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Many people express the opinion that residential property is first and foremost a shelter and therefore should only be considered from a social perspective. Many believe that it is a given right of every citizen of this country to have a roof over the head – rather than as a financial asset that can potentially make money for its owners.
Although it seems like a righteous position to hold, it cannot be denied that, in addition to offering a physical protection from the elements, residential property is, and always has been, an attractive investment option.
The old saying “property is the biggest investments one will ever make” has not been coined without reason. Besides, even when people say they are buying a “home and not an investment” they do not necessarily equate this statement with not making any money on their purchase in the future.
It would therefore be more pragmatic to consider residential real estate as “long-term accommodation” rather than just a “shelter”. It is both a  roof over the head, as well as a money making asset.
Property ownership is quite popular in <country-region>Australia</country-region>. According to the Australian Bureau of Statistics, as at August 2011, 67% of all residential dwellings were owner occupied. Although this proportion is slightly down since the previous Census in 2006, it has remained relatively unchanged for the past 50 years.
Those Australians who had a stake in residential property did quite well over the last six decades, as the following chart demonstrates.
 <img alt="seven_decades_of_prices" src="/images/stories/2014/02/10/seven_decades_of_prices.png" height="261" width="470">
Source: Based on ABS data and Stapledon 2007
Returns varied from decade to decade as property prices rose at different paces, but they have always remained positive. So will property owners be seventh time lucky? Chances are they will, given the <a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank">past history of property prices in this country</a> .
What the above chart does not show is that property owners also had an opportunity to make substantial savings in the ongoing costs of accommodation (i.e. rent) once they had paid off their initial loan. This increased the actual returns to owners quite substantially.
The following chart compares estimated total returns on residential property from capital appreciation and reinvestment of imputed rents, which is conceptually equivalent to S&amp;P/ASX 200 Accumulation Index.
 <img alt="property_vs_shares" src="/images/stories/2014/02/10/property_vs_shares.png" height="275" width="470">
 
Sources: based on ASX and ABS data
The chart indicates that, over the long run, returns from residential real estate match returns from share market investments. This conclusion is also supported by a study undertaken by Russel Investments and published by the Australian Stock Exchange, the <a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">Long-term Investing Report, July 2013.</a>
It is important to stress that residential property is a long term investment option – it delivers, but requires patience. Consequently, this means it can be outperformed over a short-term by other types of investments.
Take gold for example:
 <img alt="property_prices_vs_gold" src="/images/stories/2014/02/10/property_prices_vs_gold.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Over the long run, residential property outperformed gold. However, over a short-term, those investors who piled into gold in 2005 would have experienced a much greater rate of return than property owners - even after the 2012 and 2013 falls in gold price are factored in.
 <img alt="property_prices_vs_gold_short_term" src="/images/stories/2014/02/10/property_prices_vs_gold_short_term.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Just a note of caution: Do not take the above comment literaraly – property owners could still come on top, despite the proportionately smaller increases in prices compared to gold because of the leverage that is usually applied when buying a property.
For example, a $100,000 cash investment in gold in 2005 would now be worth $250,000 (i.e. $150,000 increase). That amount invested in the right property worth $400,000 in 2005 (i.e. as 25% deposit) would deliver by now $200,000 extra in owner’s equity.
There is one more reason why property should be treated as an investment. In particular, if you believe in the merits of diversification, individuals should always aim to spread their wealth across a wide range of assets to minimise financial risk.
Residential property is an asset class with proven long-term security, hence should be considered as a part of well diversified financial portfolio.
All working Australians already participate in local and overseas stock markets, various cash instruments and/or commercial property market via the superannuation funds they belong to. However, these funds do not invest in residential property.
Dixon Advisory was the first Australian company to offer individuals the opportunity to invest in residential property in the <country-region>USA</country-region> via its <country-region>US</country-region> Masters Residential Property Fund, but not in Australian property. So, diversification into Australian residential real estate is only possible via direct investment in your own home or in the investment property (as an individual or via self-managed super fund).
All in all, residential property is an investment regardless of whether it can be morally justified, or whether those buying the property do it with full consciousness of this fact or not. It is simply because the returns are too good and too consistent to treat it otherwise.
The social aspect of housing, that is, as an “affordable shelter”, is very important and should be widely debated. However, in my opinion, the issue stands a much better chance of being addressed properly with tailored solutions aimed at assisting specific sections of the community; rather than with Robin Hood like polices advocated by some commentators, that can potentially destroy the investment value of property in Australia.
Residential property constitutes a significant part of the wealth of this nation. There is merit in the aspiration to own a property as a way of building and accumulating wealth, and therefore, there is a good reason to keep the 'Australian dream' alive.
Undermining this aspiration and shaking confidence of Australians in property will not end well – either fif it leads to destruction of national wealth, or for those who are persuaded to opt out of participation if history continues unchanged. 
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.
 
<hr>
 RELATED ARTICLES BY AREK DROZDA:
<a target="_blank" href="/news">Putting property investment losses into perspective</a>
<a target="_blank" href="/news"></a><a target="_blank" href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181">Australian property prices explained</a>
 
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An investment or just a roof over your head: How should we treat residential property?

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In my previous article, '<a href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181" target="_blank">Australian property prices explained</a>', I presented a chart that provided very accurate narrative on what has happened in the Australian property marketover the last three decades.  

It is safe to conclude that the same concept which allowed for the description of the past with such accuracy, should also be able to provide a reasonable guidance for the future.  
Of course, predicting exactly what will happen in 2014 and beyond is a tall order. Life is known to create such a variety of unanticipated scenarios that the reality will almost certainly play out differently to what everybody expects.  
Therefore, I prefer to think about the future in terms of a range of possible outcomes and likely probabilities of occurrence rather than as a single, definite result.  
The real benefit of such an approach is knowing how changes in economic conditions can potentially affect the outcome - not in picking the exact end result in advance.  
Since changes in some economic factors will have more profound effects than others, if you can identify in advance what are they, you can watch out for the tell-tale signs that a particular scenario is playing out – and act accordingly.  
You only need to be right about the direction property prices are heading to be able to benefit.
Please consider what follows with caution - in the “what if” category, rather than a certainty.  
Based on the income capacity of working Australians, residential property in this country is not overpriced and prices are far from bubble territory.  
The proof is in relative changes in the cost of buying over the last 27 years, which has been significantly below the relative changes in personal incomes over that time. Below is a slightly different representation of that information to highlight this point. 
<img src="/images/stories/2014/01/31/arek_jan_31_one.jpg" width="470" height="299" alt="arek_jan_31_one">
By rearranging the data we can create a chart that shows how much more property prices could increase at present and still be considered affordable (in relation to current incomes and as benchmarked to 1986). 
<img src="/images/stories/2014/01/31/arek_jan_31_two.jpg" width="470" height="301" alt="arek_jan_31_two">
The above chart indicates that current property prices are potentially undervalued by as much as 45%. Of course, this does not mean that prices will immediately move by this much but the potential for a substantial jump is there.  
Yet another perspective using the same underlying data reveals that conditions are now starting to resemble those in 2009. Although affordability in 2009 was not as extreme as in late 1990’s, it nevertheless led to a substantial price increase in 2010.
<img src="/images/stories/2014/01/31/arek_jan_31_three.png" width="470" height="277" alt="arek_jan_31_three">
Therefore, as history shows, if interest rates remain mostly unchanged and incomes keep growing, we can anticipate a significant jump in property prices in coming years.  
The increase could either be a rapid advancement of 10-20%, or even 30%, in the next 12-24 months if the 'good times' perspective prevails or, if pessimism dominates, it could result in an even more substantial jump but in the more distant future.  
Of course, this scenario can only play out on the proviso that there are no unexpected shocks applied to the system, such as a major international conflict, another economic calamity in the region, another collapse of world financial system, or a major natural disaster – to mention a few obvious cases.  
In terms of further outlook, if the relationship between costs of buying, incomes, rents and prices hold in the future, and the current rate of income growth continues, then it can be estimated that from now to the end of 2023 property prices could grow by as much as 140% under a historically low interest rate scenario (i.e. 5% per annum), or as little as 20% under a high interest rate scenario (i.e. 10% per annum).  
Under a more probable scenario of slower growth in incomes and interest rates averaging 7% per annum over the next decade, prices can still be expected to grow by 60% in the next 10 years.  
A much gloomier future is also possible but the probability of this scenario is rather small at this point in time.  
That is, a 40% drop in property prices is possible in the next decade but it would take extreme economic conditions for this scenario to play out. In particular, mortgage rates would have to persist at close to 20% per annum for a good part of the decade and income growth would have to drop to 2% per annum to bring prices down by this much.  
In conclusion, the outlook for property prices in Australia is positive - unless of course the world encounters another economic disaster of a magnitude that is hard to even imagine.  
Some insist that the next big event is 'just around the corner' so, it would be wise to keep an eye for the tell-tale signs of possible troubles brewing somewhere in the world but there is no obvious reason to panic just yet.    
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.
You can contact Arek on <a target="_blank" href="https://twitter.com/arekdrozda">Twitter</a>.
 
 
 
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Australian property prices in 2014 and beyond - a peek into the future

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Since property prices started to rise again a key question that comes to mind is – what about the bubble? Are we there yet or far from it? Opinions are many but I prefer to deal with facts and figures so, let’s examine the evidence…
Firstly, we have to define the “price bubble”. As it turns out, even this simple task is not without some challenges due to a variety of perspectives on the issue. Therefore, let’s settle on a simple and succinct <a target="_blank" href="https://en.wikipedia.org/wiki/Economic_bubble">definition from Wikipedia</a> which explains price bubble as “trade in high volumes at prices that are considerably at variance with intrinsic values".
So, according to this definition, the first precondition of a bubble is “trade in high volumes”. Since I do not have access to property sales data for the last few decades, the best proxy of this information is the number of mortgages issued by financial institutions, as published by the Australian Bureau of Statistics. This data series goes back to 1975 and is presented on the chart below. The red line on the chart is a 12 month moving average of monthly volumes of loans for purchase of established dwellings, new dwellings as well as for construction of dwellings. Loans classified as refinancing are excluded.
The spikes in volume can be clearly identified in 1984, 1988, 1994, 2003 and 2007. Volumes were also elevated in 2009 and are up in 2013 from a very low base but these appear so far to be “reactions” in a downtrend hence, rather unlikely candidates for a bubble.
 <img src="/images/stories/2013/12/03/total_dwellings_financed.png" alt="total_dwellings_financed" height="236" width="470">
The second precondition for the existence of a bubble is that “prices are considerably at variance with intrinsic values”. The definition of an “intrinsic value” is a much bigger problem. So again, let’s opt for something simple and widely used by economists. In particular, the most common approach to determine the intrinsic value of properties is to calculate price to household disposable income ratio, or price to rent ratio, and compare present and historical values. The second measure is my preference since there are long term data series readily available which makes construction of this indicator much easier. However, both those measures should show a very similar result.
I set the ratio of house price to rent as 1 for 1975, which is the start of housing mortgage data but I also calculated the ratio back to 1950’s - to a point in time when modern and unregulated post World War II housing market began in Australia.
Read more over page
 
 


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 <img src="/images/stories/2013/12/03/House_prices_to_rents.png" alt="House_prices_to_rents" height="288" width="470">
Looking at the above chart we can immediately identify a problem – the line only rises and it never fell back to or below 1950 level. The ratio first jumped in early 1950’s, then in mid 1970’s, again in late 1980’s and in early 2000’s, peaking so far in 2010. In other words, it implies that prices are “at variance to intrinsic value” continuously for 60 years now… Yet, despite that implied long lasting exuberance, property prices in <country-region>Australia</country-region> fluctuate periodically – they advance and then they pause or fall slightly, then they advance again to a higher level.
It means that this popular measure of intrinsic value is rather insensitive to short term variations in market conditions and therefore should probably be only applied in analysis spanning many decades or even centuries. In other words, simple measures like price to rent ratio, are rather inadequate for a shorter and medium term analysis, relevant to a person’s lifespan.  A more responsive measure is needed in order to determine whether prices are exuberant or not. I will explore this further in my next article.
For now, the only conclusion that can be drawn is that, according to our original definition, if we accept that 1950 is an appropriate starting reference point and that prices to rents ratio is an appropriate measure of a variance to intrinsic value, Australian property is in a very long term bubble that peaked so far in 2007 (the point of the highest volume of loans and high ratio of prices to rents) and that this bubble is currently deflating.
However, there is more that should be said. In particular, it is an awfully long term bubble and it may take an awfully long time to deflate, if at all. It is not out of the question that what we observe on the second chart is a reflection of ongoing structural changes in the housing market – therefore, that the chart indicates what the current intrinsic value is and not the variance from a historic intrinsic value, as this information is commonly interpreted. If what we observe is indeed the result of long term structural changes in the market, this “bubble” could as well inflate to even bigger proportions, as it happened in 1950s, 1970s, 1980s and in 2000s.
I will leave you with an interesting question to ponder about - what would it take to completely deflate this bubble and bring ratio of prices to rents down, back to 1950’s level? It would involve a serious modelling exercise to come up with a range of scenarios that could deliver that outcome but, as an illustration, prices would have to halve from current levels and, at the same time, rents would have to double to get us close to that result in the next 20 years. How likely it is to happen without a catastrophic economic shock or a drastic government intervention is not difficult to guess.
 
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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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The analyst in search of a property bubble: Arek Drozda

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“Since FY 2000, at the macro level, rents have not been able to cover costs (mortgage, maintenance, rates) and policy has produced a country of loss-making landlords who rely upon negative gearing.” Chief Economist of a large international financial organisaton.
The above statement echoes a common perception about the merits of property investment in Australia. Similar views are shared by many prominent and respectable social, economic and finance commentators and hance, get a lot of circulation in the media. Since media has big influence on public opinion, such views get absorbed by wide sectors of the community without much scrutiny as to their merit. The result is that we end up in a situation where there is a widespread misunderstanding about residential property investment.
Let me try to clarify this misunderstanding by explaining how income losses originate in the early years of residential real estate investments and what implications it has for the returns on such investments. In other words, why “losses” and “profits” can go hand in hand in property investment - and why it is not a misnomer as you may expect at first…
 
1. Property investors are price takers and, as individuals, have minimal impact on the market.
As much as investors would like to buy cheap to make big profits from day one, they are not the only buyers in the market. Hence, they have to pay prices that the market dictates. Investors also compete for tenants so, incomes from letting of residential properties are influenced by prevailing rental market conditions.
To illustrate the point, imagine you could buy a property for $500K, pay 5% in interest on 100% of the value of the property plus $5K in oncosts (i.e. $30K p.a. in total) and rent it for $40K p.a. (8% gross yield) to make a profit before tax of $10K. That property would also grow in value by 3% p.a.
So $0, nil, zip, zilch, nothing invested up front (apart from a promise to the lender to repay debts in due course or if something goes wrong) and a starting profit of $25K (comprising $10K cash and $15K in capital). There is only one question to ask - how many such properties would you like? You could probably stop working with 10, make most of your dreams come through with 20, and live a multimillionaire lifestyle with 30…
Let’s introduce a twist to this scenario and say, your cousin would like to do the same… and other members of your family, and your friends, and their family and friends… Suddenly, there would be a little bit more competition for the properties you intend to buy. So, how much such investment would be worth to you? Would you pay $600K for the property to earn “only” $20K p.a. (i.e. paying $35K p.a. in total costs and earning $5K net from rent and $15K in capital gains on original value of $500K)? Or maybe $700K would still be a good deal?
And let’s consider this case from a renter’s perspective. If it costs $40K p.a. to rent, would it be worth to buy the place for $600K and pay $35K p.a. in total costs and having an opportunity of making extra $15K p.a. in capital gains? Would paying $700K for the property be still a good deal?
The point is that prices at which properties change hands are the outcome of a complex set of circumstances, leading to individual decisions of buyers and sellers - the participants in the process, who collectively make the market. By default, since there can be only one buyer per property (whether a single person or a team), the price is usually the highest offer from all interested parties and is inevitably influenced by the cost of renting of comparable premises.
The following section explains how paying market prices works out for investors in the long run…
 
2. Long term returns on non-leveraged property investments match returns on share portfolios
<a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">Exhibit 5,7 &amp;8</a>
If you accept conclusions of <a href="https://www.propertyobserver.com.au/residential/more-liquid-shares-just-outperform-property-over-last-20-years-if-you-dont-mind-the-volatility-rismark-study/2013081963840" target="_blank">studies on returns from shares and non-leveraged residential property</a>, both these investment classes deliver comparable results over a long term. As an example, according to RP Data, on average, property delivered gross rental yields of 3.6 to 7.8% p.a. (based on 1996 to 2013 data series) and capital appreciation of anywhere between 4 to 13% p.a. (2001-2011 data series) - results vary by State and type of property. These are<a href="/news"> quite respectable returns</a> and reflect <a href="https://www.propertyobserver.com.au/residential/the-two-speed-decade-for-home-value-growth-tim-lawless/2012021553403" target="_blank">relatively low risk of this investment class</a>.
In other words, investors who bought properties with cash, or who paid off the initial loan, are consistently generating positive returns form their investments. So, labelling property investors “loss making landlords” is rather unfair generalisation.
The next section explains implications of a prospect of stable long term returns for the risk appetite of property investors…
 
 
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3. Low volatility creates opportunities for higher leverage
Since cash purchases of residential real estate are very rare, due to sums involved and difficulties in acquiring fractional ownership of a property, such investments are usually made with borrowed money. Buying an asset with borrowed money is called leverage, or gearing, and both owner occupiers and investors can take advantage of it.
Volatility in property prices is relatively low, especially on the down side. So, it is quite common for investors to buy residential properties with loans of up to 100% of purchase price plus full cost of purchase expenses (in such cases lenders take additional security over other unencumbered assets of the investor). The last six decades of persistent growth in property prices created expectations that this upward trend will continue in the future which gives borrowers and lenders confidence to enter into arrangements that are otherwise considered very risky (<a href="https://www.propertyobserver.com.au/residential/should-you-invest-in-shares-or-property-tim-lawless/2012110757682" target="_blank">e.g. for share portfolios</a>).
By applying maximum leverage to investments that already deliver positive returns investors have the opportunity to turn respectable profits into more substantial ones. However, the leverage comes at a cost in the initial stages of the investment when interest payments are not fully covered by income from rent. As borrowed money is paid off and/or rental incomes grow, those losses are eliminated.
The next section explains how those small losses can deliver big returns over time…
 
4.  Losses are actually additional capital injections that make leverage possible
Explanation of this step requires applying unconventional approach to account for profits. In short, the logic goes like this: the loan is required to secure possession of an income producing asset and it has an annual cost which initially is not covered by income from that asset (the reasons are explained in point 1 above). The annual operating loss (regardless whether reduced by negative gearing or not) and/ or investor’s contribution to the purchase price are considered capital outlays for the investment - not the purchase price of the asset. It therefore follows that these real cash outlays are what should be used in calculations of investor’s true returns.
To illustrate, a $500K apartment bought last year in Sydney with 100% loan (so, no cash outlay) that increased in value by say, 10% over the last 12 months (so, $50K gain) but generated $10K after-tax loss (i.e. which is actual cash invested), delivered in reality 500% return to the investor (of course net returns will be less due to capital gains tax and other costs if property is sold).
And it works in a very similarly way for owner occupiers. For example, a property purchased with 10% deposit that doubles in value (i.e. 100% return on purchase price) in reality is a 1,000% gross return on the original cash investment (for net return figure all costs of owning that property over the period would have to be deducted).
Of course, it is needless to say that the less leverage applied, the more those returns will approximate normal returns (as outlined in point 2 above). Also, that both property owners and investors can lose equally big if their bet on rising property prices goes the other way and properties decrease in value over time.
I am first to admit that this method of accounting for profits is controversial and can be criticised on a number of grounds. More importantly, this information taken out of context and in hands of unscrupulous peddles of “make zillions in property” seminars can be outright dangerous. However, it does not change the fact that for home owners and investors alike it is the real, hard cash that counts at the end of the day, not paper profits calculated for tax or other accounting purposes.  This method has its merits as it shows true net cash position after disposal costs, relevant taxes and debts are accounted for. It also demonstrates that even small increase in property prices can lead to substantial returns for property owners. There is no “black magic” or “secret formula” involved – this is simply how leverage works.
And to conclude…
 
5. Government or taxation policies have nothing to do with it
As I explained in my previous article <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/Page-1" target="_blank">“Negative Gearing: The three facts that will challenge your assumptions”</a>, there is very little about negative gearing that would allow drawing a conclusion that landlords in Australia have to rely on it exclusively to make their property investments viable. There are no other government policies that would directly contribute to the viability of property investing either. Residential property as an investment class has its own merits - for owner occupiers as well as investors, with or without negative gearing, with or without leverage.
Majority of Australians already participate in this class of investment, either as owner occupiers and/or investors. We are not a nation of gullible property speculators, sinking money into dubious assets - but it takes some financial acumen to understand it. Off-the-caff comments, sensationalising selective aspects of property ownership or investing, without explaining the context, will not help those who are unable to participate in the Australian Dream. Promoting basic financial education is more pragmatic and would be more considerate...
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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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Putting property investment losses into perspective

Buyers considering a residence at boutique Gordon townhouse development <a href="https://www.apartments.com.au/new-townhouses/lume-gordon-43-47-dumaresq-street-gordon-nsw-2072">Lume</a>&nbsp;now have another reason to bring forward their decision.

For a limited time, purchasers of a residence at Lume will receive a BMW iX3 50 electric SUV, valued at more than $120,000, as part of their purchase. The offer is designed to add value for buyers while complementing the lifestyle envisioned for the architecturally designed Upper North Shore development.

Scott Timmins, Development Manager at <a href="https://www.apartments.com.au/developers/winim">WINIM</a>, said the partnership was created to provide buyers with a compelling reason to act.

"In today's market, buyers need a compelling reason to act now, and the BMW partnership was designed to create that catalyst. We wanted to add genuine value for our future purchasers. Choosing the all-electric BMW iX3 50 also reflects the values behind LUME, forward-thinking design, innovation and a more sustainable way of living. It's a premium incentive that complements the lifestyle our buyers aspire to and rewards those who commit early."

[smartcode_project:default project_id=7354 project_image_fid=374893]

Delivered by WINIM in partnership with Burtonwood Investment Partners, Lume comprises 14 architecturally designed two, three and four-bedroom townhomes created for families seeking the space of a freestanding house with the ease of modern, low-maintenance living.

The three-storey residences, designed by award-winning architecture practice <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, have been tailored for families and multi-generational living, featuring private internal lifts, flexible lower-level spaces, generous open-plan living and entertaining areas, media rooms, and landscaped outdoor spaces with custom outdoor kitchens.&nbsp;

Inside, engineered oak flooring, bespoke dining joinery with integrated wine fridges and backlit bars, sculptural porcelain bathrooms, Parisi freestanding baths and Astra Walker tapware create interiors that balance functionality with refined finishes.

Each townhome has been designed to combine generous internal spaces with sustainability initiatives such as EV charging infrastructure, while <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>'s landscaped communal areas, centred around a restored creek line and native planting, encourage residents to connect with nature and spend more time outdoors.

[smartcode_project:default project_id=7354 project_image_fid=269527]

Rothelowman's Gary Tsui said the architecture was conceived to respond carefully to its Upper North Shore setting.

"Our vision was to create elegant, uplifting homes that draw on and positively contribute to the local character through meticulously considered design and an interaction with the surroundings."

The communal landscape has been designed as more than an open space between homes. Arcadia's Ben Newell and Kate Phillips said the adjoining reserve provided an opportunity to create a distinctive natural retreat for residents.

"Just as waterways carve their way through Ku-ring-gai's landscape, a raised boardwalk weaves through the reserve, connecting the homes to this tranquil oasis."

[smartcode_project:default project_id=7354 project_image_fid=374892]

Located just 300 metres from <a href="https://www.apartments.com.au/developments/gordon-nsw-2072">Gordon</a> Village and Gordon railway station, Lume offers convenient access to Sydney's CBD while placing residents close to some of the North Shore's leading schools, including Ravenswood, Pymble Ladies' College and Knox Grammar. Lane Cove National Park, Gordon Golf Club and a range of cafés and restaurants further reinforce the family-focused lifestyle on offer, with the BMW iX3 50 complementing everything from local trips around Gordon to weekend drives and city commutes.

Construction is underway with completion expected in mid-2027.

[smartcode_project_cta:default project_id=7354]

Joel Robinson

Boutique Gordon townhomes now come with a BMW iX3 50

Two apartments have sold for more than $10 million at EADE Byron Bay, setting some of the highest apartment prices ever achieved in the coastal town and underlining the growing appetite for luxury beachfront apartments in Australia's most popular coastal locations.

The $210 million project by Vitale Property Group has now secured more than $70 million in sales, led by residences that changed hands for $12.75 million and $11.75 million.

The record-breaking transactions reinforce the shift occurring in Byron Bay's premium property market, where affluent downsizers and lifestyle buyers are increasingly opting for high-end apartments over large beachfront homes.

<a href="https://www.apartments.com.au/new-apartments/eade-byron-bay-29-shirley-street-byron-bay-nsw-2481">EADE Byron Bay</a> occupies a rare 6,000 sqm absolute beachfront site on the corner of Shirley and Milton Streets overlooking Main Beach and The Wreck surf break, just 350 metres from Byron Bay's town centre.

The 25-residence development is the first beachfront apartment project approved in Byron Bay in more than a decade and is currently under construction, with completion expected in May 2027.

[smartcode_project:default project_id=145590 project_image_fid=359521]

The project has attracted a mix of local Byron Shire residents downsizing from larger homes, alongside interstate buyers from Sydney, Melbourne and Brisbane seeking a permanent coastal lifestyle without compromising on space.

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a> and with interiors by <a href="https://www.apartments.com.au/interior-designers/alexander-co">Alexander &amp; Co</a>, EADE comprises&nbsp;10 garden apartments ranging from 284 sqm to 622 sqm, nine with private pools, five full-floor apartments and 10 rooftop residences with private plunge pools, expansive outdoor entertaining areas and uninterrupted ocean views.

[smartcode_project:default project_id=145590 project_image_fid=359527]

<a href="https://www.apartments.com.au/developers/vitale-property-group">Vitale Property Group</a> Managing Partner Chris Vitale said the project's combination of scale, location and limited future supply was driving buyer demand.

"There isn't another beachfront holding in Byron Bay of this size and position that could be developed again," Vitale said.

"Buyers are responding to the scarcity and the irreplaceability of a site of this calibre and to floorplans they can't find elsewhere in the market.

"We are seeing buyers place significant value on quality, space, design, resort-style amenities and the rarity of the location. The sales achieved to date demonstrate that discerning purchasers recognise the long-term significance of what is being created at EADE Byron Bay.

"Many are coming from larger homes in the Byron region, or from Sydney, Melbourne and Brisbane, and are after the space, security and convenience, without the upkeep of a house."

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[smartcode_project:default project_id=145590 project_image_fid=359523]

The Byron Bay project follows Vitale Property Group's delivery of the Mondrian Hotel and Private Residences at Burleigh Heads, with EADE continuing the developer's focus on luxury coastal developments.

Residents will have access to a resort-style swimming pool, gymnasium, sauna, cold plunge pool, concierge services and dedicated workspaces, while the project is targeting an 8-Star Green Star rating.

EADE Byron Bay is being exclusively marketed by Projx Australia in conjunction with WHITEFOX Projects.

WHITEFOX National Projects Director Phillip Rand said demand had been driven predominantly by owner-occupiers.

"We are seeing buyers at EADE place significant value on quality, space, design, resort-style amenities and the rarity of this location," Rand says.

"The sales achieved to date demonstrate that purchasers at this level recognise the long-term significance of what is being created at EADE Byron Bay."

Residences at EADE Byron Bay are currently priced between $4.75 million and $15.95 million.

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Vitale breaks Byron Bay records with EADE sales flurry 

When buying an apartment, most people compare the big-ticket items first. Floorplans. Kitchens. Balcony size. Natural light. The view.

But there's one everyday consideration that often doesn't come up until after moving in: how parcels are delivered.

As online shopping has become part of everyday life, parcel deliveries have shifted from an occasional event to a regular occurrence. Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally.

For apartment residents, that can present a challenge.

If nobody is home to accept a delivery, parcels may be redirected to a nearby Post Office, left in a building lobby or common area, or require building management to step in. In higher-density buildings, where dozens or even hundreds of residents may receive deliveries each day, parcel management has become an increasingly important part of everyday living.

That can create a range of frustrations. A missed delivery often means making time to collect a parcel elsewhere, while packages left unattended in foyers or mail areas can create clutter and increase the risk of theft. What seems like a minor inconvenience can quickly become a recurring issue for residents who shop online regularly.

It's one of those details that rarely features in a display suite but can have a noticeable impact once residents move in.

As a result, buyers are beginning to look beyond traditional apartment features and consider how a building supports day-to-day convenience, including whether there are secure options for receiving deliveries.

Australia Post's Parcel Lockers provide one solution.

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Rather than having a parcel delivered directly to an apartment, eligible deliveries can be sent to a nominated Parcel Locker. Once the parcel arrives, residents receive a notification through the AusPost app or SMS and can collect it using a QR code or one-time PIN at a time that suits them.

The Parcel Locker network now includes more than 1,500 locations nationwide, with installations at Post Offices, shopping centres, transport hubs and an increasing number of residential developments. By providing a secure collection point, Parcel Lockers help reduce missed deliveries and avoid parcels being left unattended in common areas.

For developers, parcel infrastructure is becoming another way to improve the resident experience. Rather than relying on concierge staff or leaving parcels in communal spaces, secure collection points help streamline deliveries while preserving the presentation and functionality of shared areas.

For buyers, it's a reminder that the best apartment features aren't always the most obvious.

A generous floorplan or quality finishes might help narrow the shortlist, but the conveniences that simplify everyday life, whether that's EV charging, secure bike storage or reliable parcel delivery, often become the features residents appreciate most once they're living there.

The apartment feature many buyers don't think about, until their first missed delivery

<a href="https://www.apartments.com.au/developers/hg-developments">HG Developments</a> is doubling down on Maud Street in Newstead, filing plans for a new apartment tower just a few doors down from its under-construction Aire Newstead development.

Recently submitted to Brisbane City Council, the proposal is for an 18-storey building designed by bureau^proberts, which has drawn heavily on Brisbane's subtropical design principles while referencing the suburb's industrial heritage.

A total of 64 apartments are planned for the amalgamated 1,518 sqm site at <a href="https://www.apartments.com.au/new-apartments/17-21-maud-street-newstead-qld-4006">17–21 Maud Street</a>, a short walk from the Brisbane River and Newstead Riverwalk.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="a400c7fd-bd15-48f8-a63b-10ede92efe00" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20bldg.png?VersionId=.0vPmjpbC7CNP7kqGWa6L7rGIwsNExaw" />

"The building is defined by a series of vaulted motifs that reinterpret the arches, colonnades and layered facades evident throughout Newstead's historic built fabric," the Urban Design Report states.

"Combined with recessed glazing and generous balconies, these elements create a layered building envelope that provides shade, weather protection and opportunities for natural ventilation whilst establishing a distinctive architectural identity."

The proposal comprises 64 two, three and four-bedroom apartments across 18 residential levels, positioning it alongside a growing number of taller residential projects transforming Newstead's northern precinct. The tower incorporates extensive subtropical landscaping, with cascading planter boxes, deep planting at street level and a landscaped rooftop recreation area.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="1d8140f4-8b98-45cd-b1b8-1efe8c8e266b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20podium.png?VersionId=VAZtbCoD44YCJ57N99fQCAKeSJx7ldZs" />

Bureau Proberts has prioritised passive environmental design throughout the project, with generous balconies, recessed glazing and operable façades helping reduce solar heat gain while maximising natural ventilation. River views become available from the upper levels, while the building has been orientated to capture prevailing breezes from both the Brisbane River and the west.

The architects say landscape is intended to be integral to the building rather than an applied element.

"Vertical greenery, cascading planter boxes and elevated gardens are woven throughout the architecture, softening the built form and strengthening the connection between residents and the subtropical environment."

"Through the integration of landscape, high-quality materials and passive design principles, the development delivers a refined residential address that celebrates Newstead's heritage character while contributing positively to Brisbane's evolving subtropical identity."

Newstead has remained one of Brisbane's most active apartment markets in recent years, with a number of developers continuing to back the inner-city suburb.

HG Developments is currently delivering the 40-apartment Aire Newstead at 25 Maud Street. Fortis recently launched the 65-apartment <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> on Kyabra Street, while builder-developer BPG and Don O'Rorke's Consolidated Properties are both expected to launch their respective Newstead projects before the end of the year.

HG Developments doubles down in Newstead with second Maud Street apartment development

Walk past a new apartment development promoting its sustainability credentials and it's easy to picture rooftop gardens, mature trees, landscaped courtyards and residents surrounded by nature.

But in many cases, that's not actually what those sustainability ratings guarantee.

Australia's leading environmental rating tools have played a significant role in improving the energy efficiency and environmental performance of buildings. Yet despite their focus on reducing emissions, many don't require developers to include trees, biodiversity or meaningful green space.

In other words, a building can achieve one of the country's highest sustainability ratings while containing little more than concrete, glass and hard landscaping.

That disconnect has led to the emergence of a new movement across Australia's property industry: nature-based cities.

The concept goes beyond designing buildings that consume less energy. Instead, it encourages developers to treat nature as essential infrastructure, integrating biodiversity, tree canopy, living landscapes and green spaces into projects from the earliest stages of planning.

Research has consistently linked access to nature with better physical and mental health, cooler neighbourhoods, improved biodiversity, stronger climate resilience and more connected communities. As Australia's cities continue to become denser, advocates say those outcomes should be considered just as important as energy efficiency.

Nature Based Cities (NBC) was established in 2022 to help accelerate that shift.

Founded by Hamton Executive Chairman Paul Hameister OAM, the not-for-profit was created after research highlighted a significant gap in Australia's sustainability framework. While existing environmental rating tools rewarded energy performance and emissions reductions, they placed little emphasis on the inclusion of living landscapes.

"We've always wanted to do more, and we know other developers who want to do more, but the ESD rating tools just aren't there," Hameister says.

"In Australia, you can have a five-green-star rated building that's concrete and glass with not a blade of grass.

"The focus is on reducing emissions, which is laudable, but there hasn't been enough attention paid to protecting and re-establishing nature. We need both for the health of the environment and for communities."

Since its launch, NBC has developed independent design guidelines and accreditation frameworks that encourage developers to prioritise ecology, biodiversity, tree canopy, walkability and living landscapes alongside traditional sustainability measures. The organisation first focused on medium and high-density residential developments before recently expanding into precinct-scale communities and masterplanned neighbourhoods.

Jan Talacko, founder of sustainability consultancy Ark Resources and a member of the Nature Based Cities Advisory Council, says the initiative addresses an area that has largely been overlooked by the property industry.

"Throughout my 25 years of working collaboratively with all stakeholders in the property sector, I've always favoured a pragmatic approach to sustainable design which encourages initiatives that not only meet environmental expectations but also improve amenity," Talacko says.

"Whilst we are making steady progress in relation to energy and carbon emissions from buildings, there has been much less emphasis on encouraging biodiversity and tackling the urban heat island effect.

"The Nature Based Cities initiative responds to a gap in the suite of tools currently used by the property development sector, which don't provide sufficient incentive, or recognition, for the integration of landscaping and greenery."

For apartment buyers, the shift is also changing the questions worth asking.

Rather than assuming a sustainable building will naturally include abundant green space, buyers are increasingly being encouraged to look beyond environmental ratings and ask what nature is actually being delivered. How much tree canopy will the development create? Has biodiversity been considered? Are landscaped spaces designed for people as well as appearance?

As Australia's cities continue to grow upwards and outwards, the next generation of sustainability may not simply be measured by lower emissions, but by how successfully developments bring nature back into everyday urban life.

Arek Drozda

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