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Australia doesn’t rank badly on a global scale when it comes to market transparency. In detailed surveys conducted by Jones Lang LaSalle, we consistently rank in the top three from 81 assessed markets across America, Europe, Asia Pacific, the Middle East and North Africa.
For those interested, the survey covers performance measurement, market fundamentals, listed vehicles, regulatory and legal environments and most importantly, ethical standards among professionals hired to transact business. As Jones Lang LaSalle correctly stress on their website, rising levels of transparency are essential in terms of attracting both local and foreign investment.
As stated in their report, they “take the view that a highly transparent market is not only fairly free from corruption, it also has readily available information and operates in a fair and consistent manner”.
However, if you took this on face value without further investigation, you could have been fooled – along with many others – that pre-GFC America contained a healthy real estate environment. In 2006 for example (at the sparky end of the boom) the US ranked only second in their index – one step behind Australia. It clearly shows that “transparency” is not the sole answer to stability, nor is it an adequate measure of a “fair and consistent” atmosphere.
Despite Australia’s high ranking, there’s ample room for improvement. Our property market’s estimated value is in excess of $4.5 trillion, with the measure of household debt to disposable income sitting around 150%. In light of this, there have been calls for an increased level of “independent” government administered regulation over the whole industry. However, it’s important to understand it’s not a lack of regulation that has locked increasing numbers out of home ownership; rather it can be directly attributed to bad regulation and poor government policy (FHOG, negative gearing and so forth).
For the average Joe on the street, sourcing accurate sales data is generally only available at a cost. Statistics can only give broad indications of market sentiment providing you also take into account various external factors which can distort the data. Market research is important, however it never accounts for individual circumstance and neither is it sight for the blind. There are always risks associated with any investment; however property isn’t an item just to be traded like stocks and shares. It’s a vital commodity essential for our very survival – something that’s often forgotten by the broader offshoots of the industry – and with this in mind, we need to keep a “moral” head when discussing an “amoral” property market.
Attributed to the increasing costs of home ownership, there’s been a need to create a kind of property welfare system for those who are unable to afford the luxury. Governments have historically grappled with the question of providing safe and secure shelter for their rising populous – the answer unfortunately has too often resided in the provision of easier access to debt. The latest scheme comes from the <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2012-07-26/no-deposit-home-loans-offered-election-campaign/4156198?section=nt">NT Government</a> who have devised a plan for first home buyers to borrow up to $750,000 with no deposit or mortgage insurance applicable. Even Santa can’t offer such a deal. Once again, we’re enticing vunerable prospective first time buyers to overpay and over extend their borrowing capacity.
In Australia, the limited areas of habitable land have ensured most are forced to situate close to the major capitals. In essence, Australia’s population are trying to squeeze into cities on the same par as London with prices to match – it’s unsustainable – (hence why levels of ownership are now falling).
In the UK and Europe, the emergence of satellite towns linked by rail networks and major transport routes has dispersed the population over the available regional land mass. Schools, town centres, factories, small businesses followed and, for a time comparatively affordable options shone a light for the urban sprawl. I’ve written previously regarding Australia’s determination (intentional or otherwise) to keep its population contained in tight donut circles surrounding the major capitals and failing to invest in the necessary infrastructure to provide alternative regional options. The success – or rather lack thereof – has in part lead to our so-called “housing shortage” and stubborn 5% national vacancy rates. In short, we have plenty of “roof space”, but a severe lack of “affordable” roof space.
This has resulted in an intense squeeze around existing transport arterials and ageing rail networks, along with accusations of “NIMMYism” for owners who entered the market early, and are vainly trying to protect their assets and neighbourhood landscapes, which inspired them to take out their large mortgages initially.
There’s no balance to the question of affordability, however one thing is evident – the tremendous cost of accommodation (rental or otherwise) is an impending tower of doom for future home owners and renters alike. Unless we address it from the ground up, bandaged systems made up of incentives and grants – which inflate, rather than stabilise the market – along with poor modes of development, simply sets a proportion of Australia’s population up for an almighty fall, when our “luck” runs out.
In the US, the key to the rising bubble of property debt was to keep interest rates low, ensure the job market remained stable and increase vehicles of lending forever buoyed on by the excitement of capital gains (dreams of future wealth)… sound familiar?
The formula was perceived “safe”, however encouragement of overinvestment in the property market (high leveraging) for a broad proportion of the population not only broke the rules of “risk management”, but failed to encourage a properly administered diversification of asset management. Property can be a great investment as part of a balanced portfolio, providing its primary purpose is never ignored and providing debt is managed.
The evolution of their poorly regulated financial system, which propped up a broken model of illusionary wealth, has resulted in meteoric demise, crashing the price of housing and plunging a large proportion of America’s population into comparative poverty.
The US may yet work its way into a new financial system based on safer and less greedy foundations, however, in the meantime, residents struggle with negative equity, thrown out of housing they can no longer afford, yet housing that no longer holds value to the financial institutions who were prepared to fund the acquisition in the first place. The housing sits empty while the homeless seek shelter – a bizarre situation.
Bob Carr may have been “untactful” in his commentary on the US, however his out of context statement was in part correct. The perception of America being in decline has been reiterated from many corners – why deny it? They’re not without hope, but as with Australia, they’re without strong leadership. There’s a long road ahead and hard lessons to learn for our friends in the US – lessons we must take heed of.
In an ideal world we could perhaps come to a new understanding of wealth – wealth not driven by greed, but rather by need. A world which does not constantly push us to buy and trade items of status; but teaches us to respect and save for items of necessity. A world that provides – or more importantly saves – for the needs of all – rather than panders to the greedy side of human nature. Most importantly, a world with a system of finance allowed to fail when greed takes hold so the hard lessons are learnt. Rather than being propped up by government policy, tax payer dollars and the never ending creation of complex financial structures which permit it to evolve to monstrous proportions, which places a broad proportion of the population with no choice but to borrow a life time’s worth of debt for the sake of shelter. We’re not winning – we’re burdening our future generations with insurmountable mountains of debt.
If we only regard property as a commodity to be bought and sold for profit, rather than taking a broader, more rational approach to the larger question of affordability, then relying on our ruling powers – whose motivations have a vested interest in maintaining the vote of some 1.1 million negatively geared property investors – to create increasing methods of regulation on the industry as a whole, we won’t solve the problem of a slow demise in ownership and increasing levels of mortgage stress.
Surveys conducted in the US at the start of the financial crisis, demonstrate the tremendous reliance the majority had in complex financial systems governing powers had not only allowed, but also regulated. Pyramids of intricate financial structures you’d need a master’s degree to understand. All were based on “assumed” prospective wealth. All claimed to act in the best interests of the client. Few people questioned the wisdom of borrowing outside of their means – refinancing every three years to keep the “honeymoon” going. Less questioned the future prospects of their investment. They were allowed to do it by way of Government policy and regulation, therefore it inspired the perceived quality of safety
There’s a kind of foolish assumption that there’s nothing safer than bricks and mortar. In the US, if the buyer defaults, they walk away, however they can’t take the house with them; in the eyes of the lender, they could simply recover any outstanding debt by selling the house and riding on a boom of ever increasing debt. Consequently, it’s now possible to purchase properties in the US which were once priced in excess of $400,000 for as little as $1000. The fall has been hard – but have we learnt?
Some have suggested labelling everything data providers publish as constituting financial advice, thereby holding them liable for the consequence of poor individual choices resulting from a narrow “uneducated” reading of the data. However, this heralds a very real risk of shutting the lips of providers and financial commentators all together, which would effectively silence a free and open flow of information. This is vital if we want to keep channels of transparency open and not locked behind closed doors. Rather we need the requirement of “fee for service” models across the whole property and finance industry to reduce conflicts of interest.
Rather, the real key to the stability in a democratic society which encourages competition in the market place, doesn’t just come from good’ regulation, it requires self regulation, which in turn cannot evolve without a strong foundation of quality education – education many adults have grown up lacking.
From my own experience, by the time most first home buyers think about purchasing they’re in their mid- to late-30s, have been looking for around 12 months (or more) and know little regarding the sales transaction process, let alone the principals of good long term planning. Some come with no conception they even need a solicitor, and few have basic knowledge of what a pre-approval really means.
They look upon sales agents with suspicion, imagine they all earn in excess of $100,000 – with most failing to understand that the sales agent works on behalf of the vendor. Being encouraged to pay over and above the listed price range is not a sales agent “making you pay too much” it’s the sales agent doing what they’ve been engaged to do.
Basic lessons in property transaction, the Australian sales process, and principals of saving and budgeting won’t come from The Block, Escape to the Country, Location, Location, Location or Grand Designs, which all sell “the dream” while sheltering viewers from the bleak reality. It’s commendable that the government has slowly introduced financial literacy into schools as part of the national curriculum; however it doesn’t go far enough.
Without exception, property is the most expensive acquisition most will make in a life time – financial literacy models need to cover more than simply spending and saving, they need to cover evaluation and transaction in the property industry, as well as the principles of diversification.
Estimating the current level of literacy is hard at the best of times. However, in <a href="https://www.anz.com/resources/3/9/392786004d2fa9b6bc40bc766a918285/ANZ-MediaRelease-20081008.pdf">the ANZ Survey of Adult Financial Literacy</a> the ABS were cited as saying: “More than half the Australian population aged 15 to 74 lacked the literacy and numeracy skills necessary to meet the complex demands of everyday life and work in the emerging knowledge-based economy”.
That’s a frightening statistic and flags a call of arms to do more than cover the basics.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. 
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Why we need to be teaching the basics of property acquisition in schools: Catherine Cashmore

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"Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital." – Aaron Levenstein, associate professor emeritus of business, Baruch College.
Statistics – don’t you love them? Or perhaps I should rephrase and ask – do you understand them? Don’t feel the need to grope in the dark for an ad hoc explanation of the data – even “experts” fight over the publicised and regularly conflicting reports that solidly “claim” we’re both in a rising and falling market.
In fact, Oxford Mathematician Peter Donnelly produced a wonderful <a href="https://www.ted.com/talks/peter_donnelly_shows_how_stats_fool_juries">Ted Ed lecture</a> on the subject, which demonstrates rather succinctly how a simple and common misreading of statistics can have serious repercussions on an individual’s life. He paints the story of Sally Clark, a British lawyer who was imprisoned for the murder of her two sons who tragically died of sudden infant death syndrome.
The chances of sudden infant death syndrome occurring in a professional “non-smoking” family unit are around one in 8,500 – therefore the “distinguished” paediatrician who testified against Sally at her trial, “logically” squared the formula and calculated the chances of two children dying of the same condition was around one in 73 million. In effect, it put the jury in no doubt of her guilt.
Of course, the paediatrician was absurdly incorrect in his “assumption”. In truth, the chances of a second child dying from the same condition could be influenced by a number of external factors – both genetic and environmental – of which a microscopic view of basic statistics won’t take into consideration. Therefore, without going into too much detail, two deaths flag the need to consider the overall picture from a broader angle, eventually proving it was “more” not “less” probable for the second death to occur. Thankfully, the conviction for Sally was overturned and consequently, two other mothers convicted for similar crimes were also released. However, it clearly demonstrates how frequently statistics are misinterpreted by seemingly well-respected and educated individuals.
As for property prices – going into intricate detail on how monthly and quarterly data is collected, collated and interpreted is a science in itself. The reasons for the discrepancy can be broadly explained by the method, duration and specific grouping of data which differs between each agency provider. However, for those interested, it’s worth browsing through the ABS publication – it’s written in such a way, that if you’re not presently confused or averse to reading heavy educational research documents – you soon will be! Therefore, before you feel tempted, take note of the following ABS statement which sums up their purpose perfectly: <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6416.0Main%20Features4Mar%202012?opendocument&amp;tabname=Summary&amp;prodno=6416.0&amp;issue=Mar%202012&amp;num=&amp;view=">“They are published primarily for use in Government economic analysis.” </a>
As a case in point, over the past few weeks we’ve seen RP Data-Rismark, Residex, and the REIV all produce differing interpretations of the state of Melbourne’s market for the both the month of June and June quarter. RP Data were first off the bat, recording a rise of 1% in Melbourne’s median house price over the month of June to $480,000. The REIV were slightly more “bullish”, recording a rise of 2.9% in the June quarter taking the median to $520,000 (although they did specify that the gains were no more than a correction of previous drops in Melbourne’s median data). As for Residex, they have collated their own figures and recorded a drop in both the month of June and the June quarter by -0.49% and -1.31% respectfully. They record Melbourne’s current median house price at $555,000. So who do you believe?
All of the above is irresistible fodder for industry professionals who can “pick and choose” which data to reference (or ignore) based on their own reference point. However, I often wonder if any actually take the time to weigh up the information or research the methodology behind their findings?
The dialogue that has been published and subsequently scrutinised based on these conflicting results has consequently split the “bulls” and “bears” directly down the middle. According to random groups of commentators we’re both “recovering” and “falling”. Furthermore, how does the average home buyer or investor cope with such conflicting information circulating through various social media outlets or out of the mouths of “respected” industry professionals?
Does a vendor add or subtract a percentage or two to their asking price or reserve prior to an auction?
Do investors and buyers make hard and fast choices whether to sell, buy or hold based on the information?
I know from my own experience, purchasers who read media commentary will often be shaken one way or the other – depending on the report. However, considering how commonly the statistics are “skewed” it’s a somewhat foolish path to adopt.
Having said this, you can understand why various realtors jump on any glass half full opportunity to pump the market. In an industry reliant on turnover, a lack of confidence in the investment sector – the demographic particularity sensitive to statistical commentary – can be extremely detrimental. Investors are all but worshiped by realtors; well known for their non-emotional and often speedy approach to the buying/selling process.
However, as I cited above regarding the falsely convicted lawyer Sally Clarke, it’s important to understand a broader set of influences other than median data if you really want to grasp the statistics and draw a line where conflicts arise. For example, assuming a rise in median prices signals a broad based “recovery” the housing market becomes rather shaky when you take into account (as I pointed out last week) “overall” year to date turnover is lower than it has been over the previous four years – particularly so in Melbourne.
Other statistics indicate a large amount of stock lingering on the market. Nationally there are over 300,000 homes for sale and the previous norm has been closer to 200,000. Once again, this is specifically pronounced Melbourne – and therefore any assumption we have entered an extended period of growth, goes against the well known premise that more supply equals lower values.
Furthermore, the clearance rate of late has been jumping around like a yoyo. Melbourne’s clearance rate last week came in at 61% based on a similar number of auctions to the previous week, during which it came in at 52%. Clearance rates don’t generally move nine percentage points in one week, however, once again, industry commentators can take their pick which to “believe” or reference, all depending on their glass half empty or glass half full viewpoint.
The other layer of complexity that needs to be considered, is even with a stratified index which segregates property into different types based on number of bedrooms and so forth, it’s impossible to draw a hard and fast conclusion on a commodity which is purchased – in many cases – solely on a buyers individual tastes and needs. Unless we’re looking at a row of identical terraces with little to no differentiation between them, a home can mean one thing to one buyer and something completely different to another. Therefore, any reading of statistical data – especially when turnover is low – is no doubt down to the particular composition of properties selling rather than an indication of market recovery.
Take for example the tale of two houses recently auctioned on the same street in the attractive bay side suburb of Hampton in Melbourne. Both are four-bedroom detached dwellings situated on ample land sizes with north facing rears. One block featured a rather dated 1990s dwelling, “liveable”, but in need of work over the long-term. The other featured a property that had been updated with an element of “wow”, complete with an in-ground swimming pool in the back yard.
At the beginning of June this year, the 1990s dwelling was auctioned, attracting a large crowd of interested participants and no less than four bidders. The sale price exceeded both expectation and reserve, selling under the hammer for $1,695,000. It was a boom price and trended directly against the doom and gloom reports recently circulating in the media. No doubt the owner of the second property was rubbing their hands together in gleeful expectation.
Three weeks later and the second home was auctioned, however this time, the event only attracted a small crowd of neighbours. With no evident interest from the crowd, the home passed in on a vendor bid for $1,625,000 and remains on the market today.
This tale is far more relevant to property buyers than the frequently referenced statistics. There is no fast and hard rule to what will attract one buyer to pay above current assessed value or a second to turn their nose up at the same property – as the well known saying goes: “Beauty is in the eye of the house buyer” – and ever more so in a market atmosphere where turnover is arching back to that of the late 1990s.
However, the number that will feed into the median statistics is the boom result – thereby inflating the median data. Considering the above story is a common function of a sluggish market, where only the “best” homes attract healthy demand – a rise in the median indicates precisely this – and is not necessarily an emerging trend of market recovery.
The same applies to the two properties in Hampton. I could give you a number of reasons why the first property attracted four bidders and sold for a boom price in a dwindling market atmosphere – however I won’t be assessing the stats. I’ll be looking at the property, location, buyer interest, historical performance, suburb profile and potential for future development.
As for the average home buyer, well the statistics may indicate whether it’s a buyer or vendor market, however they’ll give little clue to the current value of a property aside perhaps an inkling of overall sentiment. Similarly, a valuer will give statistics just a passing thought when completing a sworn valuation – assessing recent comparable sales is obviously a better property specific indication.
Until overall turnover markedly improves and the clearance rate – which broadly indicates the heat in the market – rises and stabilises consistently week to week you may as well give microscopic monthly, or for that matter quarterly, statistics little more than a cursory glance.
Over the past few weeks there have only been around 350 properties auctioned in Melbourne – approximately half the usual numbers we experience. Therefore, a relatively low number of “extra” sales occurring from one Saturday to the next obviously affects the clearance rate percentage to a greater degree than it would had there been 600 properties auctioned.
So does a jump in one week’s clearance indicate market recovery? No. Rather, it represents the particular composition of “good” properties available from one week to the next. Similarly, a rise or fall in the median house price in any one month when turnover is so terribly low, indicates little more than a monthly blip on the radar. As you can see from the Hampton example cited above it is possible to achieve growth in a flat market. However, it simply reiterates the rule, you have to buy well, to sell well.
Market research is important, however it never accounts for individual circumstance and neither is it sight for the blind. There are always risks associated with any investment, however property isn’t an item to be traded like stocks and shares. It’s a vital commodity essential to our very survival. Therefore, prior to any purchase put aside the market commentary and weigh up the risks carefully.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm" style="outline-style: none; outline-width: initial; outline-color: initial; text-decoration: underline; color: #6888b1;">The Circle</a>.
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Property statistics: What they reveal and what they conceal

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There may be some reservation involved when it comes to census time. Handing over details such as family income and household budgets when you’ve got no idea where the data will go once it’s been collated understandably causes hesitation. However, I have no qualms – I’m one of those annoying people who will fill out the form online before the hard copy even hits the doormat. The results simply fascinate me. They provide a wealth of information for property investors, home owners, renters, and just plain nosy citizens wanting to gain perspective on where we stand in this broad, diverse society of ours.
The results however are hardly surprising for most that keep track of price movements and pressures of affordability.  Despite the recent downward spiral in property prices, housing – particularly along the eastern seaboard – is becoming increasingly unaffordable for a large proportion of young residents.
It’s therefore no surprise to see the numbers renting across the nation increasing from 27.2% to 28.7% since 2006, with yields up by a whopping 50% (and up as high as 77% in Western Australia).
Click to enlarge
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The figures reported indicate 34.5% of 30- to 39-year-olds now live in rented accommodation and clearly struggle to save a deposit while servicing rising rental costs. Wage growth for the vast proportion of ordinary folk simply isn’t keeping pace – particularly if you haven’t got your foot on the ladder in the first place.
It’s not a case of home ownership being out of vogue, given the option between renting for life or owning, most would choose the latter. However, the debt-fuelled inflation that spiked property prices prior to the GFC, along with poor planning for population growth and other policy initiatives such as first-home owners’ grant – often laughably promoted as “aiding” housing affordability – have in turn pushed ownership off the table for a growing proportion of young residents.
Along with this data, outright home ownership is also declining. Families with children in particular are suffering – recording a decrease in their ownership rate from 79.5% to 77.2%. Other reports suggest, had ownership percentages stayed at the same level as the “peak” recorded in the 2006 census, we’d have welcomed an additional 34,000 into the property market and yet meanwhile, we hear our leaders proclaim their intention to increase the number of home owners, because if nothing else, it makes good policy speak.
The question seems to reside around whether, as a nation, we have a responsibility to provide ownership as a national right for all (importantly, low-income families) who hanker after the great “Australian Dream”. In truth, more than expressing it as such, it became viewed as such after World War II. Along with this came a range of policy initiatives intended to assist low-income households gain finance expressly for the purpose of obtaining a foothold on the property ladder. The uptake was naturally and predictably followed by a series of boom cycles buoyed on by investor speculation as most came to expect they’d retire with a property or two worth substantially more than it had been when first purchased.
However to afford the luxury of ownership, Australia’s household debt as a percentage of disposable income has sat stubbornly at around 150% for the past five years. For those unaware, this is the highest in the world.  Back in the early 1980’s, during which home ownership levels were 70.1%, household debt to disposable income was only 50%.  You can try and justify the data all you like – stressing income growth, lower borrowing costs and so forth, however it doesn’t take away the physiological impact and significant risk employed in holding such high levels of debt against residential housing – particularly in light of the GFC’s catastrophic effects both in Europe and the USA. However, from Australia’s current prospectus, a crash of similar proportions is something we’ll hopefully avoid.
So are we on our way to becoming a rental nation? Well, according to the stats, yes. Should ownership rates keep dropping at the same rate, in some 80 years’ time, 50% of Australia’s population will be living in rental accommodation – it’s hardly encouraging, is it?
 
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An OECD report released mid last year indicated Australia is one of just five developed countries where ownership rates have fallen (along with Greece, Mexico, France and Luxembourg). However if you assess the data on a deeper level – we’re not just on a slow transition into a dominating rental market, you could equally argue we’re fast transitioning to a wandering nation of people with no fixed abode, as it seems the number of rooming houses in Melbourne alone has increased fourfold since 2006.
According to Professor Chris Chamberlain of RMIT University, there’s been a 236% increase in the number of people living in this type of accommodation since the last census. Rooming establishments are “homes” that house the most venerable – one step up from sleeping on the streets – and this data alone should wave a red flag of distress on the horizon of our sunny “lucky country” portfolio – a country with a mere 5% unemployment, loosely termed as “zero unemployment”. I should perhaps also point out that in some states, rooming and community homes are not required to meet any particular standard. Inspect a few and it soon becomes clear that comparative to Australia’s accepted standard of living, they’re “slums” for the poor.
It seems crazy that we’re in such a position considering the census data also indicates a significant rise in vacant homes – homes sitting empty, untenanted, unoccupied.  It’s worth noting, the rise from 10.4% in 2006 to 10.7% in 2011 would also include homes being renovated, sold, holiday homes, and those unoccupied on the night of the census, however there would also be a large proportion sitting vacant for no good reason, either being “land banked” or standing derelict, with little incentive from government to encourage repair.
All this aside, the total number of unoccupied dwellings officially stands at 934,471 and considering they are not all one-bedroom dwellings, this is more than enough to house Australia’s homeless. I’m not suggesting we force owners to open the doors of their empty properties to all and sundry, I’m simply stressing that the rising homeless figures sit at the bottom of a long spiral that stems from years of increasing house prices and rents, which in turn has pushed a growing minority further and further away from the security owning their own home can provide.
As for current stock on market, well SQM has June’s national total up 1.7% to 386,857 – with Hobart and Melbourne showing the biggest yearly increases at 29.4% and 27.7% respectively. For any home buyer currently shopping in inner-metro localities – areas commonly referred to as the inner and middle suburban rings of our capital cities – the levels of stock mean little. This is because the buyer market is not shopping for roof space, they are searching for quality accommodation that is suitably situated for their family’s needs. In the established suburbs, property fulfilling the current needs of home owners is not thick on the ground – especially considering most are looking with a cautionary eye on personal finance.
There was a heated Twitter debate the other week surrounding RP Data’s figures for the month of June, which indicate a rise in Melbourne’s median house price by 1%. On the back of this, REIV figures have also indicated a modest rise of 2.9% in Melbourne’s median house price for the month of June.  It’s worth noting, a rise in house prices of any percentage is not necessarily indicative of the health of the market.  Overall turnover in Melbourne – the number of sales that keep agents working, builders building and the industry as a whole ticking along – is year to date lower than it has been for the past four years. To push the point home, from an outside perspective, you could look at the worst period of the GFC in 2008 and 2009 and herald it Melbourne’s ”good times”.
However, despite the sluggish turnover rates, a rise in the price of properties that are selling would not be inconceivable. As a snapshot example, I attended five auctions this past weekend, all of which sold under the hammer with heated competition. Furthermore, all were pushed to the top end of the advertised range.  It all boils down to the one thing – the shortage of affordable stock buyers actually want to purchase.  As a case in point, the auctions I attended were: 
<ol style="list-style-type: lower-alpha;">
<li>Well positioned (inner- and middle-ring established suburbs);</li>
<li>Represented the best of their type from options currently on the market; and</li>
<li>Were priced appropriately for market sentiment within a $350,000 to $800,000 price range (covering most dual-income households).</li>
</ol>
This aside, for a number of reasons – some of which I’ve touched on above – we have an overall reduced number of buyers in the market. However, those actively looking feel under no pressure to settle for subpar properties while the market is predominately flat. I’ve fielded an uncommonly high number of calls from developers this week seeking assistance to shift stock in outer suburban estates.  One in particular told me he’d had only one sale in three months and was now close to bankruptcy.  However despite this, the irrationality of building on the fringe continues. When will governments learn to get the infrastructure planned and financed before building their “Noddy” estates. As I’ve stressed before, every home buyer and investor survey ever conducted into housing pinpoints “good access to public transport” top of the priority list.
Although “following the population” it’s not a sure-fire way to property investment success – as I’ve addressed previously. It seems sensible to assume that a large influx of residents into one state another would indicate the potential increase in demand comparative to supply – which as we’re all aware, has an upward effect on property prices.
The census shows Western Australia is the fastest-growing state, with a whopping 14.3% of people taking residence there, no doubt buoyed on by the mining boom.  If you do a breakdown of population increases in the top 20 municipalities across Australia, 85% of them are in WA.
Not surprisingly, the mining towns in particular are suffering their own mini property boom with a population growth that can only be described as “spectacular”. According the census, the Shire of East Pilbara leads the way, housing 7,900 people aged between 25 and 44, 3,000 of which have moved in from other states – principally for the work and weather.  Of course, when the “gold rush” ends, prices in the mining towns in particular will drop.  However, historically the east and western states of Australia have always been somewhat out of sync when it comes to growth in houses.
WA in particular is coming out of a five- to seven-year period of stagnation during, which Melbourne and Sydney experienced unprecedented pre GFC growth – it would therefore not be surprising to see Melbourne and Sydney undergo their own extended flat patch as WA takes the lead in price growth. Whichever way you look at it, investors shopping in the eastern states need to be exceptionally picky with their purchases if they want to make the most of any marginal gains in the short to medium term.
Finally, the most common question I get asked is “when will the market recover?”  Well, you can digest the economics – analysing GDP, interest rates, construction data, household finance, as much or as little as you like. However it’s our politicians who have the real power when it comes to dictating market movements.  Policies such as restrictions on foreign ownership, negative gearing, town planning, grants, incentives, stamp duty and so forth play an increasing role in overall market sentiment and consequently how we choose to spend or save our money. At the bottom of it all is confidence – it’s the vital ingredient that reduces the feeling of risk while underpinning a sense of direction clearly defined by our leaders.  Therefore, if you’re looking for a recovery – look first for an election, because until we have confidence in our politicians, we won’t gain overall confidence in the market.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a>.
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If you're looking for a housing market recovery, look first for a federal election

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You may have seen various job listings advertising a job in real estate as a sales agent.  They are usually adorned with wording to the effect of:
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<li>Want the chance of earning $100,000+ in your first year!?</li>
<li>Passionate about real estate?</li>
<li>Like working with people and have great communication skills? </li>
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They are all questions most of us would be able to answer with a positive response. 
After all, everyone wants to earn a healthy wage.
Nearly all jobs require good communication skills, and as for a passion for real estate? Well, it's quite simply essential to our daily needs!  A place for shelter, but also a place to express our territorial instincts, adorning our homes with elaborate renovations played out in both reality and fantasy – either with a trip to Bunnings or through the guilty pleasure of watching one of the many top-rating renovation shows on TV. However, what is the life of a real estate sales agent really like?
Does it live up to the hype?
Is it possible to earn wages in excess of $100,000 working for your passion, while at the same time enjoying working in the community? Well not surprisingly like most jobs, the fantasy is hardly representative of the experience.  It’s well known most people have a low opinion of real estate sales agents. There’s even an ad doing the rounds that states: 
''My son is dead – well... he's a real estate agent.'' 
Sales agents are branded as untrustworthy and “slimy”, driving around in their fancy cars, which many imagine have been purchased with overly fat commissions taken from innocent vendors for what most perceive to be minimal work. 
So I thought I’d break from the norm this week and take a look at the reality behind the life of a sales agent, because once again we’ve had the annual Readers Digest 2012 list of most trusted professions released on which real estate agents barely make the cut above car sales people.  In fact they sit just one step above sex workers, which leads to the question: “why would anyone take their clothes off in front of someone they trust less than a real estate agent?”
Having worked as a buyers’ agent for many years, it’s not uncommon to get many customers signing up for the service simply because they don’t want to deal with the sales agents.  For the buyer at least, when they meet a sales agent, there’s this uncomfortable feeling they’re “out to get you” – or at least empty your wallet.  It was interesting to see an article in New Zealand’s <a href="https://www.stuff.co.nz/sunday-star-times/latest-edition/7160120/Agents-fear-home-truths" target="_blank">Sunday Star Times</a> debating whether sales agents should be required to tell the truth when representing a property to buyers. In the article, Helen O'Sullivan, chief executive of the Real Estate Institute of New Zealand, was reported making a submission to Parliament that the: “Consumer Law Reform Bill could cause ‘confusion’, rather than protect consumers”.   
It follows the premise that sales agents may not always know the truth regarding a listing with one of their agencies.  However, no one’s asking an agent to convey information they don’t know.  Even if a piece of information relayed to them by the vendor is false, it’s not lying to pass it on – it’s down to the buyer to conduct their own due diligence when it comes to assessment.  After all, few would consider splashing a couple of grand out for a flat-screen TV or laptop without doing a comparative analysis of competing offers.
Thankfully – in Victoria at least – the Estate Agents (Professional Conduct) Regulations 2008 - SECT 11, states
<a href="https://www.austlii.edu.au/au/legis/vic/consol_reg/eacr2008464/s11" target="_blank">“An estate agent must at all times act fairly and honestly and to the best of the agent's knowledge and ability in the performance of the agent's functions as an estate agent.”</a>
All this aside, all you really need to understand as a consumer is: the selling agent works for the vendor. While you won’t get lies, you won’t get the “negative” side of the story, either.  No property is perfect – beauty is firmly in the eyes of the beholder – however the sales agent is there to represent the positive, not to point out the flaws. 
Is it worth coming bottom of Readers Digest polls? 
Well for some, the answer is undoubtedly “yes” – however easy it’s not.  There’s no doubt sales agents are somewhat compromised through the “commission only” model – or even the current alternative “flat fee” model.  After all, they’re not going to get paid unless they sell the property – even if that means a little “vendor crunching” along the way – and in truth, most vendors have high expectations.  What’s the alternative?  Perhaps a “pay by the hour” model – pay for service, and take commissions out of the equation. 
To last the road, a sales agent must build trust with their vendors.  Without it, building up a referral database (the main source of business for any agency) would be impossible.  Therefore, existing on a roll call of needless exaggerations is simply not a reasonable strategy no matter what the perception. 
Not only this, the common perceptions of real estate agents not working hard are far from the mark (at least for those who desire to be successful). I've often pondered that the advert for employment as an agent’s representative should begin: 
“Are you prepared to give up your weekends for the foreseeable future?” 
Because a career in real estate - especially when you start – will ask you to do precisely that!
Saturday's will be spent opening houses, conducting auctions (especially if you live in Melbourne or Sydney), trying desperately to tie up a deal so you can report a positive result to the boss during the traditional Monday morning sales meeting. But it's not just Saturdays you'll give up.  Many vendors also expect their agents to be on hand Sunday as well!   This means while everyone else is kicking back spending time with the family in shorts and thongs (well, in the summer months anyway!), the local agent will be standing in suit and jacket – rain or shine – donning a smile and welcoming house shoppers and nosey neighbours who only get the weekends to take a squiz at their short list of homes. But don’t agents get a week day off to compensate? 
Well yes, most do, but bear in mind while the agent may have a week day reprieve, it doesn’t mean the phone will stop ringing!
A real estate agent’s business is largely conducted over the phone.  Friday may be their day off, but no one else will know it.  You may think an agent should just turn the phone off? It's very hard to do when you work in a job solely reliant on commissions.
Turn the phone off, and the buyer calling may decide to contact someone else in the office about the house they're interested in. If so, you won’t get the commission should they purchase. 
And even worse – what if it's someone calling for a “free” market appraisal – a potential seller? Well that’s a call you can’t afford to miss.
 As for the open home, well merely conducting the operation is a joy to behold.  Most agents have as little as 15 minutes to get from one listing to another and against all odds, they can't risk being late! (Not an easy task for anyone who may have noticed that weekend traffic is often worst than that during weekdays.)
The vendor is essentially the agent’s boss, so they won't be happy if the agent doesn't show up for work on time.  Especially when they’ve spent the last three hours scrubbing and cleaning in an effort to create a show home masterpiece – all for the sake of a 30-minute open. 
Should an agent dare to leave more time in between opens, once they get to open number nine, they’ll be an unhappy vendor wondering why their property is not being opened until 5pm, when everyone else has knocked off for the night. 
The 15 minutes must also include finding a parking spot at each end of the street and popping the “open for inspection” boards out (if you live in an area that allows them).  For the sake of timing this often requires stopping mid road switching the emergency lights on whilst struggling with a board flapping in the wind. 
Struggling with the keys ,setting out the brochures and switching all the lights on – more often than not, with a queue of impatient buyers waiting outside to hand out names and numbers (which often turn out to be false) is another “perk” of the job. 
As a sales agent, you’ll have to don a permanent smile while at the same time, pretending the train line running so close behind the house that the whole place rattles as it passes isn't really a negative because you can't hear it when the windows are shut and after all – it’s so handy being close to the station! 
Situations like this are all part and parcel of the job.
 
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 Nor does an agent turn off in the evenings.  Work hours prevent most buyers from conducting private inspections during daylight hours. Yet if they're interested enough to purchase a property, a private inspection is often a must. This means the agent will be required to work late – long after other workers have clocked off. 
 
The agent’s mobile phone number is present on every advert – and most agencies will require the agent to use their existing mobile for business (few provide an office phone) therefore it’s also their personal “out of hours” number. 
Most of us wouldn’t give out mobile numbers unless it was to a personal contact – someone we generally wouldn’t mind contacting us out of hours.  However an agent happily hands his number to hundreds of people each week knowing full well there’ll be a proportion of those buyers who’ll take full advantage of the privilege. As I said earlier – it’s all well and good turning the phone off – however miss a call and you risk missing potential commission from an active purchaser or seller.
But let’s get to the crunch – what about the $100,000+ a year wage?? Contrary to popular belief, most sales agents are on no more than $60,000/$70,000 a year, and when they initially enter the business, the starting wage is more like $30,000 to $35,000 per year.  This is because an agent typically works for a minimum retainer, which when I last checked is little more than $500 per week. 
The retainer must cover most expenses, including a smart car and expensive-looking suit – (a well accepted requirement in the industry to at least give the impression of professionalism and expertise.) Therefore it will come as no surprise to learn many agents’ cars are leased, not owned, and the younger ones (in their 20s) usually still live at home.
As for the retainer, well in essence it's little more than a loan. Once a commission is earned, any wages received in the interim will be deducted before it's handed over to the agent.  Remember sales commissions aren't commonly paid until settlement, therefore the lag between the accrued retainer and commission can be a number of months. Average commissions differ from state to state and seem large to the home owner who often hands in excess of $10,000, $20,000 or $30,000 to the agency upon settlement. However the sales agent only receives a small proportion of this – often only 2,000 or 3,000, therefore considering the hours they work it's not all that great. 
Furthermore – when an agent initially starts his career in real estate, it’s not unusual for it take up to and beyond a year to consistently earn in excess of the basic retainer.  Any hint of a $100,000+ a year salary is firmly reserved for those who’ve weathered through five years or more in the industry, building up contacts and often working seven days a week in the process.
By far the greatest fear for an agent is the whiteboard at the back of the office that shows what each agent has sold or listed for the month. 
If an agent falls behind on expected output, the director will start to question his use to the agency.  An agent can be sacked with as little as two weeks’ notice if the boss doesn’t think he’s “paying for his desk”. 
Yet real estate is a competitive business.  It may be easy to pick up listings for the agent who's worked in the industry for a period of years with a substantial database of contacts.  However for those starting out, often the only way to get in front of a seller is to literally walk the streets.  Knock on doors, post leaflets through letter boxes, while avoiding those with “No Junk Mail” signs for fear of upsetting a potential vendor. 
Every enquiry an agent receives from a potential buyer will be followed with the desperate and hopeful question: “Do you have a home to sell?” “Do you require a ‘free, no obligation’ market appraisal?” 
Anyone entering the business better have a thick skin to combat all the angry responses and disappointments. 
Real estate sales is a highly competitive industry – especially in inner-city precincts.  When the initial free, no obligation market appraisal is booked in, most agents will be up against at least two competitors.  With the fear of the whiteboard ever present in mind, it's no wonder one agent will aim to promise more than another when it comes to their estimation of the homes potential sales price (commonly known as “buying the listing”).
Once the vendor has signed on the dotted line, the real work begins. 
The agent won't get paid a cent if she doesn't sell the property – therefore encouraging the vendor to “meet the market” (known in the business as “vendor education”), no matter what was promised prior to the contract being signed, is, of course, common practice. 
Should the agent’s authority period run out on the contract (the period of time the vendor has given the agent to sell the property) before she’s managed to get both the potential buyer and seller to agree on price, then the sales agent will get nothing! 
As for holidays, in the world of real estate they are few and far between.  Aside from the odd long weekend or Easter break, the main holiday period in the real estate industry is Christmas.  It’s the only time an agency can acceptably close. 
Therefore, in the run up to Christmas agents will work harder than ever to wrap up sales and line up potential listings for vendors not making the pre-Christmas deadline. 
The last thing an agent wants is a property looking tired as it hangs on the internet over the festive break slipping further down the default search list on realestate.com.au. 
Furthermore, they'll want to collect as much commission as possible for their own festivities, therefore, a deal done prior to Christmas means extra dollars in the holiday bank account.
All in all the life of an estate agent is a tough one, and only really rewarding for those who truly love, live and breathe property (and there are a few!). 
The real dollars come years down the line once the hard yards have been walked and the reputation of ‘experience’ earned. At that stage, the agent in question is often established enough to afford a PA to conduct the weekend opens and answer all enquiries. 
Therefore, next time you pop through an open home, spare a thought for the agent, who sits at the lower end of most people’s perceptions, yet lives a reality very different from what you may perceive. 
All this aside – we still have to ponder if such extreme commissions are worth the work involved?  The agent may not get the dollars involved, but the agency does – and it’s no small amount.  At some point the whole role of a sales agent is going to have to be re-assessed if they’re to claim back respect from the broader community.  Perhaps “pay for service” is the way to go after all?
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a>.
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The unglamorous life of a real estate agent

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You can read all the statistics and analyse as much data as you like, but there’s no getting away from the fact that Melbourne’s marketplace is a “mixed bag”.  One set of stats will indicate a market upturn (RP Data, for example, which has recorded a 1% increase over the month of June) and another will indicate our market is still in the doldrums with clearance rates dwindling below that of the previous three years.  However, for home buyers, once they find their “ideal” house, stats go out the window and it all depends on the property.
I’d predicted a repeat of last year’s finale disappointment for The Block 2012 – after all, one place the stats all agree is on the current malaise in the million-dollar-plus market.  All agents had conveyed there was active interest in the South Melbourne terraces, however when I attended on the day, I had little conception they’d be such a high level of genuine interest. A similar number registered to last year, however unlike last year, clearly many weren’t there just to get their faces on camera.
Unlike shares, each property has to be priced on its own idiosyncrasies.  Estimating the selling price employs a number of factors, predominant of which is buyer demand. Despite the figures still indicating we have a large amount of stock languishing on the market, those numbers are being boosted by high-rise accommodation or homes in the outer suburbs – areas and properties that only attract marginal buyer interest.
Arguably, there’s not a lot for the average home buyer to choose from in the inner- and middle-ring suburbs, therefore if you do find something of quality – assuming vendor expectation is comparable to market conditions – the level of demand will be the primary indicator of the eventual selling price.  With this in mind, the first key to the success of this year’s auctions lay in the reserves, which, – including Brad and Lara’s property – had been set “under” assessed market value. Obviously Channel 9 was hedging its bets against a repeat of last year’s result
Like every other bidder attending the event, I queued up to retrieve my bidding card and conversed with others buyers who were participating on the day.  Many commented that they hadn’t assessed the contract prior to attending.  Ask conveyancers or solicitors, and they’ll confirm most contracts hit their desk after an unconditional offer has been entered into.  With so little due dilligence taken with the legal documentation, it makes you wonder how much was done in assessing reasonable market value?  The numbers registering were meant to be around 20 – however it turned out to be closer to a cosy 60.
Brad and Lara’s terrace at 405 Dorcas Street was the winner, selling for $1,629,000 with a profit of $506,000 on reserve.  The property had 3 bedrooms, 2 bathrooms, but no off street parking. The land size was the largest of the four – approximately 158 square metres.  A search through comparable sales in South Melbourne featuring the same number of bedrooms and bathrooms of a similar quality situated on roughly the same land size, and you’d be hard pressed to justify a price in excess of 1.3 million.  Furthermore, the best comparables are arguably in superior “pockets” to Dorcas Street, which carries a fair bit of traffic.
It’s yet to be seen if the properties were purchased for investment – if so, I’d suggest they’ll be a long wait until they gain on the capital outlay.  Stamp duty rates alone push the price for 405 in excess of 1.7 million.  For the same price, you could purchase a similar property in a better pocket on a larger land size.
 
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Leaving aside individual home buyer preference, which can never be accounted for conclusively, the other three-bedroom terraces, 403 and 401, had a slightly smaller land size, giving the renovators a greater overall challenge in attracting a similar level of demand. However all achieved prices in excess of comparable value – even when you take the additional furniture into account.
The property at 407 Dorcas Street was the only four-bedroom terrace, and it “flew” at auction.  It was hard to count the number of bidders due to attempts at online bidding made available by Channel 9 for those not brave enough to openly raise a hand.  However, the online attempts could not keep pace with what was happening “in house”, with bids coming in from every corner and a price that exceeded the reserve on the opening bid.
The four-bedroom house arguably had the best floorplan and presented the best overall value for the money.  However, as I stressed previously, beauty is in the eye of the home buyer – especially in highly renovated homes.
Had one sold without the others, it would be arguable whether a valuer could justify the cost – thankfully all four achieved a consistent result.  Therefore each has three immediate under the hammer comparable sales for a valuer to work from.  But for anyone thinking it’s easy to “flip” a house, covering costs plus profit, the quote of the night must go to the Buxton auctioneer who commented toward the end of the bidding on Brad and Lara’s terrace: “I know what they spent the property, and we’re still under cost.” His comment didn’t faze the buyers, they still paid far in excess of what most would assess to be comparable market value.
As for Mr “Energy Watch” and his erratic bidding?  Well look at it this way.  He had 15 minutes of free advertising on the largest-rating TV show in Australia.  The cost of this alone would have been in excess of $1 million.  “Energy Watch” was not only trending on Twitter, it hit the headlines on every national media portal following the show.  Take all this into account and I’d suggest he got cheap advertising and a “free” house thrown in on the way! A house he could probably still sell to the under bidder should he decide to do so.
The room was laughing at him from the opening bid onwards and auctioneers, who are generally used to receiving round numbers, were somewhat stumped in their bemusement.  At 407, his initial bid (already past reserve) went unheard at the back of the room.  Therefore the opening number was followed with a bid of $920,000 from an online participant.  Once again laughter predominated. He obviously felt his unique approach was enough to faze the other participants and in this matter, his inexperience shows.  Furthermore, the online bidding was always one step behind – failing in every respect to compete with the pace. There’s a long way to go before this approach becomes the norm.
All in all, the success of this year’s finale compared with last year, I’d put down to a few factors.
Firstly – the properties were not situated opposite a multi-storey car park, supermarket and bottle shop.
Secondly – the auctions took place during the day “in house”. This meant the co-ordination between each was better managed.  Cameras moved from property to property, saving a multitude of bidders the pain of sitting through all four auctions, which last year took in excess of four hours to complete.
Thirdly – South Melbourne is a different location in every respect to Richmond.  Although the terraces were not in the best pocket of the suburb, they were situated walking distance from Melbourne’s CBD and Albert Park Lake, which clearly holds extra desirability to the average home buyer.
Finally – they were better properties!  Offering views (rooftop terrace), thee and four bedrooms, and larger living areas, they therefore attracted a wider buyer demographic.
We can only bow our heads to this year’s series and say “well done” to Channel 9’s The Block – an outstanding and unprecedented result in a downbeat market – and a wonderful success for the contestants who worked so hard to entertain us along the way!
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a>.
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The Block 2012 auction success proves that you cannot predict home buyer interest

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Balancing a real estate market is not an easy task.  Too much supply and prices fall – too little and they rise. Over time, various incentives – negative gearing, grants for first-home buyers, reduced stamp duty rates for off-the-plan sales and new homes, have been introduced, changed, and intermittently withdrawn by government “movers and shakers”. All have the effect of falsely influencing consumer demand one way or another.  Sometimes it’s done in favour of the investor, sometimes the home buyer, however in most circumstances it results in price increases rather than the opposite.
As the RBA is well aware, it’s a fine line you tread when it comes to maintaining stability. It takes careful analysis of a broad range of data and an intrinsic understanding of various micro markets before decisions are made.  However when it comes to the property market, state laws seem to dictate their own agenda, not to mention the federal government stirring the pot whenever it’s time to collect more revenue.
For example, when the budget came out, Wayne Swan saw fit to remove the 50% CGT discount – previously available for non-residents who have held property for a 12 month period or more – with no warning and a little addition added to “honour the discount in relation to any existing accrued capital gains ONLY if the non-resident obtained a market valuation for the asset as at May 8, 2012”.
<a href="https://www.propertyobserver.com.au/overseas/budget-cgt-change-could-be-extremely-expensive-for-expat-and-offshore-investors-michael-matusik/2012051454689" target="_blank">As Michael Matusik correctly pointed out earlier this year</a>, the sudden change will reduce demand from foreign and expat investors.  Considering most offshore purchases of property are new home or off-the-plan sales, it will adversely affect construction resulting in further stagnation of supply concentrating demand on existing dwellings.  GFC aside, metropolitan property prices in Australia are counted amongst the world’s highest. Therefore it’s vital we plan our cities effectively if the aim is to keep real estate affordable and reduce inner-city inflation in the established housing market.  It’s something our governments have yet to achieve – as analysis of boom/bust housing cycles prove.
Encouraging broad-based investment with policies such as negative gearing, which incites investors to enter into the established housing market rather than the “new home” market, do nothing to increase the supply and stimulate the many retail offshoots that benefit from construction. However it’s vital we do so if we value our ethical responsibility to provide enough affordable choices for home buyers and also magnify the supply of rental accommodation.  As the recently released 2011 census data shows, the national median weekly rent has risen 50% since the last census in 2006.  Not surprisingly there’s also an increase in the number of households getting stuck on the rental ladder, with 10% paying in excess of 30% of their income for the privilege.
Those in favour of negative gearing always base their arguments on the historical data, which proved a rise in yields in Sydney and Perth when the policy was withdrawn during the Hawke government in 1986-1988.  There are a few issues with this – firstly, the policy changes were not in effect long enough for a reasonable adjustment of market demand to be established.  For example, due to a very low vacancy rate at the time in both Sydney and Perth, rents naturally rose.  It’s worth noting – as others have done, including Saul Eslake, on numerous occasions – that rents did not rise nationally and in Melbourne, growth actually slowed.  If the market had been allowed to adjust to the changes, the consequence would likely have eventuated in investor demand decreasing in the established market, levelling the playing field somewhat for first-home buyers to gain a foothold.
It’s also worth noting at the same time the policy was withdrawn, the Hawke government encouraged the supply of new housing by the introduction of:
“Accelerated depreciation for new buildings or major renovations in order to create more rental property and more opportunities for renters”. (Keating, 1985).
Unfortunately, two years of changes were not enough to monitor the success or otherwise of the plan.  Lobbying from the real estate industry and investors, who had previously benefitted from the scheme, resulted in political back-pedaling.  All in all, it was badly handled.
No other country has such generous negative gearing policies as Australia when it comes to property investment.  Yet investors don’t leave these markets in droves.  With the policy as it stands, there is no limitation on the number of residential homes a single investor can claim against.  Consequently, we see large property portfolios acquired by a smaller percentage of the population who benefit most from reducing their tax burden and consequently, less supply for the majority market.
We need a phasing back of the current policy while at the same time planning outer-suburban and rural/regional growth with infrastructure – if not already established, then at least approved and funded – to ensure we continue to provide feasible options for home buyers and not just vacant dwellings in paddock lands.
While we will always need property investors to assist the supply of rental accommodation, for those unwilling or unable to purchase, property should not become a speculators’ domain.  Over-investment in property markets drives up demand and consequently prices, resulting in higher rent – not lower.  Rather, property’s prime function as an abode for shelter should be respected in so much as any policy is aimed at making it an achievable option for our growing populous.
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However, it’s not just distortion from negative gearing that has negative effects on property prices.  The other initiatives I mentioned at the start of this article, such as the first-home owners’ grant, have done their fair share to ramp up debt in Australia’s residential market.  For example, I was recently asked to negotiate on a property that was purchased late 2009, when the first-home owners’ boost was available.  The one-bedroom unit in question was acquired off the plan, therefore, when reduced stamp duty had been taken into account, along with federal and state incentives, the owner would have benefitted from some $30,000 ‘saving’.  However – even taking into account comparable sales during the same period when purchased – the asking price at the time was easily $30,000 in excess of what it should have been – arguably even $50,000 in excess. Three years later, and the owner of the property in question never moved into the home due to a change in circumstance (boy meets girl).  Consequently – the property is “as new” – never lived in.
The documentation provided in the vendor statement shows the mortgage still owing on the home (in excess of 80%) remains above current market value.  Clearly the grant did little to help this vendor purchase – it simply helped him spend above and beyond what the commodity was worth and landed a first-home buyer – now starting a family – with a debt burden he won’t be able to resolve with a quick sale.  It’s one of the more interesting examples of many similar stories I come across monthly.
Despite the many incentives offered under the guise of “helping affordability”, Australia’s household debt-to-income ratio has accelerated to a little under 150%.  Perhaps it’s time to admit that the intention in the first place was not to assist affordability at all. Rather they were introduced to “prop up” the property market subsequently encouraging a greater debt burden. Considering the tax revenue governments receive from the housing market it’s no surprise there’s a fear of any natural reduction in demand. Stamp duty – taken under the guise of covering “transaction costs” – is without doubt an extortionate tax albeit a major source of revenue.
The question of how/if to replace it has been debated for years, however as Andrew Leigh MP noted in 2009 observations on the <a href="https://andrewleigh.org/pdf/StampDuty.pdf">“impacts of stamp duty on housing turnover"</a> show a <a href="https://andrewleigh.org/pdf/StampDuty.pdf">“10% increase in stamp duty lowers turnover by 1-2% in the first year, and by 4-5% if sustained over a three-year period.”</a> The reluctance to sell due to stamp duty charges has the potential of encouraging a “mis-match” between the type of property and family size.  It’s doubtful we’ll see any short-term answer to housing tax reform, therefore other strategies to improve affordability and create a greater supply of residential housing and supporting infrastructure are required.
Despite all the handouts, incentives and abundance of market meddling, we’re no closer to solving Australia’s housing problem than we were decades ago. As the 2011 census shows, Australia’s population has grown by nearly five times over the past 100 years and yet the vacancy rate for the last 30 of those years (the true guide to the housing shortage) has never exceeded 5%.
No one likes the idea of losing equity in their principal place of residence, however there’s a reluctance to accept that the pre-GFC relatively long-lasting boom in house prices is no longer a feature of Australia’s real estate terrain. RBA governor Glenn Steven’s has twice sought reason to warn us about, once in 2010 when he stated:
"I think it is a mistake to assume that a riskless, easy guaranteed way to prosperity is just to be leveraged up into property. It isn't going to be that easy,"
And <a href="https://www.propertyobserver.com.au/economy/the-rba-s-glass-half-full-chart-presentation-to-the-prime-minister-s-global-economy-forum/2012061255091">more recently in his “Glass Half Full Speech”</a>, when he stated that the return to confidence we don’t need is;
“The kind of confidence based on nothing more than expectations of ever-increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind.”
The RBA has made it clear it is not in the business of creating boom bust cycles.  However there’s an overall reluctance by state and federal government to take its fingers out the pot and stop feeding a beast that will forever require market meddling to prevent a return to what Glenn Stevens calls “building wealth the old-fashioned way” – careful saving and strategic long-term educative planning.  If it weren’t for the commodity boom propping up weakness in the economy, we’d have suffered the same demise as Europe. In such a case, Prime Minister Julia Gillard wouldn’t have been giving lectures to world leaders at the G20 summit – she would have been receiving them.
Market meddling in the housing industry is based partly on greed and partly on a broad misunderstanding of the policies needed to balance it for all – not just a few. As the 2011 census data has shown, home ownership is reducing, not increasing. We don’t need meddling in the housing market from those sitting behind desks – who don’t work daily with buyers, sellers and renters, and therefore have little understanding of housing market dynamics outside of ‘on paper’ data.
A healthy market is one that is allowed to rise and fall thereby establishing its own long-term trend.  The role of government should be to provide equal opportunity for all and not target policy initiatives on a select few. We need more than a CEO sleep-out, which managed to reach top trending spot on Twitter last week, to raise awareness of the fundamental need for affordable secure shelter.  There’s not a single country that has completely cracked the problem of homelessness, however I have great belief in Australia – one of the pioneers of democratic rights – as a country with abundant potential to do so.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a>.
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Governments must stop meddling in property markets – and negative gearing has to go

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One of the first generalisations you learn when it comes to assessing real estate is the closer you are to the city, the higher the price will be. While it may be a sweeping statement with data proving the rule has many exceptions, it simply outlines what inspires one buyer to value a location over another in terms of monetary value – and that’s time.
The time it takes to travel from A to B is the most important consideration for today’s property buyers rather than the exact kilometre distance from the CBD. If a buyer is able to travel to work, the footy and any other “lifestyle” amenity on the priority list within a 30- to 40-minute period, the desirability factor increases greatly and when it comes down to it, you can value a building any which way you like, but in the end it’s only worth what a purchaser will pay. Unless you get the time factor right, demand is always going to be marginal.
When buying residential real estate, the real commodity a home buyer will purchase is the lifestyle on offer. Dwellers don’t live in houses so much as they live in communities. Therefore, building ever more houses on the outskirts of our cities is not the be all and end all for Australia’s population growth – although it’s a vitally important component if we’re to ease inflation in the already stretched and strained established inner- and middle-ring suburbs. Regardless of this, unless planning includes the other considerations I’ve outlined above, the new housing market risks long periods of stagnation in between the various government incentives on offer.
We’re all aware Australia faces an affordable housing shortage. Prices have risen past the reasonable level when judged against the average wage, and first-home buyers are all but an endangered species. I’ve written regarding the reasons for this numerous times. Quite simply, we’re a country that has centralised itself on an urban lifestyle and overwhelmingly so in the major capital cities dotted around the coast line.
As a result, no one wants to live “out of town” (or at least the vast majority of Australia’s population don’t – some 75% of them) and we’re all trying to cope with a level of unprecedented population growth from in coming immigrants – all of whom seem to have a desire to live in the inner city. When it comes down to it, it’s impossible to cope with this growth unless density increases substantially – which is precisely what the capitals’ 2030 city plans have in mind.
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Thus far urban planners and profit-chasing developers just can’t seem to develop a standard of housing that will attract the average home buyer (or, for that matter, renter). Just take a look at this <a href="https://bit.ly/Lha9jJ">eyesore</a> (pictured above) proposed in the Asian-dominated middle-ring Melbourne suburb of Box Hill. The developer’s website states” “The proposed development is significantly higher than the immediate surrounds and its striking form will be a landmark for Box Hill”. A landmark for Box Hill or not, I can’t conceive anyone thinking it’s something property buyers would fight over. As I’ve pointed out on numerous occasions, the disadvantages of living in high-rise accommodation are the major factor in the lack of genuine home buyer demand they inspire.
 
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It’s usually only considered a desirable option when the buyer is in the higher price bracket able to choose an apartment offering attractive views – and considering the abundance of high-rise development proposed across our major capitals, this is anything but a guarantee for the life of the property. Parking – if you’re lucky enough to get it – commonly requires a long trip up multiple levels of a multi-storey basement car park and then in peak hour, a queue to get out as cars ahead filter onto the busy main road (most high-rise development is located on busy main roads).
In addition to this, residing in the same building with so many others makes resolving owners’ corporation issues a relative nightmare. To get anything approved obviously requires a majority vote. If you’re fortunate enough to have a good showing at the annual meeting there may be a chance of getting a repair or dispute resolved. However, owners’ corporation meetings are sparsely attended at most low-rise developments with fewer than 20 units – therefore a majority showing at a meeting for a high-rise development, within which most units are rented along with a high proportion of foreign ownership, is unlikely.
Waiting for the lift and as it stops on its way up and down. Paying extortionate owners’ corporation fees to cover the size and various components of design (which often include a gym, swimming pool and high level security features) – all add up to buyers choosing to sit on the rental ladder rather than buying into a development that they’ll move out of as soon as they’re able. All in all, high rise is not currently offering the home buyer market what they want. It’s principally servicing rental needs.
Having said this, there are high-density developments that are extremely successful and as a consequence, tightly held. Furthermore, it’s possible to develop models that are relatively “low rise” yet still take up a similar footprint, housing the same number of residents. Unlike high rise, where the outdoor communal areas are limited to rooftop gardens with space around the building (the required setbacks), which is generally unused, a low-rise design built around a central communal courtyard is a proven success. I can cite a few examples in Melbourne’s Southbank that attract consistent buyer demand and consequently when assessing the historical data, prove stable capital growth. Furthermore, the level of “perceived” density of a relatively low-rise yet high-density development, in comparison with residential tower blocks, is predictably much lower. There’s less overall impact on the street aspect for neighbouring homes and they are generally better received. However, regardless of the need to increase inner urban density, it’s also necessary to continue building a steady supply of new accommodation further away from our capitals if we accept population growth is inevitable.
Thus far, most first-home buyer schemes have focused on sweeping incentives that cover established real estate as well as new homes. Property advocates have long argued how essential it is to scrap incentives for established dwellings and if grants are needed at all – use them to fuel new growth. The “noisy” housing data when a grant is introduced and then withdrawn does no one any favors aside from the investor who manages to capture the wave when selling. We don’t need incentives to encourage the purchase of established real estate. The desirability factor is there already.
In the recent NSW budget, it was a welcome change to see all incentives pushed into new homes. The shortage of property in NSW is greater than that of some other states, so encouraging additional supply has been broadly welcomed by all. However, you’ve got to have some sympathy for the first-home buyers who do venture out buoyed on by the incentives because planning in the outer-suburban estates has been woefully unsuccessful principally for the reason I stated at the beginning of this article: time!
Despite all the rhetoric broadcasting the contrary, when new suburbs are zoned you can guarantee promised facilities to encourage commuters who need to get back and forth from the major commercial centres within the hour will never eventuate. Without them, you can forget any hope of attracting consistent demand to the outer suburban estates. Grants and incentives may produce a wave of growth in the newer suburbs, but as soon as the lifestyle – or lack of such – bites and grants are once again withdrawn, the market will stagnate and we’ll be back to square one.
If there’s no money set aside to build the needed amenities alongside the residential dwellings at the start of the project, you’ll always need to introduce incentives to encourage home buyers to make the move. It’s not the distance from the CBD – it’s the time. Buyers could accept outer-suburban living a lot more readily if they were able to commute within a reasonable time frame and demand would go up naturally without the need for a “sweetener”.
 
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It’s really unforgivable to encourage erosion of city fringes, eating into arable farmland and areas of natural beauty unless the compensation is a genuine answer to population growth. We all understand that if you purchase in the inner city land sizes are smaller and to keep around the city median, choices are going to be limited to apartment living. However, for most people there is no choice but to stick to established areas. If they do dare to venture out into “never never land”, they face endless hours sitting in peak-time traffic and a vague dream of the government-proposed promise of a train service.
We’re currently going through this yet again in Victoria. Aside from the abundance of poorly designed high-rise apartments popping up in the CBD, fringe growth is back on the agenda. The state government has released plans for six new suburbs and 12 new train stations. If you’re a first-home buyer reading that as a headline it sounds fantastic. However of the “12 new train stations”, only two have had funding approved. The rest – so says the government – will be part funded by developers along with additional infrastructure, all compensated with tax rebates. However, guess who’s going to end up paying if the developers agree to the above proposal (which I doubt will happen)? The home buyer, of course – it will all be added on to the already inflated prices!
Anyone familiar with Melbourne’s planning history will be able to prove how “airy fairy” the above proposals sound. For example: what happened to the Doncaster and Rowville train stations initially promised in 1890? Plans commenced in 1969, and yet residents are still waiting – not so patiently! Furthermore, once any proposed train stations are finally built and functioning, the level of demand has already outgrown the facility. For example, Lynbrook train station, which opened in April this year, has already “outgrown” the number of people wanting to commute. <a href="https://bit.ly/KIdJkb">Two weeks</a> after opening, and the 900 space car park is not only packed to capacity, the surrounding neighborhood has taken on the overflow, regardless of restrictions. Forget getting the peak hour train – it’s already over brimming.
Existing train lines were promised upgrades years ago – Mornington and Melton, for example, have plans pending to be “electrified”, however once again, some 20 years later, residents have long lost faith it will happen. It’s not just Melbourne that such outlandish examples can be found. Despite the level of investment in NSW’s infrastructure doubling over the past five years, Sydney is a capital locked down by peak-hour traffic. As with Melbourne, promises of train lines – such as the 23-kilometre north-west link first proposed in 1998 (to be completed in 2010) – are still in the planning stages. Yet residents move into newer suburbs with the promises tinkling in their minds. “Buy in” now – and once the train line has been established, the schools built, the leisure facilities created – land value will rise and investment potential increase. Promises made by successive governments should come with a small printed disclaimer stating *unless notified otherwise, this promise will expire within 24 hours. 
Rather than building ever more roof space in outer-suburban localities, we need a national plan for population growth and it should be firmly focused on increasing supply in already flourishing and established satellite cities along with a strong rural agenda. Geelong, Ballarat and Bendigo in Victoria, for example, all of which have infrastructure and existing train lines (which can be upgraded at a lower cost than building new stations) offer “affordable” options for first-home buyers and upgraders. Rural regions are crying out for growth – and agriculture is a growing industry. Yet we ignore it at our peril, with policies that favour “big farmers” over their smaller counterparts and an unforgiveable lack of funding for universities to encourage young Australians to involve themselves in the industry.
Fly in, fly out mining towns – why is this formula even allowed to be promoted by the mining companies? It may be a needed option for a proportion of the workforce, however policies should be placed to force large companies to train local residents. A targeted goal established, where the majority of employees are locals and the workers are “walk in, walk out” residents, should have started a generation ago. Instead, mining companies have systematically destroyed once flourishing rural neighborhoods – and they’ve been allowed to do so.
Like it or not there’s little we can do to stop population growth. As it stands, the real market has become a game of shuffling cards – as increasing numbers trade and compete over established dwellings, which arguably are the only feasible option for most of today’s property buyers. Planning ministers and state governments shoot themselves in the foot when they make vague promises with outcomes that never eventuate. Before new suburbs are built, the infrastructure should have already been planned, funded and projects started, with the final ingredient being community involvement. There’s none better to understand what a community needs to flourish and grow than the residents who’ve been living in the general locality. If any minister cares to understand why consumer confidence is at a GFC lows, despite Australia’s attractive prospectus – perhaps they should start listening.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on<a href="https://ten.com.au/the-circle.htm">The Circle</a> and a senior consultant for <a href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs of property owners Australia wide.
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Home buyers' necessary premium price to cut down on commuting time

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Everyone’s keen to address affordability in the housing market.  It’s top of mind for struggling first-home buyers and the average Joe holding a mortgage.  Each time the RBA sit down to assess the economy, the concentration around interest rates dropping is always flagged in headlines of “good news for mortgage holders”, with only a few remembering to mention hard-working savers and self-funded retirees losing out as a consequence.
A drop in rates may help those struggling with loan repayments (assuming the banks play ball and “pay it forward”), however it hardly inspires confidence in the economy. In the eyes of us regular folk, sharp rate cuts are akin to putting on the emergency breaks – it waves a red flag of concern. There is broad opinion in the housing industry that the established market will respond to the drop and “recover” recent loses – however for the “non-economist” the data is confusing.  We’re told the Australian economy is in “good nick” by Wayne Swan, with low unemployment, “on target” inflation and accelerating growth.  After being told GDP would flag in lower than expected, the final quarterly figures exceeded all expectation at 1.3% (4.3% over the year).  On paper out economy is rocking along, yet rates being cut give the impression of just the reverse – I greatly doubt it will inspire spending spree.
Of course, doom and gloom in the housing market is rarely out of the media spotlight.  It’s been a drab couple of years for established dwelling prices as far as growth is concerned.  However, considering the growing number of buyers getting locked out the market and only a drip feed of first-home buyers to represent a new demographic, lower prices in established suburbs where most want to live, work and play is no great tragedy.  I’d go so far as to argue it’s exactly what’s needed.
RP Data released figures last week showing the national capital city median house price dropped in May by 1.4% – with the largest drop of 2.7% evidenced in Melbourne. However, it’s important to remember the median house price is simply the middle number of all properties sold, and therefore not helpful when it comes to working out individual values.  The pull back in Melbourne’s house prices – showing little recovery despite May’s rate cut – is understandable when you take a close look at the historical data.
 
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Figures pulled from RP Data-Rismark's new daily hedonic index series and featured on Christopher Joye’s blog last week prove the extraordinary boom that occurred in Melbourne over the Jan 2009 – Dec 2010 period, during which prices rose a whopping 34%.  This level of growth is unhealthy and clearly unsustainable.  Therefore a correction was necessary, as a subsequent 9% in the median to date (most of which has occurred since April this year) proves. However, the average home buyer shopping in the established housing market may be wondering why he or she not noticing a great drop in prices considering the lacklustre clearance rates and falling median prices?  For this, we need to delve a little deeper to assess exactly where the price drops are occurring.
Thanks again to <a href="https://christopherjoye.blogspot.com.au/">Christopher Joye’s blog</a> which has a wealth of interesting data, further information based on RP Data-Rismark’s house price data reveals the median house price is being pulled down principally because of weakness in the top end of the market.  Once broken down, the most expensive suburbs nationally (accounting for 20% of the market) – have experienced the largest falls to date (3%).  However, the middle 60% of suburbs have sustained market prices and properties in the lower price bracket – the cheapest 20% of suburbs – have shown a marginal upswing in growth.
This largely corresponds with on-the-ground agent feedback.  Weekly I attend eight to 10 auctions across Melbourne, covering a broad range of house prices and wide span of suburbs. There’s little evidence to show properties around the state median (currently $490,000) are dwindling.  Providing the property has been marketed and priced “at value” and appeals to the predominant home buyer demographic shopping in that particular suburb, it’s more common to experience relatively strong demand and competitive bidding.  Many times, I’ll walk away from an auction because a property has exceeded comparable value – on some occasions of late, it’s been well in excess of 10%
Along with this, AFG (Australia’s biggest mortgage broker) – processed 7,600 mortgages in May, which tops all other months since March 2009, clearly indicating there’s increased activity in the market.  A breakdown of the Victorian data indicates the average size of those loans was $379,130 with an LVR of 68.65%, therefore it’s clear where the major buyer demographic sits – not in the luxury housing market!  However, based on the above housing data, a cut in rates is not needed in the established housing market, albeit other areas of the economy would no doubt vehemently disagree.
You’d be forgiven pondering the unfortunate circumstance this year’s rate rocketing Channel 9 television series The Block has landed itself in. Not only have producers managed to pick what seems to be on paper the worst-performing mainland capital city market since the GFC to date (beaten only marginally by Hobart). They’ve also chosen to turn this year’s ugly duckling properties into “luxury” $1 million-plus houses, which, as shown above, is the sector of the market suffering the greatest losses.
Even taking into account the latest interest rate drop, it’s unlikely they’ll be any evidentiary effect on buyer sentiment by the time these properties are auctioned. Obviously I’m not a fortune teller, however with clearance rates in Melbourne still struggling to break into the 60% bracket, which is in line with market conditions when the 2011 series finale was recorded, it’s highly unlikely the properties on Dorcas Street, South Melbourne will sell under the hammer.  In addition, the 60% clearance rate is not a good indicator of “under the hammer sales”.
The Real Estate Institute of Victoria releases the most comprehensive auction data for <country-region>Melbourne</country-region> each Saturday evening.  The percentage reached is made up not only of properties sold “under the hammer” but also properties that sold via post auction negotiation (usually resulting from a “passed in” result) Therefore the percentage clearance rate is not representative of what most would consider an exciting “street theatre” event.  Watching a property pass in on national TV – as we witnessed last year – is hardly a heart-stopping experience.
It’s not unusual to get the figures posted on a Saturday evening with a large number of auction results unreported.  This can often be as much as 16 or 17%.  When the results are finally gathered up in a mid-week round up, the clearance figure “corrects” – nine times out of 10 falling a percentage or two further.
For those familiar with the auction process, it’s clear the unreported results are down to a larger than usual proportion of selling agents trying to tie up deals for properties that failed to attract an adequate amount of interest to sell under the hammer.  Negotiations can take time to finalise, and therefore the results are subsequently late arriving.  This doesn’t mean the property will necessarily sell for less – a good negotiator will still be able to extract a fair price for the home.  However, it doesn’t make good street theatre for the 50 or 60 or so neighbours who’ve turned up hoping for an entertaining boom result.
Last years The Block grand finale was heralded a huge anticlimax principally because the Richmond houses failed to attract competitive demand on the night.  It didn’t seem to concern Channel 9 – the series attracts fantastic ratings and a level of advertising sponsorship that would no doubt pay for the houses’ end value twice over. However, I have no doubt it will be of concern to the selling agents, who will be relying on the publicity to raise their individual and company profiles. The last thing an auctioneer needs is an audience of millions watching a property pass in on a vendor bid on national television.
Ruth Roberts – one of last year’s auctioneers – fell under much criticism when she failed to sell Josh and Jenna’s house under the hammer. It’s a shame she didn’t get more positive press when she managed to negotiate the fantastic post-auction price of $1 million – which I’d assess to be above market value considering the location. (Lesson number one when choosing a sales agent – hire the best negotiator!)
The price paid for the Richmond homes last year was far above reasonable market value. By the time stamp duty, holding costs, and planning permits had been accounted for, the properties were already valued above $1 million.  The price of $3.8 million (not including stamp duty of $209,000) paid for this year’s South Melbourne properties is a fairer price.  The position is better than last year’s Richmond location, however when all the planning and renovation costs have been accounted for, the properties still need to sell past current market value to achieve a reasonable return.
There have only been six auctions on Dorcas Street thus far this year – two sold at auction, one sold prior to auction and three passed in at auction.  From the results, the closest comparable to The Block properties is 349 Dorcas Street,  which passed in on a vendor bid of $1.15 million in April – finally selling one month later for an undisclosed price. To date, the clearance rate for South Melbourne is trending below the state average (63%) at 58.3%.  Thus far, it’s not looking good for this year’s contestants.
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As entertaining as they are, programs like Channel 9’s The Block play to the concept that it’s possible to renovate and “flip” a home immediately back onto the market, covering costs and gaining a healthy profit on the outlay. Updating an older-style home through a carefully thought-out renovation is a fantastic idea if the owner is a) careful not to over capitalise and b) holds the property for a period of time suited to market conditions.  The first rule is perhaps the most important, because one person’s tastes are not universal. Most potential owner-occupiers want to place their own stamp on a home, so while a good floor plan and effective use of interior space will provide a backdrop for a new buyer to do this, few want to pay a premium for someone else’s extravagance, and it takes experience to recognise how to finely balance the difference.
Interestingly, from all the “serious” buyers who viewed the properties used on The Block last year, three of the four homes were purchased by investors and subsequently rented for around $1,000 per week. No doubt most of the home buyers would have been interested in adapting the renovation ideas to their own tastes rather than paying a premium for a completed version not specifically tailored to their needs. It really was a perfect example of over-capitalisation. Though clearly that was half the fun of the program and proved great entertainment. Whether the properties will attract current yields in years to come as the initial shine wears off, especially considering the compromised position of the homes opposite a multistorey car park and bottle shop, is debatable.
Australia’s obsession with renovation is not unique or arguably harmful for those doing it for personal enjoyment. Furthermore, altering the floor plan of an old Victorian dwelling to improve the arrangement of the bathroom’s proximity to the bedrooms while creating a nice environment suited to our modern lifestyles is a requirement for today’s market and adds value for most home buyers who would be willing to pay a good deal extra for the service.  However, it’s a fine line – particularly in a soft market – that separates what buyers will and won’t pay for. The Block renovations obviously over-step this line as, was evidenced last year.
Interestingly enough, it was argued back in 2010 by Phillip Lowe – assistant governor at the Reserve Bank – that Australia’s obsession with renovating and extending established dwellings was fueling the desire for bigger and better homes, thereby stagnating investment into new housing, which is necessary to reduce inflation. Investors make up roughly 35% of our housing market, and our negative gearing policies direct the purchasing power to properties that historically prove good rates of capital growth – principally the established housing market.
At the root of this obsession lays the widespread acceptance that property always goes up in value. It’s looked upon not so much as a place to live, but a key to building wealth and establishing financial security. With the ability to also claim tax incentives for capital works on an investment property, it’s no surprise to find homes not just being improved to make them comfortable for renters, rather they are renovated to inspire premium prices.
However, if you analyse individual house data, the stark truth remains that even in a rising market, renovating and “flipping” expecting an immediate profit can achieve little more – once costs are accounted for – than a small return at best. To do so successfully requires numerous calculations that not only include the initial outlay, time plus cost of improvements and an analysis of recent sales to establish the likely ‘end’ selling price.  It also requires an expert assessment of the major buyer demographic in the neighborhood to ensure it ‘meets’ relevant demand without overreaching.
On top of this, market conditions – often unpredictable – have the untimely ability to change as months pass, always leaving an element of speculation in the equation.  Therefore, have a go if you must, but do so knowing the risks and understanding in many respects it’s a gamble.
As for The Block – enjoyable as it is – I’m laying my own bets on another finale re-run of last year.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a> and a senior consultant for <a href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs of property owners Australia wide.
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The Block 2012 unlikely to get Dorcas Street clean sweep as the Melbourne $1 million-plus market struggles: Catherine Cashmore

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This past week, another revolutionist was busy plotting the future of the human race and this time the savior of the world is going to be surrounded by concrete in the form of a vertical city.  The founder of TED, Chris Anderson, told a Sydney audience that the worlds 10 billion (which is expected to be achieved over the next 70 years – providing we don’t self-destruct, which I ponder is an ever present reality) can only be fed, sustained, and resourced, with <a href="https://bit.ly/M4GhIs" target="_blank">urban living</a>.  Chris’s view of urban living isn’t in the suburbia that fueled the old Australian Dream, providing a backyard to grow food and sustain a comparatively healthy lifestyle for the average family.  In Chris Anderson’s vision, children will be born and raised in vertical towers, the family car will become a bygone antique, and once habitable rural land will be allowed to regenerate into forests and wilderness.
While I admit to being a fan of TED and love a healthy exchange of ideas, Chris’s vision is frighteningly close to the reality of our inner-city municipalities. Especially when you consider Melbourne’s currently undergoing a <a href="https://bit.ly/M4GEmi" target="_blank">massive growth spurt</a> with high-rise CBD expansion set to grow from 180 hectares to 900 hectares in a bid to accommodate our unprecedented population growth. In his speech, Anderson did make comment advocating a standard of quality in his vertical vision.  He maintains that architects need to design towers where residents are not living in a rat trap or boxes jammed together.  However, in our modern, money-making, bang for buck economy, it’s doubtful whether any developer would put internal floor space above the potential of squashing as many on a block as possible while selling in bulk to the first foreign investor to register interest. It’s well accepted that our current high-rise craze is the bread and butter of the foreign investor market – most of which are sold off the plan with generous rental guarantees.
Anderson isn’t wrong in his assessment of urban growth, however.  Back in the 1800s just 3% of the world's population lived in urban areas. By 1900, the figure had swelled to almost 14%, with 12 of those cities numbering a population of 1 million or more. By the 1950s the numbers jumped again, with 30% of the world’s population choosing city living over a rural lifestyle – 83 cities had a population of 1 million or more. In 2008, for the first time in recorded history, half the world’s population was living in towns and cities. And by 2030 – assuming we’re not hit by a plague on the scale of Spanish flu, which wiped out 3% of the world’s population – the number living in towns and cities will swell to almost 5 billion – that’s 70% of the population.
This unprecedented growth in urbanisation is a powerful force.  The top 25 ‘mega-cities’ now account for over half the world’s wealth, 50% of which comes directly from within India and China – Australia’s largest migrant populations (which are incidentally now on the brink of outnumbering the European-born residents). However, while we’re busy urbanising the world and working out how to squash the average family into a vertical tower while still providing quality living, it might be worth while sparing a thought for who’s going to be farming the land to feed the world’s 10 billion?  Especially considering there are still in excess of 1 billion people suffering worldwide from hunger and according to the <a href="https://bit.ly/M4H1gL" target="_blank">Population Reference Bureau</a>, there are a further 8  billion mouths to feed each year.  Not to mention the robust level of population growth Australia is experiencing.
In a recent report led by land-use expert Trevor Budge at La Trobe and RMIT universities questioned if <a href="https://bit.ly/M4HiQJ" target="_blank">“Australia risked being profligate in wasting or taking out of production its best farmland</a>.” Coal seam gas exploration knows no bounds in this regard – quickly eating into some of the richest agricultural land in NSW and Queensland.  As an excellent <a href="https://bit.ly/M4HDmE" target="_blank">Four Corners</a> documentary pointed out last year, Australian landowners are only considered owners of the top soil - not the mineral reserves below.  Therefore gaining planning permission to drill and prosper is seemingly no hard task. However, according United Nations' Food and Agriculture Organisation <a href="https://bit.ly/M4I3cJ" target="_blank">(FAO)</a>, over the past 33 years, our farmland has diminished by 16%.  It’s not due to building so much as the financial pressures on small farmers who can’t compete with the big players in the industry.  Much of the land has been reserved for conservation, some has been urbanised, however in short, it’s an industry that should be a thriving magnet for young Australians and yet for a number of reasons it’s dwindling . Consequently, intensive farming rules to the detriment of our smaller farmers who can’t compete with the large global companies who bid and buy prime Australian arable land.
As farming struggles, regional locations suffer the consequences.  According to the National Farmers Federation <a href="https://bit.ly/M4Ifsj" target="_blank">(NFF)</a>, Australia has more than 135,000 farms, which our inland regional towns and centres largely service. Not only are these regional towns the life and blood of our farming communities, they are areas of natural beauty preserving age-old traditions and providing an historical link to the roots of Australian culture.  While we’re busy building up our cities and taking advantage of the prosperity spanning from urban migration, there are some real challenges facing our primary farming communities. Low commodity prices, years of draught, foreign imports, increasing debt and the dominant duopoly of our major two supermarkets forcing prices down have caused many to sell up and move on.  Losing primary rural industries results in the devastating loss of smaller rural communities, and if we’re really to solve Australia’s population challenges this is exactly where we should be pouring funds rather than building more vertical towers.
 
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Most city dwellers have their eyes firmly fixed on residential investment, the argument being that everyone needs shelter and we simply don’t have enough affordable accommodation to support the unprecedented level of urban growth our capital cities are attracting. This is true, however, land is about more than just shelter – it’s about food, biodiversity, productivity, and sustainability.  The answers to Australia’s population growth aren’t contained in the skies above – although vertical living is part of that plan. Rather the answers are to be found under the soles of our feet – in the abundance of land that surrounds us.
As our arable land diminishes, investment in farmland is promising large returns. Wheat prices have soared due to poor weather conditions in Russia and Ukraine.  According to the <a href="https://bit.ly/M4IH9Y" target="_blank">Australian Farm Institute</a>, Australia is the second biggest wheat exporter – hence why we see so many international investors eyeballing our crops.  However, the profit taking is dominated by the bigger players and in the meantime small communities are missing out.  Victoria’s government have been <a href="https://bit.ly/M4IR14" target="_blank">harshly criticised</a> for its plans to build over prime agricultural land in Werribee South and Casey, and the suburban sprawl is daily fodder for the passions of media journalism.
However, when you consider the challenges facing our increasing population, you’d be woefully shortsighted if you didn’t recognise the roll on effect assisting smaller land owners would present, in encouraging numbers to enter the industry and consequently reviving growth and business in dying regional communities.  Fostering an atmosphere where smaller farmers could compete without being swallowed up by larger companies (often part internationally owned) would be dependent on policy changes.  Areas not so centralised on capital locations should play a significant part in our grand plans for population accommodation.
Not everyone wants to be a city dweller.  A significant minority would happily relocate to regional centers if opportunity presented itself.  For example, a few weeks ago, in excess of 8,000 attended Melbourne’s Exhibition Centre for the inaugural Regional Victoria Living Expo. Following the expo, Peter Ryan, the Victorian Deputy Premier released evidence indicating 11% of Melbourne’s metropolitan residential population (around 450,000 people) are contemplating moving to regional Victoria in the next <a href="https://bit.ly/M4JzLM" target="_blank">three years</a>.  The challenge will be sourcing employment in the regional centers – the primary industries being agriculture and tourism.  The will is there if the chances arise.
Last week’s episode of Four Corners <a href="https://bit.ly/M4JS9w" target="_blank">“Casualties of the Boom”</a> uncovered similar sentiments.  The program focused on the small Queensland town of Moranbah, which is suffering a self-sacrificing demise as miners fly in and out without contributing to the greater community.  Although the majority of workers would choose to reside only temporarily, a significant minority would be happy to move their families and lives to the area permanently.  Unfortunately, the cost of housing and lack of essential facilities from smaller businesses, unable to compete with wages offered by the mining sector, prevent those willing from doing so. The key to solving this problem is closer work and communication from industry partners and local government with the community as a whole – ensuring dominance doesn’t always mean demise.
As it stands at present, demand for agricultural university graduates is double current supply and enrolments are diminishing. According to La Trobe University, over the past decade, the number of university campuses offering agricultural courses in Australia has fallen by more than half – <a href="https://bit.ly/M4Kg7K" target="_blank">down from 23 to nine</a>. Yet, Australian farms have grown into a $40 billion industry, with just over half our land mass devoted to agriculture.  Mining will adequately fuel Australia’s growth for the foreseeable future, but agriculture will be one of the prime industries we’re left with. Therefore, we need to make moves now to ensure opportunity in this sector serves Australia and her citizens – and more importantly, use the wealth to benefit and increase the feasibility of living in regional centers. It will take more than the NBN – we need to empower local communities to enable them to take control of local development.
Meanwhile global demand in our farmland is growing. <a href="https://bit.ly/M4Lct5" target="_blank">TIAA-CREF</a>, a leading US financial services provider, has recently raised $2 billion in commitments to invest in farmland in the United States, Australia and Brazil. On its website it states: “Farmland presents a risk-return profile that meets our depositors’ objectives and that offers portfolio diversification.” Other big investors allocating money into farmland assets include <a href="https://bit.ly/K1ubfa" target="_blank">Jim Rogers</a>, the chairman of Rogers Holdings and Beeland Interests, Inc. who has recently established an Australian farmland investment fund – boldly announcing that we’re in the middle of an agricultural “super cycle”. <a href="https://bit.ly/K1ucQ5" target="_blank">China</a> is pushing for less scrutiny in its Australian farmland acquisitions and according to one report, even the <a href="https://bit.ly/K1uzdF" target="_blank">Kiwis</a> can purchase Aussie farmland cheaper than Australian investors.  The ABS have foreign investment in Australian farmland at 11% – under current policy, this will no doubt increase.  Our own farmers simply can’t compete.
Of course, reviving regional localities is not just about agricultural investment – it’s part of a much broader plan.  Alignment of state and regional responsibilities, greater attention on transport and telecommunication, establishing strong connections between smaller and larger neighborhoods to enable the support and development of high performance industries, which will in turn attract a younger work force, are essential.   Let’s start developing our country for people and community rather than selling it off to big profiteers who have a vested interests elsewhere.  We are the lucky country by world standards, but complacency should never be allowed to dominate. Vertical living may suit some, however we need a better plan for all.  Part of that plan should be dramatically speeding up the regional agenda and this requires a much larger investment in Australia’s agricultural industry by way of education, along with immediate policy changes to level the playing field so smaller farmers are able to compete once again.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a> and a senior consultant for <a href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs of property owners Australia wide.
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We must encourage regional and rural living to house and feed our growing population

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It’s been a while since we heard about the “top 1%”.  The protests that spread the globe earlier in the year have fallen under the radar in <country-region><place>Australia</place></country-region> – buried deep below the Thompson affair and global “wows”.  However, according to recent reports, if you live in the <country-region><place>United States</place></country-region>, the 1% are busy bulk buying thousands of real estate foreclosures and taking full advantage of what’s becoming – in some states – a very tight rental market.
The once “American dream” that fueled a nation with a similar owner-occupancy rate to that of <country-region><place>Australia</place></country-region> is slowly turning into a rental nation.  It’s no secret that <country-region><place>US</place></country-region> recovery from the financial crisis has been little more than a halfhearted limp.  If owner-occupiers have managed to hold onto their homes, it’s been at a substantial capital loss. Aside from the large number of foreclosures – which according to a recent report in the <a target="_blank" href="https://nyti.ms/LedaiO">New York Times</a> has been in the order of some 4 million since 2007,   potential home owners now find it virtually impossible to access finance.  This, along with the pressures of record high unemployment, has begun to fuel an unparalleled rental boom.
For example, in <city><place>San Francisco</place></city> the vacancy rate has dropped to around 2% compared with 5% in 2009.  Property managers are charging fees simply for placing an <a target="_blank" href="https://bit.ly/LeephV">application</a>, and rents have increased some 13% since last year.  As one report puts it – trying to access rental accommodation has turned into a <a target="_blank" href="https://bit.ly/JESorm">‘competitive sport’</a>, and it’s a similar story in other cities such as <state>New York</state>, <city>Los Angeles</city> and <city><place>Boston</place></city>.
Whether the <country-region>US</country-region> buying market has bottomed out or not is debatable and like <country-region><place>Australia</place></country-region>, it’s impossible to draw broad conclusions because each state suffers its own unique conditions. However, recently <a target="_blank" href="https://read.bi/LekCKw">Gary Anderson</a> reported in Business Insider that the number of bank-owned homes for sale in the most affected market of the <country-region>US</country-region> – <city><place>Las Vegas</place></city> – has fallen from 18,000 to just 1,600 in a remarkably short period of time.  The suggestion mooted by <city><place>Anderson</place></city> is that banks have been marketing these foreclosures for a period of 30 days at a “real” price, after which – if not sold – they are taken off the market and offered in bulk to investors, who enter a bidding war to purchase the homes at “wholesale” prices.  There is no evidence for this in the article and it’s also worth noting that <city><place>Las Vegas</place></city> has recently passed a bill requiring banks to use the more expensive “judicial foreclosure” process, which would add to the reduced figures.  However, there’s plenty of evidence that points towards a massive Wall Street buying spree of foreclosed homes which is creating a huge disparity in the market.
The <country-region>US</country-region> government is moving ahead with a trial project to sell big pools of foreclosed family homes owned by Fannie May, in some of the hardest-hit markets in <country-region><place>America</place></country-region>.  The initiative has created what Reuters report as <a target="_blank" href="https://reut.rs/LeqhQV">a "Wall Street investing craze”</a> and the L A Times suggests “Wall Street hedge funds and private equity firms" are " positioning themselves to snap up foreclosed homes and convert them into rental units”.
Of course, when you have a large number of investors purchasing affordable family homes that are the bread and butter of the owner-occupier market, you not only have speculation potentially inflating prices, you also have more distressed potential home buyers firmly stuck on the rental ladder.  It’s important to emphasise the <country-region><place>US</place></country-region> housing bubble resulted from a sub-prime lending crisis and not from large numbers of cash buyers looking for positive rental returns.  Therefore, it would be unwise to jump to any broad conclusions that this is the start of another potential boom-and-bust “bubble” cycle.  However, the market tipping in favour of investors over owner-occupiers has led to many wondering if the <country-region><place>America</place></country-region> dream has become just that – a dream.   Such is the outcry, some 15,000 realtors recently gathered in <place><city>Washington</city><state>DC</state></place><a target="_blank" href="https://bit.ly/MFJpwk">to protest</a> against the investor-dominated market.  As one realtor on the video states – “we’re here to protect home ownership and the American dream!”
More on pages 2 and 3
 
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Back to Australia, and although we have been fortunate enough to avoid the level of housing stress seen in America, I often wonder if we shouldn’t take time to learn a few valuable lessons in our own defense of the right to home ownership. The right not to be kicked out after a six-month or 12-month tenancy, the right to own a “share” of tangible Australian land, the right not to suffer from rent increases – and the right to feel secure.  The number of first-home buyer commitments nationally fell by 19% in the first three months of this year and is currently sitting some 24% below the five-year moving average.   Outside the east-west divide of those prospering from the mining sector, potential first-home buyers are becoming long-term renters and under current policy decisions I can’t see it improving.
Like <country-region>America</country-region> pre GFC, <country-region><place>Australia</place></country-region> has grown used to its reliance on a booming housing market.  Generous tax incentives such as negative gearing, first-home owner grants, capital gains benefits, borrowing against equity, restrictions on residential development, low interest rates and an insistence on keeping growth and job centers predominantly locked in capital city locations has pushed the cost of metropolitan accommodation to unsustainable extremes.  Household debt to income ratios sit at around 150% and while all the above policies have supported debt fueled growth in the past, it’s time we took steps to discourage our housing market from becoming a long-term investor-dominated paradise.
The drop in interest rates may be welcomed in so much as it eases the burden on the average mortgage holder releasing much-needed disposable cash.  However, lower rates primarily encourage investors to borrow more, leveraging interest-only loans against increasing yields in a very tight established housing market. Other policies such as negative gearing and poor urban planning encourage investors to take advantage of the bread and butter of the first-home buyer market.  Investors aren’t typically buying million-dollar real estate, they’re purchasing inner-city apartments – the “affordable” options, leaving first-home buyers unable to compete.  Investors have the upper hand in our housing market, and it’s assumed the asset will provide above-inflation capital growth, which the above government policy decisions all but guarantee.
A recent OECD Better Life index of 34 member countries looking at “housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety and work-life balance” has voted <country-region><place>Australia</place></country-region> as “the world’s happiest country”.  It shouldn’t come as a shock when you consider the economic climate in the <country-region>USA</country-region> and <place>Europe</place>.  It doesn’t take a “Better Life” index to work out, when comparing <country-region><place>Australia</place></country-region> with nations currently on their knees with double digit unemployment, we’re going to come out top of the pile. Of course, Wayne Swan is having a field day on the news, and who can blame him?  There’s hasn’t been an abundance of good news in the Labor camp of late.  However, neither Wayne Swan nor a “Better Life” survey can hide the fact that in <country-region><place>Australia</place></country-region>, there is a widening gap between the rich and poor.
Last year, the OECD bought out its <a target="_blank" href="https://bit.ly/MFS7e7">Divided We Stand: Why Inequality Keeps Rising</a> report.  It showed that since 2003, <country-region><place>Australia</place></country-region> has jumped some five or six places up the ladder in terms of inequality and currently sits in ninth pace.  Although we fare better than the <country-region><place>US</place></country-region>, since the year 2000 the rich/poor divide has been speedily increasing.  Studies conducted by the ABS have shown the top fifth of households hold some 62%of the country’s total wealth. We now boast the world’s richest woman (Gina Rinehart), whose fortune is estimated to be $29.17 billion.  Never is it more evident that the wealth of the mining boom simply does not trickle down than when you see reports such as <a target="_blank" href="https://bit.ly/MFUOwe">"WA is moving away from the east"</a> and read from the 60,000 jobs created in <country-region><place>Australia</place></country-region> over the last 12 months, some 50,000 of them were mining.  As the article clearly points out, the eastern and western states may be connected physically, but mentally our western state is fast becoming a closer partner to Asia than <city><place>Canberra</place></city>.
The rental market in <city><place>Perth</place></city> speaks volumes.  Vacancy rates are as low as 1.6% and over the past 12 months, the average rent has increased by 10.5%.  Yields are now coming in at 5.5% and expected to get higher. WA is taking a greater share of overseas migration than anywhere else in <country-region><place>Australia</place></country-region>, and the consequential stress on house prices will place pressure on those most vulnerable.  We may have low default rates in <country-region><place>Australia</place></country-region>; however, we can hardly hail it a healthy environment when over 50% of an average family’s income is spent on funding mortgage repayments.
More on page 3
 
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A recent AHURI (Australian Housing and Urban Research Institute) study suggests 43% of mortgage holders are redrawing on their mortgage for “pressing financial needs”.  The report presents a compelling argument that <country-region><place>Australia</place></country-region> is moving into a “housing-based welfare system” with funds heavily invested in the “prospected” safety of bricks and mortar.  Falls in superannuation, a dramatic reduction in business investment, lower capital gains from investments and continual shocks of confidence as Europe threatens to do a Mount Vesuvius-style eruption have led to an over reliance on the mining boom and vain hope that China will continue to need us far into the future.  As long as <country-region>China</country-region> goes the course, we can prop up any prospected surplus and wave around figures that give the notion we’re all enjoying <state><place>Western Australia</place></state>’s increase in wealth.  The true picture is far more dangerous.
Most people don’t go through life looking for extreme riches; however most assume if they’ve worked hard, paid their taxes and invested wisely, they can at least rely on the government to set in place the potential to grow old in relative comfort.  Around 64% of the gross wealth of Australian home owners is locked in their housing.  The expense of housing ensures most of an average family’s income is given over to servicing high mortgage payments and hedging against prospected growth in overall household expenditure – investment elsewhere is therefore compromised.
Through various methods of manipulation, successive governments have done everything they can to inflate house prices and encourage over-investment in what should be viewed primarily as a commodity for shelter rather than a quick road to leveraged riches.  Housing is debt-fuelled and totally reliant on supply of credit and the ability of banks to prop up lending volumes. The mining boom may have protected the wealth of this country – however all “happiness” surveys aside, this wealth is not being distributed across the broader population – “haves and have-nots”.  As a consequence, many of today’s workers will enter retirement still paying off mortgages or servicing high rental fees.
Various studies have shown two thirds of residents under the age of 35 living in Sydney are locked out of home ownership altogether and considering Melbourne’s house prices are only baby steps behind Sydney’s, the stats are likely to be similarly mirrored.  The prospect of growing numbers reaching retirement locked out of home ownership is as frightening as an economy heavily leveraged against a debt-fuelled, rate-sensitive capital model. Our reliance on <country-region>China</country-region>’s continued need for Australian commodities is all but assumed, however various economists such as Satyajit Das have pointed out <a href="https://ind.pn/KVtA40">many</a> times that <country-region><place>China</place></country-region>’s economic picture may not be as sunny as it seems.  Should <place>Europe</place> collapse, the resulting consequences and looming dark clouds could reduce that demand a lot sooner than expected.
As it stands at present, there is nothing to suggest an immediate or quick deflation in house prices – however we should all keep a close eye on Europe fully understanding the consequences any dramatic fallout could have on commodity demand from <country-region><place>China</place></country-region>.  We are short on adequate affordable housing supply around the major job centers where the population is rising and demand for accommodation (buying or renting) is consistent.  However, housing should be a provision first and foremost for owner occupiers and models that encourage broad based investment in the established market (as in the US) need to be scaled back and pushed into increasing supply and infrastructure in newer suburbs in order to boost the supply and feasibility of affordable accommodation.
Options for secure long-term tenancy need to be investigated to provide those unable to purchase adequate affordable and secure shelter into retirement. And we must increase the supply of good quality public and social housing. <state>New South Wales</state> and <state><place>Victoria</place></state>’s decisions to cut back their funding for <a target="_blank" href="https://bit.ly/LpMbAQ">public housing</a> is remarkably short sighted. The powers that be have their heads in debt-fuelled sand. Our banking sector has directly or indirectly invested around 80 per cent in housing. We’ve already seen finance tighten and income stagnating, not to mention the risks of a rising unemployment as small business’s struggle.  The housing crash in <country-region><place>America</place></country-region> – albeit caused by a landscape different to our own – is resulting in similar consequences, by ensuring increasing numbers will enter retirement firmly stuck on the rental ladder.  There will always be those who are unable to purchase, however can we call a system “just” if we’ve manipulated policies that advantage investors over owner-occupiers, potentially locking many out of home ownership all together?
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on The <a href="https://ten.com.au/the-circle.htm">Circle</a> and a senior consultant for <a href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs of property owners Australia wide.
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Just as the US after the housing crash, Australia is becoming a nation of renters

The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

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Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

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While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

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That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

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Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

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The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

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The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

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What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Catherine Cashmore

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