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It would be easy to outline the physical and emotional effects skyscrapers and the surrounding density of concrete tend to inspire. To start with, when you fly into a city, a wide array of high-rise accommodation and office buildings is immediately indicative of wealth and prestige. Like the axel of a wheel, the concrete jungle is where the power is concentrated – the heartbeat of the city. As many regional areas will attest, capital cities are top on the priority list when it comes to providing amenities, transport facilities, medical centres and so forth.  All too often, those living in the center of it all tend to forget a life exists outside the city boundaries at all.
The crunch always comes down to “sustainably” managing population growth and the quandary of squashing ever-increasing numbers into our growing metropolises. Urban developers seem obsessed with the notion of building high-rise concrete jungles or at the very least, limiting development to apartment living or high-density housing. It may seem like an obvious solution – it certainly does if you’re sitting behind a desk with a calculator in hand, because it’s argued that building high is more economically viable than creating new infrastructure in the outer suburban peripheries. “Happiness economics: clearly doesn’t feature high on the priority list.
I recently read a <a href="https://bit.ly/K263vD">report</a> on the value buyers place on having a garden. In the study, it’s claimed that some families would spend up to an extra $75,000 to get a private bit of “green” around their properties.  My reading of the findings followed a question I’d be asked by a reporter researching the notion of gardens and their place on a buyer’s priority list. As with all equations, the crunch ends up in the dollars you spend. With land values increasing in inner-urban zones, outdoor spaces are decreasing and the modern preference – even in outer-suburban new estates – is to go low maintenance and build to the boundaries. After all, Australian’s still beat the world record for desiring homes with the largest floor space per capita. For many, a bigger block of land is only used as a key to a bigger and better house.
Yet, probably one of the best Australian “inventions” was the old suburban home, primarily made familiar to those of us who emigrated to the country because of programs such as Home and Away and Kath and Kim. A house in the burbs with an ample backyard for the kids is the foundation of what was once called the great Australian Dream. In fact, the quarter-acre block – which eventually became the  eighth of an acre block – was a great ecologically friendly model, and it all came down to the backyard.  The backyard was used for growing food, disposing of waste, socialising with neighbours, playing and enjoying a good dose of vitamin D from the glorious Aussie sunshine. Considering our modern push to look after the environment, it’s surprising a decent-sized backyard does not feature higher on the priority list with planning authorities, who tend to allow housing in new suburban estates to take up larger footprints leaving no more than a walkway of paved private outdoor space.
It was an early report from the Grattan iInstitute that coined the phrase <a href="https://bit.ly/K26Z32">“The virtues of suburbia may yet turn out to be the saving of our cities”</a>.  In the report, it points out how the foundations of living sustainably from private land surrounding the home have eventually broken down to a form of inner-city dependency on outlets such as Coles and Woollies.  It’s not just the idea that a garden enables families to produce food, collect water from a rain tank, or dispose of rubbish in the compost heap. It’s the fact that backyards promote health benefits that are hard to emulate in a public park (if you’re lucky enough to live near one) and with our busy urban lifestyles, even the local park doesn’t often feature unless you own a dog or have children who make use of the facility.
I shouldn’t need to point out the benefits of a garden.  From a personal perspective, I feel as if I grew up in a garden – I spent more time outdoors than indoors during summer months. Flowers are just about the most beautiful phenomenon nature produces – internationally symbolic of love, sympathy, beauty, celebration and commiseration. The land is where we get our food, but the concrete jungle is where we “grow” children who have no idea if a potato comes from underground or off a tree. Living in a city is dynamic, convenient, exciting and yet without a balance – the pace of inner-city life is exhausting, polluting, frustrating and draining. The health benefits that can be obtained from a private garden –social, physical and mental – would be too numerous to list.
It’s been argued on many an occasion that buyers prefer apartment living.  Apparently the ageing population want to downsize, there are increasing numbers of single-person households, and the persistent desire to live in the inner-urban localities all equates to a ‘new Australian dream’ no longer founded in a detached dwelling. However, aside from the additional costs selling and buying can impose, there’s good reason why many older baby boomers choose to hold on stubbornly to their detached family homes.  According to a report <a href="https://www.grattan.edu.au/publications/091_cities_report_focus_group.pdf">‘Project New Home’ </a>commissioned by the Grattan Institute mid-last year researching Australian’s “housing preferences.” Even taking into account changing lifestyles, detached homes are the preferred option of our buying market, whether old or young. The report outlines:
“Associations with small spaces are still predominantly negative – with ‘the average’ apartment representing the most challenging end of the spectrum.  Although there is a realisation that available land is shrinking and we, as a community, need to be ‘smart’ about housing options of the future – there are strong rational and emotional drivers that still fuel the preference for detached housing…
“Owning a fully detached home is expected (particularly for families), it is part of building a life, something that is earnt and relished and the best property option 
- Outside of the pull to detached houses are the push factors away from attached homes of which ‘neighbours’ is the major barrier.”
In short – an apartment may be where we start, but it’s not where most want to end up.  Aside from the convenience of being close to an inner-urban locality, concerns with neighbours, owner’s corporations, privacy, lack of outdoor space and so forth, put a large majority of maturing buyers off the idea all together. The apartment market is viewed as a place where most people rent or stay for a temporary period of time – generally not considered suitable for family life.  It’s probably for this reason, along with pressures of affordability, that the major part of <place><state>Victoria</state></place>’s growth has been evidenced in fringe localities such as Wyndham, Melton and Whittlesea. However even in these areas, such is the price of land, when it comes to building, buyers push to the extremes of development. If you can squash a four-bedroom house on a block rather than comfortably fitting a three-bedroom home, it seems a better investment idea to do so (it certainly does to developers who can charge more for the former).  The bigger the house, the more the on-sale value – land is only valuable in many investor’s eyes if you can build on it.
 
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One of the benefits of increased density (it’s argued) has been the notion that it reduces pollution from people commuting across town to access jobs and other facilities.  However there’s little evidence to support this, although living closer to the city may encourage increased use of public transport, our car dependent life styles and inefficient public transport systems, ensure traffic congestion and urban pollution continue to rise.  Not only this, but any notion that apartment buildings are environmentally friendly has been put to bed by many organizations such as “<a href="https://www.population.org.au/">Sustainable Population Australia”</a> who have reported;
“Studies have shown that high-rise housing increases per-capita greenhouse gas emissions by up to 30% due to a total reliance on power, switches and being unable to enjoy the natural cooling of shady trees and living sustainability. Department of Planning and EnergyAustralia study (NSW) and the ACF Consumption Atlas show high-rise buildings emit more greenhouse gases per dwelling and per person than smaller blocks of flats, townhouses or detached homes”
Of course,<a href="https://bit.ly/K27OJh"> Harry Triguboff</a> managing director of property group Meriton, states that:  
“Councils think that people care whether there are tall buildings or lower buildings. People who buy the apartments prefer taller buildings because they allow more light and afford views and are cheaper to run than lower ones – which require more lofts, more stairwells, and more security, all adding to the upkeep.”
This is predictable, but quite astonishing.  The costs of running high-rise buildings alone are tremendous when you take into account features such as lifts,  electric security gates, lighting, heating of common areas and so forth – not to mention the footprint incurred from so many individual apartments each running a separate fridge, air-conditioner and plasma TV. I’ve not been through one yet that boasts a solar panel to reduce electricity costs. To have the luxury of light and a view adds to the expense and yet there is rarely a guarantee the view won’t be built out.  
All of this is evidenced the stark difference in the yearly owners' corporation fees of high-rise verses low-rise, which can add up to thousands.  Furthermore, to keep development costs down, a balcony is becoming somewhat of a dying luxury.  The above quote of $75,000 extra for a garden is a little over what the average buyer would shell out for the luxury of a medium-sized balcony on one of these inner-city apartments.  A wide expanse of heat-producing concrete increases the environmental footprint.  However all this aside, as the original design of the "garden city" proves you can have high-density housing on a smaller footprint of land and still retain lawn space around the buildings, thereby maintaining the streetscape and environmental benefits.  However, it does require double-storey living.
We’re lucky in Australia because early planners had the foresight to provide abundant park land in each inner-suburban locality.  It’s still possible to look out over our cities and take in an abundance of "green".  However, for how long is debatable – London, which has an estimated population of around 8 million (a number that metro Melbourne is prospected to achieve around 2050) used to hold the reputation of “of being one of the world's greenest cities because of its extensive public parks and gardens. However a recent report by the <a href="https://bit.ly/K288HW">London Wildlife Trust</a> has shown Londoners are paving over gardens to avoid maintenance costs associated with gardening in some cases using the area as an extra parking lot at – according to the study – an "alarming" pace.  According to the report “an area of vegetated garden equivalent to 21 times the size of Hyde park was lost between 1998 and 2006” simply through the demise of the private backyard.
This kind of transition is not limited to London – it’s a worldwide phenomenon.  Modern lifestyles don’t leave time to tend a garden or grow food – after all, it’s argued that Australia has the world's hardest workers – tending a garden is therefore a luxury reserved for those who are retired. In his excellent publication “<a href="https://bit.ly/K28bne">The Death of the Australian Back Yard</a>” Tony Hall argues that the change from backyard culture has “has not been subtle or gradual in either space of time”.  It’s an excellent paper and well worth a read.  In it he demonstrates, through time-lapsed aerial shots, how our living preferences have altered.  Even though there’s still evidence of healthy interest from much of the population in gardening, it’s the renovation shows that dominate the media and keep the focus on the interior.  A low maintenance garden is a selling point in a modern home; a big back yard is simply an area holding development potential.
The loss or demise of the domestic backyard has an effect far beyond that of the individual household.  Issues such as the loss of biodiversity in plant species, the loss of areas of land in which to soak up rainfall, not to mention the role gardens play in micro climate control and combating carbon dioxide and various other pollutants permeating the air.
Whilet there is no doubt the push towards urban consolidation is an inevitable consequence of our population growth and changing cultural shift, we’re certainly not healthier for it – and many would argue that neither are we happier for it. First home buyers have increasingly limited choices when it comes to housing options, and for those that do settle in inner urban areas - as a recent report from the Grattan Institute entitled <a href="https://bit.ly/K28dvm">‘social cities’</a> highlights – there’s a  worrying increase in social isolation and loneliness due to residential seclusion. It’s impossible to improve the situation without active communication with local residents.  Therefore, power needs to be placed in community hands to decide what’s needed in each locality – whether it be a communal garden, ‘pocket park’, games room, or some other form of meeting place. High density planning should have a requirement to make room for some form of freely accessible social interaction.
While gardens may be looked upon as high maintenance and a private area of green space may not be in vogue or high on developer’s priority list, it is down to our urban planners to ensure we don’t lose the joy of an area of green lawn and maturing trees all together.  Australia has an abundance of land for everyone to spread out and enjoy the joys of nature if only more effort and expense was dedicated to the development of industry, transport arterials, and growth in the smaller "satellite" cities and regional centers.  As it stands at present, we’re losing a part of Australian culture that cultivated an ingrown appreciate of "the land".
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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The disappearing Aussie backyard and its emotional, physical and mental toll

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If you've been following the budget and numerous political highlights over the past few weeks and getting tired of fluctuating insecurity over interest rate movements and unemployment figures, take a break and look towards the property market, because it's currently in a phase of unchangeable stability. However, the aesthetics of the localities we have become familiar over the last 20 years have changed considerably – and consequently the value and potential liveability the existing established real estate holds has, and is, changing as well.
Australia 2030, and the shape of our cities as we move towards 2030, is firmly in the hands of urban developers and well underway for rapid expansion. For example, in <place><city>Sydney</city></place>, by 2030 the focus is to stop urban sprawl and the development of freestanding houses. According to <a target="_blank" href="https://bit.ly/JvstFb">Graham Jahn</a>, director of planning, development and transport for the City of Sydney, the new city will be “compact” apartment living close to the CBD, providing a “more communal way of life”.
It’s prospected that by 2031, the 26 square kilometres of Sydney City will have 55,000 new dwellings housing 88,000 new permanent residents. Needless to say, high-rise towers will be the dominant feature and any outdoor living activities for those in inner-city localities will need to take place in the local communal park.
Across all states, the building boom of high-rise apartments is astounding. In Melbourne, plans are well underway to accommodate 90,000 new dwellings by 2031. In Brisbane, the Infinity Tower – which will dominate the skyline and provide “546 meticulously designed apartments” over 81 levels – is one of many projects currently under construction. Every capital city government website has a prospected plan for 2030, which outlines its new vision for Australian cultural life.
Even with the recent slowdown in population growth – which at 1.4% (ending July 2011) is the lowest it’s been since 2005-06, our capital cities are crying out with growing pains – not due to lack of roof space as such, but lack of affordable roof space and affordable rental accommodation. However, despite the bursts of construction, the buying market remains soft. Gaining credit is harder than it was pre-GFC, first-home buyers don’t generally qualify for high-rise accommodation due to various loan restrictions– issues I have pointed out previously. Neither does this type of accommodation offer affordable rental opportunities, as any quick search through internet listings will prove. Instead, they are principally marketed to the foreign market, for which there are no buying restrictions for new or off-the-plan dwellings – and it can only be hoped demand is sufficient, considering our high Aussie dollar, to soak up the reserves currently in progress.
Residents familiar with the current outlook of their neighborhoods are understandably concerned. Organisations such as <a target="_blank" href="https://www.sos.org.au/">Save Our Suburbs </a>– active in various states across Australia – have been established to combat development of high-density housing and the consequences of an increasing population. Needless to say, there is little if any consultation with the community in light of the new developments affecting various neighborhoods. As Save Our Suburbs points out on their NSW website “the majority of communities report that they feel their governments are not concerned with community preferences on planning issues”.
It’s a common cry – no one likes a neighborhood changing. And as we’re all aware, having a block of flats or large subdivision constructed in the near vicinity will not only affect the streetscape increasing the general foot traffic, it can also have consequences on local public transport facilities, which struggle to cater for a higher numbers of residents.
The federal government’s <a target="_blank" href="https://bit.ly/JvtIEl">‘Our Cities’ discussion paper</a> reads like a tourist brochure – full of pictures of laughing residents or artist drawings of leafy parks with children playing and parents picnicking. Within it, the national 2030 vision is set out
“To provide for our communities, urban development needs to offer a diversity of housing options that incorporate a substantial component of affordable housing that is age friendly, innovative and has good environmental performance.”
I’m not so sure the mass building of high-rise projects fits into the description above, however the words are noble in themselves.
The initiatives outlined in the report to improve housing affordability include the ‘Housing Affordability Fund’. However, as I’ve pointed out previously, it’s hardly an initiative to be proud of. When I last checked the<a href="https://www.anao.gov.au/Publications/Audit-Reports/2011-2012/Implementation-and-Management-of-the-Housing-Affordability-Fund"> 2011 audit</a>, the fund had outlaid $12 million for administration and set aside a promised $500 million for the projects , yet on last count it had only assisted 749 home buyers, while encountering some major administrative cock ups along the way. I don’t call this improving affordability or wise use of taxpayer funds. Yet it’s an initiative the government continues to boast about.
Also outlined in the report is <a href="https://www.coag.gov.au/coag_meeting_outcomes/2008-11-29/docs/20081129_national_affordable_housing_factsheet.pdf">National Affordable Housing Agreement</a>, which requires each state to dedicate federal funds towards the achievement of “key outcomes”. Some of the outcomes include decreasing homelessness and ensuring people have access to affordable rental accommodation and housing. Any initiatives dedicated towards such outcomes are commendable, however when you delve into the progress reports to see how progress for this agreement is tracking, highlighted are some serious problems in auditing the results. The latest report states:
“It is not possible to track progress towards each of these outcomes on an annual basis. Performance reporting under the agreement is particularly reliant on survey and census data that are not available annually. In addition, the performance framework itself is still under development, and not all outcomes are currently able to be measured.”
Furthermore:
“There is very limited information on the nature and extent of homelessness and risk of homelessness, including the housing” 
And of course, last year’s admission from the ABS showing its homeless figures had been <a target="_blank" href="https://www.theaustralian.com.au/national-affairs/opinion/inflating-homeless-to-fund-lobbyists/story-e6frgd0x-1226165274504">“inflated” </a>further confuses the data and ignited arguments from homeless advocates who maintained the existing figures had been underestimated, not over-estimated.
 
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The federal budget outlined its commitment to the first-home buyers’ grant, but in truth, what a dismal failure it’s been. The percentage of first-home buyers “shopping” in the market is no higher now as a result of the grant and rarely fluctuates from the long-term average. State by state, first home buyer activity currently varies between 13.1 per cent in <state>South Australia</state> to 23 per cent in the <place><state>Northern Territory</state></place>. As many ‘potential’ first home buyers will now tell you, the dream of buying a ‘home,’ is just that – ‘a dream’.
Commitment to the <a target="_blank" href="https://bit.ly/JagS23">National Rental Affordability Scheme</a> also remains in this year’s budget. It’s a commendable initiative established to increase the supply of affordable rental accommodation for “key workers” such as police officers, nurses, teachers, and so forth. The scheme provides financial incentives for investors to purchase housing, which is identified as “suitable” by the government.
There are conditions of course; there is a requirement to hold the property for a minimum of 10 years while allowing a rental rate 20% below the market average. For doing so, there is an annual income tax kick back – currently at $9,524 per dwelling, indexed annually to the rental component of the CPI. However, it’s not intended for the solo investor and neither is it “social housing”. It’s primarily for property trusts and superannuation funds, and the accommodation is intended for “low- to middle-income wage earners”. Although the scheme has helped a proportion of families – as the Tenants Union rightly <a target="_blank" href="https://bit.ly/KPvbU8">points out</a> – the rents charged are still too expensive for a large number of low-income households. Therefore, there are still a too many falling through the net.
As for the social housing initiative, this has no extra money forthcoming in the budget. As <a target="_blank" href="https://www.shelter.org.au/">Shelter </a>and <a target="_blank" href="https://www.anglicare.org.au/">Anglicare</a> point out, any drop in the waiting list figures nationally have been due to a tightening of eligibility criteria in many jurisdictions rather than a genuine reduction. Again, in light of this, monitoring numbers of those in need starts to get blurred in the rhetoric that travels back and forth between government and social housing advocates. Trying to assess the success or failure of the project is not an easy task – it often gets lost in various criticisms over hasty built or inappropriately located projects. However, broadly speaking the initiative is a good one especially when you consider there are some 250,000 people sitting on waiting lists for public housing often waiting nine months or more.
In Victoria the public housing problem has reached crisis point after the release of its recent audit report, which showed the state was “facing a cash crisis, with all cash reserves expected to be exhausted during the 2012–13 financial year based on current budget estimates”. Interestingly enough, the government has come up with <a target="_blank" href="https://bit.ly/JPImVX">'radical reforms'</a> to combat this problem, which look positive in themselves, however judging from past record, expensive reports into various reforms never seem to transpire into promised results.
For example, if you go into the <a target="_blank" href="https://www.imap.vic.gov.au/">IMAP</a> reports (the Inner Melbourne Action Plan ) a collaboration of inner-city councils currently assisting in the state government developments towards 2030, you’ll find a specific section devoted to “housing affordability”.
It seems since mid-2009 letters have been going back and forth between various ministers trying to investigate site-specific opportunities for “inclusionary zoning” (a process whereby governments mandate a certain proportion of a new development be marketed below market rates).
Fast forward to mid-2010, and finally a suitable site was found at 400 City Road in South Melbourne. Unfortunately, or perhaps predictably, it failed to gain support from the state government. So back to square one, and now, three years since ‘inclusionary zoning’ was mentioned we’re apparently awaiting another report into “Community Land Trust Models and their application in Australia”. According to the latest progress paper “reports will be provided to the Committee in due course”. An “end date” for “due course” isn’t provided
All of this rhetoric about social housing wouldn’t be such a problem if we hadn’t experienced such a boom in house prices for which wage growth couldn’t keep pace. It’s all OK for some economists to argue that when you take the national wage growth and national house price, the inflation has not been so extreme. This is true; however the main sticking point with the argument is contained with the stubbornness to keep the bulk of development in inner-city locations. Limited outer urban land releases have also been another hot topic along with hefty development overlays in growth activity centers, which add, disproportionably, to the capital cost.
Those benefiting from increased equity in their house prices have taken full advantage of Australia’s negative gearing policies to purchase a second, third and fourth investment properties. With more borrowing power than first-home buyers looking for similar established homes, this has locked increasing numbers out of home ownership.
Rents have increased disproportionably to wage growth, and there’s growing disconcertment in the younger population charged with handing over 50% or more of the weekly wage for the privilege of shelter.
How many uncountable reports have there been into extending train lines to outer urban areas to provide greater options for first-home buyers willing to compromise on location and move further out? Better transport systems would enable them to do so. However the reports have resulted in nothing more than expensive promises that remain sitting on a minister’s desk. Along with this, it could be argued that money spent on government first-home buyer incentives has been wasted, ineffectively inflating market prices rather than improving affordability.
The big key to our problem is allowing those who are working on an average wage the chance to enter the property market should they choose to do so. This can only be achieved with lower property prices and more affordable stock to meet demand. Back to the report I cited at the beginning of this article and it boldly announces: “Australia’s future tax system noted that some existing taxes on housing, especially stamp duties, are inefficient and can impede housing supply. The review suggested that reforms such as introducing a broad based land tax, along with changes to the taxation of rental housing and rent assistance, would go some way toward improving housing affordability”.
I don’t know the cost of the ‘Australia’s future tax system” review. However, it’s clear that the current government has firmly ruled out any changes to current models of negative gearing or increases to rental assistance.
As for first-home buyers – the road ahead is bleak. The advice I have is to start saving young and take advantage of the few positive initiatives out there such as the <a target="_blank" href="https://bit.ly/IHqSym">first-home buyers savings account</a>. Don’t be afraid to compromise on expectations and purchase a first property in an area further out from the city where land is more affordable. Considering our population growth and current future economic forecast, outer-suburban locations will continue to attract strong demand.
Keep your feet on the ground and be aware of the sacrifices property ownership entails before stepping in. If you’re prepared and able to tread the road, and have the ability to do so, it’s hard to beat the security that results from owning your own home. It’s just a shame more having been given the opportunity 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://bit.ly/I7SGaw">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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While governments provide rhetoric and reports, thousands are waiting for real housing solutions

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The Reserve Bank has decided to backpedal and heeded the demands of economists who have been up in arms ever since the central bank kept the cash rate on hold last month.  We had the usual surge of tables splashed over the front of the dailies highlighting the savings to the average mortgage holder should the banks pass on the full cut.  Sellers in the property industry are rubbing their hands together, expectantly waiting for prices to rise, and the focus for the next few weekends will be firmly on the clearance rate for any indication of a change in sentiment.  However, after all the celebratory drinks have been clinked over the table as those who “bet” on the exact basis point drop get their “told you so” moment, perhaps we can get back to reality. It’s unlikely we’re going to see a surge towards the property market – at least not in the near future.
It’s clear the RBA has lost some element of persuasion over the banks, with the statement that 50 basis points drop was to “encourage” the banks to at least pass a proportion of the rate cut onto customers. To all outside eyes, we’ve managed to end up with a system where the banks are in the controlling seat and the RBA’s influence and relevance to home owners is diminishing.  Wayne Swan has warned the banks to pass on the full amount – however, his threat can only be addressed with an “…or what?”. The banks no longer need to bow to the demands of those we voted into power – they are a ruling power unto their own interests and profit margins.
One minute we are exhorted to save, pay down debt, hunker down and tighten our belts.  The next we are told we need to march out and stimulate the economy.  Retail needs it, the housing market is apparently crying out for it – and Swan is dancing around as if he’s personally responsible for the whole charade, with his obsession with a surplus by 2012-13.
The drop would stimulate confidence it was reported; however, it does just the reverse.  It tells everyone what we already know: anyone not in mining is struggling – particularly if they own a small business, work in the retail and manufacturing sectors, or are one of the millions on the average Australian wage trying to service rental or mortgage payments.  For those struggling on the minimum wage (around 1.4 million people, or roughly one in six workers), it’s a lifestyle of ball juggling as it’s now well accepted that the majority of Australians spend at least 50% of their disposable income simply putting a roof overhead.
With the banks passing on a proportion of the rate cut, home buyers and mortgage holders will gain a marginal benefit in disposable income,  however unless your mortgage is in the top percentile, the drop is only slightly beneficial at most.  For the majority of new home buyers it does little to improve affordability.  Anyone who has managed to save a deposit is most likely out there shopping already – a lot of them dual income couples, high-income earners, or beneficiaries of a gifted deposit.  A growing majority of low-income earners are simply locked out while struggling to service growing rental yields.
In the recent Victorian budget, it’s welcome that more funds have been dedicated to <a href="https://www.propertyobserver.com.au/victoria/victoria-s-new-home-bonus-grant-ends-june-30-but-lower-stamp-duty-cuts-in-january-2013-for-first-time-buyers/2012050254518">dropping stamp duty costs by 30% for first-home buyers</a> (details of which can be found <a href="https://bit.ly/IHmEqu">here</a>.) However, in order to do so, the government stripped away the $13,000 grant offered for the purchase of new homes. In light of the fact that new supply is essential for reducing competition and inflation on established stock, there’s not much to celebrate really.
Then again, as we’re told repeatedly, despite promises to the contrary, there isn’t as much in the coffers to hand out at the moment.  Ted Baillieu should be well adverse to the adage that you always “promise less and deliver more”.  However, apparently, due to the softness in the housing market, less than expected came in from stamp duty payments, therefore tough luck to the taxpayer.  The only way government, both local and federal, know how to raise money is to raise taxes.  To think outside the square never gets further than an expensive research paper. However, to be fair, much of Victoria’s problems did have their beginnings in poor management from previous administrations.
Different states offer a range of different policies for first home buyers (aside from Tasmania, which offers nothing outside the federal government’s $7,000 grant.)  All are introduced for periods of time, however all are subject to change by subsequent governments providing no confidence of consistency.  Some policies are better than others, however, the minimal assistance that is available arguably inflates the market rather than the reverse (as evidenced by the boom and bust cycles as various the schemes are introduced and subsequently scrapped).
Billions has been thrown at first-home buyers over the years, which is amazing when you consider evidence proves it’s not achieving the desired result.  Should the current trend continue, we’ll see today’s 35- to 44-year olds reach retirement with a quarter still renting – and when the 25- to 34-year-old bracket reach retirement, a third will still be renting. How long until 50% are reaching retirement while paying someone else’s mortgage?
If you’re reading this and already hold a mortgage you’re probably understandably too concerned with meeting your own bills to take a close look at the bigger picture that is growing to be a crisis of monumental proportions. Some may have read or heard about the latest Anglicare report that has taken a snapshot nationally to look at the supply of affordable rental accommodation for those on a low wage or on government allowances.  Not surprisingly, the results are truly dire – you can read the full report on Anglicare’s <a href="https://www.anglicare.asn.au/site/research_reports.php">website</a> – however the outcome emphasises “people on the minimum wage need two incomes to rent a house. In many places even that is not enough”.
Two incomes to rent a house? If you can’t rent on two incomes, you certainly won’t be in a position to buy – renting is still the cheaper option, and house prices are not reducing by any significant proportion to change this ratio.  In Anglicare’s report, it surveyed more than 65,000 advertised rental properties across Australia. For singles living on an aged or disability support pension there were no affordable options in any urban area across Australia, and for singles on the minimum wage the options were so limited that in Sydney, not even 1% of all the advertised properties met the requirement. This is in a nation envied worldwide for its prosperous economic status – one of the few that “beat” the recession.
I only have practical experience of the Melbourne rental market, which has a reported vacancy rate of 2.5% – this is up from 2.2% last year.  When it announced the latest vacancy figures, the REIV commented, “the reduction in population growth and increase in construction of new dwellings is now beginning to provide easier conditions for renters”. Well, it may look that way on paper, but in reality, it couldn’t be further from the truth.
The rental agency I deal with has demand at such a level that – whatever the condition - an advertised property will be marketed for no more than a few hours before numerous enquiries are received requesting and inspection.  It’s a common story repeated within every management company across the metro area.  Most recently, I witnessed a line of prospective tenants queue outside an old untouched one-bedroom-plus-study house that could can only be described as highly unsuitable for a family.
The location on a busy main road arterial, coupled with the “rawness” of the internal condition, including an oven that didn’t work and no laundry facilities, gave doubts it would attract any enquiry at all.  However, it rented after being on the market for less than a day. The successful application was a couple with a two-year-old child – both of whom had full-time employment.  They’d been looking for a number of weeks and offered to paint the property at their own expense by way of an incentive.
Current yields in Melbourne are advertised around 5% for inner-city apartments – however, other states such as Perth for example are easily achieving yields around 5.5% in inner city suburbs. To secure accommodation, it’s not unusual for many applicants to offer in excess of the advertised price.  For prospective tenants unable to provide an incentive, options are virtually nonexistent.  I can’t over-emphasise the problems this is causing.
It’s in the rental market, homeless numbers, and waiting lists for public housing, where you’ll find the true story of <place><country-region>Australia</country-region></place>’s housing shortage.  The buying market is simply a game of musical chairs as one established property passes to another.  New home sales are at decade lows because they’re situated in areas on the outskirts of the city where many can’t feasibly settle.  This is why we need to distinguish between “housing need” and “buyer demand”.
As the RBA points out in its latest analysis of the market, “rental vacancy rates have been around 2 per cent since 2009”.  It’s the consequence of years of poor planning that has squeezed everyone into urban areas close to centralised employment centers.  As such, we have ended up in a situation where rental applicants have to compete against each other to acquire some sort of shelter, a little like some pseudo form of the Hunger Games.
Under current conditions, whether buying or renting, “housing stress” is almost an understated term.  We all need a home and in this prosperous nation of ours, everyone should have access to feasible options to provide shelter for their family – whether renting or purchasing. If you have a system where growing numbers are unable to attain the basic essentials for their families without experiencing significant stress, there’s no room for innovation and development of ideas that are the key to increasing productivity and consequently a country’s overall wealth.
As always, it’s those most in need who come bottom of the pile – and based on the Anglicare report, we can now add full-time employees to that number.  The solution to the problem should not be concentrated on a market driven by incentives or tax breaks, which simply pits one buyer against another.
Instead, it’s important to start listening to local voices, real community needs.  To give one example, Point Cook in Victoria, located 25 kilometres from the CBD, was marketed as a “vibrant new retail and commercial development being created in Melbourne's western suburbs”. Expected to provide housing for over 12,000 families and a 25-minute drive from the CBD, it’s been one of Melbourne 's fastest-growing residential areas.
However, the residents that moved there discovered the 25-minute drive is only applicable if you leave for work at 3am, otherwise – with only one major road in and out of the suburb, it can end up being a two-hour commute.
The residents are crying out for more roads, schools, leisure facilities, and so forth, however the house building continues and as more families move in, the problems worsen. Unfortunately, there’s no end in sight for Point Cook residents.  In the recent Victorian state budget, Melbourne’s fastest-growing region was completely overlooked. No one listened.
As such, it’s no surprise that turn over in some areas of the suburb is three times the Melbourne average and land banking from speculative investors (or residents “changing their minds”) has resulted in many empty lots sitting undeveloped.
Considering the billions of tax incentives and home owner grants that have been handed out over the years, it’s clear protecting growing house prices has always been a priority – and building thriving communities has not.
From an outside perspective, Australia’s land mass, wealth, skills shortage, ageing baby boomers, along with many regional locations simply crying out for an increase in population, I’ve always seen ample opportunity to channel population growth to our social advantage.  However, it’s clear that successive governments have judged the health of our economy as figures on paper not adequately planning for our growing community’s needs.
The wealth of any nation should be judged on the standard of living provided for all – not a select group.  Seeing as we can hardly cope with housing those who already live here, and as there is no reasonable policy shift to aid a rapid improvement of the situation, perhaps it’s time to close the doors all together aside from fulfilling our obligation to provide refugee protection? Based on current data, the population would stabilise around 2050, however in my mind, it would be a terrible admission of failure.
As for improvement in the housing market, well, don’t look at clearance rate figures for a sign of recovery, instead look towards the polls. Because only when people feel their voices are heard and basic needs provided for (without breaking the bank), will the polls improve and confidence return.  Until such a time, we’re in for a long, flat road ahead.
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://bit.ly/I7SGaw">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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Australia's property market is in for a long, flat long road ahead

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Two weeks in a row now I’ve written about affordability issues seriously affecting our home-buying market – principally first-home buyers who, without some kind of family assistance to help with a deposit, often find themselves on the wrong side of the real estate ladder.
Call me a pessimist, but when it comes to Australia’s housing market, if often seems like an insurmountable problem that successive governments find “too hard” to change within their short-term outlook.  It’s not through lack of educated advice.  We’ve had the Henry Tax Review that recommended changes to negative gearing, which, as I pointed out last <a href="https://bit.ly/IIWx0X" target="_blank">week</a>, needs to be scaled down to ease inner-urban inflation.
In addition, various investigations have been made into the problem of effectively increasing affordable housing stock – such as the <a href="https://mckellinstitute.org.au/" target="_blank">McKell Institute's</a> Homes for All report.  However, they all call for changes that risk polarising opinions and shortening terms in power and as with negative gearing, pressure for policy change continually falls on deaf ears.  Therefore, instead we tend to see solutions employed to bandage over the issues rather than providing any long-term outlook.
Measures such as first-home owners’ grant, which result in quick bumps in inflation followed by fairly lengthy periods of correction, seemingly provide short-term optimism, but over the long term simply escalate the underlying issues of affordability.  Other initiatives such as the national first-home buyers’ savings scheme are worthy ideas, however it was set up in such a way that when first introduced, stringent conditions initially placed limitations on home buyers’ options, thereby deterring significant take up.  Although improvements have since been made, poor marketing and less than a 5% take-up has resulted in many banks withdrawing the option all together.
Of course, you could choose to travel outwards and live in paddock land where real estate is cheaper and houses generally bigger.  However, as numerous media reports have <a href="https://bit.ly/IIZ5MH" target="_blank">publicised</a>, the woeful lack of community facilities and long commute times to inner-urban employment centers have allegedly resulted in serious medical conditions such as obesity and depression.
OF course, all of this is only going to affect you if you’re a first-home buyer.  Second-home buyers have existing equity to assist them up the ladder, and investors sit top of the pile with generous tax incentives and an increasingly tight rental market to assist cashflow.  The Age recently <a href="https://bit.ly/IIZzCo" target="_blank">highlighted</a> the lengths some will travel to run loops around the tax system, with a proportion of investors allegedly structuring loans to divert  rental income from their investment properties directly into their “home loans,” thereby clearing the way to claim a larger slice of tax-deductible expenditure from payments on their investment loan.
There are all sorts of stories of those who try to beat the system. It wasn’t long ago we heard of stories of those illegally claiming the <a href="https://bit.ly/JGSBPH" target="_blank">first-home owners’ grant</a>.   Furthermore, Australia’s obsession with seeing housing as a model merely for investment has managed to reach such lengths that we now have a <a href="https://www.propertyobserver.com.au/residential/rp-data-rismark-march-1-daily-index/2012030153640" target="_blank">daily house price index</a> specifically modeled to be openly traded on the stock exchange, allowing punters to “bet” on short-term price movements, encouraging the continued obsession with property speculation.
Land banking is another wondrously spruiked initiative – not so bad if you’re securing an older-style house in rentable condition and enabling a tenant to live in the home until it’s either sold or developed.   However, we have no indication on numbers of inner-urban land sites purchased by investors who allow derelict property to sit vacant whie waiting for population growth to inflate the investment as the surrounding finite land gets subdivided into smaller and smaller lots.  The UK market is fast getting initiatives in place to combat this <a href="https://bit.ly/IIZLlk" target="_blank">issue</a>; however, it took significant media and people power to start the process rolling.
Recently Robert Doyle – lord mayor of Melbourne – took to the battle ramps to penalise owners of un-used, un-livable, property who allow the homes to sit<a href="https://bit.ly/IIZQ8q" target="_blank"> vacant </a> for years on end.  The owner of a derelict site in Melbourne’s CBD – the old Savoy Hotel on the corner of Bourke and Spencer streets – was approached by the council to turn the area into a playground until the site is sold.  It would enable the land to at least be used by the community until a decision has been made. Needless to say the owner turned down the proposal, preferring to let his eyesore fester. Melbourne City Council is now under pressure to employ a new rates system that will penalise the behaviour. It sounds hopeful, however hope and good intentions are easy to sell and as we all know, often seemingly hard to implement.
However, out of all the models of investment that inspire healthy, contentious debate, there is nothing quite as igniting as foreign ownership of Australian assets – and in particular, residential real estate.  In the latest annual financial report from the<a href="https://bit.ly/IJ08w2" target="_blank"> foreign investment review board</a>, we learn that in 2010-11 10,293 proposals were received, of which the majority (9,771) were approved for residential real estate.  There is a spike in the figures between 2010-11 compared with 2008-09 simply because hotly contested changes to the rules for temporary residents wishing to purchase property were relaxed by then prime minister Kevin Rudd in the previous year.  Therefore we have no idea of the 2008-09 figures, which – considering relaxation of requirements – were no doubt higher.
Despite the recent doldrums, foreign investment in residential real estate is the playground of the wealthy.  Recently a report by <a href="https://www.colliers.com.au/" target="_blank">Colliers International </a> outlined that with “an unemployment rate of 5.2%, annual GDP growth of 2.5% and higher yields for prime-grade assets, compared to other global markets’ Australia’s property market is viewed to be particularly attractive”.  <a href="https://www.cbre.com.au/" target="_blank">CBRE</a> –  “the world’s largest commercial real estate services firm” – earlier this year reported in The China Daily that “more than 1,200 apartments were either planned, being marketed or were under construction by Chinese companies in Australia in the fourth quarter of 2011”.  Accordingly, the company goes on to say: “Foreign developers made up about 30% of the Australian market last year, and China took up 9% of that – an increase over previous years.”
Asian buyers are active in various markets across the globe and principally in Australia because we possess something they don’t have in China – “freehold” laws.  In China, purchasing residential real estate not only requires large deposits as a down payment (some 40% to 50%), the laws surrounding Chinese property ensure there is no private ownership of land, only “rights” to use that land and no guarantee it won’t be whipped away by the government if so desired.   Therefore, as a sales agent from J P Dixon in a recent <a href="https://bit.ly/IJ0G4Y" target="_blank">‘China Daily’</a> report so eloquently said: “"Unlike in China, once a buyer purchases property in Australia, it's theirs forever and can be passed down from one generation to another."
When you read the requirements published by the FIRB for the purchase of established residential real estate in Australia it seems very straightforward.  For established dwellings, there must be a commitment from temporary residents to use the property as housing and if not seeking permanent residency in <country-region><place>Australia</place></country-region> at the end of their term, sell the home.  Foreign relatives may purchase on behalf of those with temporary visas under the same requirements.  Companies can also purchase established dwellings as long as the property does not sit vacant for more than six months. If so, it must be advertised and leased on the open rental market.  The application process is simple.  An online form is used and a few boxes need to be ticked requiring the purchaser to disclose intentions for the home.  As can be seen from the figures, putting aside those who withdrew applications, only 42 applications for residential real estate were rejected. Huge numbers are clearly taking advantage of the ability.
It’s interesting however to ponder how many fall through the net. As much as property has been in the doldrums of late and even accounting for our strong Aussie dollar, due to the shortage of land surrounding our capital city locations, property is viewed as a low -risk investment and a safe haven for foreign investors to “bank” their wealth.  In an economy that’s performing as well as ours in comparison to Europe and the USA, coupled with a shortage of live able desirable land plus strong population growth, the prospect of losing money in a property investment long term is a low-risk proposition.
I know from experience in my own field of work, enquiry from the foreign market – in particular Asia – is in abundance, and seeking FIRB approval seems to be a simple online  “take my word for it”,  “box-ticking” process.  For example, those who don’t employ the services of a buyers’ agent (most of whom will check if the client has a legal right to purchase for reasons of liability) will find that when purchasing established or new property – they are not asked for ID when filling in a contract, or evidence they are an Australian citizen or even permanent or temporary resident!  All that most agencies require on a real estate contract is a signature and deposit cheque for – “ideally” – 10% of the purchase price.
A solicitor or conveyancer acting on someone’s behalf is not required to check his or her viability to purchase Australian real estate. Even for those who have been approved by the FIRB  at the present time, there is seemingly no follow up process to ensure the “box-ticked” rules are being adhered to. All we are told in the FIRB financial review is the board is “moving toward a systemic series of targeted investigations of non-compliance by foreign investors.”
Therefore, at the present time, who checks if a property has been sitting vacant for six months or more?  Who establishes whether a home purchased by a temporary resident is sold when they leave the country or simply sits vacant?  In view of the numbers, ongoing regulation under the current system would require significant manpower and considering proof of ID is not a usual requirement when buyers purchase a property, keeping tabs on those who never applied for FIRB approval in the first place would likely fall through the net of observation.
Having said this, in Australia, simply having rules governing foreign investment of established residential real estate is a step ahead of other countries that have no special requirements.  In London for example, anyone can purchase property and the luxury real estate market is booming. Last year a penthouse apartment was sold in Knightsbridge for £136 million and throughout the course of 2011 over £4 billion was transacted by foreign purchasers in the London market, costing the treasury over £750 million a year. Other countries such as Canada and the USA also have no restriction.  In light of this, we should consider Australia on the front foot.
There’s no getting away the fact we sit top of the pile when it comes to issues of unaffordability in the housing market, we have falling numbers of home owners and increasing numbers getting stuck on the rental ladder.  It’s been principally caused by poor planning policies, squashing our population around the capital cities where prices are out of reach for a growing majority.  It’s one of the many reasons we’re heading into a crisis in terms of rental accommodation and public housing.  A shameful position for Australia to find itself in, with larger proportions of our population living in conditions more suited to Third World developing countries than a leader on the world stage.
It’s an issue of many parts and I see nothing wrong with encouraging foreign ownership if it’s going to help increase new supply. However we know from the figures, purchasing established real estate is the preference of the largest percentage of property investors (including foreign investors looking for capital growth) and therefore it stands to reason, to allow more first-home buyers into the market, we should be limiting competition in this sector to slow down inflation and ease supply.
Good supply of rental accommodation is always important, but let ownership of established stock be closely monitored to limit imbalance in the marketplace. If the ability to monitor foreign ownership of established stock – ensuring it’s being utilised in line with current policy - isn’t there, it’s arguable whether we should allow it in the first place?
Real estate prices rising above inflation are not good for the home buyer – only for the seller looking for a windfall, or the speculative investor.  Let’s keep housing’s primary purpose top of mind when designing policy initiatives and ensure our limited established stock and precious inner-urban land favours those who require a roof rather than a speculative investment.
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://bit.ly/I7SGaw">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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Foreign investors banking wealth in Australian real estate and hurting affordability

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I love reading reports that predict real estate movements.  You’ll hear it trotted out frequently that we’re at “such and such” stage of the “property clock” or property cycle.  Accordingly, over the past few days I’ve read that Brisbane is at <a target="_blank" href="https://bit.ly/ISw7Mq">five o'clock</a>, unless you own a unit that is, in which case you’re at <a target="_blank" href="https://bit.ly/ISxlY2">four o’clock</a> . Adelaide is also at <a target="_blank" href="https://bit.ly/ISw7Mq">five o’clock</a>, but Sydney on the other hand is languishing somewhere between <a target="_blank" href="https://bit.ly/ISyX41">‘3.30 and 5.30’</a> (depending on your “time zone”, no doubt,) and on it goes. 
I’m not averse to predicting property movements.  I’ve done it myself on numerous occasions.  There’s almost an irresistible urge in all of us to “foresee” the future like some modern day-prophet and to be fair, there are fundamental historical patterns that give good hints to the basic principles of timing a market. 
There’s a quirky joke that goes along the lines ‘If you want to tell God a joke, tell him your plans,’ and whether you’re a believer or not it makes the point aptly.
Just take a look at the tumultuous waters over the previous few years that led the majority of economists not only to miss the GFC and the pace of international recovery, but to follow this with continuous misinterpretations on either a rise or fall in the basic cash rate and subsequent strength of the housing market. 
As we’re continually told, on paper Australia has a strong economy, unemployment is low, we’re on the brink of a recourses boom, inflation is “under control”, there’s a shortage of homes, and the population’s growing.  On the surface, it’s the perfect formula for price rises.  However, it didn’t inspire purchasers to get out their wallets in 2011, as record low turnover in overall sales for a decade proved.  Like a snowball effect, as soon as something drops out of sync with a widely accepted formula, a fall in confidence hits the market and impacts predictions even further.
Second-guessing the RBA rate movement has become a popular sport on Twitter and various other media outlets.  Daily I have reports flying into my inbox regarding the most recent RBA rate call. Most are opinions, however a large number have already made predictions assuming a drop in rates for the next meeting.  It’s not based on anything specific, just an interpretation of “hints” contained in the latest minutes as if the decision has already been made – which clearly it hasn’t. 
Furthermore, as far as the home buying market is concerned, it now incurs little relevance – the banks call their own tune regardless of the RBA.  Therefore the auctioneers in Melbourne these past couple of weekends who shouted out in their auction preambles that we’ll soon experience a fall in rates to take us into an upward trajectory of the property cycle are either living in a box or under the impression that the buying market is. 
As for other predictions, it’s true Australia has a shortage of well-located homes where our rising population want and need to live, and it’s true the Australian market is fragmented, with some areas performing better than others as we move through various stages of the property cycle.  However, it’s also true that successive governments have played their part in creating a model of ownership designed to favour the investor and contribute to the shortage of affordable property for home buyers in the areas where most want to settle.
It’s called “negative gearing”, and it’s the proportion of seasoned investors who take advantage of this tax strategy who eagerly watch the property clock I cited above.  Investors make up roughly 35% of the buying market and many have climbed the equity ladder to own a substantial portfolio of property acquisitions.  Figures from the Australian Taxation Office suggest around 2 million Australians claim deductions for net rent, and figures from the RBA show around one-quarter of all household credit is there for the purpose of holding an investment property.  According to the ABS, the level of household debt over the last 18 years grew twice as fast as the value of household assets.  The ratio of household debt over this period has doubled from 9% to 19%. 
On top of this we now have a growing numbers taking advantage of changes in policy that allow investment property to be purchased as part of a self-managed super fund.  So attractive is this proposition that for those with the funds built up to support the strategy, purchasing an established residential property with a long-term trajectory in areas where – under current conditions – an increase in value is inevitable is – for all intense and purposes – a no brainer. 
Real estate industry professionals love investors.  The sales process is generally smoother with less emotional content involved, and the real estate agency often benefit from the rental management of the property, thereby creating a lasting relationship with their client’ and an ongoing income stream.  The majority therefore readily accept the policy.
I can cite all sorts of facts and figures to you regarding negative gearing and arguments for and against the strategy.  It was arguably introduced to increase the supply of housing for those unable or unwilling to buy.  Due to our changing lifestyles and the way we now live and move, most have need for a transitional period in rental accommodation at various points in their lives. Therefore investors make up an important part of the home-buying fabric.  It’s also argued that it reduces demand on public housing.  However, as I pointed out <a href="https://bit.ly/HM8ofY">last week</a>, due to rising prices sandwiching many out the market, demand for public housing is hardly reducing!
Then there are those who take you back to the Hawke/Keeting era during which negative gearing was to some extent “quarantined”.  The result was marginal at best, there was a dampening of investor enthusiasm and a small increase in rental yields in two states.  The changes didn’t stay around long enough to take us through this transitional period and enable effective judgment of the results. Stringent lobbying by the voting real estate fraternity and property investors ensured at first opportunity the policy was re-introduced.
At the time, there was overall fear that the market would crash, which obviously didn’t occur.  However, I have no doubt if the policy were removed, or even scaled down, there would be less demand for established stock and a subsequent dampening in prices.  No vendor enjoys the thought of their property falling in value, however isn’t this precisely what we need if we’re to allow new home buyers to gain a foothold?
Some argue that if housing were to fall in value, home buyers would be discouraged from purchasing fearing a loss on investment.  So embedded is this obsession with watching property prices rise and fall, we seem to have missed the point of why we need it in the first place. Although there’s no doubt, if prices were to stagnate for an extended period of time, or even deflate in value, some would delay a purchase hoping for further drops.  However, it would be a short-term transition.  It’s a natural human desire to own property once you reach a period of life where there’s a need to settle rather than sojourn. The desire for safety and security runs to the very roots of us all.
 
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In countries where property prices are suffering under the consequences of the GFC, residents would still rather own than rent if given the choice. However currently in the US and parts of Europe, many aren’t able to qualify for a home loan under present conditions and therefore don’t have the choice. Regardless of this, if the current model of negative gearing were scaled down, we’d still be a long way from having a surplus of homes, making it extremely unlikely we’d see a crash as some have presumed.
Eight years ago, the RBA cited negative gearing as one reason for growing un-affordability in the market place.  However, those advantaging from the policy have argued that this is somehow OK because we’re not the only country to employ negative gearing as a tax strategy.  As Saul Eslake (of the Grattan Institute) has <a href="https://bit.ly/HUUqTU">pointed out</a> on many an occasion – we may not be the only one, however our policy is at the front of the queue in terms of generosity.
The fact that a few other countries also employ similar incentives provides no realistic platform to argue in favour of the policy.  The real estate market in each country, and within the localities of each country, differs in terms of supply, demand, and affordability.  It’s impossible to compare one against another with a sweeping statement to justify a policy affecting the intrinsic needs of <country-region><place>Australia</place></country-region>’s buying market.  Australia is one of the least densely populated countries in the world in terms of head of population per square metre.  Much of our land is currently un-liveable, and yet we have a rate of population growth that beats even that of <country-region><place>Saudi Arabia</place></country-region>!  To top it off, we’re reportedly set to have a housing shortage of 35 million by 2050.  With fewer and fewer able to afford their own place of residence, the future looks anything but sunny for new home buyers.
The call from successive governments to first home buyers looking to get a foothold to go to the periphery of our cities, where housing is marginally cheaper simply because facilities are scarce and public transport is all but non-existent, is hopeless.  The primary reason new estates don’t turn over a reasonable proportion of sales outside of inflationary stimulus packages such as the first-home owners’ grant., isn’t because home buyers don’t like new homes.  It’s because the new areas give no promise of essential community facilities and are hampered with expensive development overlays intended to fund the “ever-promised” schools and public transport systems that seem to take some 20 years to implement. If you want buyers to move there, you’ve got to do more than just build an excess of roof space.
Furthermore, the level of high-rise developments intended to increase the supply of affordable accommodation in our cities are often poorly designed, provide a low-quality living space, and fall out the reach of most first home buyers due to stringent lending restrictions from banks, who see the purchase of this type of oversupplied accommodation a high risk acquisition.  Coupled with this, due to the high number of investors who buy into the new developments looking for a good yield, they don’t offer affordable rental accommodation (hence why so many sit vacant).
The reason why first-home buyers are buffeted out to the outer suburbs is because our models of investment – whether it be negative gearing, land banking, or borrowing to purchase in a self-managed super fund – are solely reliant on capital growth.  You don’t need a master’s degree to understand that the levels of capital growth we’ve been used to seeing in Australia are principally caused by decades of poor planning, which has ensured everyone is squashed around our capital cities for employment and reasonable access to good schools and other essentials such as a local GP and public transport.  For this reason, 93% of investor house and apartment purchases are in the highly sort after inner-suburban locations where most people need to live if they don’t want to face a life stuck in paddock land.
Let’s be realistic about this, it’s essential we encourage personal investment as a plan to support retirement.  Furthermore, there will always be a need for property investors to provide accommodation for those unable to purchase.   However to put policies in place to encourage this in the highly sought-after home buyer suburbs, at the expense of a growing number of people who have no hope of ever owning their own place of residence, does nothing to promote a fair and prosperous democratic nation for all.  It simply splits the population down the centre between those who have and those who have not.
Joe Hockey may want to reduce the country's expenditure on welfare; however under the current system of ownership, which tips the market in favour of the investor and out of reach of the first home buyer, there is little hope of doing so.
The reason we need a policy change isn’t just about reducing affordability in the inner suburbs, it is essential we start creating models of ownership to encourage investment in the outer suburban thresholds where new supply is dearly needed and communities need to grow. At the moment, if forced to locate into an outer suburban zone, until facilities are provided, most would rather rent than buy, at least until the level of population warrants substantial government and private investment to build the facilities to attract “settlers” not “sojourners”. Therefore investment in these areas is sorely needed – investment that does not rely on capital growth to prosper. 
Back in 2007 an article was posted on <a href="https://bit.ly/IIAJA1" target="_blank">Smart Company </a> predicting “within the next two years legislation will reduce the scope of negative gearing as a taxation benefit.”  Last year the Gillard government reportedly <a href="https://bit.ly/IIBEke" target="_blank">sounded out unions</a> opinions on scaling down the system.  It was also a key recommendation in the Henry Tax Review.  However to date, nothing has been done. 
I can’t help thinking back to a talk I attended where a Victorian state minister was lecturing on the state of our economy (I won’t mention names).  During the course of his speech, he revealed he had ownership of nine investment properties – the majority of which are negatively geared.  He’s no fool – he understands under the current system of investor ownership, property prices in the inner- and middle-ring suburbs prices will continue to inflate over the long term.  Therefore, debating with him – or others like him – for a change in policy will obviously inspire opposition. 
Considering we have growing numbers of investors (and voters) employing negative gearing above other investment strategies, there’s no security – should a change in policy be introduced – that it would last the course of the current or even subsequent governments.  However ethically speaking, for the sake of Australia’s growth, a change in policy (through either “quarantining” current rules or scrapping the system in stages) is a much-needed requirement. 
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://bit.ly/I7SGaw">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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Negative gearing is unethical

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There’s an old Jewish proverb, which – as a rough translation – says: “People come to poverty in two ways: accumulating debts and paying them off.” Perhaps our politicians should take note, because it’s clear we’re becoming a society split down the center of “those who have” and “those who have not”. You don’t need the brain of a statistician to work out why the polls are so low.  It’s not just about lowering hospital waiting lists and reducing ever rising electricity bills, which are always on the agenda for any state or federal government in power. Neither is it about handouts to “appease” changes in policy such as the carbon tax, or other “nanny” initiatives.  No – it’s as simple as an effective policy to provide shelter for those unable to commit 50% or more of their wages to accommodate for their needs – let alone that of a growing family.
I admit to being a bit of an ABC junkie, always tuned into one of the various news stations.  I listen to MPs’ voices coming over the airwaves daily, reminding me of Australia’s “sunny” outlook in the light of Europe’s economic woes. I hear our Prime Minister remind me that by 2013 we’ll have a surplus and I read reports of the flood of “economic” migrants flocking to our shores to take advantage of our low unemployment status.  This is all fair enough and on the face of it, not untrue.  However, while there’s no shortage of “those who can” in the divide of the “wealthy” and the “struggling” – there’s an increasing shortage of “those who can’t”.
Most recently I read of an English northerner, a hard-working former paper-mill operator by trade, who refused to go on the dole in the UK to provide for the needs of his family of dependents (all 13 of them).  Frustrated with the lack of opportunity in the UK, he’s taken to the seas and like a pioneer – determined to make a new life for his family – has moved to Queensland.  Staying with relatives, he believes our “positive portfolio” will provide opportunity here, which he’d be unable to furnish elsewhere – and he’s probably right.  However, what he may not have factored in is the cost of housing.  With 12 children among his dependents, finding a house to comfortably accommodate his needs won’t be easy – or cheap. Especially if he wants to be within cooee of transport, schools, and shopping facilities.
But it’s not just about purchasing; the rental market in every capital city is stressed to the max. You may pull me up here and emphasise certain media reports quoting figures “indicating” that Melbourne’s vacancy rate has “softened” under the boom of construction.  If so, it’s worth remembering most of this new construction is in the form of high-rise accommodation, which offers neither affordable rent nor (for those on an average wage) a quality lifestyle.  Investors, looking for good yields, have purchased most of the smaller apartments and you’d be hard pressed to get a studio flat with no parking facilities for less than $300 per week – hardly affordable for those on an average wage. 
While writing this, I have just paused to have a conversation with a young girl about to vacate from her current accommodation due to the current owners wanting to move in.  We spoke briefly about an established two-bedroom apartment that has just been let.  Such was the demand for this relatively small unit, numerous applications had been fielded, offering some $50 per week above the advertised yield (which isn’t by any means an unusual occurrence for apartments in boutique blocks of this type).  It doesn’t just happen in affluent locations, it happens in the poorer areas also. Suburbs in the outer-western Melbourne regions where the market’s arguably more affordable also fall under high demand for an increasing number unable to save for their own homes.
During the conversation we touched on the subject of the current “abundance” of high-rise apartments currently sitting vacant in the CBD (SQM has the vacancy rate sitting at 4.6%); however her comments were along the lines of “small, expensive and anything but appealing”. 
I was then told how she always offers three months rental in advance (not including the bond, which would be an additional cost).  However, even this is often not enough to beat the competition.  For those unable to provide such incentives, it makes you wonder how low-wage recipients and the unemployed cope with finding appropriate shelter. Perth’s vacancy rate has now dropped below 1%, Sydney 1.5%, Adelaide 1.3%, Canberra 0.7%, Darwin 0.7% and Brisbane 1.6% (all figures courtesy of SQM). Possibly the only capital offering a marginally easier terrain is Hobart, with a vacancy rate of 2.4% – however, it’s sparse comfort. 
Tenants who are knocked off the rental ladder (a frighteningly increasing statistic nationwide) confront a truly dire situation.  In 2010 – even after a tightening of the rules of who could, and couldn’t, apply, there were 248,419 people on the waiting list for government-assisted accommodation. The recent McKell institute’s <a href="https://mckellinstitute.org.au/">‘Homes for All’</a> report cited the increased and very real need for public housing.  The latest <a href="https://www.nhsc.org.au/supply">‘State of Supply’</a> report highlighted similar issues.
A recent and damning audit commissioned by the Victorian government <a href="https://bit.ly/HMBtVI">‘Access to Public housing’</a> reads like a company about to go into administration.  Apparently, Victoria has “a $17.8 billion property portfolio, housing 127,357 Victorians”; however, there is a massive 42% gap between income and rental expenses.  Furthermore, the deficit is set to “more than double from $56.4 million in 2011, to $115.1 million in 2015.” Victoria’s apparently “facing a cash crisis with all cash reserves expected to be exhausted during the 2012–13 financial year based on current budget estimates”!  The report can’t even pinpoint where it all became “unsustainable” – “because the division has funded deficits by deferring acquisitions and maintenance and using cash received in advance for long-term programs, along with unspent cash from capital programs.” Recent news confirming the waiting list for public housing in Victoria has fallen by 1,582 is no light on the horizon in the face of such a dire situation, especially considering there are in excess of 38,500 still stuck in “limbo”.
To be fair on the current Victorian government, this is the most detailed report I can find on the subject in the Auditor’s archives.  It’s therefore evident the crisis spanned back well into the previous government’s term and was never adequately addressed or assessed. In light of this, it’s positive that such a review was indeed commissioned, however it’s yet to be seen if the “insurmountable” problem is able to be resolved in the near or long term.
They are all facts and figures that make up part of one of many public reports – reports that have been addressed previously – reports that cost taxpayer money – reports that result in little if any change no matter who’s in power. 
Of most concern is the national review on how housing affordability has been managed.  On the Australian National Audit Office’s <a href="https://bit.ly/IBJrQi">website</a> you can source a damming overview into the administration and implementation of the federal government’s “Housing Affordability Fund (HAF)”.  The objective of this fund was to increase the supply of new homes whilst also reducing their cost, with the key focus being on the “reduction of housing development costs associated with infrastructure projects”.  This is an issue that sorely needs addressing, yet the report is an embarrassment to read. The funding was to be in the form of $500 million over a five-year period from 2008-09 to 2012-13, with a further $12 million allocated for administration costs. Qualification for the funds was assessed on a strict “needs” basis looking at the number constructed, against the projected savings to the home buyer.  In other words, the funds would not be rationed equally across all states. 
All was going OK, until a shortfall in spending to the tune of $12 million was brought to light.  There followed an administration nightmare, with funds allocated to projects that fell clearly outside of the assessment criteria.  Projects that should have been funded weren’t, and those that failed the assessment guidelines and should have been rejected were approved.  Furthermore, it was clear that funded projects did not make evident the amount of savings passed onto the buyer, and neither were the results of those funded fully assessed on completion.  All in all, considering the result to date has only assisted 749 home buyers for an outlay of $12 million in administration costs and a promised $500 million for the projects, it’s clear better strategies could and should have been implemented.
Comparing property markets across the world is difficult due to the way statistics are collated, with some markets substantially less transparent than others.  However, in the <a href="https://www.demographia.com/">International Housing Affordability Annual Survey</a>, the only market that eclipses Australia in terms of income-to-housing cost is Hong Kong.  The survey rates each country by dividing the median house price by the annual median pretax wage.  Australia has a score of 6.7; however, Hong Kong has a score of 12.6.  While there’s plenty of healthy debate over how the figures are calculated, <a href="https://www.propertyobserver.com.au/residential/sydney-and-melbourne-more-affordable-than-demographia-suggests/2012012953158">showing that it’s not quite as black and white as it seems</a>, there’s no doubt Hong Kong stands out and it’s therefore worth looking how affordability has affected its most needy – especially considering we’re well on our way to a similar level of disparity.
The country is one of the most densely populated in the world – and with such a finite source of land, it’s no wonder the existing real estate holds its price. Hong Kong has no option but to build upwards – high-rise living is therefore widely accepted, and apartments are small by our standards.  However, since 1953 when the first public housing scheme was initiated, the number of people living in government-assisted accommodation has now reached 50% of the total population. The split between those who can and those who can’t purchase has led to a range of initiatives aimed at providing adequate shelter for not only the poorest, but for increasing numbers of low- and even middle-income recipients not qualifying for public housing, but still sandwiched out of ownership. 
Schemes now include public rental housing estates, home ownership scheme estates, tenants purchase scheme, flat-for-sale schemes – the list goes on. None of the above mentioned has been a “cure” for which statistics of “homeless” have now been replaced with those “caged” in high-rise accommodation.  Accommodation where the standard of living is no better than battery farmed chickens in a coop.  However, action has been taken and to date, it seems to far exceed Australia’s efforts. 
Here we are fast losing the battle altogether, however unlike Hong Kong we have one of the least densely populated countries in the world with an abundance of land – land we haven’t properly used! Furthermore there are a growing number who, like those in Hong Kong, are “sandwiched” – unable to qualify for housing assistance (for which application rules have been tightened) and yet can’t afford adequate rental accommodation close to the transport facilities they need for employment.  Yet we’re told daily how prosperous Australia is in comparison to other nations as if everyone is ‘enjoying’ the ride.
Do we really want to end up like Hong Kong with 50% of the population needing government-assisted housing simply because successive governments haven’t gone far enough to action effectively the recommendations of their various multimillion-dollar funded reports?  Planning rules must be relaxed in outer-suburban areas.  There needs to be a fresh look at the requirements to build “green”, which I’ve previously spoken about <a href="https://bit.ly/rrfUxd">here</a>.  Provision of facilities, making regional locations feasible for home buyers working in central towns and cities, need to be timetabled and implemented (another issue I’ve addressed – along with others – on numerous occasions). 
We don’t need an “HAF” that helps fewer than 1,000 recipients for an outlay costing hundreds of millions. Nor should we be giving out “nanny” incentives, which place inflationary pressure on existing real estate such as the FHOG (first-home owners’ grant). Instead, we should remove stamp duty on new dwellings and consider a change in policy on negative gearing and other such recommendations cited in the <a href="https://bit.ly/HMDOjA">Henry Tax review</a>. 
We may be rolling along on a mining boom, which looks great on paper.  Nevertheless, like the “unsinkable” Titanic on calm waters, no one seems to be flagging the great iceberg ahead. 
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 – Australia wide – for home buyers and investors.
Iceberg photograph courtesy of <a target="_blank" href="https://www.flickr.com/">Flickr</a>.
 
 
 
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Unless we address affordability, Australia's property market will hit an iceberg: Catherine Cashmore

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Results from various reports from every corner emphasize the national shortage of housing – most notably the 2011 National Housing Supply Council’s State of Supply report, which emphasizes that during 2009-2010 financial year the gap between supply and demand expanded from 28,000 to 186,800 dwellings.
That’s a big jump, indicating that we’re facing a real crisis and when looking through the crystal ball the outlook doesn’t get any sunnier.
The report says that by the end of the 2012 financial year we’ll have a gap of 243,000 dwellings, 2014 a gap of 300,000 and by 2024 the figure will have reached more than half a million.
They are numbers we can’t easily conceptualize but everyone will have noted the dramatic changes in the topography of our cities during the past 20 years and the subsequent consequences to our lifestyles, including traffic congestion, pollution, crowded public transport systems, etc.
The easy answer is to start mass building projects, expanding outwards and in inner urban areas upwards, and via various spurts of growth that is exactly what has happened.
However it seems that we’re not doing it fast enough and rather than ramping up construction the pace is slowing quite dramatically. Latest ABS statistics show the number of new dwellings approved for construction fell 7.8% in February 2012 seasonally adjusted.
The Housing Industry Association’s National Outlook for Residential Building Housing Starts quarterly report says that should the current trend continue figures will continue to fall some 12.4% during 2011-2012, making it the seventh consecutive drop during the past nine years.
The only area of construction which seems to be booming is demonstrated in the passion owner occupiers have for renovating existing dwellings.
During 2010-2011 some $30 billion was spent on upgrades, pushing the price of established housing ever higher and certainly out of reach of first home buyers.  No wonder Bunnings is one of the few retail outlets bucking the downturn and recently announcing the creation of 6000 jobs nationally.
Of course construction for new homes is only going to improve if the appetite for new housing from the buying market improves.
The differences between underlying demand and effective demand need to be clarified.
The first is assessed from the level of migration and changes in population growth and the second – effective demand – is driven by the buying market, which is dictated by market forces. When it comes to supply of new housing the pace of construction can only be driven by the latter.
The number of finance commitments for the purchase of new dwellings for owner occupation, seasonally adjusted, fell 6% in January 2012 and is now at the lowest level since the onset of the GFC.
Demand for new construction only ever seems to rise by any significant degree when incentives are ramped up for first home buyers, such as the removal of stamp duty costs for a new property under $500,000, which is the case in NSW.
There are various reasons for the low demand apart from the overall malaise in the buying market, which is currently being hampered by affordability along with concerns about the economy, job security, and interest rates.
New housing falls into two main categories. The first is high-rise construction of comparatively expensive 1 and 2 bedroom apartments, which are hastily built, commonly located on main roads, lack character and come with high owners’ corporation fees, therefore holding little appeal apart from investors looking for tax benefits.
The other is the outer suburban style “Mac mansion” found in new housing estates which have commonly been planted in paddocks with sparse local facilities, poor transport systems and no established sense of community.
It doesn’t take an intelligent mind to understand why the demand is so low. Below are a couple of recent comments I picked up from online conversations on the subject which sum it up nicely:
“I'm looking to buy/build my first home and cannot justify the expense and lack of infrastructure/connection in the areas where land is offered.”
“Maybe if builders started actually building houses from scratch fully insulated and by that I mean walls and floor not just roof space, with double glazing as standard on an 800-metre block, then you could justify those ridiculous prices for a blot in what was once a paddock in the back of beyond.”
“These places also need to be built somewhere where there are basic amenities – anyone with a grain of sense now knows that a new home in an outer Melbourne suburb comes complete with long drives (no public transport) to work, school, shops, medical services and entertainment.”
Another major reason is failure of local governments and councils to understand what drives a home buyer to settle rather than sojourn.
Proximity to work, schools, shops and transport are of course necessary, but we all end up settling where we feel a sense of belonging and that is down to the community that surrounds us.
Community means different things to different people – in a regional town community people are far more likely to take an interactive hands-on role with the immediate surrounds as opposed to an inner urban area, where the population per capital is greater.
In urban areas community is not so much focused on conversations we have with neighbors over the back fence – it’s often formed from those who sit next to us in the workplace, people we interact with over the internet or Skype and more importantly the atmosphere generated by local facilities that give us a sense of enjoyment, enhanced activity and life.
Those who purchase in an urban atmosphere may go a day without conversing with anyone in particular but still have that sense of belonging generated by the local community. In essence people don’t buy a home, they purchase a lifestyle or to put it another way, people don’t live in houses, they live in the communities in which those houses are situated.
High rise construction has its own issues. Not only is it harder for a first home buyer to purchase (with banks generally seeing it as a higher risk proposition, thereby requiring a bigger outlying deposit), they are often no more affordable than established units, coming with much higher owner corporation fees and commonly located on busy main roads.
For that reason larger numbers are rented, demand from most home buyers is lacking and there is no getting away from the fact that for many they are eyesores on the horizon.
Local communities have protested in vain against the development of high-rise towers and it’s not just a bad case of NIMBYism, it’s a desire to have an active role in how suburbs are developed.
It’s important to allow residents that involvement in order to nurture growth in the communities but so far protests have been overruled on just about every occasion.
Rather than providing affordable accommodation for first home buyers the number of home buyers who prefer this type of accommodation tend to be a higher-earning demographic which picks out premium apartments in the block and have an income to service inflated fees.
Rents are also no cheaper than established apartments, in fact due to the newness of the development they are often a good deal higher.
In Melbourne the recent burst in rapid construction of those dwellings, which have a strong investor market but suffer low owner occupier demand, has pushed vacancy rates close to 3%.  Because of that many think the rental market is somewhat softer in Melbourne and consequently yields will fall.
In our Melbourne office’s rental department demand for the much lower number of established low-rise apartments has been so intense that there have been many applications offering more than the advertised weekly rate for available tenancies.
There has been growing evidence since the 2006 census that single-person households are no longer growing at the rate previously speculated, with a marginal increase in household size being noted, but how far the wheel will turn in the opposite direction is debatable.
When it comes to purchasing property it generally happens at the “couples” stage, where combined incomes and the future aspiration of forming a family unit pushes people to “settle”, moving out of rental accommodation or living with relatives.
When they do they are most likely to look for something larger than a typical 2 bedroom, 1 bathroom apartment.
Whether it’s a townhouse, detached family dwelling with backyard or small single-level subdivision, it’s important to remember couples with children still make up the largest buying demographic, therefore it is essential to provide a mix of housing across all communities that provides viable accommodation for all – and we’re simply not fulfilling that need.
Governments seem fixated on spending large amounts of taxpayers’ money preparing expensive reports on how to effectively increase the supply of affordable accommodation but I don’t think anyone would argue that we’re not even halfway to winning the battle – and if anything the situation is worsening.
In one of the Annual Demographia International Housing Affordability surveys there is an interesting picture painted that compares Sydney and Melbourne growth with Dallas Fort Worth and Atlanta in America.
In 1981 both cities were a similar size to our biggest capitals but in America they provided cheap land on the outskirts of city boundaries and unlike Australian counterparts, who believed it was too hard to nurture such growth due to the expense of providing infrastructure to newer suburban districts, they proved the theory wrong by doing just that –expanding public transport systems into the new suburbs as part of the plan.
Neither city has suffered the same level of housing affordability we’ve experienced here and it’s also worth noting that Dallas Forth Worth’s 2030 growth plan includes further expansion of train lines, obviously envisioning the wisdom of such a move despite the current financial crisis.
It’s vital that we start listening to local community needs to understand how to effectively increase and nurture growth and expansion of our suburbs.
Ask a community in an outer suburban location what they need to grow and they’ll answer “community facilities” and more often than not a train line along with better public transport systems.
Ask a community in an inner suburban location what they need and the debate will focus on greater balance in the type of accommodation on offer, such as small-rise apartments, townhouses, better public housing facilities and re-evaluation of the number of empty homes as well as old industrial sites.
It’s also not unreasonable to draw a line under the rate of population growth rather than cramming as many people as possible onto one site, as is the case with high rise accommodation.
It’s a welcome relief to see various reports emphasize such points such as the recent McKell institute’s ‘Homes for All’ paper, which touches on some good policy changes which should be openly debated.
Compared to other nations suffering the kickback from years of greed we’re a mere teenager in our stage of growth and it’s clear that what we’re doing is failing to adequately provide for the needs of all. It’s favoring those who are already home owners and not providing viable options for those who aren’t.
It’s been a long time and many failed promises since Gough Whitlam’s It’s Time speech, which gave hope of affordable housing to those locked out of the market.
It’s clear that unless authorities stop and listen to community needs we’ll continue to lose the battle.
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 target="_blank" href="https://ten.com.au/the-circle.htm">The Circle</a> and a senior consultant for <a target="_blank" href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs – Australia wide – for home buyers and investors.
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The death of the housing market – for all but a few

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We’re about to launch into the mid-season compulsion with renovation programs.  It seems only moments since the last great furore over Channel 9’s The Block, which hit our screens mid last year.  During the course of the open house inspections, more than 300,000 people queued outside the homes to take a sticky beak over the intricacies of design.  Details of the price initially paid, previous owners and subsequent buyers were fished out and endless analysis followed. Such was the furore that many were convinced sales expectation would be achieved. However, the finale was heralded a disaster.  Only one property sold under the hammer and when renovation, stamp duty and subsequent sales costs were totted up, none of the homes – in and of themselves – made a profit.  However, that wasn’t the point.  Far exceeding expectation, it was the station’s highest-rating show of 2011 and factoring in the sponsorship and endless publicity, the “owner” (Channel 9) could have given away the homes and still made a healthy profit. 
Obsession with property isn’t unique to Australia, however it’s manifested itself as one of the great foundations of our culture to the point of being heralded – above everything else – as “The Great Australian Dream”.  Go out on a Saturday in Melbourne and you’ll see street auctions attended by 50 or so people, of which three-quarters will be there for the fascination value alone, intently concentrated on the numbers and either comparing their own properties against the result or dreaming of pursuing a similar acquisition. Although the desire to own property doesn’t set us apart as a nation and no one relishes the thought of paying a landlord well into old age, other countries have accepted a culture far more adapted to renting than owning and consequently overall demand for the purchase of property has been lower along with price appreciation. 
<country-region><place>Germany</place></country-region> is one such relatively well-known example. In Germany, the accepted culture is to rent rather than buy, with less than 50% of the population recorded as “owner-occupiers”. Because of this, rents have outpaced house prices since the year 2000. As with any country, the market is fragmented, with some cities performing better than others and there’s still a clear east/west divide. To accommodate a larger rental landscape, yields are monitored closely with a regularly updated publication called the Mietspiegel (Rent Mirror), which lists average rent prices in each district, and landlords are required to adhere to them. Leases are expectedly lengthy and agreed over years rather than months.  The responsibility to decorate or renovate falls upon the tenant, not landlord, and is often part of the negotiated contract. Tenants are given free rein to make the property at least “feel” as if it’s their own providing they return it to a “neutral” state upon vacation. 
The rental market in Germany is tight and it can take months for families to secure suitable accommodation.  In some towns, at least half the family wage is dedicated to the task. You may wonder why more don’t decide to purchase, and there are various reasons attributed to this.  Unlike in Australia, banks don’t court the buyer market – there are no property grants and few tax incentives.  Deposits have to be large and there’s a general, inbuilt, reluctance to borrow or even spend on credit. Interest rates are fixed – thereby avoiding the inflationary tendances changes to a variable rate can evoke – and population growth is low and has been falling since the year 2000. 
As with any country, Germany’s growth rates vary across different regions depending on supply and demand, however since the mid-1990s capital growth in the housing market has been unimpressive at best. Perhaps this is one reason we don’t see the same rate of real estate obsession in various European countries such as Germany as we witness here? For example, you won’t find streets lined with real estate agencies in Germany, or listen to discussions on “the state of the market” around the kitchen table. Property advocates are there to help people secure rental accommodation rather than purchase or sell. It’s a different landscape altogether. 
Australia’s obsession is built into the very fabric of our culture. Even the modest backyard cubby house has started to take on grand proportions, with companies specialising in building “eco-friendly” models complete with solar panels and plasma TVs. For those interested, they can fetch prices, up to, and in excess of $15,000 – and when you see the work involved, there’s no surprise why.  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. I’m not telling you anything you don’t know; investment in bricks and mortar is encouraged from every quarter, from 95% LVR loans to open-handed tax incentives and property grants. 
However, we seem to have worked ourselves into a catch 22 situation because as the market ebbs and flows through its cycle and the supply of affordable and appropriately located accommodation diminishes, rental demand increases and yields rise, thereby locking a large section of society out of the market all together.  Consequently, gaining a foothold on the property ladder for first-home buyers is both a huge commitment and celebrated achievement. Once the first acquisition has been secured, it’s no wonder expectation and anticipation surrounding property prices feeds the obsession we feel when analysing price growth. However, in this respect, there’s a fine line to be drawn between obsession and greed. 
As entertaining as they are, programs like Channel 9’s The Block play to the latter, feeding 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 old-styled home through a carefully thought out renovation is a fantastic idea if the owner is a) careful not to over capitalise and b) hold 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 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; however 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 <a target="_blank" href="https://www.propertyobserver.com.au/residential/the-block-buyers-face-a-proposed-12-storey-richmond-apartment-block-threatening-their-investments/2011101851982">compromised position opposite a multistorey car park</a>, is debateable. However, no doubt this year’s series will attract a similar level of obsession as the last. 
Back in 2010, the consequences of a nation obsessed by renovation was discussed by Phillip Lowe – assistant governor at the Reserve Bank. He, along with others, argued that our obsession with renovating homes and building ever “bigger and better” is stagnating investment into new dwellings and exasperating the nationwide shortage of affordable accommodation.  The more we pour into renovating existing dwellings not just for our own living :wants”, but with a view to expecting a return “plus profit” on the initial outlay, the more expensive property becomes and the harder it is for first-home buyers and renters to secure a foothold. However, higher prices aren’t limited to homes renovated in inner-urban locations; government overlays and strict building regulations imposed on builders to ensure every new home meets the new “six-star” energy rating now adhered to in most states places additional and arguably unnecessary premiums on prices. 
It’s yet another example of how this obsession to build bigger and better has somehow traversed itself into policy proving that “affordable” isn’t the priority, less carbon emissions are.  Consequently, prices are unnaturally high in the growth regions of our capital cities – or at the very least, higher than they should be. As the population slows and affordability continues to take a hold, it’s likely that those who purchased new developments in the boom phases of the market cycle will lose money on their investments, at least in the short term. 
This requirement and obsession with property along with overcapitalisation on renovation hamstrings the market making property ever more unaffordable for a large section of our society. It’s not unique to Australia; other countries have similar issues providing affordable housing under strong population growth. Israel is one such example. Israel’s recent “Occupy movement, during which a record 7% of the population moved into a tent city, was initiated by a single renter unable to secure affordable accommodation in the inner-urban localities – areas with adequate facilities not available on the periphery. However, in Australia we have something these other countries don’t have, we’re different.  We have an abundance of land along with a comparatively smaller population and one of the best-performing economies in the world! 
It’s therefore should be a priority that we move the focus onto the low-income groups and come up with a broader debate on how we can make property more affordable for the larger percentage of our population most at need – both renters and home buyers.  It’s not just about building more roof space, it’s about doing it in combination with adequate facilities which will provide options for those stuck with high cost accommodation in inner urban suburbs, combating ever rising house prices and extreme rental yields.  These policies must be addressed nationwide if we’re to secure a prosperous future for all Australians – not just a privileged few.
 
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://nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs - Australia wide - for home buyers and investors.
 
 
 
 
 
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Australia's obsession with bigger and better property is making it less and less affordable

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Over-spending on real estate is a temptation often hard to resist. It’s not an emotion restricted to houses, however as property is often the most expensive purchase most make in a lifetime – usually with the intention of making a profit from the proceeds – it’s a serious enough “habit” to ponder the psychology behind it.
This past week, the media has widely publicised RP Data’s research revealing that<a target="_blank" href="/news"> the number of home owners experiencing negative equity rose to 6.11% in December 2011</a> compared with the previous quarter, which came in at 4.9%.  The report measures “baseline” equity – so in other words, it doesn’t take into account debt levels, which are based on individual circumstance and correctly observes most owners are covering interest payments on their home loans, as well as paying down the principal.
It simply assesses the difference between what your home was worth then and what it’s worth now. A full breakdown of how RP Data collates the information is described on the company’s website and to give the company its due, it leads the way in such technology, taking into account not only location and property type, but also basic attributes of each listing such as number of bedrooms and so forth. However, while this is valuable – especially when analysing broad market movements – it cannot accurately assess why two properties with similar attributes including land size and location may differ quite considerably in their sale price – did one owner overpay? To answer this, a physical inspection and subsequent assessment is needed.
RP Data uses an “automated valuation model”, which it has assessed through “blind tests” to be “within plus or minus 15% of the actual sale price”. However, while automated models are gaining traction as a credible tool even among time-poor (and arguably underpaid) valuers (some of whom seem to think a quick “drive by” is enough to attain an accurate assessment of “real value), they simply cannot be relied upon for an assumption of current market value when the majority of Australia’s real estate market is made up of home buyers whose individual circumstance and needs are subject to attributes that can only be assessed physically.
Last year the national capital city median dropped 5.5% (RP Data), which is a big enough drop to instigate a degree of concern. Yet RP Data reveals that in assessing the disparity between the previous sale price of a home and its current market value, it can be anywhere up to 15% “inaccurate”.  Even if we’re generous and assume properties entered into the system fall closer to the mark being just 10% or maybe even 5% out in terms of real selling price, it’s not a good enough analysis to make an assumption of the exact number of properties in negative equity – which is precisely what RP Data has done.
When valuing a home, certain aspects cannot be ascertained by an automated valuation model. These include physical condition of the property, the “feel” of space, natural light and most importantly, the “emotional appeal” unique to each home buyer. All of these you can only assess via a physical inspection and yet all bear a significant impact on the final sales price.
Our lives are ruled by automated systems that churn out statistics that affect not only commodity prices, interest rates and market sentiment, but also bear an increasingly controlling effect on our society and the decisions we make for ourselves and families.  We’ve had a year during which on paper, the economy looks remarkably OK. Market sentiment has been blamed for the housing downturn, however large numbers of small businesses are struggling – numbers that are somehow missed in various statistical models or eclipsed by the mining boom. This is not to dismiss the importance of transparent data; I’m simply drawing a line between where this data is useful and where it becomes an unnecessary and inaccurate intrusion affecting the paths we take.
Property is an emotional purchase where beauty is commonly in the eye of the beholder.  Spend enough time assessing a location, walking through open homes, attending auctions, gaining access to accurate sales data, and understanding the demographics of the area-specific buying market and what may drive one property to sell higher than another, and you’ll get easily within 5% accuracy on a property’s sales price 95% of the time – something an automated model cannot independently achieve.
This is one reason why buyers’ advocates are becoming an obvious option for the time-poor who don’t have the energy to do the necessary legwork I’ve described above.
We also need to bear in mind, in some states – such as Victoria – there’s still not open disclosure to the general public of “private” sales data aside from listing the street and suburb – further details revealing the exact house number are limited to licensed estate agents, therefore any detailed research in the public domain is limited to properties that have been auctioned (of course, assuming those prices are not listed as “undisclosed”).
 
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However, for a home buyer, the assessment on how much to pay for a property is an emotional issue. What a house may be worth to one buyer is not an indication of what it’s worth to another. I’ve attended a surprisingly high number of auctions during which the next-door neighbour has been bidding for the home. Obviously a sale of land that has the potential to dramatically increase the value of the neighbouring house or apartment is worth significantly more than it would be to an average home buyer. Therefore overpaying and subsequently experiencing negative equity in such circumstances is consequential and should not be a concern considering the long-term benefit to the holder.
So are we really looking at 6.4% of homes in negative equity? Well, considering we’ve just been through a year with turnover has been at its lowest level for a decade and a drop in median value that has – in some areas and suburbs – eclipsed 10% or even 15%, there’s no doubt that those who purchased some three years ago at the peak of the market will be wondering if they didn’t over pay comparatively to today’s prices. Additionally, there are always those who didn’t research the market closely enough before jumping in, got carried away at auction and arguably overpaid. I see this often enough to genuinely believe that every home buyer should be diligent enough to get qualified independent advice prior to purchasing.
Other concerns on price paid include the number of off-the-plan sales, which are fast rising in number. Trying to value an unfinished product considering the considerable and temporary oversupply is hard at the best of times – therefore in answer to the question above, we can assume there is certainly a number of properties that are currently experiencing negative equity.
The report suggests there are some – albeit 1% – who have owned their homes for over 10 years that are looking at lower values. I would find this hard to perceive in any capital city area unless we’re assessing a location affected by floods or a regional location, therefore the exact breakdown of these results would need to be assessed further to draw conclusion. Therefore in short, yes, there are numbers who may be suffering a temporary period of negative equity, but to assess how many is quite simply impossible outside of a broad estimation (even “guess-timation”).
Aside from what I’d assess to be a report that is more of an assumption than accurate representation, there is a tendency to overpay for real estate that resides deeply in every home buyer’s psychological makeup. I’ve worked with many investors and owner-occupiers with budgets ranging from $300,000 to in excess of $4 million.  Without fail, all desire one step more than they can reasonably afford and the more money they have to play with, the more grandiose expectations become. You can somewhat understand it when dealing with a first-home buyer or a family who need a house but can only extend to a unit. Genuinely “needing” more than the budget can afford is a frustrating hazard of a rising population.
However, it’s a little harder to relate to at the other extreme and no better is it demonstrated than in those who commonly have the purchasing power to own modern man’s equivalent of the ancient castle. This is also the demographic most likely to experience negative equity when trying to sell in a downward cyclical phase.
As <a href="https://www.propertyobserver.com.au/residential/australia-s-housing-market-could-crash-if-property-s-primary-purpose-is-forgotten-catherine-cashmore/2012030553684">I’ve pointed out in previous articles</a>, since history began, housing has been an integral part of the most valuable asset man desired, fought over, possessed and in many cases died for. Land was – and has always been – the ultimate symbol of power and wealth, and owning it often holds more significance for the vendor than can be assessed in monitory value alone. In this instance, it’s not so much about need for shelter, but desire to exhibit status, and the higher the price paid, the greater the risk involved. For example, head out to the suburbs surrounding the capital that fall into the highest median price bracket, with large land sizes complete with McMansions – suburbs such as Toorak in Melbourne and Point Piper in Sydney – and the buyer market diminishes considerably. The further away from the median price bracket you get, the more volatility experienced.
Supply verses demand is what fundamentally drives market activity, therefore the less demand you have, the less opportunity for price appreciation. In a downward cycle, multimillion-dollar real estate will be forced to drop further in price in order to sell. Therefore if you’re a bargain hunter, pick the right time, and this isn’t a bad place to start! Once the cycle turns, these areas will re capture the greatest gains in median value and make a tidy profit for the astute buyer who “timed the market”.
Meanwhile, to each and every home buyer, considering we have not experienced anything near to a 40% drop in median value as exhibited in areas of the US and strong indications suggest we’re unlikely to for some time to come, you can assume any talk of negative equity affecting your property is a consequence of what a computer has assessed, not a home buyer. Once computers get to the level demonstrated in the film I, Robot I’ll take a little more notice.
 
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 – Australia wide – for home buyers and investors.
 
 
 
 
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Negative equity hurting McMansion owners, but most home owners needn’t worry

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Well, was it any surprise? Last week we saw <a target="_blank" href="https://bit.ly/wjWOIi">a report</a> publicised that blamed obesity on outer-suburban living. It wasn’t the only health issue highlighted; others such as respiratory problems, abuse of alcohol, depression, and various other mental and physical diseases resulting primarily from poor lifestyle were cited. It’s a long shot to solely lay the blame on fringe living for a destructive lifestyle. It’s true residents in outer-suburban locations are generally more reliant on their cars as their prime method of transport and therefore won’t be walking to the non-existent “local” shopping strip and various other amenities abundant in our established inner-city ’burbs, however there are many other contributory factors we must consider – poor education being the first.
However, the report wasn’t revealing anything new – for years various studies have been citing rural and “growth” suburbs as hotspots for obesity epidemics, and it’s not a problem unique to Australia – similar results are also to be found in the USA, UK and throughout the western world.
Currently our outer-suburban new estates are amongst the fastest-growing suburbs in Australia. Areas such as Wyndam City and Whittlesea North in Victoria, along with Ipswich in Queensland, Camden in Sydney, and Wanneroo in Western Australia are just a few of the fringe localities that are all outperforming in the population stakes.  Some are running high on the mining boom, however these are commonly pulling in “fly in, fly out” workers and investors more than potential owner-occupiers.
The vast majority of home buyers are heading outwards for one of two reasons – the first being affordability.  Most houses in the new estates come with an attractive median price tag in some cases well under $400,000. Considering the average home loan hovers between $290,000 and $327,000 depending on which state you purchase in, it’s no surprise to see strong demand around the fringes, especially in times on low confidence and financial instability.
Government incentives are another inducement that pull purchasers outwards. The first-home buyer boost during the GFC offering generous grants for regional purchases produced large jumps in the median house price (resulting from increased buyer demand) and also inflated population figures in many of these localities. The same results have been replicated in NSW throughout 2011 due to cuts in stamp duty for first-time purchasers (cuts that have now been withdrawn for existing properties, but remain for new homes, mostly located in the outer-suburban estates).
However, the main buyers forced to look out of town are young families unable to afford their dream in the inner-city suburbs, which for the price of a house in woop woop would only be able to purchase a one-bedroom flat at best.  For those on tight budgets, it’s not a bad option – after all, our now affluent middle-ring suburbs were once considered outer suburban with similar issues as those above.  Fast forward some 20 (or so) years later and their median house prices are considered “unaffordable” and resident lifestyles improved with better amenities. Therefore it can – in some circumstances – be a good initial footstep onto the property ladder.
For years both state and national governments have understood the importance of facilitating the outer-suburban regions with adequate community facilities such as reliable public transport systems, schools, shopping centres, leisure centres, train lines, open park land and so forth. However, the cost of doing so has always fallen heavily on developers and purchasers, resulting in limited land releases and hefty development overlays. Most notably, promises of improvements in infrastructure supposedly funded by these development overlays generally go unfulfilled.  Quite simply, local government is now facing the stark reality of unprecedented growth, which has been forecast for decades by the ABS, but hasn’t been adequately planned for – whether this be through lack of funds or poor administration.
The prevalence of obesity results not only from the lifestyle, but also the socioeconomic status of the demographic. Studies done previously by the Australian National Rural Health Alliance Inc – Australia’s peak non-government organisation advocating for rural and remote health – shows “obesity is particularly prevalent among men and women in the most disadvantaged socioeconomic groups”.  These groups are generally located in remote or poorly facilitated outer-suburban areas such as those mentioned above. Not only are there a lack of sports and leisure facilities, it’s also been shown by “market basket surveys” in the Northern Territory that the further away from the city you migrate, healthy food items increase in cost in regional localities. Results that have been replicated in studies done by the Queensland HFAB (Healthy Food Access Basket) and various other organisations both here and abroad.
However, let’s be clear about this – purchasers don’t buy into these areas just because they have no choice. The second reason they buy in these localities is the abundance of property better suited to their version of the “McMansion-style Australian dream” – preferring to compromise on location rather than house size.
The old Aussie obsession of a quarter-acre block and detached family home may have modified somewhat as the population increased, however it has never disappeared.   It’s true, flats and apartments marginally outperform house sales in capital growth statistics; however, this is due to decreasing land sizes and greater density in the inner-city suburbs, where they make up the bulk of the housing stock.
Those who hold professional positions in the capitals are often unable (and unwilling) to live distances that require long commutes to the work place or local shopping strip.  However given the choice, there are few who would choose an apartment over a four-bedroom home, and countless studies have proven this with home sizes increasing, despite household numbers decreasing. Single-person dwellers may be the fastest-growing demographic, however “family units” are still our biggest buyer market and therefore affording the size of home needed and desired in an inner “well established” locality just isn’t possible for a growing demographic.
Oliver Hume real estate agency, which holds the market when it comes to land sales, reports that even though block sizes have decreased, due to affordability, the desire hasn’t diminished for large houses. In its 2011 Survey of Purchaser Sentiment, the company points out that large houses are still as requested as they were previously.
Given choice, the majority of purchasers wouldn’t push to the outer suburbs; however they do so because they often want to buy something bigger. And who can blame them? No one really wants to live in areas of increasing density. It’s one of the major complaints inherent in inner-city residents and hardly conducive to a healthy environment.  The levels of obesity may be lower in well-established affluent suburbs, but living in overcrowded polluted streets where despite being crammed in, you don’t know the person living in the upstairs apartment, and your once-private backyard is now overshadowed by the surrounding subdivided townhouse developments, is hardly an improvement on the suburban sprawl.
 
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Believe it or not, the secret to all of this lies in “happiness economics”. If we’re going to effectively manage a growing population – something inevitable to our future evolution – we need to understand the importance of happiness in the equation.  Diseases such as those mentioned in the recent reports laying the blame for obesity and depressive illnesses on poorly designed suburbs are all stress related and prevalent in areas of high density as well as regional locations.
However, they can be effectively combated when the attention moves away from building houses to building communities. The obsession governments have had with building roof space to combat what has been widely accepted as a fundamental shortage of housing (something attested by our low vacancy rates across most states of Australia) has lead to an over supply of poorly designed accommodation, whether it be high-rise apartments, or endless rows of house-and-land packages.
We need to provide family accommodation, which we simply can’t keep doing in already overpopulated inner-city suburbs – therefore going outwards is not an option, but a necessity. However, unless we facilitate community needs vital for emotional health, we’re going to end up spending large amounts of money combating stress-related diseases such as obesity, which have nothing to do with proximity to a local gym or swimming pool.
It’s worth looking at a few places that have successfully found a solution to this paradox. In various studies that have been conducted across the country, certain suburbs have been named “the happiest place in Australia” – and they are not located inner city, with gyms and pubs on every street corner.  Results include <a href="https://bit.ly/ACGYww" target="_blank">Wagga Wagga and the wider Riverina</a> in NSW, and <a href="https://bit.ly/yOPFEE" target="_blank">Mayo</a> in South Australia. Both these areas have not proven stress free, as recent flooding and loss of housing will attest, however residents are judged happy and consequently healthy because they have a relationship with their neighbours.
Within the suburb are community facilities such as religious meeting places, local festivals, good schools, parks, play centres and so forth – more importantly, their society has an element of autonomy, where residents take the initiative and encourage involvement in local activities. Their happiness has nothing to do with income but everything to do with their connection to others.
Therefore if we’re going to keep building outwards, it’s vital we invest money at the same time into infrastructure that nurtures community involvement and provide local residents with a say in what’s developed. You can’t do one without the other – and there is no advantage waiting until an expensive government report can prove the viability of providing a train line, school or leisure centre. The return on infrastructure investment is never easy to prove on paper but then, happiness economics isn’t about money, it’s about people – and when employed correctly, it will nurture a growing populous who will prove less burdensome on the economy over the long term.
It’s not a new concept: Aristotle, Thomas Jefferson, and more recently great religious icons such as the Dalai Lama have put the pursuit of happiness on equal status to other revolutionary concepts such as liberty, democracy, and economic health.  However, let’s be clear about this – we don’t need to pursue happiness, we have it right there in the people surrounding us. Community involvement is the key, and high priority when assessing a property’s investment potential. As Rabbi Jonathan Sacks once said, “If I have power and money and give some to you I have less, however if I have love and happiness and give some to you, I have more.” As for the home buyer and investor, the lesson is obvious, you don’t buy a house, you buy a location and consequently a lifestyle – a happy community will increase the potential of your property investment two fold, and an emotion that should never be discounted.
 
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 both investors and home buyers Australia-wide.
 
 
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Community facilities are necessary to keep home buyers both healthy and happy

<a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.

A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.

Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.

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[smartcode_project:default project_id=149670 project_image_fid=360965]

“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.

From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.

The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.

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[smartcode_project:default project_id=149670 project_image_fid=360981]

Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.

A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.

Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.

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[smartcode_project:default project_id=149670 project_image_fid=360966]

Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.

“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.

Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.

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[smartcode_project:default project_id=149670 project_image_fid=360969]

Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.

The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.

“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”

The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.

The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.

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Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.

The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.

Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.

The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.

The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" />

Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.

Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.

The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."

The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" />

Campbelltown has been starved of new residential developments in the last decade.

The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.

First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

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[smartcode_project_cta:default project_id=152737]

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Catherine Cashmore

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