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GUEST OBSERVATION
Last month, the government released it’s latest <a href="https://fsi.gov.au/files/2014/12/FSI_Final_Report_Consolidated20141210.pdf" target="_blank">Financial Systems Inquiry Report</a>. 
The Inquiry led by David Murray laid out a ‘blueprint’ for the financial system over the next decade. It has been 16 years since the last 1997 Wallis report which led to ASIC and APRA being setup, amongst other things. The previous Campbell report in 1981 led to the floating of the Australian dollar and the deregulation of the financial sector.
In short, this is an important report that is listened to and will have impacts on the way financial system moves forward.
One key recommendation in the report was to ban leveraging (borrowing) within superannuation and therefore the removal of limited recourse borrowing arrangements (LRBA). LRBAs have been growing at an astounding rate as property investors have been able to use all the tax benefits of self-managed super funds to buy investment properties in a low tax rate environment. Obviously with the love of property Australians have, this has been a great idea for some and not so great for others.
The reason Murray is worried about borrowing and for considering banning these arrangements is due to the leveraging of assets may destabilise the superannuation industry sometime in the future if property prices should fall. He is also concerned by the shear number going forward and does this make our superannuation industry property heavy.
The government may after the consulting period which finishes on 31 March 2015 decide to make an immediate change from any day going forward. If it believes it is a wise suggestion, they would remove the ability to borrow inside superannuation for property and make this change for future arrangements only and all current SMSFs can continue as normal.
So is this an opportunity you could miss?
It is important to be very mindful that this is not for everyone. Investing in any property has different associated risks and especially when using debt. One of the drivers for change, is down to there being greedy property spruikers that have been targeting lower balance disgruntled superannuation members with new properties for sale.
Spruikers have been using Australians love of property as bait and selling properties to unsuitable super members. This is the real risk for this strategy; purchasing poor property at top prices with no diversification in place or buffer if things should go wrong. I have seen this first hand. I have been offered and absolutely refused the opportunity to sell horrendous investment properties to my clients for huge commissions. This is a disaster waiting to happen and I have been actively against this type of behaviour for many years.
Putting this to one side;  For some purchasing a great, sound, highly sought after investment property in an SMSF can however be an absolute brilliant strategy to build wealth for retirement in a diversified way. The tax advantages of Superannuation means debt can be repaid faster with lower tax on contributions and rental income. It does however solely come down to it being an outstanding property – one characterised by limited supply and an ever increasing demand.
So should you buy a sound stable property in your SMSF?<a href="https://www.canopyprivate.com.au/" target="_blank"> </a>
It can give you a great low volatile asset and with the power of debt can increase your exposure to the investment market by three to four times what you are currently have in an investment portfolio. While this is not suitable for all, if you are currently contributing more than $15-20,000 per year, have over $300,000 in your family super funds and have at least five years till you retire; you may like to consider it before the opportunity may go in 2015.
However, If you are still under $200,000 and still growing your contributions, I would sit tight and wait a few years before even looking at it.
I am actively disagreeing with the removal of LRBAs as i believe it should be the right for investors to decide how their superannuation is invested. I do however want greater attention on property spruikers and developers who are selling these without any concern on the effect it has on the person buying.
Chris Bates is a director of financial advisory firm <a href="https://www.canopyprivate.com.au/" target="_blank">Canopy Private</a>.
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ChrisBates-qgpJqFG5wJ

Is SMSF lending on borrowed time?

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GUEST OBSERVATION
Over the past few months of 2015, I have found myself dealing with a similar conversation almost every day. Many clients have been looking for help to think through a very difficult and challenging situation.
My clients (usually Sydney based ambitious families in their 30s and 40s) have all been battling the very same problem: “How do we get our family 'forever home' with the insane price rise in Sydney property?”
I doubt that I need to mention just how enormous the prices have been. Apparently <a href="https://www.theaustralian.com.au/business/property/melbourne-sydney-housing-prices-continue-to-rise-rp-data-shows/story-fn9656lz-1227204705717" target="_blank">Sydney is now up 57% since January 2009</a>. What makes this even more challenging is that the once affordable parts are now part of the unaffordable parts of town close to the city. 
If you read, what other people are willing to say (not that you should believe it) but<a href="/expert-insights/buying/the-factors-that-will-continue-to-drive-sydneys-prices-higher-peter-chittenden"> prices appear likely to continue to rise</a>.
From what I can see on my end is that affordability is pushed to the hilt for most families. Most families are taking out very large loans but what i see is that it does not meant they are not willing to push it a bit further.
With five year fixed interest rates at 4.4%; Buyers are undoubtedly saying I do not mind if the property prices do not grow further. I am just happy to make sure I do not have to rent long-term.
With rental prices at 3-3.5% of the house value; it is not such a crazy argument to have a stable home and potentially get some capital growth. Interest rates at 7% however and it would be a totally different story.
Without going in to detail about how I think Sydney property prices work, why they are very special, dangerous in some parts and very safe in others; it has been very interesting to have these conversations.
What makes it exciting is that we have actually ended up in very different places and decisions.
While a mortgage brokers job on the surface is very similar and boring to most, in reality when they take a financial planning approach with an education mindset they are able to help clients deal with their situation in their very own individual way.
An outcome that is suited to them and their future.
I love this about my job, it’s never a one-dimension answer and I believe in all these cases the client has made a great decision for them.
So fundamentally, what is the problem and what are the options?
<ul>
<li>Option 1: do I continue to rent in Sydney and be pushed out of the market forever</li>
<li>Option 2: do I buy a home with a huge debt</li>
<li>Option 3: do I invest elsewhere</li>
<li>Option 4: do I save a bit more money and wait for Sydney prices to fall or cool down?”</li>
<li>Option 5: Many others as you will see.</li>
</ul>
"What do options create? Problems"
It’s important to know that even though they all want the very same thing - a family home to last them forever; they are all have very different circumstances. Some have property already, some know their future plans exactly, some have lots of savings built up and some have very little savings but very high incomes. No matter where they have come from and where they are today, they are all dealing with this problem of "how can we get a home in Sydney with these ridiculous prices".
Couple 1 – Don’t buy in Sydney but invest elsewhere
This couple are in their mid 30s and are soon to be getting married. One partner is from Melbourne and both are very successful in what they do. To complicate things, depending on their employment they may move to Melbourne one day.
They do not have any kids, but long-term they would love to live on the Northern Beaches in a family home. They are renting together at the moment and are questioning what they feel like is a ridiculous amount on rent each month.
At our initial conversation, they were planning on buying a two bedroom unit in North Sydney as this is what suited their needs today. We discussed the pros and cons and the more we chatted the more the conversation went in many alternative ways. 
At the end of the conversation, we realised the two bedroom unit was not the right move. We agreed that even though they knew it may be better to buy their longer term home today in Northern Beaches and rent it out, they were not sure, where, when and what they wanted.
After many followup chats, they decided to invest elsewhere and in another state. They chose to buy a great unit in Brisbane with the help of a buyer's agent. They still kept plenty of cash aside and are potentially going to buy another investment property in Melbourne in the future.
The outcome, was to get one to two great long-term investment properties and delay the home purchase due to uncertainty around where, when and what. A great result I believe, as the assets they are purchasing are top properties and it would have been riskier to buy something that did not suit their needs in Sydney long term.
Couple 2 – Buy dream home today, but fix it up and rent it out
This couple had a very large amount saved up from years working overseas. While they have no immediate plans to get married or have children they are very sure they want to stay in Sydney long-term and know the areas they love.
Happily renting a cheap property on the beach, they decided to buy a home today in the inner east. They went for the worst house in the best street approach and they are spending the first few months, tidying it up before renting it out.
While they are not planning on living in the property for at least five years, they will be making a tax deductible loss and have improved the rental return with their small renovation. 
Couple 3 – Buy their dream home but in the Central Coast for a third of the price
This couple were at a similar point in time, not married and with no kids on the horizon just yet. They loved space and the sea, and after a few discussions they did not want to put a huge debt over their head.
To buy a home near the sea in Sydney would have cost them a fortune and after a few trips up the coast they decided to buy a home on the central coast at less than a third of what they would have paid for something similar in Sydney.
This decision suited them to a tee. They can now live the life they want but without the worry of a huge mortgage over their head and pressure to earn very high incomes.
Couple 4 – Buy a great Investment Apartment in Sydney and borrow at 88% to keep cash available for the home.
This couple similar to the above were looking to purchase a property in Sydney with the idea of selling again in five years to buy a home. After a long and lengthy discussion, we agreed that this may not be the best decision due to buying and selling costs, the type of investment they were looking at and what they want to buy long term.
We agreed that if they were going to buy in Sydney it would need to be a great asset that they could hold forever – not have to sell. They would have to get a great property and after some heavy negotiation with a very sharp agent they picked up a top two bedroom unit in the inner east of Sydney. A beautiful unit that will stay highly desirable forever.
We realised to buy this place and put down a 20% deposit would be a big ask and may not be wise. We decided to borrow at 88% and paid a portion of lenders mortgage insurance as a result. This kept a significant amount still available for when they purchase a home one day and lowered their risk for what was a minimal fee. A very happy outcome and couple. They haven’t got the dream home yet but they do have a cracking property in Sydney market for the next five years at least.
Couple 5 – Buy now with the help of parents and pay down the debt fast
This couple in their 40s and had a family already well underway. After a divorce, a wedding and bringing up teenager kids in Sydney, savings were limited. Fortunately however their combined salaries serviced loans well over $2 million.
After a lengthy chat, it was clear that it would be possible to use the equity in their retired parents investment property. While extreme care was taken, they are now able to purchase the home they want today. It should not affect their parents as long as they continue to pay the loan and in a few years hopefully they can remove this guarantee. With interests low, they are able to pay down the debt significantly over the next five years as long as they bought within their limits due to the very high incomes. A great result that means they have their home forever now for the family and do not have the stress of having to continually pay very high rent for a family of four.
These are just five examples and there are actually many other examples. Sydney prices are insane and difficult but there are other ways to cut the cake.
Chris Bates is a director at boutique financial advisors <a href="https://www.canopyprivate.com.au/" target="_blank">Canopy Private</a>.
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Sydney's insane property prices - the tale of five couples: Chris Bates

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GUEST OBSERVATION
One of the biggest frustrations I have with the financial industry is the inability and general exclusion of property discussions by financial advisers and mortgage brokers alike.
I know this general lack of care and foresight in itself is affecting clients in life changing and sometimes irreparable ways. Whether they have not benefitted from the huge growth in the property market in the last five years as the adviser thought it was "too expensive", have unfortunately bought wrong assets with huge risks because they didn’t know who to ask, or they have gone ahead and not purchased anything at all because the adviser never discussed it with them.
One of the most cherished parts of my day to day role as a trusted adviser is to help my clients think through their property related decisions.
For example, this daily discussion could be helping my clients to understand whether they should or should not buy an investment property today, or when they want to buy a home in the future. It might be to discuss whether they should sell and buy a new family home or if it is better to renovate the one they live in today. It may be a strategic plan on how to build a multiple property portfolio over the next 30 years or it could be whether they should be buying a property at all.
All of these conversations are highly interesting and add huge measurable value in the future life of my clients. I love to help them think through their decisions and help them go deep in to the property market psyche. Let me be clear, this is not recommending individual properties on individual streets, but educating them on what drives the market and what type of properties suit their plan at this stage. I leave the hard work of finding the right property to professionals who know what they are doing - called buyer's agents. They are the ones who will find the right property to suit them long-term and not just today - not me.
Unfortunately however, I know I am rarity in the financial planning and mortgage industry. I would prefer that I wasn’t but due to being a financial planner, my previous experience in a property firm and also a mortgage broker I have had exposure to the many different areas of the property market. This experience while invaluable is also unique but I believe this should be a necessity and obligation for any aspiring financial planner.
Property has been an asset class that financial advisers have never had, and purposely not had, on their radar.
While completing initial qualifications it is barely mentioned and let alone tested in any way. The major financial institutions do not have any desire to encourage or educate their financial advisers to recommend property. To put simply, it would hurt their profits and shareholders would not like that.
Why has it not been discussed? Why have the majority of the advice industry decided to ignore a recommendation for over 20 years?
Internally within the industry, we all understand that the reason financial planners do not discuss it is because they do not get paid.
Financial planners have always been paid a commission for recommending investment share based products. If they recommended clients to purchase a property, they would not get paid. Sounds simple and maybe a rhetorical question; but is that advising or selling I ask?
If they recommended their client to consider purchasing a property and not shares, they would in affect rule themselves out of a nice paycheck today and to compound the issue further a lot of income in the future.
You see the ongoing fee package for the vast majority of financial planners is based on a percentage based fee. It is called an Asset Based Management Fee and has been around 1% for a long time.
Therefore, the more an adviser recommends for you to invest with them in shares and the less for you invest in property – the more money they make every year. If you a noticing a slight conflict here, you could be on to something?
To make you aware, there are legislation restrictions on advisers from recommending individual direct property and importantly professional indemnity insurance usually does not cover this advice. I am in complete and resounding support of advisers not recommending individual property. It would be highly conflicted and we are not the right people for the job in the first place.
Property is not an investment Australians would generally go to a financial planner to discuss. I would argue however that it one of the most important things they should be able to and need to discuss.
Property has been a great asset class for investors and homeowners. An important part and only a part of an adviser role is to help their clients to invest wisely, safely and in line with their future aspirations. The property market has been a great asset to help clients achieve their aspirations. But why do so many advisers choose to avoid this asset class entirely. In my eyes this should be called either insanity or greed. I’ll let you decide.
Lets put that to one side.
If financial planners are not advising property investors; where do they go?
Unfortunately the vast majority they make this key investment decision themselves. They may ask their friends and family what to do or quickly read a property education magazine, which is full of property developers selling property.
On first glance the property market seems simple, but the more clients understand it, they realise it is not as simple as everyone tends to believe. The first big mistake is that the property market is not one market. Just like the share market every property will perform very differently to every other property over the next 10 or 30 years. Some will do better than others, some will go down in value and some will go up significantly in value. Every property is different, that’s the biggest mistake.
What can be very complex to understand is also exponentially magnified, as the industry is unregulated. Every man, woman and their dog can sell property. They can tell you how amazing growth will be and how outstanding your rental yield is.
Three years ago I was telling clients to avoid mining towns like the plague and sure we all knew a crash was coming. There are houses selling at 20% of the value they were selling three years ago.<a href="https://www.dailytelegraph.com.au/realestate/news/property-prices-in-once-booming-mining-towns-crash-providing-lesson-in-where-not-to-invest/story-fni0cly6-1227210791143" target="_blank"> </a>
There are more horror stories of people buying the in the Docklands in Melbourne, Gold Coast and Noosa. There are fundamental risks with huge developments in apartment heaven near Sydney Airport.
You see people have bought all these properties, people are making all these horrible and life changing mistakes. They are real people and they are real losses.
Clients need guidance, clients need protection and clients need help. Unfortunately the property market can say whatever they want to say. Its buyers beware people.
For most Australians, their biggest asset is their home. Therefore their biggest investment decision would usually be the purchase or sale of their home. This decision alone will without doubt have huge impacts on their future wealth and prosperity. If a planner or mortgage broker is not skilled in talking about this decision nor makes an effort to help them with it then whom I ask does? Who are clients getting help from for the biggest financial decision in their life?
The issue I have is that very few planners or mortgage brokers are educating their clients on the property decision. Is it training, conflicted remuneration, education or general lack of care? Unfortunately the consumer society we live in and the significant growth we have witnessed has caused all sorts of problems in the property market. We now believe that anything new is better than old, we now believe that the property market only goes up and we all watch the block thinking renovating and making money in property is simple. I argue however that all three of these are incredibly wrong.
The biggest reason why so many people have made money in property is not through buying smart but it is due to the fact that they have owned property in the first place. This feeling has made people think that any property will do and society pressure to get on the ladder is causing investors to take the line of least of resistance when purchasing. Something new.
The purchase or sale of the property is huge decision. This decision has a whole list of other decisions it also brings. There are hundreds of different strategies, issues and opportunities that an investor needs to understand and consider.
Chris Bates is a director at boutique financial advisors <a href="https://www.canopyprivate.com.au/" target="_blank">Canopy Private</a>.
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Greed or insanity? The financial advice industry is ignoring a key problem: Chris Bates

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GUEST OBSERVATION
As a financial planner my role is to always be thinking about what is the best strategy and path for my client to take. Since I have been working very closely with mortgage brokers for many years, I have realised the vast majority of brokers and to a greater extent bank employees do not take the same strategic view.
Being a somewhat transactional role, most mortgage brokers take the line of least resistance to get the deal done. Whether they understand structuring strategies or not, very few take the time to educate their clients on the pros and cons of different decisions and how to make the most of their situation. In reality, they are also limited by compliance standards in some cases.
As a warning upfront, this can become very confusing and challenging for new clients to get their head around. If you end up feeling a little unsure, I’m not surprised as it does go against everything you may believe.
Moving forward, whether you should choose to go interest only or principal and interest is a question that every borrower needs to consider and answer when taking out a home loan.  Naturally we rush to find an answer, but before you make that decision, it’s important to truly understand it.
Our natural response is “principal and interest”. Our parents, grandparents and society all tell us that debt is bad and we need to repay it and that is true to a certain extent.
So why would I go interest only when I want to pay my debt down?
Well the truth is you can pay your debt down and a whole lot more by choosing to take an interest only loan with offset account.
Before I get marching in to why, I recommend nearly all my clients to go interest only, though there are ones from time to time that it is better to go principal and interest. These are generally borrowers who do not have their cash flow under control and feel like they need to be forced to save. This is purely the only benefit of going principal and interest – the bank forcing you to save.
I know I would prefer to choose what I do with my money each month and if I want to pay my debt down I will. If I need to just pay interest this month or use this money to cover short-term additional expenses I will.
So how does it work?
Firstly it’s important that when you setup the interest only loan, you also open an offset account linked to your loan. These are usually included for free with any package loan from a bank. An offset account does exactly that, offset your loan account. For example, if you had a loan of $500,000 and you had $20,000 in your offset account, you in reality only owe the bank $480,000. When they calculate your interest due for that day, you will only be charged interest on $480,000 owing, not $500,000. Without trying to drum the point home further but if you happened to put another $20,000 in your offset account, you would only pay interest on $460,000.
The offset account I believe is the best invention and tool in the financial planning world. I absolutely love them. They give my clients complete flexibility in what they would like to do with their cash flow and savings. We use this as a  “savings account” that will always be getting a greater return than any other savings account. It is completely assessable and can moved wherever needed. So if you do not have an offset account, I suggest you get one and secondly, understand how to best use it.
So if the key to paying down your debt each month is not by principal and interest each month, how do I do it?
I ask all my clients to reassess their lifestyle expenditure every year. This allows them to see what income they are likely to earn and what expenses are going to be this year. On the back of this we choose an affordable amount and my clients commit to this amount for 12 months straight.
Each month this amount goes in to the offset account and when interest is due, the bank takes it out of the offset account. Whatever is left over is build up in that offset account and means they pay less interest the following month.
By growing the offset account as much as possible, we are reducing the interest due and that means they can grow the offset account even further. Each year my clients goal is not to pay down their debt by $50,000 but it would be to increase their offset account by $50,000 for example.
The key benefit to understand is that interest is calculated daily and you would be in the exact same position financially if you decided to save the same amount each month and pay via principal and interest.
For example, If you took two routes over 10 years and saved the exact same amount on a debt of $500,000. One route the debt may now be paid down to $300,000. The other route the debt would still be at $500,000 but you now have $200,000 in an offset account.
At this stage, you may be asking so what is the benefit?
There is no obvious benefit, but I can assure you, you would always want to take the debt of $500,000 and $200,000 in the offset account and I’ll explain.
To make sure we are both on the same page, the key takeaway here is that you can still repay your debt via interest only but the different is, it’s your choice to do so, not the bank forcing you to.  Instead of reducing your loan every month, you are aiming to build your offset account up.
Chris' six reasons are on the next page. Please click below.
<hr class="system-pagebreak">
Why I do not like principal and interest loans
<ol>
<li>
Separating Debt By going interest only on all loans, you keep the original debt at that level forever. You then put any left over savings in an offset account against any debt that is not tax deductible. This flexibility means you can move your savings around to whatever debt is not tax deductible at the present time and it also clearly separates your debt. If you decide to move to another property you own, you transfer your offset account to a different loan and this will save you a lot of tax. 
</li>
<li>
Lower Commitment On a P&amp;I loan the minimum payment due to the bank each month is roughly 20% higher on a 30 year loan. In reality if you cannot afford that 20%, you have probably got too much debt but why would you force yourself to a higher commitment. Personally, I would prefer to have a minimum payment 20% lower and choose to save more regardless in to my offset account. 
</li>
<li>
False Pretenses  I also believe that paying the minimum payment each month gives clients false pretenses that that is the amount they should pay per month. The bank want you to take as long as possible to pay this debt down. That’s why they give you loans for 30 or 40 years. Do you really want to have a loan for 40 years? T he best way to pay your debt down is to pay as much as you can afford each month by undergoing a detailed lifestyle questionnaire each 12 months. Disregard what the bank minimum payment says as that is not what matters. Just save as much as you can above your interest only amount per month. 
</li>
<li>
Flexibility    The negative with paying the extra 20% and more every month, is that this begins to add up to a lot of money over time. There may be times in your life when you cannot afford your minimum repayment each month and you do not have any buffer built up as you have paid it all in to the loan. By paying this amount in to an offset account instead you are building your buffer every month and if you cannot pay this month, that’s ok you have money in the offset account to cover it. 
</li>
<li>
Home becoming an investment property = tax savings  The ATO states that once you pay down your debt you cannot redraw on that debt and get a tax deduction unless it is for investing purposes. In the example above, because the debt has never been paid down, if you moved out of this house and decided to use as an investment property. The tax deductible will be at $300,000 and not at the original loan of  $500,000 not $300,000. A big difference and at current interest rates that you would be $4,000 a year better off in tax. 
</li>
<li>
Home Purchase in Future  It is very common that we are going to purchase a new home in the future and this debt will not be tax deductible as it is your principal place of residence. What you need at this point in time is cash or equity to cover the 20% deposit and costs. But what you would also like is to put every single dollar you have saved over the many years before hand and put this in to an offset account against this new debt. If you pay down your loans via principal and interest, you cannot get this money back to put in to the new offset account. If you have it sitting in an offset account, you can move it straight away and get the tax benefit.</li>
</ol>
As you can see above these are just six points, why I challenge you to rethink how you structure your loans. This is a mental mind shift and that is all that it is. Once you understand it; you still pay down your loans just as you were and just as fast but do this by having a focus to increase your offset account.
I cannot stress the benefit of going interest only and using an offset account. By not doing this, I’ve had many clients who have been forced to sell their homes that they would have kept if they went interest only. 
I’ve seen clients been able to keep their homes through financial tragedies due to having a buffer and I’ve seen clients pay down their debt faster by staying disciplined to the amount they can afford not what the bank tells them to repay.
Chris Bates is a director at boutique financial advisors <a href="https://www.canopyprivate.com.au/" target="_blank">Canopy Private</a>.
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The six reasons why interest only loans are the way to go: Chris Bates

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GUEST OBSERVATION
Can I see a virtual show of hands for anyone who can remember bank interest rates at 16% in the 1990s?
Keep your hands up and can I see anyone who can remembers rates at 7% in the 2000s or all the way back in the 1970s?
Now can you put your hand up if you can remember a time besides present when they were at 4%?
As you can see, no one has ever experienced rates this low and from the look at long term fixed rates banks are offering well under 5%. They are going to stay this low for some time.
You see we live in a world that is debt ridden from tip to toe. This same world was filled with people that love to spend money they don’t have and the issue with spending money you don’t have means you are effectively bringing forward the things you are going to buy in the future to today. You are having Christmas today and paying for it tomorrow.
Unfortunately due to interest, the horrible thing you have to pay when you borrow, the banks will make money from these borrowers till the day they pay every penny back. This interest further increases their future expenditure problem, as they would have been able to spend this interest in the future. There goes another Christmas.
The winners in all this are the bank, home owners through excessive rises in property prices and the businesses who did well in the boom years, which was for nearly 20 years I might add.
The losers were people who spent beyond their means and took on personal debt, anyone who did not own property or investments and those who did not own a business in these boom years.
So what is the new world? 
The increase in debt has caused two major issues; firstly the world cannot afford high interest rates due to every 1% rise causing a major increase in the amount of interest we all need to pay each month.
Secondly, because we have too much debt and have been scared away from taking on more…we are not spending like we used to. This reduction in spending has already caused the world to stagger it’s way through a recession.
We do need to say thanks to the government for following our lead however and spending BIG to get us through it.
So in 2015, we are all debt ridden; governments, individuals and corporations to a certain extent.
Governments are the ones who are in control of interest rates. While they are still at the mercy of the economy, in reality all the governments around the world do not want interests rates to go up. The more interest they pay, the less they can spend. The less they can spend, the less votes they win and the less votes they win.
Without trying to sound pessimistic, as I believe the world will be very productive long-term, I do believe we are in for a long period of slow growth. Slow growth means slow employment and wage growth. If we are not earning more, we are not spending more.
On a side point however there is technology innovation happening on a grand scale. This brings opportunity to be more efficient and to drive a new round of expenditure but at cheaper prices.
For example, like we have seen in big TVs. I see the owners of smart innovative businesses will do very well in the coming years but due to capitalism the profits will stay with the owners of these businesses not the majority of the population, the worker themselves.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
So what does this mean for interest rates?
If we are in a low growth world, the government know that they need to keep rates low as long as possible and that is good news for home owners.
Investors of the past few years, saw this as an opportunity to take on more debt and have geared themselves up to the eye balls, some much wiser than others. This has pushed prices in the Sydney property market up 50% in the past five years, a ridiculous amount.
Will we ever see rates this low again?
The truth is we might. We might this year and we may next year.
When I was working in the UK in 2008, if someone had asked me if rates would still be zero effectively in 2014 I would have fell off my chair. The truth is they are today with no end in sight.
Where are they going to be in five years? The answer is no one knows but long-term interest rates do give you some insight in to what the world is thinking and that is staying low.
<a href="https://www.canopyprivate.com.au/wp-content/uploads/2015/01/image_thumb11.png"><img class="alignnone size-full wp-image-20717" src="https://www.canopyprivate.com.au/wp-content/uploads/2015/01/image_thumb11.png" alt="image_thumb[11]" width="782" height="399"></a>
What should I do?
I see this an opportunity to pay your debt down as fast as possible for as long as possible on the home you live in. By paying less interest, you are freeing up more cash flow and your choice is either to spend or to save. I suggest you save.
For investment debt, you should be looking to build a buffer by saving. This will support you as much as possible when rates do finally rise and mean that you can consider further investing in the future.
The best way to save is to know exactly what you are going to spend each month and the biggest expense you have is likely to be your home loan or your kids. To protect yourself you may like to fix a portion for five years at under 5% – unheard of rates.
Secondly, banks know rates are going to stay low and are happy to suffer a little bit to their profits by offering even bigger discounts. The discounts we are seeing today at over 1.3% to small loans was a dream two years ago to home loan borrowing.
I cannot encourage borrowers enough to review their lending rates as i’m sure there are better rates out there.
There are plenty of options but I stress that just because rates are low it is not a reason to spend; it is an incentive to save or to invest wisely in to a business, property or shares.
Christopher Bates is a director at <a href="https://www.canopyprivate.com.au/" target="_blank">Canopy Private</a>.
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Will interest rates ever be this low again?

<a href="https://www.apartments.com.au/developers/sunland-group">Sunland Group</a> has officially lodged plans for its first Gold Coast apartment project since the departure of the Abedian family from the company three years ago, unveiling a new high-rise proposal for a prominent Broadbeach corner site on Old Burleigh Road.

The application was submitted by an entity directed by Tom Jamieson, stepson of longtime Sunland leader Soheil Abedian, and Riaz Rezvanipour, brother-in-law of Sahba Abedian, Soheil’s son.

Sunland acquired the 1,283 sqm site on the corner of Old Burleigh Road and Armrick Avenue for $9.5 million late last year and is now seeking approval for a <a href="https://www.apartments.com.au/new-apartments/99-101-old-burleigh-road-broadbeach-qld-4218">42-storey tower with 81 apartments</a>.

<img alt="First look: Sunland Group returns to Broadbeach with new Old Burleigh Road tower plans" data-entity-type="file" data-entity-uuid="fea2946d-90ee-4cfc-babe-2a8ad5db2cb6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers.png?VersionId=BV0fihJw31nDIQ8ozY_h3GbS8mxDyhnm" />

Designed by <a href="https://www.apartments.com.au/architects/contreras-earl-architecture">Contreras Earl Architecture</a>, the proposed tower at 99-101 Old Burleigh Road would deliver a predominantly larger-format apartment mix aimed at the owner-occupier market. Plans include 17 two-bedroom apartments, 55 three-bedroom apartments, and nine four-bedroom residences across 35 residential levels.

The development also incorporates three basement levels, four podium parking levels, two levels of communal recreation facilities, and rooftop plant and equipment. A total of 189 car spaces are proposed, significantly exceeding the 90 spaces required under the planning scheme.

The architecture adopts a sculpted, curvilinear form, with deep wraparound balconies and integrated landscaping intended to soften the tower’s vertical expression. The planning report states the building’s “slender footprint/form provides a complimentary yet varied built form within the local streetscape” and contributes to “a varied, yet ordered skyline.”

Contreras Earl noted in its Architectural Statement that from the early stages, the project addressed a fundamental challenge: how to accommodate the required residential yield while avoiding the conventional model of a tower sitting on a rigid, fully resolved parking podium.

“The most direct response would have been to consolidate parking into a singular, flat podium and extrude a repetitive tower above,” the statement said. “While efficient, this approach would result in a consolidated built form with limited engagement with the surrounding landscape and public realm.”

Instead, the conventional podium model was “deliberately rejected”. The architects described the base of the building as “a landscaped architectural condition where structure, planting and circulation are integrated”.

“Rather than presenting a continuous built mass, the base of the building is articulated through a series of concrete planter elements that organise the podium into a fragmented system,” the statement said. “This approach reduces the perceived bulk of the lower levels while establishing a more permeable interface with the streetscape and adjacent open space.”

<img alt="Sunland" data-entity-type="file" data-entity-uuid="923fad8d-c960-4527-8fbe-975cf1ddf88d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%2010.32.03%E2%80%AFAM.png?VersionId=pngwb0hYOIUpq9vDw6F2EsOiVuHF3DiX" />

&nbsp;

The site sits within the High Density Residential Zone and inside the City of Gold Coast’s unrestricted “HX” building height area, where the planning framework anticipates intensified residential development tied to the expanding light rail corridor. The planning report notes the area is undergoing “transition toward more intense development forms” given its proximity to Broadbeach, Surfers Paradise, and high-frequency public transport infrastructure.

Positioned directly opposite Broadbeach Park and within walking distance of Florida Gardens light rail station, the development would sit among a rapidly evolving stretch of Old Burleigh Road that has become one of the Gold Coast’s most active apartment development corridors.

The application joins a growing pipeline of luxury residential projects reshaping Broadbeach, including nearby developments by 5Point Projects, Polycell, and Graya.

The planning report argues the project contributes toward the Gold Coast’s long-term housing targets under the South East Queensland Regional Plan, which forecasts the need for more than 100,000 additional high-rise dwellings across the city by 2046.

<section data-scroll-anchor="false" data-testid="conversation-turn-4" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" dir="auto">
The Abedian family departed Sunland Group in late 2023, ending a four-decade association with the company, and subsequently established the private development firm Abedian &amp; Co. The group is currently delivering <a href="https://www.apartments.com.au/new-apartments/greenmount-residences-cnr-hill-street-and-marine-parade-coolangatta-qld-4225">Greenmount Residences</a> at Rainbow Bay and recently launched <a href="https://www.apartments.com.au/new-apartments/18-mary-avenue-14-18-mary-avenue-broadbeach-qld-4218">18 Mary Avenue</a> in Broadbeach.
</section>

Joel Robinson

First look: Sunland Group returns to Broadbeach new apartment market with new Old Burleigh Road tower plans

The Minns Labor Government has established the new Bays West Delivery Authority to lead the development&nbsp;of the Bays West Precinct and Blackwattle Bay Precinct.&nbsp;

The Authority is charged with creating Sydney’s newest precinct, a thriving, connected, sustainable hub with White Bay Power Station as its cultural heart. Its vision is to build on the area’s natural, cultural and industrial history to shape a vibrant new neighbourhood.

The precinct will deliver up to 8,500 well-located homes, including a minimum of 10 per cent affordable and essential worker homes. Combine new housing with public open space, opening public access to the waterfront for the first time in more than 100 years, while retaining important deep-water facilities to support Sydney’s working harbour.

Located just minutes from the Sydney CBD and connected to a world-class metro, ferry, walking and cycling links, the Bays West precinct will rebalance housing growth towards well-serviced inner-city locations and help tackle the state’s housing crisis.

The Bays West Delivery Authority,&nbsp;an agency of the Department of Planning, Housing and Infrastructure, will report to the NSW Minister for Lands and Property who already has oversight of major precinct renewal projects including at Blackwattle Bay and Barangaroo.

As part of the broader Bays West transformation, the Minns Government recently announced that a proposal from Lendlease to redevelop part of the Bays West Precinct has progressed to Stage 2 of the NSW Government’s unsolicited proposals process.

<img alt="Sydney" data-entity-type="file" data-entity-uuid="2ed71eb9-d8e8-4fa7-b9d1-de4531dcf2f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%209.42.31%E2%80%AFAM.png?VersionId=IDryFIbped9SNDg72LEN_EecvhUsOPvp" />

The Minns Labor Government has also confirmed the Bays West precinct will have a new suburb name. This will be the first major suburb built in close proximity to Sydney’s CBD in decades and will encompass the area currently being referred to as Bays West, including Glebe Island and the White Bay Power Station. Served by a new Metro station just five minutes from the CBD, it will become one of the most populous suburbs in the Inner West and one of Sydney’s premier cultural destinations.

An early works program is taking shape, which&nbsp;includes the first stages of an international design competition.&nbsp;

The aim of the Bays West&nbsp;International&nbsp;Design Competition is to&nbsp;ensure design excellence is embedded in the project from the start. The competition will deliver an&nbsp;urban framework that defines the character, ambition and long-term identity of&nbsp;this&nbsp;former industrial precinct as it transitions to a vibrant, inclusive and sustainable residential&nbsp;neighbourhood.

The competition will be led by the Bays West Delivery Authority in partnership with Government Architect NSW.&nbsp;

It will launch with an invitation for a global Expressions of Interest, before moving to an invitation-only stage that will be assessed by a panel that&nbsp;will provide advice to Cabinet who will select a winner.

Premier of NSW, Chris Minns said the establishment of the new Authority is the first step in transforming the Bays West precinct into a vibrant, livable suburb minutes from the Sydney CBD and two stops from Hunter St Station on the Metro West line.

“The Authority will deliver well-located homes close to the heart of the city and integrate the new precinct with Blackwattle Bay and the new Sydney Fish Market.

“This is a generational opportunity to build a new suburb on the city’s edge and open the harbour foreshore to the public for the first time in a century.”&nbsp;

Minister for Lands and Property Steve Kamper said the new Bays West Delivery Authority established by the Minns Government will turbocharge the development of Sydney’s newest suburb.

“The Authority is working at a record pace to deliver an international design competition, planning pathways and a financial model so that this development benefits Sydney with well-designed homes in a central location, close to public transport, jobs, entertainment and essential services.

“If we want Sydney to stay liveable and affordable, we need to be bold about using underutilised government-owned land to deliver homes for the future while making sure essential working harbour functions can be accommodated.”

Bays West Delivery Authority established to "turbocharge" Sydney’s newest suburb

Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.

A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.

Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.

“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.

Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.

“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.

The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.

It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.

The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.

One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.

Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.

The developer is also exploring the potential for additional affordable housing outcomes.

Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.

Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.

Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.

&nbsp;

&nbsp;

Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.

“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”

Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.

Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.

Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.

400 new homes planned for Adelaide's former West End Brewery site

Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.

The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.

Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" />

“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.

The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”

The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" />

The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.

According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.

“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.

A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.

Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" />

All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.

The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.

Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.

The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.

Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" />

Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.

The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.

"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.

The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.

The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" />

Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.

Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.

Chris Bates

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