philip Davies, Infrastructure Australia’s Chief Executive, the modeling shows the growth will put an end to Melbourne’s place as the world’s most liveable city – unless serious changes in planning are made. And made quickly.

One of the most critical recommendations in the report is an increase in investment in public transport. Mr. Davies says the current Melbourne Metro $11 billion CBD underground link project is a good start. But the report calls for further critical additions, including another underground rail link through the city centre. Other transport services will have to be upgraded. Existing tram routes will have to be extended.

Controversially, the report recommends road-user fees for both cars and trucks, to be introduced in the near future to help control congestion and raise revenue for better roads and transport.

LA, New York, or London?

The ‘Future Cities’ Report describes three likely city-types that a growing Melbourne will have to conform to – either a New York Model, an LA Model, or a London Model.

The New York Model:
A high density, compact Melbourne with jobs and housing concentrated within 15 kilometers of the CBD. Public transport use will be higher. An extra 2.2 million residents will live in established areas with medium to high density housing along the major transport routes. With this planning model access to schools, hospitals and universities will improve by 2046. As it is today, the concentration of jobs in inner Melbourne would be at the expense of the outer suburbs.

The LA Model:
This places more than a million extra people living on the cities edges as low-density development increases outward sprawl. People will rely heavily on cars (electric) to go to work. Only 3% of jobs will be within 30 minutes travel by tram, train or bus. 97% of people will be travelling longer, to get to work. Public amenities like schools, hospitals and universities will be less accessible than they are now. Melbourne’s west will take most of this growth with urban development continuous to Geelong.

The London Model:
This medium density model spreads population growth more evenly putting jobs closer to where people are living. Two million people (70% of the growth) will be added to established suburbs. The centre of population will move westward with employment hubs at locations near Werribee, Sunshine and Tottenham. Concentrations of residential development will be near the rail hubs of Footscray and Sunshine, or at redeveloped industrial sites such as Essendon Airport.

Great town planning is what made Melbourne the world’s most liveable city in the first place. According to Infrastructure Australia, only the right planning will save us now.

Despite Beijing’s recent restrictions on offshore company investment China’s presence in Australia’s property market remains very strong, accounting for a third of national development sites.

A recent study by Knight Frank exposed Chinese investment in Australia to the tune of $2.02 billion worth of development site sales, across 2017, with the average site measuring 21,785 sqm.

More stringent mortgage lending by local banks, plus tighter controls by the Chinese Government to stem the flow of capital fleeing offshore,
has cooled Chinese demand for Australian property over the last 12 months.

According to Michelle Ciesielski, Knight Frank head of residential research, Chinese buying had tripled in size since 2013, to reach 38% in 2016. The figure has since decreased to 33%.

The Chinese interest has lessened only slightly. With so much capital in play it’s not surprising the Australian and Chinese Governments have kept a close watch on accompanying lending regulations.

In Australia APRA (Australian Prudential Regulation Authority) has encouraged stricter controls by local financial institutions, while the Chinese Government and China’s Central Bank have applied new rules to companies making Yuan denominated loans to entities overseas.

Melbourne and Sydney still the target

Chinese investors continue to target Sydney and Melbourne and for any new Chinese developers entering the market, transactions will be dependent on being able to transfer their funds.

But in mid 2017 this was relaxed a little, producing a boost in investor confidence and activity. The Chinese dominate foreign investment in Australian residential development sites and many Chinese companies are now firmly established.

Chinese developers are diversifying

As Chinese developers gain experience in Australia there is more diversification – besides higher-density projects many developer portfolios are including medium and lower density sites as well.

Lower density developments have also become more popular with local Australian developers, particularly in New South Wales with the release of the Medium Density Design Guide draft having been released, encouraging this section of the market. According to Dominic Ong, Head of Knight Frank Asian markets, “This style of project tends to have fewer hurdles with the imposed lending restrictions, and overall, lowers deliver-risk for the developer”.

What are smaller Chinese investors buying now?

The average Chinese investor knows little about Australia and Australian property. They rely heavily on marketing groups and agents to steer them through the complex regulations to the types of Australian property they want. And this has become a branch industry in itself. At the start of the Chinese surge into the Australian market several years ago it was mostly 1 and 2 bedroom off-the-plan apartments in Sydney and Melbourne that were most popular, priced under $500,000.

By 2018, despite the marketing of Brisbane, Perth and Gold Coast and other cities, Melbourne and Sydney still dominate. Now Chinese investors are showing growing interest in house and land packages. Townhouses are being increasingly sought after – because of the land component and larger living areas. There’s high-level interest from Chinese selling agents in quality projects in blue-chip locations, especially near good schools or universities.
Once congregating in more limited conclaves, Chinese investors and immigrants are transforming entire middle class suburbs in Melbourne, with the wave of investment and arrivals.

Local bank lending restrictions and tighter offshore buyer regulations put some downward pressure on demand in 2017, but the buyers are resilient and demand remains strong. Many Chinese investors are cash buyers, with a full 82% of Chinese buyers having enough capital in hand to settle their property purchase without needing finance at all.

In Australia, the Chinese market is big and it’s growing. With an overall population of 1.4 billion people, there are 74 million residents in China’s 4 biggest cities of Beijing, Shanghai, Guangzhou and Tianjin alone.

The burgeoning middle classes there are constantly increasing their wealth and targeting offshore strategies to secure their families’ future financial security with investments outside China.

Victoria take note. New South Wales is leading the way in Australia with changes to the housing code that make medium-density housing types like terrace houses easier to build. The new code will take effect on July 6, 2018.

The goal is to improve housing affordability plus produce more housing choices to meet a range of emerging needs. The changes will fast track complying development approval. The new Low Rise Medium Density Housing Code will allow medium density housing to be approved with a ‘complying development’ system.

Medium density low-rise housing has been missing

Up until now complying development approvals have been for straightforward residential, industrial or commercial projects like detached one, or two-storey homes, swimming pools or fences. But with the new code, manor houses (single buildings that comprise 3 or 4 homes), terrace houses, or dual occupancies will be eligible as well for complying development approval.

It’s estimated that by 2036 Sydney will need an extra 725,000 homes to cater for surging population growth. State Government Housing Minister Anthony Roberts says the new code will assist with quicker housing supply.

Medium density low rise housing as ‘complying development’ is allowed only where ‘medium density development’ has already been permitted by a Council local environment plan.

In Victoria as well as NSW, supply of this category of medium density low rise dwellings, sitting between the traditional freestanding home and strata title apartments, has been missing from housing stock. But both cities need it.

Emerging lifestyles need new home styles

As the population in NSW ages and evolves, we need a greater variety of homes to suit emerging needs and lifestyles, including empty-nesters, singles, and young families, says Housing Minister Anthony Roberts.

Under the new regulations the design of the housing has to be consistent with 2017’s Medium Density Design Guide. This had set the design criteria for low rise medium density dwelling types, with key principles regarding; built form and scale, neighbourhood character, aesthetics, density, sustainability, housing diversity and social interaction. These changes were welcomed by the Executive Director of the Australian Institute of Architects NSW, Joshua Morrin. Morrin said good architectural design for medium density dwellings makes sure residents can enjoy good liveability and amenity. “Good design prioritizes both human amenity and quality of space. Something our cities are going to need more and more as they grow bigger. Our living spaces need to work harder.”

“Smaller homes will play an increasingly important role in our cities. This highlights a need for good design principles as set out in the Medium Density Design Guide. Looking forward, quality design will future-proof the liveability in our communities.”

Clearance rates have dropped sharply in many Melbourne suburbs in 208’s first quarter as the heated property market went down a gear. Analysis of 2018’s first three months shows the cool change is in, with suburbs as diverse as Chadstone, Balwyn, Berwick, Mont Albert, Sunshine West, Springvale and Altona getting a less than 50% sale at auction rate (Domain Group Data).

The drop has been recorded across both established neighbourhoods and greenfield.

In dozens more suburbs the clearance rate just managed to get over 50% as the hot market enjoyed by sellers for the last few years drops off.

Market peaked in autumn

Some real estate agents claim the market peaked in autumn 2017.

Since then, factors maintaining downward pressure are government crackdowns on overseas buyers and also tightening on investor lending. The sustained surge in Melbourne house values over 2016 and 2017 also had to eventually stretch affordability levels – with buyers in 2018 far more reluctant to raise hands at auction. Bidder numbers are down. Of those still wanting to buy a home put to auction many are preferring to negotiate after the property has passed in instead.

High demand suburbs take a hit

In Prahran just 57.4% of homes sold under the hammer in the first quarter. For the same period last year that figure was far higher – at 73.7%

In highly sought after Camberwell 2017’s first quarter clearance rate was 79.4%, but can only manage 54.7% in 2018’s first quarter. Newport was in high demand last year with a clearance rate of 85.7%, but for the same period this year achieved only 56.9%.

New research by CoreLogic has clarified migration (mostly international) as the main driver of rising home values in recent years. High population growth is the main common factor.
Over the last few years, all 4 states with high immigration levels – ACT, Victoria, NSW and Tasmania are the same states achieving the steepest home value growth. But the states with less than average immigration show the weakest growth.

The lion’s share (75%) of migrants arriving in Australia settle in Sydney with 98,000 a year and Melbourne, 88,000. Accordingly, house values in both cities are Australia’s highest.

But the slow down is no reason for alarm according to ‘Empower Wealth’ buyer agency CEO Ben Kingsley, “The cycle is cooling off a bit, but I wouldn’t say it’s the beginning of a correction.”

Going against the grain of the slowdown are properties at the affordable, entry level end of the scale. These are selling well. First-home buyers taking advantage of stamp duty concessions and other incentives are often competing for these. Units are also being targeted as people seek out affordability, plus convenience for commuting and getting in to the CBD.

In the 80s and 90s townhouses were a fairly average, straightforward style of accommodation. They were usually bigger than apartments, but smaller than houses, they were often seen as a stepping stone before acquiring a bigger or more luxurious dwelling. But things have changed dramatically.

Now, townhouses, or townhomes as some builders prefer to call them, are no longer playing second fiddle to the quarter acre block, and in fact many buyers prefer a townhouse to a free-standing home.

According to national developer Cedar Woods chief operating officer, Patrick Archer, “If you are a professional couple with a busy schedule you might not want a large garden. My own weekends are very busy with the kids sports and the like, and I don’t want to be spending time maintaining and gardening. It’s exactly why townhomes are so popular.”

Data compiled by property specialists PRDnationwide shows townhouse development approvals have grown in metropolitan Melbourne by an average of 126.3% a year since 2011.

Huge changes in demand

By contrast, in 2011 only 16 individual townhouses were approved for development in the Melbourne metro area. In 2018, 1471 individual townhouse approvals were granted in first 4 months. It’s a massive shift.

PRDnationwide data shows Box Hill and Glen Waverley are among the strongest performers, gaining 134 and 75 respective development approvals for individual townhouses in the first 4 months of 2018.

Pascoe Vale was another hotspot with 265 individual townhouse approvals over that same 4 month period, already doubling the tally of the whole of 2017.

According to Greg Davy, chief executive of luxury builder Canny, “We shifted into the townhouse market about 4 years ago because we saw a move in the market towards them. Now the townhouse market is about 65 to 70% of our work. 5 years ago it was 100% custom made houses.”

So what’s driving this love affair for townhouses?

According to Canny’s Greg Davy “Apartments don’t have land. Townhouse buyers like the idea of buying a piece of land rather than just space in the sky. The mentality of land ownership in this country is a real factor, and people know that also presents better resale value.”

Mr. Davy says “Townhouses can be fairly straightforward, or also very luxurious depending on what the client wants or needs. Usually, people require a minimum of 3 bedrooms, 2 bathrooms and a second living space.”

“People often want marble kitchen bench tops and stone in their ensuites. The finishes are often as fine as you expect in a custom home. Some want basements, or wine cellars, or lifts up to their third floor.”

Patrick Archer of Cedar Woods says townhouses cater to a growing demand for low-maintenance but with the luxuries of a much larger home.

According to Mr. Archer, “They are built with incredible energy efficiency with most having 6.5 star rating. We are also making living spaces more functional – it’s not uncommon to have a butler pantry in a townhouse these days. Once people were satisfied with a cupboard-concealed euro laundry, but many want a full walk in laundry now in their townhome.”

Cedar Woods developments like Jackson Green at Clayton South and St.A at St Albans have a large townhouse component, many selling out within several days. The Jackson Green Type 9A townhouses, with 3 bedrooms 2.5 bathrooms a single garages were available from $865,000 in the Harvest Release.

The St.A Lotus townhouses with 3 bedrooms, 2.5 bathrooms, plus single garage were available from $626,000 in the Padley Release. Both communities being reasonably close to the city is also a key factor. Cedar Woods tends to build townhouses in infill areas with established communities and infrastructure.

Mr Archer said “Adding high density living supports local restaurants, cafes and businesses. We also build close to parks and ovals”.

In the past growth corridors were the preserve of bigger homes but as land becomes more expensive, even on the outer fringe, townhouse options are appearing in masterplanned communities also.

“Land value has climbed by 20% in some growth areas in just the last 12 months. If you are buying land at $350,000 you are building an expensive home. Townhouses are a much more affordable choice.”

The growing need to service an ageing and also rapidly growing population has highlighted a need to increase our range of housing options. Called the ‘missing middle’, the Low Rise Medium Density Housing Code is helping to manage a changing society and the critical housing shortage.

Low-rise medium density housing assists housing affordability by providing smaller homes, on smaller lots, but still providing all the amenities of a single dwelling. They can better accommodate a wide variety of lifestyles and needs, including growing families or empty nesters.

The goal of the new code is increasing the supply of housing across New South Wales, particularly in Sydney, and helping to improve affordability.

According to CEO of Suburbanite, property commentator and valuer, Anna Porter, the Low Rise Medium Density Housing Code aims at fast-tracking complying development approval for 1 and 2 storey side-by side occupancies, manor houses, terraces and dual-occupancies (one above the other) in New South Wales.

According to Ms Porter, “It means the Development Applications for this type of housing can be hurried through councils at a faster pace. The new code fast-tracks approval to 20 days if compliant.”

After three years of consultation, the Code commenced in most council areas on July 6, 2018. It allows well-designed medium density housing within complying development approval guidelines. A few councils have requested further time to get ready for the introduction of the Code. Lane Cove, Liverpool, Bankstown and Northern Beaches Councils were granted a deferral until July 1, 2019.

Ms Porter says “Downsizers are the demographic that will most likely benefit from an increased supply of medium density housing. The ageing population will have increased housing stock to select from when choosing to downsize, while putting their big family style houses on the market.

The new code and policy is a pragmatic response to the shortage of housing in New South Wales. Melbourne has the same housing supply and affordability issues as Sydney and we hope to see the Victorian government take similar initiatives here.

Although the federal election result sparked some encouraging signs in the property market the main thing boosting the industry still appears to be Australia’s surging population.

New figures released by the ABS (Australian Bureau of Statistics) show Australia’s population increased by 1.6% over 2018 reaching 25.2 million. Births in 2018 hit an all time peak of 314,900 while migration from overseas added 248,500 people (below the peak year of 315,700 in 2008).

Victoria continues to add big numbers with burgeoning annual growth of 2.18% over 2018. This compares with population growth in South Australia at 0.8% and Western Australia at 0.9%.

ABS projections see Australia’s population hitting 30 million by 2029. Soon Melbourne will overtake Sydney as Australia’s biggest city, probably around 2050.

‘Biggest city’ figures can be a technicality. Sydney has traditionally included separated northern zones in Gosford and the Central Coast in its population tally. If Melbourne included similar areas around Port Phillip Bay like Geelong and the south west Surf Coast, it’s likely Melbourne would already be the nation’s biggest metropolitan mass.

New South Wales will remain as the biggest state with a population between 9 and 9.3 million by 2027, however growth will be fastest in Victoria, reaching 7 to 8 million by 2027.

By 2050, Melbourne will reach 8.5 million people while Sydney’s population will have hit 8.3 million.

According to the ABS Queensland’s figures will increase to 6 million in 2027, Western Australia will hit 3 million. Growth will be slower though in South Australia increasing to just 2 million.

In coming years this rampant population growth combined with under-investment in new housing stock could again present Australia with the familiar predicament of under-supply.

Population surging, but construction is down

The RBA’s June cut in interest rates along with reports that the prudential regulator’s proposal to ease the interest rate floor has encouraged better funding conditions. But the weakening Australian dollar, improved general housing affordability and access to credit have continued to add to the housing construction downturn.

A drop in house and apartment building activity, plus diminishing mortgage loan commitments to investor buyers who underpin a lot of the construction of national housing stock, is likely to be sustained for the foreseeable future.

The most recent (May 2019) monthly Performance of Construction Index (PCI) published by the Ai Group and HIA showed house building declined for the 10th month in a row with new orders contracting further.

For apartments, activity contracted for 20 of the last 22 months. And the commercial sector including warehouses and office towers continues to drag on the index. ABS data also shows loans to investors buying homes contracted for the 9th straight month from the peak at the beginning of 2017.

Last year about 50,000 jobs in construction were lost. Construction index data indicates that another 9,000 jobs have been lost in 2019’s first quarter. The slump in the housing market that has dropped Sydney values down 14.9% so far from their 2017 peak and Melbourne values down 11.1% continues to strike hard at the new home-building pipeline.

Homeowners falling behind on their mortgages have risen back up to 2010 levels but the RBA says this doesn’t present a risk to the financial system.
Speaking at a property industry summit, RBA’s chief of financial stability Jonathan Kearns, stated weak income growth, house value falls and increasing unemployment is some areas are contributing to a lift in mortgage arrears.

Jonathon Kearns said “the banks’ share of housing loans in arrears is back around the 2010 level, the highest it has been in many years. But this is still below the level of the early 1990’s recession”. He said housing arrears are rising but by no means pose a risk to financial security.

Australian banks’ non-performing household loans that were in ‘arrears or impaired’ nudged 2% in the early 1990s. In June 2019 Australian non-performing household bank loans are currently half that, at 1%.

According to Moody’s Investors Service, it expects a moderate rise in mortgage delinquencies in quarters ahead. Numbers of interest-only mortgages are due to be converted to principal and interest loans before the end of 2020. Moody’s expects this will cause delinquencies as borrowers are saddled with high repayments each month.

Clear pattern of arrears emerging

Personal misfortunes like bad health, relationship breakdown, or a death are often inadvertently connected to loan arrears, but it’s weak economic conditions that drive the cyclical upswings in repayment failures.
Jonathan Kearns noted that what he is seeing across Australia is “a clear pattern of more loans heading into arrears” in places where unemployment rates are higher.

Parts of regional Queensland and Western Australia have had unemployment rates increase and income growth rates decline because of the end of the mining boom. As a result such areas are recording a larger increase in arrears. Kearns said Western Australia’s arrears rate is now about twice the rate as the rest of the nation.

The housing market takes the biggest nosedive when a lot of people lose their jobs and simply have to sell. However most of the nation hasn’t reached that extreme pressure point in either 2018 or 2019.
Although the increase in arrears is pronounced, Jonathon Kearns says the rate of arrears across Australia is still low compared with many other advanced economies and countries. While about 1% of Australian housing loans may be in arrears, 99% are on schedule, or ahead of schedule.

Jonathon Kearns reported that although Australia’s economic outlook “remains reasonable” and there is likely to be a pick up in household income growth, it’s quite possible the arrears rate might continue to edge higher for a bit longer.
But with the strong lending standards that are in place and as long as unemployment remains low, arrears rates shouldn’t lift to levels that bring risk to the financial system or cause harm in the household sector.

New research produced by Rachel Ong from Curtin University and Gavin Wood from RMIT University shows there are an increasing number of older Australians who are carrying their mortgage debt into retirement, determined to back their ability to meet the payments and continue their quest to fully own the family home. Homeowners likely to fall in this category (55 to 64 years of age) increased from 14% in 1990, to 47% in 2015.