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GUEST OBSERVATION
The following comment echoes a dilemma of many potential first home buyers in Australia: 
“I am in late 20s, early 30s, $150,000 household income, $200,000 in savings - what should I do? Do I buy a property and risk my cash on an asset which is said to fall in value, or do I rent and invest my money into shares?”
The numbers may differ from person to person but the concern is the same.
I dealt with the issue of property prices in Australia and <a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank">what will happen in the future</a>, so instead I would like to focus on the issue of confidence.
If we analyse Australia's current economic situation objectively, we have a <a href="https://www.propertyobserver.com.au/residential/a-roof-over-your-head-or-the-biggest-investment-you-ll-ever-make-how-should-we-treat-residential-property/2014020967655" target="_blank">six decades long history of strong growth in property prices</a>, historically low interest rates, a low unemployment level and an economic growth rate which is the envy of other developed nations. Also, it is relatively easier to finance property purchases nowadays than it was 20 years ago. In addition, there are ample examples of research demonstrating that residential property in Australia is <a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">potentially the best investment class over the long-term</a>.
Yet, the fear of losing money, “because property prices are doomed to fall” and a pessimistic outlook are paralysing many to the extent that they are incapable of making a decision to buy a property.
Where does this fear come from? Why are we the biggest pessimists in the world despite surviving the global financial crisis quite well so far? We used to have severe recessions and other economic calamities before so, what’s different now? 
Let me digress for a moment and reflect on the “old times”, when things were viewed from another perspective.
How things used to be
Back then in the 1970s, 1980s or even 1990s, there was no talk about a possibility of property prices falling. The idea was to line up for a loan at the first opportunity and to get your first home as soon as you got your first full time job. It didn’t matter that the property had to be in a location on the city outskirts – you were buying what you could afford, and not your ultimate lifestyle.
The logic was that you pay your first property off as quickly as you can and then upgrade to something better and closer to city centre. Then do it again. And again. So that in the period of 15 to 20 years you could end up with something to enjoy for the rest of your life and which suited your lifestyle.
Your grandparents did it that way. Your parents did it that way. Everyone just followed the same routine. No questions asked. Everybody knew you cannot go wrong following this recipe.
I am generalising but it conveys the overall attitude of an older generation of Australians towards residential real estate. Now, let’s fast forward to present times.
How things are now
Parents and grandparents are no longer the role models and the primary source of wisdom. There is a new paradigm now.
Younger generations now take advice from media manufactured, faceless avatars and do-gooders on the Internet who create, either knowingly or unintentionally, the environment of fear, uncertainty and general misinformation.
This is not a criticism of a younger generation – quite the opposite. It is extremely difficult for anybody to make a decision with full confidence in such circumstances. The problem is more universal and relates to all generations living in present times. However, those of older age have those big decisions well and truly behind them while younger people have to face them now or in the near future.
The causes
It could be argued that it is the symptom of modern times that we are so overloaded with everyday tasks that are unable to find time to learn, discuss concepts and ideas with peers and elders we respect, analyse information and then make conscious decisions. Consequently, everything needs to be served on a plate for easy consumption where there is no need to exercise the brain too much.
As an example, we “do research” by skimming through news headlines and the more extreme and negative they are, the more attention they are likely to attract. We express our approval, opinions, or even protest, by clicking “Like”. And we tend to make only binary decisions: “Yes/No”, “Good/Bad”, etc. It seems there is very little time to ponder on “what if…” scenarios.
That is why media (traditional and social) and the internet in general have such a profound influence on what we think and do – they deliver snippets of information in chunks we are able to process without much effort.
The ease of dissemination of information in the digital age means there is a room for all sorts of views but what makes into a wider circulation is controversy and extreme cases.
So, we hear and read: “Property prices to fall 20%”, scratch that, 40% sounds more dramatic! But no one bothers to answer a fundamental question: "…and then what?"
Will they stay low or rebound? Is it likely that government would not intervene and would not try to prevent such a disaster? If there is intervention, what could be the impact on prices? Does this prediction have any merits after all?
It could be argued that there would be too much thinking involved to get these answers and in the fast paced digital media world there is no time for that because of editorial deadlines. The main game is headlines that attract the audience - not necessary the real story behind them.
And nobody bothers with putting caveats on such predictions either – by the following year the public will not remember “current scares” since focus will move onto the next extreme set of predictions.
A big part of the problem is how we interpret information published in the media – instead of treating those claims as a starting point for further investigation we tend to jump to a quick conclusion: “I saw it on TV so it must be right.”
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It is rather rare that a balanced and objective view of the state of affairs reaches wider audience via popular media channels – there is no incentive to publish such information simply because there is nothing sensational about it.
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Therefore, we are probably as much to blame for what is happening as the media. That is, we do not demand in-depth analysis behind the story simply because we don’t have the time to digest it. We just assume that someone must have done it diligently to come up with the conclusion, so the headlines will do just fine.
It is rather rare that a balanced and objective view of the state of affairs reaches wider audience via popular media channels – there is no incentive to publish such information simply because there is nothing sensational about it. Balanced views simply do not attract enough audience.
The effect is that only simplistic, negative, very often contentious, views propagate - leading to a widespread misinformation, like: “Property prices will fall in Australia because they have fallen everywhere else”; “We have affordability crisis because of negative gearing and speculators”; “Foreigners are causing property prices to rise”. There are a tonne of those around.
It should therefore come as no surprise that a significant proportion of would be buyers is put off making a decision.
Article continues on next page. Please click below.
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Some unexpected consequences
There is a number of quite ironic consequences resulting from all that doom, gloom and misinformation about the property market in Australia.
Firstly, it makes us vulnerable to exploitation by unscrupulous spruikers. In particular, on one hand it all leads to a perception that “property ownership is a dumb idea” (whether for living in it or earning income from it), that “everybody is losing money” and “everything is going to collapse very shortly anyway”.
On the other, it creates a fertile ground for those who claim to have a “secret formula” to “make it all magically work for us” and “to make the taxman pay for everything” - if we only spend $10,000 on a seminar and instructional videos, and some more on personal coaching.
There are plenty of people who fall for a magic of big numbers and a prospect of becoming a property mogul - despite the fact that there are no secrets to making money with property, just clever marketing.
The second consequence is that it led to emergence of new industries with a sole purpose of helping people to buy into property – from online discussion forums, dedicated blogs and property search portals profiting from advertising, through those selling specialised reports, smartphone apps, DIY property investment books and seminars, to buyer advocates and mortgage brokers offering information, tools and services for a fee. And now even financial advisers are getting on-board with advice on investment in property via self-managed superannuation funds.
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The overload of information and assistance, rather than helping in making decisions, has a totally opposite consequence – that is, more information tends to paralyse us rather than aid in making those hard decisions.
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Yet, it seems that, for many, it is harder than ever to make a decision. The overload of information and assistance, rather than helping in making decisions, has a totally opposite consequence – that is, more information tends to paralyse us rather than aid in making those hard decisions.
Not to mention that everybody demands a fair compensation for their work so, that assistance can add quite substantially to the overall cost of buying, making us even more apprehensive about making the decision.
Not many of these services existed 20 odd years ago and information was not so easy accessible either. So, the bulk of advice and assistance was coming from parents, relatives and your local bank manager – all for free.
The trust that young people had in older generations is no longer as strong for the current generation of young people. Maybe this is also due to the fact that the elders also have become confused and no longer have as strong a conviction about the merits of purchasing a property as they used to have in the past.
This is unfortunate because that trust was crucial in providing moral and emotional support for young people getting into debt for the first time. And it helped to positively reinforce the decision.
The perception that nothing can go wrong because “everybody is doing it this way”, created by decades of success stories by people they knew personally, was also very empowering.
In other words, it appears that the whole support structure that helped in making tough decisions is significantly weakened, if not entirely collapsed. There is really nobody that can be trusted anymore since those who offer assistance are there only to gain something from us (i.e. either clicks, patronage or real money for a service). The notion of “impartial advice” is somehow compromised in those circumstances as one can never be certain of true intentions behind provided information and advice. We are really on our own with those big decisions.
Social considerations that cannot be ignored
Then there are also social pressures impacting on the decision whether to buy a property or not. In the 21st century fun, globetrotting, gadgets, extreme sports, celebrity status, etc. “symbols of good and joyful life” are valued much higher than debt on a property located somewhere on the city's outskirts. Committing to owning a property early in life would mean sacrifices (i.e. less of the fun things) and would undermine rather than enhance the status of individuals in the eyes of their peers. So, at young age the choice is easy – don’t buy.
By the time people are ready to settle and start a family (which happens much later in life than in the past) they have already got used to the convenience of living in the city but they are overwhelmed by the amount of money required to continue that lifestyle as a family unit (either renting or buying, which requires taking on a substantial debt). This is when the anxiety about the future really kicks in.
The fact that Australia has not really experience economic hardship since early 1990s means that many of younger people also do not know what to expect when the hard times do come, adding to the anxiety and multiplying the fear factor (ie. because of the unknown).
This is a point in life when headlines like “property prices are overvalued by 40%” or “there is housing affordability crisis in Australia” are becoming a drawcard for this demographic group because it helps them to cope with the anxiety by reinforcing the fact they are not alone in this predicament.
However, these are not the real reasons why they are unable to buy - it is all primarily about the mindset.
A simple solution
The reality is that things are never black and white as they are over-simplified by media for the purpose of easy consumption. What we mostly hear in the media are opinions and not indisputable facts based on evidence – even those expressed by experts.
So, this fear is not substantiated with a valid reason. It is just a consequence of not knowing what to believe in, as well as not having the adequate knowledge to objectively assess what others are purporting to be the “ultimate truth”.
The only way to overcome this paralysis it is to get to know the facts. And this requires making the effort of starting to think for yourself.
The bottom line is that one cannot outsource thinking because there is a big price to pay at a later date. 
End note
I did use many generalisations in this article to emphasise the important issues underpinning the problem but, of course, there are many exceptions, as current property sales statistics show. There are many first home buyers that are making the decision to buy right now.
It all boils down to a mental state of having a confidence in the decision you make. It requires knowledge and conviction that this knowledge is not tainted.
It takes effort and lots of thinking before you can get into that mental state. So, taking time to think should be as important as attending the gym or undertaking other routine activities of your daily life. Sorting out finances to buy a property is the easy part.
There are no right or wrong decisions. However, since there are consequences of each decision, there will be those decisions that one can live with and those that will be regretted until the end of one’s life.
The key is to be mentally prepared to bear those unpleasant consequences when you make a decision which produces an outcome that is not in your favour.
This is the only secret one really needs to know to make a decision whether to buy or not to buy a property at present time. Affordability has nothing to do with it - it is all about the confidence.
Arek Drozda is an independent analyst who has worked in the public and private sectors for over 20 years in business development, data analysis and in building geographic information systems.
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Crisis of confidence or crisis of affordability?

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I was recently tagged on an article that did the rounds on LinkedIn. The article proposed the notion that professionals in the financial sector are fearful of being ostracised by developers. More to the point, John Collett of the Sydney Morning Herald wrotes “The brokers fear that they will be ostracised by developers if they go public…”.
Perhaps I’m totally misunderstanding the writer’s point and the genesis of the brokers’ fears. Have I missed something altogether? Let’s discuss.
I don’t disregard what Collett writes and I’m glad to accept that there is one more voice crying foul-play when it comes to overinflated commissions and the financial sector being induced to participate. I am however, bemused that none of Collett’s interviewees or article subjects, shed any light into the simple truth that selling real estate without a license is against the law.
If the single and only notion is that “the brokers fear that they will be ostracised by developers if they go public” then I believe the financial sector has totally missed the required need to be a “licensed real estate agent” to sell real estate.
For over 4-5 years I have been writing about the need to have Real Estate Commissions disclosed by one form or another. I have tracked over the last decade how “Marketing Fees” have moved from 4% to an alarming 10% value off the sale price of a property in the new construction sector. The average or typical real estate agent’s commission on a sale is 2%. In an overly heated market, these fees are added to the end values of the properties, which in turn only add more fuel to the property bubble.
Hopefully, we will soon hear the voice of the consumer crying foul-play, as the properties that were marketed by the financial sector and brought through SMSF property investment schemes, lose value.
We already have hints of such concerns, as new properties in mining-town sub divisions which were notoriously preferred by these schemes are now losing value due to high vacancy.
Soon enough and on the agenda, will be high rise apartments in capital cities and in particular projects that are still under construction. Presently there are properties being sold for $360,000, with "marketing fees" reflecting 10% or in real terms $35,000.
Huge losses incurred by the investors may be the trigger or the catalyst for the regulators to take more assertive action. These are actions that will hinder the sale of property by spruikers and marketing companies that don’t hold real estate licenses.
Nonetheless, it won’t stop most. However, if commissions were disclosed the consumer stands a better chance at discerning what is good value or not. Don't you think?
How this is allowed to happen and why is this so prevalent is no real secret. As to the how? It all comes down to one word. Replace the word “commission” with “marketing” and the fee payable need not be disclosed and anyone can sell real estate.
As to the why; the exaggerated fees are readily passed on to “property marketers and spruikers” mainly involved in the financial sector, all because they have an immense amount of influence over the purchaser. The spruikers assist with the decision making and place high recommendations on the development/project. This in turn allows the developer to inflate the price of the property to make room for the 8-10 percent commissions, sorry I meant “marketing fees”.
Again, please enlighten me, why brokers should fear developers? They get a commission under their job description as pointed out by Jan Kirstein and that is mortgage brokering. However, even Kirstein only refers to “something going wrong” as the main reason and conflict of interest, should things go pear shaped. Again, there is no mention of the need for a license. Leave the sale of real estate and reasonable commissions to the licensed real estate agents, is my suggestion.
At this point I ask, where are the Real Estate Institutes on this topic? I first raised this very issue and the need for agents to be protected against spruikers tainting the industry, over 4-5 years ago.
The financial industry was encroaching in our territory even before the “property boom” hit town. And before it was fashionable to set up SMSF schemes to buy property. Or better still, before they learned to by-pass the real estate agent and go direct to the source, the developers.
The further demise of the real estate industry and in this arena where simple regulations can also protect the consumer, is not due to lack of education on the part of the agents. We know very well not to make any reference to any financial gain, assertions about return on investment and capital gains. But, it seems clear that the financial sector are not well versed on who can sell real estate, legally that is.
One of the key rules I share with my friends and family, when it comes to being offered property by spruikers, accountants or mortgage brokers is; if they refer you to new property, then it’s just not worth the risk. If they in turn, refer you to a buyer’s-agent to help you find something other than new or off-the-plan, it would make more sense. However never avoid doing your own research. Nor underestimate, the power of simply calling a local agent in the area to ask what comparable properties are selling for and they don't need to be new.
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Sell real estate without a license and earn more than an agent: Arek Drozda

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GUEST OBSERVATION
It is budget time again and, like on many previous occasions, the voices seeking easy publicity are calling louder and louder for the abolition of negative gearing. Housing affordability is a hot topic in an environment where property prices are rising, in some places quite significantly, so the media is happily running with this agenda without questioning the basis of various claims.
But how can you have an honest debate on the issues involved if none of those commenting against negative gearing demonstrate enough knowledge on the topic they are talking about?
Dispelling myths about negative gearing is like trying to convince a 3 year old that "spinach is good for you"… It requires some maturity to comprehend the topic of the discussion before one is able to participate without any prejudice.
It may appear as a harsh and provocative assessment of those criticising negative gearing and Australia’s current tax arrangements - especially since the anti-negative gearing voices include prominent economists, managers of investment funds, various social think-tank organisation and media personalities. But if you scrutinise what they are saying it is very obvious they are just repeating overheard phrases without any understanding of the meaning of what these words really mean. Just like the aforementioned 3 year olds…
Just to illustrate, the prevailing theme is that negative gearing is a "cost to taxpayers"… Really? How about taking a class in basic accounting to understand the principles of cash flow before making any such statements publicly? Then the commentator would understand the negative gearing is all about cash flow and not about profit and therefore, that it is neutral from an overall tax perspective. (I explained the mechanics in my earlier article if you care to read - <a href="/news/negative-gearing-the-three-facts-that-will-challenge-your-assumptions">Negative gearing: The three facts that will challenge your assumptions</a>).
Then there are ideas about changing the provisions to allow negative gearing on new properties only, to increase new build. Yeah, right, great idea. Let’s keep all those people unable to buy isolated in renter ghettos, or relegate them to city fringes, and keep the suburbs pristine and free from temporary drifters. Let’s repeat those social housing experiments from 1960’s and 1970’s (this time round with private money) which legacy is still haunting parts of our capital cities half a century later.
Of course I am exaggerating the possible consequences but only to highlight that those who call for such arrangements did not think through the full consequence of what may happen. Ask yourself, where is the greatest demand for rental accommodation? Of course, in city centres and along major transport routes. This is where investors are providing the bulk of rental stock - because this is where the demand is. And of course this is, in the great majority of instances, second-hand and not brand new stock for a very obvious reason.
“But” they say, “if properties were cheaper in those convenient locations, more people could afford to buy there and would not need to rent”. Great logic. Sure, let’s implement policies that will allow converting everything in such locations to cheap owner-occupier housing – and then we will end up with a real housing affordability problem for those who prefer or are forced to rent. But sure enough, taxpayers will be very happy to spend billions of dollars to address it, no worries.
The premise that renters will buy “cheap houses” rather than continue renting would be amusing if it was not promoted so seriously by those prominent commentators. The naivety of such thinking, on such a large scale (mind you, without any evidence and/or testing the assumptions), is staggering.
One only needs to look to late 1990 to understand why such thinking has no merit whatsoever. In particular, towards the end of 1990’s, the cost of owning a property was at a historically low level and in many locations renting was costing more than paying off a property and still, not everybody was prepared to buy, even if they could afford it easily.
All those commentators are forgetting the basic logic that drives people’s decisions – if prices are cheap, they are so for a reason. That is, owning is perceived by the majority as unattractive and without a merit, and cheap prices in relation to rental expenses only reinforce this perception. People need to perceive a positive outlook for the property market to want to own the place of their residence - this outlook can only be reinforced by a history of rising prices. It’s as simple as that, yet so difficult to comprehend for many.
Then we have such pearls of wisdom like grandfathering negative gearing on existing purchases but, at the same time, allowing for the writing-off of operational loses against capital gains. Great, let’s make tax affairs so complicated that nobody will be able to figure out whether they are making money or losing it. Accountants will love it and growth of employment at the Tax Office will propel Australia’s economic growth for the next few decades.
Or how about proclaiming that before 1986 there were no property investors in Australia (because this is what housing finance statistics “show”) and that the “current property investment boom crisis” is the fault of Keating and Hawke re-introducing negative gearing and Howard and Costello halving the capital gains tax on investment properties? This position conveniently disregards the fact that the proportions of rental stock remained relatively static for many, many decades. So what is really going on?
<img src="/images/2015/05/04/Occupied_private_dwellings.png" alt="">
Those commentators simply don’t comprehend that there was a shift in the investor profile from, a situation where a single person owned entire blocks of flats, to that where now many individual investors only own one flat each. Those aforementioned policies were just a catalyst enabling this transition to happen.
And because of these policies, people now have a choice to either live where they are and invest their extra money in the long term rental accommodation business (yes, it is a business after all) or upgrade their primary residence - and the financial outcome is the same at the end. Unbelievable but true, once you do the math.
But the biggest fable of all is that negative gearing is the reason prices are “so high” today. So, by removing negative gearing, we will restore “housing affordability” - whatever that means. Pity not many can understand what is really driving property prices in Australia.
It doesn’t fit in these people’s agendas that the cost of buying and renting in Australia is close to its historically best level, and that housing is more affordable now than at many points in time in the last three decades. Even in Sydney – the apparent “epicentre of housing speculation”.
<img src="/images/2015/05/04/Long_term_purchase_affordability_Sydney.png" alt="">
Interestingly enough, NSW’s share of net rental income losses was only 5.7% in the 2012-13 financial year (or $312 million out of $5.5B claimed by investors – as per Table 15 of recently published statistics that show all income and expense items from rental property schedules, by the state/territory location of the property). This means that just two years ago, in aggregate, profits from long term rental accommodation business in NSW almost matched losses.
In other words, negative gearing was not as widespread in NSW as everybody is led to believe. No surprise here at all since purchases with gross rental yields of 6-7% were not that uncommon in Sydney in 2012. But why bother with facts that spoil a “good story” for media attention.
By the way, where were these commentators in 1997-99, 2005/6, 2009 or 2012-13 when there were ample opportunities to buy property cheaply? Why they were not heralding those opportunities then as loudly as they now voice their opposition to negative gearing? (As a side note, did you notice how regularly these opportunities come about?) There is a simple answer - because back then they were chasing media headlines with another favourite crowd pleaser - the upcoming Armageddon.
My, in many ways, aggressive and ironic commentary serves the purpose of mobilising you - the reader - to start confronting these commentators and questioning their understanding of a concept they are so outspoken about. And secondly, treating what you read and hear on the news about negative gearing with a fair dose of scepticism.
After all, in the whole scheme of things, negative gearing is inconsequential for individual property investors – sure, it helps with cash flow but it does not impact profitability and certainly, it does not make houses more expensive. So, its abolition would not change a thing – but that point of view is missing from the public debate.
Journalists are failing in their duty to present information objectively by not offering contrasting opinions and, most importantly, by not questioning individual commentators on merits of their points of view.
I have a tip for anybody who wants to know whether a particular commentator has any idea about the topic of negative gearing - check if they consider negative gearing to be a cost to taxpayers, or offering extra profit for investors, or none of the above. If they do consider it a cost or extra profit opportunity, then you know you cannot take seriously anything they say, no matter what other credentials they present.
Arek Drozda is an independent property market analyst. Follow on Twitter @arekdrozda.
 
 
 
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Are publicity stunts driving the negative gearing agenda? Arek Drozda

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GUEST OBSERVATION
Buying a property is a complex process with many decision points along the way, regardless of whether you are buying to live in or to rent out. A very important part of that decision process is deciding where to buy, and what type of property in particular.
There will be those rare occasions when the buyer just sees a property for the first time, either in real life or just on a picture, and immediately knows “this is it”.
However, more often than not, the selection of a property for purchase is an elimination process whereby you firstly exclude what you don’t want, and then evaluate and rank what is left to arrive at the final decision.
In either case, the more time one spends learning about various property options and getting to know the peculiarities of the local market, the better the chance of spotting that ‘perfect opportunity’ - or at least making the selection process a more logical exercise, and hence less stressful.
There is a large variety of property market information available to individuals. Some information is accessible for free online as part of marketing activities of various real estate related web sites (such as the suburb data available on this site), while other requires payment of hefty fees to access.
Although Australian Census data may not be at the top of the list of the most popular information sources to consult when buying a property, it is a great resource that should be seriously considered as a starting point in the purchasing process.
The key advantage of using Census data in property market research is that it allows you to quickly narrow the choice of locations to concentrate your further, more-detailed research on. Hence, it allows prospective buyers to make their research more focused, and subsequently, a much cheaper and much faster exercise.
After all, as any real estate agent will tell you, buying a property is about ‘location, location, location’. So, defining ‘where’ to start looking should always be a priority.
Sales reports for suburbs or postcodes that list recent transactions provide prospective buyers with good insights into the price distribution in a given location and at a given time but can be quite expensive to obtain. These are great for the final stage of your research when you are comparing between specific offerings on the market and assessing whether what you are interested in is good value in relation to other recent sales in that location.
However, considering there are a few hundred suburbs or postcodes per capital city, accessing all that information would be prohibitively expensive. Not to mention impractical if it is delivered in a pdf report format.
Therefore, tools that allow analysing and mapping data across whole regions offer much more utility in the early stages of the research.
Let’s review a few examples of simple maps with data from the latest 2011 Census of Population and Housing to illustrate the value of such information for deciding on where and what to buy. We will focus on Sydney and will use postal areas as a geographic reference.
Census data was current as at 6 August 2011 so it may appear a bit dated in 2015. However, in this analysis we are primarily interested in the relative differences between areas rather than absolute values, therefore the age of data is not so important, as long as it is reasonably recent.
The obvious choice in starting the analysis would be to look at median mortgage payments per postcode – this acts as a quick reference to the distribution of prices across the city. The map below gives a good indication where the expensive and not so expensive parts of Sydney are.
Click on maps to open in new window and view suburbs in more detail.
 <a href="https://www.propertyobserver.com.au/https://mapdeck.com/409" target="_blank"><img src="/images/2015/04/29/median_morgage_monthly_b.png" alt=""></a>
However, using this dataset alone will not allow you to distinguish between areas with lots of new mortgages (hence high mortgage payments) and those with expensive but mostly paid-off properties (that is, with smaller remaining mortgages).
Therefore, median rent data provides a much more useful picture since rental costs and the cost of buying a property are closely related (see my previous article titled “<a href="/expert-insights/australian-property-prices-explained-independent-analyst">Australian property prices explained</a>” for the explanation of this concept).
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/410" target="_blank"><img src="/images/2015/04/29/median_rent_weekly_b.png" alt=""></a>
Using the map like the one above, you can determine areas around the city with similar property prices. For example, if you have identified one area with properties in your price range, by locating polygons shaded in the same colour you can easily identify neighbourhoods that have similarly affordable properties.
Price affordability is one factor affecting the choice of location but how desirable is the neighbourhood is another important consideration in the purchase decision. You could try to assess the attractiveness of the neighbourhood based on the rate of unemployment or family incomes but the best summary measure is The Index of Relative Socio-economic Advantage and Disadvantage which summarises information about the economic and social conditions of people and households within an area.
For example, a low score indicates relatively greater disadvantage and a lack of advantage in general. That is, these are locations with many households with low incomes, or many people in unskilled occupations and few households with high incomes, or few people in skilled occupations.
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/411" target="_blank"><img src="/images/2015/04/29/seifa_advantage_disadvantage_b.png" alt=""></a>
It is all well and good to follow advice to “buy in the West” because it is cheaper and prices have the potential to rise more than in the East over the next few years (this pattern of price growth was explained in my earlier article “<a href="/expert-insights/investing/inner-ring-the-best-bet-in-sydney-and-heres-why">Inner ring the best bet in Sydney and here's why</a>”) but the decision has to be balanced with the risk that it will be much harder to sell or rent out in those locations when the going gets tougher.
Furthermore, as an investor, you may be interested primarily in locations with high concentration of rental properties which indicate high demand for rental accommodation. Whereas, owner-occupiers may prefer to avoid areas with excessive stock of rental accommodation.
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/412" target="_blank"><img src="/images/2015/04/29/rented_dwellings_b.png" alt=""></a>
Landlords cannot and should not discriminate against families with young children but those who would like to reduce the risk of excessive wear and tear of their rental properties could use Census data to pick locations where probability of this type of tenant is reduced.
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/413" target="_blank"><img src="/images/2015/04/29/kids_0_4_years.png" alt=""></a>
And how crucial is a parking space if you are buying an apartment to rent out? Sure, it is great if there is one included in the purchase price but for many locations along major train lines and arterial roads where 30% or even 50% of households do not have a car, lack of parking space should not be a deal breaker.
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/414" target="_blank"><img src="/images/2015/04/29/no_motor_vehicles_b.png" alt=""></a>
Finally, consulting Census data can also help prospective buyers as well as existing landlords to assess the potential of specific locations for group rentals which can significantly boost rental yields by maximising income from the asset.
<a href="https://www.propertyobserver.com.au/https://mapdeck.com/415" target="_blank"><img src="/images/2015/04/29/group_households_b.png" alt=""></a>
Census data cannot provide all the answers but it is of great help in the property selection process as it offers a fast way to narrow your search options to a handful of locations to then focus your more detailed research on. Using Census statistics will save you money and valuable time in arriving at the optimal selection for purchase.
Arek Drozda is an independent property market analyst.
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Improving property selection with Census data: Arek Drozda

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Market outlook: neutral (upgraded to reflect positive turnaround in several indicators).
<ul>
<li>Renting and buying are now equally balanced options (as at March 2015).</li>
<li>Purchase affordability has improved again (as at March 2015).</li>
<li>Confidence in the economy is low but potentially at a turnaround point (as at March 2015).</li>
<li>Housing Credit Impulse points again to a stronger demand for real estate (as at March 2015).</li>
<li>Prices are elevated in relation to mortgage credit flow but can be sustained without problems if flow of funds into the market continues (as at January 2014).</li>
</ul>
National Real Estate Price Forecast
The year has started with a renewed optimism about the Australian residential property market after a period of noticeable slowdown in the second part of 2014.
January property finance figures were very strong, and that was even before the interest rate cut.
In February, RBA reset the overall market conditions by reducing interest rates to a historically low 2.25%.
In an environment where growth in prices was slowing and where incomes were progressing at a steady, albeit moderate, pace it resulted in a significant improvement in purchase affordability.
The reset in purchasing costs increased the attractiveness of buying, when compared to the second half of 2014.
In addition, there are signs that negative expectations about the economy are ready for a reversal (the raw measure turned up in November 2014 and is rising).
All in all, the March quarter estimates point to a very buoyant market. If current enthusiasm can be sustained and continues into the autumn selling season, 2015 can be expected to deliver another year of solid growth in property prices.
We will have to wait until the next set of figures are released to confirm whether this positive turnaround is just a temporary aberration or a more lasting trend.
Detailed Analysis
#1 optimal accommodation choice: renting and buying are equally balanced options
<img src="/images/2015/03/13/BRI_March2015.png" alt="">
The Buy-Rent Indicator (BRI) identifies how cost of buying is changing in relation to cost of renting.
The latest estimate implies a substantial fall in BRI value, indicating that buying costs are now changing at a comparable pace to rental costs.
BRI is constructed based on the simple concept that renting and buying are substitute accommodation options; hence the optimal choice depends on which accommodation cost is rising in relation to the other.
The practical use of this indicator is for identifying market cycles and for timing purchase and sale decisions.
The reversal of the direction of the indicator is the result of the recent slowdown in growth of the national property prices as well as a reduction in mortgage rates. Both those factors contributed to the reduction in growth of purchasing costs which are now changing at the same pace as rental costs.
Cut in mortgage rates so late in the cycle, that is, after two years of rising property prices, is somehow unusual but it is not totally unprecedented.
The reset caused by RBA’s decision gave prospective buyers another opportunity to jump on the property ownership bandwagon.
Although this is not the most optimal time for buying (the optimal timing was at the bottom of the cycle in early 2012), nevertheless if interest rates are cut further and there is only a moderate growth in prices, the cost of buying will be rising slower than cost of renting, making purchasing a more attractive accommodation option. This scenario can be compared to the situation experienced in March 1999.
Only a very substantial rise in prices and/or interest rates can make buying unattractive again, as it happened in 2000.
#2 purchase affordability: at a historically high level and improving again
<img src="/images/2015/03/13/PAI_March2015.png" alt="">
The Purchase Affordability Indicator (PAI) compares changes in the annual cost of buying to changes in average full time adult income; therefore, it identifies how purchase affordability has changed over time.
The March 2015 PAI estimate points to a reversal in the direction of the indicator, and hence, to improvement in purchase affordability.
This indicator explains that, in historical terms and relative to incomes of Australians working full time, property prices are still very affordable.
And thanks to RBA’s February decision on interest rates and continued, modest but steady, growth in incomes, the recent downward trend has been halted and purchase affordability is increasing again.
It may be hard to believe that after two years of price rises it can be the case but recent auction clearance rates leave no doubt how buyers feel about current prices.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
#3 perceptions about economy: still negative but no longer deteriorating
<img src="/images/2015/03/13/EWI_Maach2015.png" alt="">
The Economic Wellbeing Index (EWI) is designed to reflect general perceptions of Australians about the current economic conditions.
The EWI has been falling since June 2013 but the trend is now levelling out. The raw measure recorded a small fall in March 2015 but it has been rising for the last few months.
The key premise behind this indicator is that people are generally less inclined to make big purchases when they are worried about the state of the economy.
The perceptions about the Australian economy, although still negative, are no longer deteriorating. And there are signs they are about to start reversing. However, the overall negative outlook for the economy is keeping the lid on the rate of growth of property prices. Without that restraint, chances are, we would be experiencing a rerun of early 2000’s. We all remember what happened then…
#4 demand: strong and expanding again
<img src="/images/2015/03/13/PHCI_March2015.png" alt="">
The Private Housing Credit Impulse (PHCI) provides an indication of the level of buyer activity in the residential property market in Australia, hence it reflects underlying demand for properties.
The March 2015 PHCI estimate reversed from falling to rising again, resuming the upward trend. PHCI is as its highest level since 2005, implying the highest rate of acceleration in housing credit in a decade.
The practical use of this indicator is to provide early warning about impending changes in housing credit uptake, and hence, changes in the underlying demand for residential property.
The March 2015 PHCI estimated value indicates a substantial rise in the underlying demand for the residential property in Australia. Hence, property prices have potentially much further to run in this cycle as the Australian public embraces the abundance of cheap credit. Perhaps, the scenario of a return of early 2000’s is not totally out of the question...
#5 property price expectation: growth very likely to continue at moderate pace
<img src="/images/2015/03/13/PPG_March2015.png" alt="">
The Property Prices Gauge (PPG) is a proxy of a property price index. It becomes a leading indicator when combined with House Price Index (HPI).
PPG increased in January 2015 but the indicator continues to lag behind HPI.
The fourth in a row rise in the value of the PPG confirms the resumption of an upward trend of the indicator after several months of relatively flat results (that is, between March and September of 2014).
This gives the confidence that prices are reasonable and are well supported at current levels.
However, the gap between PPG and HPI is still large, and therefore, further price growth is expected to be kept in check (that is, at current growth levels or lower rate).
Arek Drozda is an independent property market analyst.
# Caveat - The information is provided in good faith and does not constitute financial advice. Use with caution and at own risk.
# Background information - For more extended description of individual measures and how to apply this information please refer to the first report in this series: <a href="/expert-insights/buying/buying-more-advantageous-than-renting-yet-change-imminent-april-2014-state-of-the-market-analysis">State of the Property Market, April 2014</a>.
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Very buoyant market to deliver strong growth: Arek Drozda's March state of the market analysis

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GUEST OBSERVATION
As 2014 has just drawn to a close it is a good time to reflect on the events of the past, and especially the last 12 months, to prepare for what to expect in the Australian property market in 2015 and beyond.
Let me begin with this absolute gem of a quote:
“At last we anchored within Sydney Cove;… it is a good town; the streets are regular, broad, clean &amp; kept in excellent order; the houses are of a good size &amp; the Shops well furnished. — It may be faithfully compared to the large suburbs which stretch out from London &amp; a few other great towns… the number of large houses just finished &amp; other building is truly surprising; nevertheless every one complains of the high rents &amp; difficulty in procuring a house…”
- Charles Darwin's Beagle Diary, 12 January, 1836, Sydney.
It looks that Sydney property market had not changed much in 179 years - the same issues were widely debated in 2014 and they will continued to be debated in 2015. The chances are that another few generations will hear the same old complaints over and over again.
At the beginning of 2014 there were many sceptics about the uplift in property prices, clinging instead to the previous media propaganda favourite – an imminent price collapse.
However, dwelling prices increased across the country in 2014. In some places very modestly, at a level that could be considered just noise in the data, but in other parts of Australia, like Sydney or Melbourne, quite noticeably (12.4% and 7.6% respectively according to Core Logic RP Data Home Value Index).
<a href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181/Page-1" target="_parent">As I outlined last year</a>, price growth should have been expected considering the historically high purchase affordability.
Price advances in 2014 put Australia well on track to record another decade of growth - the seventh consecutive decade of growth since World War II.
<img src="/images/2015/01/01/Prices_per_Decades_December2014.png" alt="">
However, you would not know from news headlines that our property market is as expected since 2014 was another year of media beat up about property bubbles fuelled by negative gearing, housing affordability crisis, foreigners and investors stealing houses from first home buyers, and baby boomers eating their young.
As many Property Observer readers already know, these are just overblown exploits by attention seeking media outlets and not the real issues, as I have previously highlighted in my feature article: <a href="/expert-insights/investing/crisis-of-confidence-or-crisis-of-affordability">Crisis of confidence or crisis of affordability?</a>
In 2014 the supply of new dwellings started to increase as a response to rising prices. At the same time, increased participation of property investors led to increases in supply of rental accommodation. Rents held well in larger capital cities in 2014 but declined in Canberra, Darwin and Perth (as per Residex November 2014 results).
The cost of buying Australian property is now considered expensive in comparison to rents. The pendulum swung in favour of rents in March and the changeover was reported in <a href="/expert-insights/buying/further-price-growth-likely-though-pace-may-slow-may-2014-state-of-the-market-analysis">May’s state of the market report</a>.
The December preliminary analysis indicates that the peak in this cycle might have been reached but we will have to wait for a confirmation in the coming months.
<img src="/images/2015/01/01/BRI_December2014.png" alt="">
However, in historical terms, residential property remains well within the financial means of working Australians, despite substantial price rises in 2013 and 2014. Even in Sydney.
<img src="/images/2015/01/01/PAI_December2014.png" alt="">
The property market in Australia fared well in 2014 in comparison to the stock market but, as noted earlier, returns varied across the country.
The best capital gains were recorded in Sydney and Melbourne, and Canberra and Darwin were the worst performing markets in 2014 (as per CoreLogic RP Data Home Value Index).
It is therefore not a coincidence that the security and relatively low volatility of residential property is very attractive at the moment.
<img src="/images/2015/01/01/HP_Accum_December2014.png" alt="">
Also see:<a href="https://www.propertyobserver.com.au/residential/a-roof-over-your-head-or-the-biggest-investment-you-ll-ever-make-how-should-we-treat-residential-property/2014020967655" target="_blank"> An investment or just a roof over your head: How should we treat residential property?</a>
Article continues on the next page. Please click below.
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The Australian dollar fell at the end of the year, making our property market cheaper for expats and international buyers.
As far as market intervention goes, we had two property related Senate inquiries in 2014: one into housing affordability and the other into foreign investment in residential property. And there was the financial system inquiry, the so called Murray Review. Government policy responses are expected to have some impact on the property market but the magnitude and timing of eventual actions is uncertain.
There were also strong calls during the year for the implementation of micro prudential regulations to curb property investment growth, as well for the removal of negative gearing provisions, but the probability of any actions by the authorities remains rather low at this point in time.
Besides, the likelihood of any negative impact stemming from these actions on the property prices is minimal if we consider New Zealand experiences with micro prudential controls and the true role negative gearing plays in property investment (as explained in <a href="https://www.propertyobserver.com.au/news/let-s-get-the-facts-straight-negative-gearing-benefits-less-well-off-investors-more-than-it-does-the-rich/2013111266324" target="_blank">Negative gearing: The three facts that will challenge your assumptions</a> and <a href="/news">Putting property investment losses into perspective</a>).
Money has flowed strongly into the property market throughout 2014 but that flow has potentially reached its peak in the December quarter. We will have to wait until March 2015 for a confirmation of change in trends, but a pull back in demand in autumn is very probable.
<img src="/images/2015/01/01/PHCI_December2014.png" alt="">
Transaction volumes remained subdued in 2014 in historical terms. With consumer confidence down for the year, unemployment on the rise and general expectations of low growth in wages, and tough economic conditions ahead, the demand for property has been weakening throughout 2014 and can be expected to decline further.
<img src="/images/2015/01/01/EWI_December2014.png" alt="">
Price growth started to decelerate in mid 2014 – the outlook for the market was downgraded to neutral in June, and again in July to neutral with negative bias, to reflect deteriorating conditions.
In the last 12 months, the Australian property market has followed a slow growth scenario, as outlined in <a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank">Australian property prices in 2014 and beyond</a>.
All in all, at the end of 2014 the property market in Australia remains strong but there are signs it is ready to take a breather.
Jitters in international financial markets and the constant worries about the domestic and the world economy (China in particular), negatively influenced the confidence of market participants. Prices cannot advance strongly in such an environment so we may have already seen the peak activity in this cycle.
If confidence in the domestic economy improves significantly in 2015, it could put a rocket under prices because property in Australia is still relatively cheap. With the expectation of interest rates on hold throughout 2015 and only moderate wage growth, the key to the Australian property market fortunes is employment.
Arek Drozda is an independent property market analyst.
Caveat - The information is provided in good faith and does not constitute financial advice. Use with caution and at own risk.
Background information - For more extended description of individual measures and how to apply this information please refer to the first report in this series: <a href="/expert-insights/buying/buying-more-advantageous-than-renting-yet-change-imminent-april-2014-state-of-the-market-analysis">State of the Property Market, April 2014</a>.  
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State of the market report – 2014 in review

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GUEST OBSERVATION
Market outlook: unchanged - neutral with negative bias
<ul>
<li>Attractiveness of renting as a preferred accommodation option continues (as at December 2014). </li>
<li>Purchase affordability is still very high but declining (as at December 2014). </li>
<li>Confidence in the economy is low but conditions are not deteriorating (as at November 2014). </li>
<li>Housing Credit Impulse points again to a strong demand for real estate (as at September 2014). </li>
<li>Prices are vulnerable at current levels, but can be sustained if flow of funds into the market continues (as at September 2014).</li>
</ul>
<h3>National Real Estate Price Forecast</h3>
The latest set of statistics paints a more positive picture than initial estimates and preliminary results indicated just a month ago.
In particular, we can see a small improvement in perception about the economy (but this is not yet reflected in the main indicator, only by a row measure), the actual demand for properties turned out to be much stronger than originally anticipated and there was a small but important lift in Property Price Gauge, indicating a notable increase in the flow of funds into the market.
The rebound in several indicators and the fact that prices are still very affordable, signal that the market remains relatively strong.
However, we will have to wait a few more months for confirmation if the rebound in the indicators is a sign of a return to fast paced growth in prices or just a late sprout of activity that will soon subside.
Without this confirmation, the overall outlook for the Australian property market remains at a neutral level and unchanged from previous month.
<h3>Detailed Analysis</h3>
#1 optimal accommodation choice: renting still the more favourable option
<img src="/images/2014/11/28/BRI_November2014.png" alt="">
The Buy-Rent Indicator (BRI) identifies how cost of buying is changing in relation to cost of renting.
The September 2014 BRI final value is higher than in previous quarter, confirming that buying costs are growing faster than rental costs. However, the first estimate of BRI for December 2014 quarter points to a likely reversal of this trend.
BRI is constructed based on the simple concept that renting and buying are substitute accommodation options; hence the optimal choice depends on which accommodation cost is rising in relation to the other.
The practical use of this indicator is for identifying market cycles and for timing purchase and sale decisions.
The BRI shows that renting is currently still a more attractive option than buying. The reversal of the direction of the indicator is a result of the recent slowdown in the growth of national property prices and hence, the slowdown in the growth of purchasing costs. At the same time, the rental costs continue to increase at a steady pace.
In a market where purchasing costs are rising primarily due to price increases, the optimal point for selling a property is when the indicator peaks and then starts to decline.
Based on the previous behaviour of this indicator, the peak of the current cycle is anticipated to happen before the end of 2016.
If the currently observed change in trend is confirmed in the next few months, it would indicate that the fast price growth phase of the cycle has ended. The December 2014 quarter will therefore mark the end of the “seller market” and the beginning of “buyer market” conditions.
#2 purchase affordability: at a historically high level but falling
<img src="/images/2014/11/28/PAI_November2014.png" alt="">
The Purchase Affordability Indicator (PAI) compares changes in the annual cost of buying to changes in average full time adult income; therefore, it identifies how purchase affordability has changed over time.
The December 2014 PAI estimate points to a continued, gradual decline of the indicator.
This indicator explains that, relative to incomes of Australians working full time, property prices are still very affordable.
Since the cost of buying a median priced property relative to average income is significantly lower than in the late 1980s, there is still a lot of room for prices to move before Australian real estate can be considered overvalued. 
Article continues on the next page. Please click below. 
<hr class="system-pagebreak">
#3 perceptions about economy: still negative
<img src="/images/2014/11/28/EWI_November2014.png" alt="">
The Economic Wellbeing Index (EWI) is designed to reflect general perceptions of Australians about the current economic conditions.
The EWI is falling since June 2013. The November 2014 preliminary value is in negative territory and continues trending downwards. The raw measure recorded a small rise for the second consecutive month.
The key premise behind this indicator is that people are generally less inclined to make big purchases when they are worried about the state of the economy.
The reversal of the raw measure in October and a small uptick in November 2014 are positive signs, giving hope that perception about the Australian economy has started to improve, or at least, that it is not deteriorating any further.
However, the overall outlook for the economy is still fairly negative and property prices cannot be expected to advance strongly in such an environment.
#4 demand: much stronger than indicated by original estimates
<img src="/images/2014/11/28/PHCI_November2014.png" alt="">
The Private Housing Credit Impulse (PHCI) provides an indication of the level of buyer activity in the residential property market in Australia, hence it reflects underlying demand for properties.
The September 2014 PHCI preliminary reading is much stronger than the last month’s estimate and this latest update did not confirm the previously reported reversal in the direction of the indicator. That is, the PHCI value has actually increased, not declined. However, the increase is very small.
The practical use of this indicator is to provide early warning about impending changes in housing credit uptake, and hence, changes in the underlying demand for residential property.
Housing credit data for September 2014 was very strong which impacted on the overall result for the quarter.
It implies that, after an initial slowdown in July and August, buyers have returned in force in the last month of the quarter. Therefore, the underlying demand for residential property is actually much stronger than initial estimates suggested.
Nevertheless, the increase in PHCI is only marginal which does not give confidence that this high level of demand can continue unabated beyond the December quarter.
#5 property price expectation: further growth possible but at risk
<img src="/images/2014/11/28/PPG_November2014.png" alt="">
The Property Prices Gauge (PPG) is a proxy of a property price index. It becomes a leading indicator when combined with House Price Index (HPI).
PPG increased slightly in September 2014, more than in the previous several months, but the indicator continues to lag well below HPI.
A noticeable increase in the value of the PPG points to a possible resumption of an upward trend after several months of relatively flat results. While it is a positive sign, there would need to be a much stronger upward movement in the indicator in the coming months to confirm that the flow of money into the market is substantial enough to support further growth in prices.
Otherwise, the previously experienced rate of price growth is not sustainable and prices will be vulnerable to a sudden halt at the current level.
Caveat - The information is provided in good faith and does not constitute financial advice. Use with caution and at own risk.
Background information - For more extended description of individual measures and how to apply this information please refer to the first report in this series: <a href="/expert-insights/buying/buying-more-advantageous-than-renting-yet-change-imminent-april-2014-state-of-the-market-analysis">State of the Property Market, April 2014</a>.
Arek Drozda is an independent property market analyst.
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Market set to tip in favour of buyers: November state of the market analysis

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GUEST OBSERVATION
Saul Eslake, chief economist at Bank of America’s Merrill Lynch financial services division, released a chart last week that confirms the median house price in Australia is below implied price based on income growth and interest rates.
<img src="/images/2014/11/18/estlake-housing.png" alt="">
<a href="https://www.businessinsider.com.au/merrill-lynch-housing-price-growth-will-weaken-in-2015-2014-11" target="_blank">In Chris Pash’ article </a>published in Business Insider last week, Eslake is quoted as saying that “house prices will converge with ‘fair value’ estimates based on household income growth and mortgage rates” after an anticipated 3.5-4% increase in 2015, if there is no change in interest rates.
Eslake sees possible deceleration in growth of nominal prices, or even a decline in real prices, in 2016 as the Reserve Bank of Australia starts to raise interest rates.
Eslake’s finding that property prices are below fair value confirms conclusions from my own research I have been sharing with Property Observer readers since last year:
<ul>
<li><a href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181/Page-1" style="line-height: 1.3em;">Australian property prices explained: Independent analyst</a></li>
<li><a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank" style="line-height: 1.3em;">Australian property prices in 2014 and beyond - a peek into the future</a></li>
<li>
<a href="/expert-insights/investing/crisis-of-confidence-or-crisis-of-affordability">Crisis of confidence or crisis of affordability?</a> 
</li>
</ul>
Saul Eslake is better known to the property industry observers as an avid critic of negative gearing on property and a frequent commentator on housing affordability issues.
Therefore I have nothing but praise for Saul that he was prepared to publish a piece of research that contradicts his previous, very strong stance, on these issues.
As John Maynard Keynes said: “When my information changes, I alter my conclusions. What do you do, sir?”
Since I have not seen this chart before, I can only assume it is just the latest revelation from the research that Eslake and his team at Merrill Lynch undertook recently.
I can only hope that Merrill Lynch will be prepared to fund further investigations into specific nuances of the Australian property market - for the benefit of their clients but also, as a by-product of their PR, to keep the Australian public informed with key findings.
I have no doubt that this research will only confirm that property prices in Australia are primarily driven by changes in incomes and interest rates, that affordability is not an issue for working Australians (i.e. as in most developed countries, is only an issue for specific underprivileged groups), that there is no bubble in the property market and that prices are well within expected range. And, of course, that negative gearing plays only a minor role, if at all, in the whole scheme of things.
In essence, all these are already proven by the above chart, but additional research would broaden the evidence.
Oh, and one more comment to finish off – it demonstrates that price-to-income measures, favourite with many economists, property commentators and some publications that purport to be a serious economic research, are grossly out of touch with the reality. But this fact is already well known to Property Observer readers from my previous articles.
I am looking forward to more research revelations from Saul Eslake and Merrill Lynch team. Thanks a lot for this first little gem!
It is a most welcome development and I sincerely hope that propagation of this and similar information in the public domain will bring balance to the debate on the state of the property market in Australia.
Arek Drozda is an independent property market analyst.
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The chart that proves property prices are undervalued

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GUEST OBSERVATION
Market Outlook: unchanged - neutral with negative bias
<ul>
<li>Attractiveness of renting as a preferred accommodation option continues (as at September 2014).</li>
<li>Purchase affordability is still very high but declining (as at September 2014).</li>
<li>Confidence in the economy is low but conditions are no longer deteriorating so rapidly (as at October 2014).</li>
<li>Housing Credit Impulse has turned down, indicating change in the underlying demand for residential real estate (as at September 2014).</li>
<li>Actual prices are above what could be expected based on changes in housing credit, making them sensitive to adverse changes in economic conditions (as at August 2014). </li>
</ul>
National Real Estate Price Forecast 
Limited new data was released over the last month hence, the October 2014 report represents only a minor revision of previously released charts.
New data points were added only to the Economic Wellbeing Index and Property Price Gauge; however, both measures register almost no change on the previous month values.
In general, indicators continue to point to softer market conditions. Significant pessimism about the economy, elevated purchase costs, declining affordability and falling demand are well evident in the data.
These conditions do not indicate a crash but without a major turnaround in the indicators, prices are very unlikely to increase for much longer.
In the absence of evidence that demonstrates prices have reached their peak in the current cycle, the outlook for the property market in Australia remains neutral.
Detailed Analysis
#1 optimal accommodation choice: attraction of renting over buying is increasing
 <img src="/images/2014/10/29/BRI_October2014.png" alt="">
The Buy-Rent Indicator (BRI) identifies how cost of buying is changing in relation to cost of renting.
BRI bottomed in June 2012 (indicating the lowest point in the current cycle) and it has been rising consistently since then. The indicator crossed the equilibrium line in March 2014. The September 2014 estimate points to a continuation of an upward trend for this indicator.
BRI is constructed based on the simple concept that renting and buying are substitute accommodation options, hence the optimal choice depends on which accommodation cost is rising in relation to the other.
The practical use of this indicator is for identifying market cycles and for timing purchase and sale decisions.
The crossing of the indicator from the buy to rent zone gives a signal that buying costs are starting to rise faster than rental costs. So, currently, renting appears a more advantageous accommodation option than buying. 
In a market where purchasing costs are rising mainly due to price increases, the optimal point for selling the property will be when the indicator peaks, which should coincide with an interim peak in property prices. That point can be anticipated any time now, within the next 12-24 months.
 #2 purchase affordability: at a historically high level but falling
 <img src="/images/2014/10/29/PAI_October2014.png" alt="">
The Purchase Affordability Indicator (PAI) compares changes in the annual cost of buying to changes in average full time adult income, therefore it identifies how purchase affordability has changed over time.
PAI is still at a historically high level despite the September 2014 estimate falling in value. 
This indicator explains that, relative to incomes of Australians working full time, property prices are still very affordable. There has been no significant change in the estimate since last month. 
The cost of buying a median priced property relative to average income is still lower than in late 1980s.  So, given the expectations of long-term low interest rates, there is still a lot of room for prices to move before Australian property can be considered overvalued.
This article continues on the next page. Please click below.
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#3 perceptions about economy: negative
 <img src="/images/2014/10/29/EWI_October2014.png" alt="">
The Economic Wellbeing Index (EWI) is designed to reflect general perceptions of Australians about the current economic conditions.
The EWI is falling since June 2013. The October 2014 estimate is in negative territory and continues trending downwards. The raw measure estimate recorded a tiny increase in October 2014.
The key premise behind this indicator is that people are generally less inclined to make big purchases when they are worried about the state of the economy.
The reversal of the raw measure in October, and the fact that it did not fall in the previous month significantly below June 2014 low, rise expectations that the outlook for the Australian economy may be stabilising and that perceptions will not deteriorate much further. 
Nevertheless, gloomy perspective on the future still prevails and property prices cannot be expected to advance strongly in such an environment.
 #4 demand: weakening as trend has changed
<img src="/images/2014/10/29/PHCI_October2014.png" alt=""> 
The Private Housing Credit Impulse (PHCI) provides an indication of the level of buyer activity in the residential property market in Australia, hence it reflects underlying demand for properties.
The updated September 2014 PHCI estimate is positive but the turn downwards is now almost certain (final reading of this indicator will be confirmed next month). This is a very strong negative signal indicating change in the underlying demand for properties.
The practical use of this indicator is to provide early warning about impending changes in housing credit uptake, and hence, changes in the underlying demand for residential property.
A positive but declining value of PHCI indicates that credit uptake is slowing down and therefore, that the underlying demand for residential property is softening.
#5 property price expectation: growth to slow further
<img src="/images/2014/10/29/PPG_October2014.png" alt=""> 
The Property Prices Gauge (PPG) is a proxy of a property price index. It becomes a leading indicator when combined with House Price Index (HPI).
PPG did not increase in August 2014 and continue to record value well below HPI.
The PPG is almost flat since June 2014 and changed very little since March 2014, implying that the previously experienced price growth is not sustainable and that prices are vulnerable to sudden halt at current level, or even a small reversal.
Historically, when PPG diverged from HPI over a longer term, this pattern preceded a period of increased turbulence in the Australian property market (as was the case in 2003 and 2007). The likelihood of the same scenario playing out in coming months is high if PPG does not move higher soon (for example, as in 2006 or 2013). 
# Caveat:
The information is provided in good faith and does not constitute financial advice. Use with caution and at own risk.
# Background information:
For more extended description of individual measures and how to apply this information please refer to the first report in this series: <a href="/expert-insights/buying/buying-more-advantageous-than-renting-yet-change-imminent-april-2014-state-of-the-market-analysis">State of the Property Market, April 2014</a>. 
Arek Drozda is an independent property market analyst.
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Growth to slow further: October state of the market analysis

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GUEST OBSERVATION
I don’t usually get many comments in response to my articles, so it was a real thrill to receive a full length dissection of key points from my latest story titled '<a href="/expert-insights/buying/lies-damned-lies-and-housing-statistics">Lies, damned lies and housing statistics</a>'.
I always welcome constructive criticism since variety of well argued opinions promote better understanding of facts. Ultimately, this is what we are all after – an informed community with well balanced opinions and not prone to fall under the spell of any particular ideology. 
In the interest of promoting that better understanding of property market in Australia, I would like to revisit a few points from <a href="/expert-insights/buying/subjectivity-damned-subjectivity-and-housing-statistics">Joseph's (aka Bullion Barron) commentary</a> to reinforce the original point made in my article – data does not lie, only people interpret it incorrectly or deliberately omit inconvenient truths to advance their own agendas.
My intention is to highlight that if one is prepared to dig deeper, there is much more to official data than often realised and that too narrow an interpretation of facts can lead to completely incorrect conclusions. 
In my previous article I presented a chart showing that, in relative terms, Brisbane, Melbourne and Perth housing prices grew much stronger in the last 28 years than Sydney prices. It concluded that the recent jump in Sydney prices may be just a long overdue catch up – the recent strong growth is nothing out of ordinary.
Further evidence was that Sydney prices grew only a tad over and above the weighted average of eight capital cities and that purchase affordability is still very good, in historical terms.
My objective was to demonstrate that if Sydney property prices were indeed out of control, we would have seen the evidence no matter what statistic was used. This was clearly not the case.
To counter my arguments Joseph (Bullion Barron) referred to information published on the internet by him and other property market commentators. Let’s examine a couple of pieces of information in detail to determine if indeed this information can decisively undermine my earlier conclusion. 
Case One:  Low rental yields as a proof of high level of speculation and overvaluation
The following chart was presented as the evidence (sourced from RESIDEX August 2014 report, indicating median values and rental yields for houses).
<img src="/images/2014/10/27/arek%20oct%2027%20one.jpg" alt="">
Source: RESIDEX
In order to determine if this data really proves speculation and overvaluation we would need to know if Sydney and Melbourne yields are indeed out of ordinary. That is, we would need to find out at least “how low is low” - by comparing current yields to those from the past, as well as to other risk free options. So, let’s put this information into a broader context.
Firstly, as any avid follower of the property market will know:
<ul>
<li>Rental yields are always higher in smaller capital cities and in the country than in larger cities. This pattern is clearly visible in the provided data but we cannot determine whether the gap between Sydney and other cities is reasonable or not;</li>
<li>Yields always fall when prices grow strongly (simply because rental contracts are usually a year in duration; as well, in many states rents cannot be adjusted more than once a year and more than by a certain percentage, so it takes time for rents to adjust to rising prices) – the table does not contain historical information for comparison so we cannot determine whether rental yields were always like this or whether they are declining or rising.</li>
</ul>
Please note, the author omitted yields for apartments which are in mid to high 4% for Sydney and Melbourne and do not show such a dramatic difference in comparison to other states and capital cities.
Examining rental yields from a historical perspective reveals that the current numbers are not the exception. For example, data published by SQM Research indicates that Sydney had similar yields in July 2010 (unfortunately, the data series does not go any further than that and I don’t have access to historical information from RESIDEX).
<img src="/images/2014/10/27/SQM_gross_rental_yield_Sydney.png" alt="">
Yields for apartments are currently at the lowest point since July 2009 but they are still well above 4%.
SQM Research charts for capital cities confirm the pattern that rental yield for houses are generally higher in smaller cities. However, the difference between the cities appears to be smaller than RESIDEX data implies (different methodologies may explain that discrepancy).
An interesting point to note is that Perth used to have yields in the low 3% in 2010, which is much lower than Sydney and Melbourne now. This is another indication that things may not be that extreme as yet.
And comparing alternatives, Sydney and Melbourne rental yields still look pretty reasonable. For example, the Reserve Bank of Australia (RBA) publishes cash deposit rates for financial institutions which in September 2014 were ranging from 1.25% per annum for a one month term deposit to 3.75% per annum for retail deposit and investment rates on savings accounts (for banks' bonus savings accounts with balances of $10,000 plus). So, even Melbourne’s 3.58% yield is not as bad in comparison as it can appear at the first glance.
I know what many are going to say: “But rental yields are gross yields, there are costs that need to be taken out; it makes more sense to keep the money in the bank…”
True, there are costs to be accounted for but commentators tend to forget that in case of property, total return consists of rental income and capital appreciation.
Keeping money in the bank returns only interest income. Property, even if not leveraged, can therefore deliver substantially more than cash in the bank.
That is why investors can accept lower yields, especially in the current low interest rate environment and when the stock market delivers so little in comparison.
Considering Sydney and Melbourne are our largest cities (so rental yields are expected to be lower than for the rest of the country), and that alternative investments appear too risky in comparison (i.e. the share market is not delivering), it would be hard to conclude that current rental yields are the undisputed proof that property market is out of control. Rather, it looks more like just a normal stage of the property cycle where prices jumped ahead and rents have not yet caught up to these higher prices. 
<address>Article continues on the next page. Please click below.</address>
<hr class="system-pagebreak">
Case Two: Value of investor loans for Australian states (12 months rolling basis) as a proof of out of control speculation by investors 
The following chart was presented as the evidence (sourced from Pete Wargent - a regular commentator on Property Observer):
<img src="/images/2014/10/27/arek%20oct%2027%20three.jpg" alt="">
Source: Pete Wargent
This chart is full of interesting twists. There is nothing wrong with charting raw data but special care needs to be taken with interpretation of such charts, and especially with comparisons between presented data series. Otherwise it is easy to draw totally incorrect conclusions. Let’s examine this chart a bit closer.
You will notice that it compares total value (i.e. 12 months running total) of property investment loans for states which have:
<ul>
<li>Widely varying population sizes,</li>
<li>Varying rates of population change, and</li>
<li>
Big differences in property prices. 
</li>
</ul>
Furthermore, the information is represented as nominal values (i.e. is not adjusted for the effect of inflation over time –a billion dollars nowadays is not equal to a billion 30 years ago). Not to mention there were differences in lending rules now and then…
In other words, a lot of the difference between the presented data series and the steepness of the rise in individual lines can be explained by the above listed factors. That is, in order to make a meaningful comparison between states, as well as relative change over time, we would firstly need to adjust the data to eliminate the effect of all these factors on the original data series. 
So, yet again “the proof” ends up raising more questions than providing answers.
I will leave the exercise of recalculating the data for another occasion since this is quite a time consuming task. Then and only then we will be in a position to confirm whether what is happening in Sydney with respect to property investing by individuals is indeed out of ordinary or only proportional to changes in the Australian economy and demographics.
There is one more interesting point to be noted about this chart. That is, it starts with values close to 0. Does it indicate then that in the 1980s there was hardly any investment in residential property by individuals?
Yet, as another set of data from ABS demonstrates, the proportion of rental properties in Australia remains relatively stable over time, ranging between 27-32% for many decades…
You will have to wait until another opportunity for the explanation of this apparent inconsistency. For now, I will just point out that “the rise of individual property investor” phenomenon dramatically exaggerates what is really happening in the rental end of the property market.
I have no doubt that Joseph’s (Bullion Barron) intentions are noble and that he and other commentators proclaiming that Sydney property market is out of control strongly believe this is the reality. However, as you can see, the data does not decisively support such a conclusion.
There are more inconsistencies and erroneous conclusions I could address in Joseph’s article but I think I have already made my point. I sincerely hope that you have enough insight and wisdom now to not accept any claims about the Australian property market without a dose of realism. 
Arek Drozda is an independent property market analyst.
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A dose of reality: Populist opinions v the property stats

Rockdale has long been characterized as a suburb on the cusp. Well-located, well-connected, but historically underserved by modern apartment offerings.

It has everything going for it: outstanding connectivity to the Sydney CBD, just four train stops to Central Station, strong local amenity anchored by Roc​kdale Plaza and a growing main-street dining scene, and enviable proximity to Brighton-Le-Sands. The six-kilometre beachfront is lined with bayside restaurants, cafés, and walking paths, giving residents a lifestyle typically associated with much more expensive coastal suburbs.

What Rock​dale has lacked is high-quality contemporary apartments. Most existing developments date back several decades, with floorplans that no longer support modern living needs, and buildings constructed long before today’s standards in engineering, efficiency, and sustainability.

Lender, fund manager and apartment developer Princeton identified the gap early. Seeing all the right ingredients in Rockd​ale, transport, lifestyle, retail, and affordability, they set out to deliver what the suburb was missing. Their answer is <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, a collection of 58 one-, two-, and three-bedroom apartments now nearing completion just a short walk from Ro​ckdale Plaza, home to over 50 specialist retailers and anchored by&nbsp;Woolworths, Big W and Aldi.

[smartcode_project:default project_id=136442 project_image_fid=355216]

Understanding they would be resetting the benchmark for the area, Princeton focused on ensuring buyers received best-in-class quality, longevity, and protection.

A major step was securing the sought-after Latent Defects Insurance policy from Resilience Insurance. This policy protects apartment buyers from structural or waterproofing defects for the first 10 years of the building’s lifecycle. Crucially, it is first-response insurance, meaning that if an issue arises, the insurer pays immediately for remediation—rather than waiting for lengthy investigations to determine fault before work can begin. For purchasers, it offers an unprecedented layer of security rarely seen in Sydney apartment projects.

During construction, independent building inspection firm SDSS has been providing Technical Inspection Services, bringing highly specialised construction experts on-site at key stages to ensure workmanship meets the highest standards. The project is being built by Coplex, an iCIRT-rated construction company, and throughout the build SDSS has frequently referred to <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a> as one of the best projects currently on their books.

Princeton also doubled down on comfort, acoustics, and livability.&nbsp;As well as being the only building along Princes Highway with a landscaped buffer between the building and the road, Princeton has purposefully included double-glazed windows in all apartments to reduce noise.

Apartments feature double-glazed, noise-reducing windows and ducted air conditioning in every residence.&nbsp;In addition to the project’s transport convenience, Princeton has partnered with GoGet Car Share to provide a dedicated GoGet vehicle housed permanently within the building. Residents will receive a free annual GoGet membership, paying only usage fees, offering a flexible alternative to owning a second car and enhancing the project’s sustainability credentials.

[smartcode_project:default project_id=136442 project_image_fid=277075]

Residents will enjoy an exclusive rooftop oasis, purpose-designed as an extension of their living space. The communal rooftop includes BBQ facilities and outdoor entertaining areas, a&nbsp;pergola-shaded dining zone, a dedicated children’s play space, and a landscaped herb garden.

Princeton and Coplex is approaching completion of <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, and are expecting residents to move in early in the new year. The mix of apartment configurations and price points have been a hit with young professionals, those who need to commute to the CBD, and families who appreciate doorstep amenity.

“Marque is a place where residents will be proud to call it home," Princeton Head of Development George Young says.

"We’ve worked really hard with Coplex and our design team to deliver an incredible building for the future home owners to make their own. The homes are all designed to allow the residents to make it their own, a place to belong and live a stylish urban life."

[smartcode_project_cta:default project_id=136442]

Joel Robinson

Marque Rockdale sets a new standard of apartment living in Sydney's south

Plans to revitalize the&nbsp;long-established Benowa Gardens Shopping Centre into a mixed-use community combining living, shopping, dining, health and wellbeing facilities, have been proposed to the Gold Coast City Council.

The Benowa Gardens Urban Village proposal by Benowa Gardens Holdings seeks to transform the 17,660 sqm site at <a href="https://www.apartments.com.au/new-apartments/203-ashmore-road-benowa-qld-4217">203 Ashmore Road</a> into a contemporary, sustainable destination that reflects global trends in modern community design while retaining the familiar local character residents value.

The site is bordered by Ashmore and Benowa Roads and Carrara, with ready access to Pindara private hospital, four schools, TAFE, sports fields and the nearby Botanic Gardens.

Benowa Gardens Holdings is seeking a preliminary Council approval only for its proposed masterplan and variations to the site’s Neighbourhood Centre zoning.&nbsp; 
Formal Public Exhibition commenced Friday and also marks the start of comprehensive community consultation with surroundings residents, schools, P&amp;Cs, existing retailers, nearby sporting clubs, arts groups and Botanic Gardens volunteers.

Designed by Neylan Architecture, the masterplan envisions around 413 new apartments, complemented by upgraded retail, dining, and wellness amenities as part of 10,000 sqm of retail, and 9,630 sqm of office space/medical suites.

The development will feature green open spaces, shaded promenades, landscaped terraces, pedestrian walkways, and expanded healthcare and lifestyle services in synergy with the neighbouring Pindara Private Hospital and local schools.

<img alt="Benowa" data-entity-type="file" data-entity-uuid="244f4d54-2e67-4141-92b8-78d5735f47c2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2012.47.34%E2%80%AFPM.png?VersionId=FmF5lzhpwVZc7POsdB770TJ_Bf2c0od8" />

“This concept embraces the way people increasingly want to live - safely, conveniently, and within strong local communities,” said Patrick Lu, Director of Benowa Gardens Holding.

“Benowa Gardens will set a new benchmark for integrated living on the Gold Coast. It’s a thoughtful, community-minded evolution that brings global best practice in urban design to one of the city’s most established areas.”

Lu said this isn’t just a redevelopment, it’s a renewal with purpose.

“Benowa Gardens has served the community for decades. Our goal is to ensure it continues to do so for generations to come, as a lively, connected Urban Village where people can truly live, work and thrive. We’re already talking to school leaders and the community to seek their feedback on our proposal, and have taken on board their ideas to improve student safety with additional “traffic calming” measures on Carrara Street. We’re conducting meaningful and sincere consultations and want to play our role in preserving and enhancing the local community."

The proposed redevelopment aims to deliver tangible benefits across the Benowa and wider Gold Coast community, including:

<ul>
	<li>Improvement of retail amenity, to capture the under-served local market demand and keep the local business at their local shopping centre.</li>
	<li>Housing diversity; offering a range of apartment types for key workers, downsizers, and local families who wish to remain in the area.</li>
	<li>Enhanced shopping and dining; revitalised retail spaces designed to support local businesses and attract more visitors.</li>
	<li>Health and wellbeing access; additional medical and wellness amenities to complement existing local facilities.</li>
	<li>Improved traffic flow and access; two new access points, upgraded intersections, upgrade pedestrian pathway’s signal and proposed upgrade of pedestrian and cycle connections/space to improve safety and convenience, especially for school children.</li>
	<li>Environmental sustainability; energy-efficient design, green rooftops, and water-sensitive landscaping to reduce emissions and enhance comfort.</li>
	<li>Local jobs and investment; supporting hundreds of construction and long-term roles while stimulating local economic growth.</li>
</ul>

The group behind the project boasts extensive experience in the property development industry, both in Australia and international markets. Over the past 23 years, the group has been involved in the development and management of a diverse portfolio of assets including residential dwellings, shopping centres, bulky-goods stores, community and medical facilities, childcare centres, offices, hotels, and taverns, across Brisbane, Ipswich, and the Gold Coast.

Benowa Gardens to become new mixed-use urban village

Demand for townhouses in Melbourne’s inner west has surged as buyers seek the elusive combination of space, affordability, and location.&nbsp;

With family-first apartments increasingly rare and standalone homes often out of reach, townhouses have emerged as the new sweet spot, delivering generous living areas with lower maintenance needs within close proximity to the Melbourne CBD.&nbsp;

<a href="https://www.apartments.com.au/new-townhouses/kings-lane-south-kingsville-50-58-new-street-south-kingsville-vic-3015">Kings Lane</a>, the new under-construction townhouse development by the family-owned developer&nbsp;<a href="https://www.apartments.com.au/developers/blue-run">Blue Run</a>&nbsp;in South Kingsville, responds directly to this trend. Comprising just 25 residences designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, the project offers a compelling alternative to both apartment downsizers and family upsizers. With three-bedroom homes priced under $1 million, it presents one of the area’s rare attainable pathways to townhouse living less than eight kilometres from the CBD.

[smartcode_project:default project_id=145042 project_image_fid=355147]

<a href="https://www.apartments.com.au/developments/south-kingsville-vic-3015">South Kingsville</a> itself is quietly becoming one of Melbourne’s most dynamic pockets of urban renewal. Flanked by the established appeal of Yarraville, Newport and Williamstown, the suburb balances quiet, village-like streetscapes with major infrastructure upgrades and a growing slate of retail, dining and lifestyle amenity.&nbsp;

Kings Lane occupies a well-connected site at 50–58 New Street, just off Blackshaws Road and within walking distance of the emerging Union Quarter precinct, a major retail destination anchored by Woolworths, specialty food outlets and wellness services.

A 400-metre stroll brings residents to the Vernon Street shops, a local favourite known for its mix of independent grocers, cafes and family-run eateries. For broader shopping options, Altona Gate Shopping Centre and Yarraville Square are both within a short drive. Spotswood IGA and the Williamstown retail strip further broaden the convenience of daily essentials.

[smartcode_project:default project_id=145042 project_image_fid=355139]

Dining options in the area lean toward eclectic and community-driven, with standouts like Rocco’s Deli, Dad and Dave’s, and Pizza d’ASPORTO offering a range of casual and elevated menus. Cafés such as Hudson Road Wine &amp; Beer and Blacksheep Coffee add to the lively yet local feel of the neighbourhood.

Green space is another hallmark of life at Kings Lane. Edwards Reserve is close enough for morning walks or casual sport, while larger parks like Newport Lakes, Yarraville Gardens, and Cruickshank Park are all a few minutes’ drive away. More than half of the nine-hectares of new green space or parkland being created as part of the West Gate tunnel works is located just at the end of New Street, the same street as Kings Lane.

&nbsp;

For those with school-age children, South Kingsville is home to a range of quality childcare centres and schools, including Kingsville Primary, Spotswood Primary, and Williamstown North Primary. Community Children’s childcare and South Kingsville Preschool are nearby, making the suburb particularly attractive to young families.

Transport links continue to improve, with Spotswood Station and the West Gate Freeway both within a five-minute radius. Future upgrades, including the proposed sky rail for Newport and Spotswood, and the delivery of the West Gate Tunnel project, promise even better access to the CBD and Melbourne Airport in the years to come.

Kings Lane's 25 all-electric townhouses are currently under construction, and will complete in late 2026.

[smartcode_project_cta:default project_id=145042]

Staff Writer

Kings Lane townhouses offers rare value in Melbourne's thriving inner west

Developer-builder <a href="https://www.apartments.com.au/developers/billbergia">Billbergia</a> has set a new apartment price record for <a href="https://www.apartments.com.au/developments/rhodes-nsw-2138">Rhodes</a>, a suburb the company has been instrumental in transforming over the past two decades.

The milestone follows the delivery of thousands of apartments across the harbourside peninsula, culminating in the $4.5 million sale of a 220 sqm penthouse in the <a href="https://www.apartments.com.au/buildings/rhodes-central-oasis-39-marquet-street-rhodes-nsw-2138">Rhodes Central Oasis</a> building, which Billbergia completed earlier this year. It is the first apartment in Rhodes to surpass not only the $4 million mark for settled sales, but also the $3 million mark, eclipsing the previous $2.75 million record set in 2021.

The purchaser had originally secured several apartments in the 40-storey tower off the plan as investments. During settlement, she spent more time in the Rhodes area and was so impressed with the building that she decided to downsize from her Northbridge home into the four-bedroom plus MPR penthouse.

The sale underscores the long-term work Billbergia has undertaken in Rhodes since the early 2000s. The company, rated 4.5 Gold Stars under the NSW iCIRT system, identifying it as one of the state’s most trustworthy and financially secure developers, was a pioneer of the area’s urban renewal. What was once a heavily industrial waterfront has become one of Sydney’s most successful examples of transit-oriented development.

<img alt="Billbergia" data-entity-type="file" data-entity-uuid="56093d7f-db18-42f4-bf9b-115bdf76f5f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.10.06%E2%80%AFAM.png?VersionId=pca77Mr.H83nwXbJexmaLUAqBewtQ7d9" />

Billbergia is now driving the peninsula’s next major evolution: the most ambitious project in its nearly four-decade history. They are planning the Rhodes Bay Masterplan, an eight-tower, mixed-use precinct on Leeds Street. Currently with the NSW Government’s Housing Delivery Authority which is now championing large-scale projects across the state, the Rhodes Bay Masterplan lays the groundwork for a generational reshaping of this important pocket of Sydney’s Inner West.

The masterplan spans more than 31,000 sqm of amalgamated industrial land along the foreshore, land that has been privately held and inaccessible to the community for more than a century. According to Billbergia’s Development Director, Saul Moran, reclaiming this land for public use is central to the company’s vision. 
 
“What’s so exciting is that we have over 300 metres of privately-held industrialised waterfront, land that’s been locked away for more than 100 years, which we’re bringing back to the community,” he says. “It’s taken many years to assemble sites like these, and the goal now is to transform them into meaningful public space where new homes can be built in an integrated, amenity-rich setting.”

At full completion, the Rhodes Bay Masterplan is expected to deliver over 2000 apartments, with the first 1000 to be completed by 2029. Billbergia’s design focused on nine slender towers, so they could give back more to the ground plane. There will be more than 16,000sq m of new parkland and recreation space, including sports fields, a foreshore play area and waterfront green links. Around 14,600 sqm of retail is also proposed, extending the precinct’s role as a true mixed-use hub.

<img alt="Rhodes Bay" data-entity-type="file" data-entity-uuid="240ffc41-4f26-421a-9606-5c56f6fc2d93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.05.48%E2%80%AFAM.png?VersionId=BkBxZr7S8CAt1vgNa8AF3zjdc3YuVh0L" />

“Density only works when it’s paired with amenity, transport and open space, and that’s what’s made Rhodes such an amazing success story,” Moran says, adding that the demographic shift Billbergia has seen over the last two decades has informed their future development pipeline in the suburb.

“Rhodes has moved from being largely an investor market to a strong owner-occupier community,” Moran says. “There’s real demand for three-bedroom homes, flexible intergenerational layouts, and apartments people can grow into.”

&nbsp;“We’re designing taller, more slender towers to free up the ground level for sport, recreation and green space. High-density communities thrive when people have the best backyards in Australia, and that’s what we want to create here.”

Demand remains robust, evidenced by Billbergia’s recent results. “We achieved a record sale across the entirety of Rhodes Central just last week,” Moran says. “It shows the depth of confidence buyers have in what’s being built here.”

Billbergia’s vertically integrated model allows them to overcome the recent cost escalation and challenges in the build environment. “Having an in-house construction team lets us control feasibility, value management and quality from day one,” Moran says. “It’s critical in the current market, where construction escalation is at the forefront of every project’s viability.”

The company is also leveraging the NSW Government’s new Housing Delivery Authority process, which Moran describes as a more efficient pathway without compromising design standards. 
 
“We’re really applauding the NSW Government for its efforts to increase housing supply. There’s been a remarkable improvement in how they’re helping deliver more homes, more quickly.”

Billbergia has already commenced construction of Stage One of the Rhodes Bay masterplan. They will be lodging the State Significant Development Application before Christmas.

“We’re moving quickly, but with due care,” Moran says. “This is a generational precinct, and it needs to be done right.”

Billbergia smashes suburb record as Rhodes transformation continues

The sheer scale of the two skyscrapers at <a href="https://www.apartments.com.au/new-apartments/victoria-albert-broadbeach-20-albert-avenue-broadbeach-qld-4218">Victoria &amp; Albert</a>, soaring 40 and 64 storeys above the heart of Broadbeach, was always destined to deliver some of the highest and most luxurious apartments ever built in the suburb.

Now, builder-developer <a href="https://www.apartments.com.au/developers/iris-capital">Iris Capital</a> has unveiled the Horizon Collection, a selection of residences with the largest floorplans and most commanding views in the towers. The three-bedroom apartments, starting from $4.64 million, include butler’s pantries, multi-purpose rooms, and, in some layouts, master retreats with private sitting areas.

[smartcode_project:default project_id=107928 project_image_fid=3944]

The most prestigious apartments in the Horizon Collection are the sub-penthouses and penthouses. The two sub-penthouses on the 38th level of the Albert Tower are priced at $8.85 million.

Each features three bedrooms, a study, and a flexible multi-purpose room with a sliding partition that allows half the space to function as a games room.

The open-plan kitchen, living, and dining area, complete with a butler’s kitchen and private wine cellar, flows onto a full-width balcony framing panoramic coastal views.

[smartcode_project:default project_id=107928 project_image_fid=3943]

There is now just one sub-penthouse for sale on the 62nd level of the Victoria Tower, with one already secured by an expat owner-occupier. The remaining sub-penthouse, priced at $8.95 million, offers four bedrooms and a wraparound balcony that captures panoramic views up and down the Coast. vistas from every angle.

Crowning each tower is a full-floor penthouse offering multiple expansive indoor and outdoor living and entertaining spaces. Atop the Victoria building is Oceania, which measures over 735 sqm of living space, and Kurrara atop the Albert Tower, which is almost 800 sqm. They each have four bedrooms, including a master and guest suites, a full 360-degree panorama of the Gold Coast, and all the bells and whistles expected of a luxury penthouse. They are priced from a little over $18 million.

“Every detail, every finish has been thoughtfully considered to imbue the penthouses with the ultimate sense of luxury,” says Susan Rossi, Director of Interior Design at <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, who led both the architecture and interiors for V&amp;A. “We shaped these skyhomes to embody the spirit of Gold Coast luxury.”

[smartcode_project:default project_id=107928 project_image_fid=234091]

Victoria &amp; Albert, colloquially known as V&amp;A, is the flagship Gold Coast development by the Sydney-based Iris Capital. Led by developer and hotelier Sam Arnaout, Iris Capital acquired the landmark Niecon Plaza site in 2021. At the time, Arnaout described the company’s expansion into Queensland as a strategic move to capitalise on one of Australia’s strongest growth markets.

“We were initially looking to expand into Victoria, but the massive migration to the regions that followed the pandemic created a new dynamic across the Australian market,” Arnaout said.

“From a strategic point of view, Queensland — and the Gold Coast in particular — is the perfect fit for our business. The fundamentals here are strong: genuine employment growth, high net migration, and an undersupply of apartments driven by strong demand. The Gold Coast has matured into a thriving, progressive regional city with a fantastic future.”

[smartcode_project:default project_id=107928 project_image_fid=234097]

Across its two towers, V&amp;A will deliver 425 luxury apartments, supported by a suite of resort-style resident amenities. These include a subtropical podium featuring a 25-metre lap pool, gym, yoga deck, residents’ lounge, kids’ play area, zen garden, and barbecue terraces with outdoor dining spaces.

<a href="https://www.apartments.com.au/project-marketer/colliers">Colliers</a> Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market. Colliers Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market.

“The premium market has definitely spoken, with V&amp;A having now reached over half a billion dollars in presales since our launch,” Higgins says, adding that over 65 per cent of V&amp;A is now sold.

“Our buyers continue to validate the success of the Victoria &amp; Albert development vision and the luxury amenity that comes along with their apartment purchase. Of course, Broadbeach’s most walkable location, just 100m from the Broadbeach surfing beach, makes this luxury apartment a compelling addition to your real estate portfolio.”

Last year, Iris Capital brought construction in-house through its new arm, Iris Built. Completion of the 40-level Albert Tower is scheduled for late 2027, with the 64-level Victoria Tower, the taller of the two, expected to follow in mid-2028.

[smartcode_project_cta:default project_id=107928]

Arek Drozda

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