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GUEST OBSERVATION
Treasury recently released its <a href="https://bettertax.gov.au/files/2015/03/TWP_combined-online.pdf">submission to the federal Tax White Paper</a>. It has found a tax that actually confers a benefit on Australian citizens. That is, using it actually leaves us better off.
It isn’t a new tax - it is land tax.
Unbiased economists have always known a broad based nil exemption land tax has a marginal excess burden of zero. They have continually urged government to use it ahead of every other conceivable tax instrument available.
The net benefit comes about because foreign and domestic landowners must pay it yet it is spent solely on Australians.
Or, as Treasury describes it:
"Modelling also suggests that broad-based land taxes, such as municipal rates, have a low economic cost (Chart 2.9). This is because land is immobile (unlike other capital) and cannot be moved or varied to avoid tax. The model applies this assumption to both domestic and foreign ownership of land. Land taxes paid by foreign and domestic landowners are only redistributed to the domestic households, providing a benefit to Australian households and generating a negative marginal excess burden for a broad-based land tax shown in the chart."
<a href="https://www.prosper.org.au/wp-content/uploads/2015/03/ScreenHunter_6774-Mar.-30-10.24.jpg"><img class="alignright size-medium wp-image-8881" src="https://www.prosper.org.au/wp-content/uploads/2015/03/ScreenHunter_6774-Mar.-30-10.24-494x300.jpg" alt="ScreenHunter_6774-Mar.-30-10.24" width="494" height="300"></a>
There is much unrest at the high and growing level of foreign land ownership in Australia. We have abandoned the settler compact that all political parties once held as sacred: that every Australian citizen, no matter how humble, should enjoy the freedom, independence and privacy of land ownership.
Now, the share going to first home buyers is at historic lows yet there is no let to the foreign investment in Australian property, according to a recent NAB survey:
<a href="https://www.prosper.org.au/wp-content/uploads/2015/03/NAB-foreign-buyers28.png"><img class="alignright size-full wp-image-8880" src="https://www.prosper.org.au/wp-content/uploads/2015/03/NAB-foreign-buyers28.png" alt="NAB foreign buyers28" width="434" height="274"></a>
I urge a debate on land tax, not because it takes from foreigners – although that is certainly a positive feature – but because we would be richer, more active and freer with it.
If a tax exists with a positive excess burden, we have an obligation to examine its features and shortcomings with a microscope.
The only genuine negative I have ever heard about land tax came from nobel laureate<a href="https://www.youtube.com/watch?v=yS7Jb58hcsc" target="_blank"> Milton Freidman, who observed</a>: “It’s the only tax left on the books for which people have to write a big cheque.”
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
This article first appeared on Prosper's website.
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dcollyer-7rQRVBSdz6

A land tax would leave Australia a lot better off: David Collyer

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GUEST OBSERVATION
New Sydney flats will have to be bigger, <a href="https://www.afr.com/real-estate/residential/ruling-could-make-sydney-apartments-bigger-and-more-expensive-20150414-1mjpmk" target="_blank">the NSW Land and Environment Court ruled last week,</a> overturning long accepted common practice allowing minimum one-bedroom unit sizes at 50 square metres.
Dual-aspect flats must be a minimum 58 square metres and more common single-aspect flats 73.4 square metres.
Property observers have been watching the steady shrinking of highrise flats with some alarm. This isn’t about dizzy planners imposing costs on struggling home buyers, this is about permanent additions to our housing stock and how useful they are.
Highrise reinforced concrete buildings are <a href="https://www.theage.com.au/victoria/melbournes-new-wave-of-skyscrapers-could-survive-100-years-20150318-1m1dmx" target="_blank">very hard if not impossible to change</a>.
The one bedroom flats are mostly being sold to investors who have no intention of living in them. They are the developers’ customers, not the occupants.
In theory, two cramped flats could be amalgamated to make a single spacious one. Sadly the numbers go against this. Putting two $350,000 flats into one worth $600,000 makes no financial sense. The next buyer will simply reverse this and pocket the sacrifice. This is why minimum standards are so important.
Meanwhile, the average size of a <a href="https://www.oliverhume.com.au/news/melbourne-new-apartment-sizes-shrinking-again" target="_blank">new one bedroom flat in Melbourne</a> has fallen to 44 square metres and two bedders to 59 square metre. Smaller flats aren’t cheaper – the savings are simply capitalised into higher land prices on all future developments.
There were moves last year to establish minimum standards in Melbourne, with former Coalition Planning Minister, now Opposition Leader, <a href="https://www.theage.com.au/victoria/strict-new-rules-for-highrise-apartments-on-table-20140723-zw4qk">Matthew Guy making encouraging noises</a>, however implausably, but vanished with the election of the Andrews ALP government.
There is a democracy lesson in all this. If the bureaucracy can’t act and the parliament won’t, the judiciary must – which is why the NSW Land and Environment Court ruled on minimum flat sizes.
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
This article first appeared on Prosper's website.
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Sydney apartment size ruling a lesson in democracy: David Collyer

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GUEST OBSERVATION
Rents always go up – don’t they? The 1.2 million negatively geared Australian tax payers whose property expenses exceed their rental income think so. Their cunning plan is to patiently wait while the rent ratchet turns their negative cash flows positive and net income losses into profits.
If house prices stabilise at current levels – even if they fall back for a time – overall, wages will continue to grow if only by inflation, pushing up rents. And time is on the land owner’s side.
That’s why it’s called a ratchet. Rentiers make money in their sleep or while striking alpha male poses around the BBQ.
But what if rents don’t rise?
Blasphemy! Yet the historical record shows that is exactly what happens in downturns – and rents can keep falling for years.
My pals, Paul Egan and Philip Soos produced the following chart, of both nominal and real rents Australia 1880-2012.
<img class="alignright size-medium wp-image-9199" src="https://www.prosper.org.au/wp-content/uploads/2015/04/australioan-real-rents-1880-2014B-526x300.png" alt="australioan real rents 1880-2014B" width="526" height="300">
After the 1888 boom, rents fell hard and kept falling for eight long years. In WWI, real rents fell again, while wartime inflation maintained at least nominal rental growth and rentiers’ poise. The 1929-33 depression again saw savage cuts with three years of strongly negative rent contraction. WWII was an era of rent controls to keep wages down and protect the war effort. The spike after the election of the second Menzies government and their removal in a housing shortage shows just how effective the controls were. The 1959, 1972 and 1990 recessions are clearly seen, even though rising inflation kept nominal rents rising.
I expect the legions of spruikers and yes-men employed by the FIRE sector to distract citizens from reality will find fault with my skip through the historical record.
A key theme will be that it is the nominal change in rents that matter as borrowings are in nominal dollars, and that the Australian economy is more broadly based now.
OK. Let’s look in nominal terms at Australia’s last recession in 1989-92. I have to acknowledge Australia’s extraordinary 25 years that followed without a technical recession, a world record, but the downturn really hurt residential rents.
<a href="https://www.prosper.org.au/wp-content/uploads/2015/04/australian-ABS-nominal-rents-1972-2014.png" target="_blank"><img class="alignright size-medium wp-image-9203" src="https://www.prosper.org.au/wp-content/uploads/2015/04/australian-ABS-nominal-rents-1972-2014-526x300.png" alt="australian ABS nominal rents 1972-2014" width="526" height="300"></a>
The record shows very weak rental growth from 1990 to 2006, under four per cent annually in nominal terms, while inflation consistently tracked near 3%. In fact, aside the three years 2006-09, nominal rents have been quite stodgy since 1990. The weakening trend since 2010 continues to this day.
That is a very very long time between drinks. And remember, the Australian economy was much more diversified then – we weren’t relying on iron ore and coal for export income – we even exported cars.
For every well-chosen well-located rental property that sailed through this era providing solid rent rises to absent owners, another underperformed. Never mind the continual fresh investment to update property facilities and features in a highly competitive market for quality tenants.
Real, after inflation rents 1972-2014 fluctuated around zero.
<a href="https://www.prosper.org.au/wp-content/uploads/2015/04/australian-real-rents-1972-2014.png"><img class="alignright size-medium wp-image-9205" src="https://www.prosper.org.au/wp-content/uploads/2015/04/australian-real-rents-1972-2014-526x300.png" alt="australian real rents 1972-2014" width="526" height="300"></a>
This is not the stuff of fortune-building or a secure retirement, let alone making a decent return on investment. We as a nation have gone massively into debt in pursuit of paltry returns. Nuts.
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
This article first appeared on Prosper's website.
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The rent ratchet mumble of the BBQ landlords: David Collyer

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GUEST OBSERVATION
We usually look at macro economics, yet a micro example of what can go wrong in the property market – very, very wrong – might aid your concentration.
Andrew, a Sydney ‘investor’ bought properties in Mackay and Blackwater Queensland, “when rents were crazy and out look was bright (sic)”.
<a href="https://somersoft.com/forums/showthread.php?t=106133">He posted his entirely credible dilemma</a> on the Somersoft property investor forum.
He paid $495,000 for a Blackwater rental returning $49,400 per annum gross – a hearty 9.9%. Blackwater houses workers at the BMA and Curragh coal mines. With coal prices in the doldrums and layoffs creating plenty of vacancies, agents now value the property at $200,000 and estimate its rental potential at 18,200 per annum gross. The property carries a mortgage of $475,000 at 4.89% interest or $23,200 per annum.
Andrew’s other property in Mackay cost $485,000 for a passing rent of $36,400 per annum, or 7.5%. Now, it is worth $380,000 and market rents are around $10,400 per annum gross. The property carries a mortgage of $450,000 at 4.89% interest or $22,000 per annum.
Violent re-pricing indeed.
Rule of thumb says direct costs, rates, land tax, etc, would be half the gross, certainly on the later rents. So his net rents of around $29,000 support an interest cost of $45,200 per annum, or a net loss of $16,200 per annum, assuming nil vacancies.
Clearly unhappy with his position, Andrew wants out. He faces a loss of $70,000 on the Mackay property and $300,000 on Blackwater if he sells. I suspect these figures disregard stamp duty and other transaction costs.
He says: “I have a house in Sydney that has about $500,000 equity. My mum lives with my family who has contributed into this purchase so selling this property is not an option.”
That equity isn’t his to risk in support of his rental investments. Mum and family would be unimpressed with the idea of selling Baulkham Hills for a Queensland adventure.
“Will this get worse???” he asks plaintively.
His horror story is being repeated all over Queensland and Western Australia. Goaded into action by an army of spruikers in an anecdote-rich, fact-poor media, a naive investor class saw stellar yields and paid a seemingly reasonable capitalization. He thought he won the lottery, when in fact the winner was the vendor.
Little can be done for Andrew and his very hard life lesson.
Yet there is an insight available in what government can do in a volatile land market.
Andrew pays state land tax (SLT) on both Queensland rentals. Valuations are conducted every two years, which softens his liability on the way up but doesn’t retreat nearly quickly enough in a falling market. In an era of wild land price gyrations, government should step up to annual valuations, both to moderate the rise and ease the fall. While this sounds like I am recommending annual revaluation of every parcel of land in the country, it is entirely possible to value half each year and interpolate the rest. SLT already piggy-backs on council valuations, so this is a cost-less exercise.
Land tax is a powerful automatic stabiliser, if we use it properly.
The investor frenzy in Sydney would be less if their bidding up of land prices was immediately transmitted into higher SLT. Dizzy buyers would get a good kicking from existing owners for driving up their costs, rather than the slap on the back for increasing values.
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
This article first appeared on Prosper's website.
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Dizzy buying turns to disaster with violent repricing for Queensland investment purchases: David Collyer

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GUEST OBSERVATION
Victorian Labor in its <a href="https://www.danielandrews.com.au/wp-content/uploads/2013/11/Victorian-Labors-Project-10000.pdf">November 2014 election transport manifesto Project 10,000</a> boldly announced it would “remove our 50 worst level crossings” at a cost of $5-6 billion.  They are now the government.
Grade separation of rail – elevating the track or, preferably, putting it underground in cut and cover trenches – removes congestion for both rail and road.  Higher transit speeds shrink the city. The savings available are quite substantial.
I am sure Melburnians quite like all this – provided someone else pays for it, and their personal amenity improves.
Tantalisingly, Labor alluded to ‘value capture’ as a funding mechanism:
"This engineering work requires a considerable amount of track on either side of the crossing to be submerged underground, freeing up land at ground level.
"At some locations there is likely to be an opportunity to develop this available land and ‘capture the value’ created by the removal of the level crossing.  While development opportunities will vary with each site depending on physical restraints, Victorian Labor will actively pursue appropriate development opportunities and reinvest the proceeds generated back into further improvements to the public transport system."
Those ‘appropriate development opportunities’ are the subject of a fascinating research paper, <a href="https://msd.unimelb.edu.au/sites/default/files/docs/Intensifying%20Melbourne%202014_180dpi.pdf">Intensifying Melbourne by the Melbourne School of Design</a> at the University of Melbourne, looking at practical urban design opportunities – like turning waste land around rail stations into high density residential – to transform the way this city lives.
The paper is broader than rail station redevelopment, but I want to focus here because of the principles involved.
Intensifying Melbourne looks at redevelopment scenarios for Reservoir, Sunshine, Surrey Hills and Batman rail stations, all surrounded by large areas of currently unused land with the potential for high density residential. The newly-created high-value land funds undergrounding the rail, overall density increases and congestion falls – a win-win-win.
Intensifying Melbourne is astonishingly honest about the difficulties around change of this magnitude. The sobering realities are nasty and include:
<ul>
<li>Councils are often elected to enforce the anti-development views of residents. Those in well educated, wealthy suburbs often see anything higher than two stories as gross over-development and are formidable opponents.  Governments take them on at their peril.</li>
</ul>
<ul>
<li>The cost of trenching is triple that of raising rail lines, and many scenarios result in negative land values – the engineering cost exceeds the land value uplift.</li>
</ul>
<ul>
<li>Reservoir and Sunshine are considered highly unattractive residential locations by planners and developers. Developers face above-average risks in realising their investment, relative to other competing opportunities. There is a genuine possibility of failure after government has spent hundreds of millions liberating land over time-frames longer than the four year electoral cycle.</li>
</ul>
I say, the problems and solutions are structural and go deeper that revealed by this analysis.  These calculations are incomplete and overlook key free-carried interests.
Labor identified major, widely dispersed congestion reduction benefits.  Large scale level crossing removal will uplift land values everywhere, as faster travel times shrink distance and cut both time and cost.
The current cultural narrative that all such benefits must accrue to land owners is the barrier.  Intensifying Melbourne sees this: “The way in which urban infrastructure investment creates capital gains and increased economic flows need to be better understood to ensure the capital gains due to public investment can be captured to fund that investment.”
This, of course, goes back to the structure of taxation.  We rely heavily on wage taxes and under-tax land.  Rebalancing this anomaly – an economically damaging imbalance imposed by major land owners on other citizens – would dramatically realign the economy toward productive activity if the beneficiary pays.
Shrinking the distance between say Narre Warren and the CBD brings important efficiencies and would permanently raise land prices along the entire corridor between.  The Victorian government has the tool to ‘value capture’ enough of the uplift to square the equation.  It is called state land tax.  Use it.
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
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Could value capture be the key to Melbourne's infrastructure development?

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GUEST OBSERVATION
The report of the parliamentary committee inquiry into the Foreign Investment Review Board (FIRB) is out.
<a href="https://www.aph.gov.au/Parliamentary_Business/Committees/House/Economics/Foreign_investment_in_real_estate/Tabled_Reports" target="_blank">The inquiry</a> has been conducted with great fanfare to edify the Liberals’ rising star Kelly O’Dwyer.
And what are its findings, once the party-political propaganda is removed?
<ul>
<li>
"A national register of land title transfers that records the citizenship and residency status of all purchases of Australian real estate would fix this and would allow facts to be injected into discussions about foreign investment, rather than ‘best guestimates’. A national register would also help with compliance and enforcement with the foreign investment framework – allowing data to be compared easily."
</li>
</ul>
Ahem, <a href="https://www.psma.com.au/?product=cadlite">we already have a national cadastra (land registry).</a>
It aggregates state land data and has existed since soon after Federation.  104 years ago, the Fisher ALP government believed large swathes of the country were under-utilised and vowed to break up the big estates. Fisher set up the national register within the Australian Tax Office as a pre-condition to imposing a federal land tax with the Land Tax Act 1910 and the Land Tax Assessment Act 1910.
The economics committee recommendation merely overlays citizenship and residency criteria on this existing dataset.  Data-matching departing visa-holders ought give a clear and complete picture of whether owners are in the country and compliant.
<ul>
<li>"The systems failure at FIRB needs to be repaired; and new resources injected into FIRB to ensure better audit, compliance and enforcement outcomes."
</li>
</ul>
Well, quite.  Underresourcing the FIRB began under the Howard government. The Liberals’ free-trade posturing (code for freedom to invest, not the icy blast of real competition on cosy monopolies) leads them to look away when foreign interests buy Australian assets – even where there are national strategic imperatives.  Smearing Rudd and Gillard for their budget errors does not mean Liberal hands are clean.
<ul>
<li>"The ability to sanction people who have breached the foreign investment framework more easily is critical. Hence the need to bring in a civil penalty regime for breaches of the foreign investment framework; along with the need to capture those people, who have previously stood outside the framework but materially impact the integrity of our foreign investment regime. For instance, third parties who knowingly assist foreign investors to breach the rules."
</li>
</ul>
The key word here is ‘sanction’, which likely refers to international law and the trans-national reach of our domestic laws.
Funny, the disputed asset is land, which remains subject to Australian law under all circumstances – it is remarkably difficult to shift offshore.  It could be argued any purchase by a foreigner ought have a covenant added to the title as a warning at sale of the property’s special status. Third-parties playing straw man for ultimate owners are notoriously difficult to expose – good luck bringing a civil case against any but the most obvious examples.
<ul>
<li>"Currently, non-resident foreign investors can profit from the illegal purchase of property. Given this, the current financial penalty that can be applied to a property, regardless of its value, is seen by many as simply the ‘cost of doing business’. Fines and pecuniary penalty orders should directly relate to the value of the property concerned. Furthermore investors who breach the framework should not be able to profit."
</li>
</ul>
Sure.  Just remove the cap on the fine and leave calculation to the judge.
The inquiry recommendations are typical for a conservative government. They are internally coherent, appear to resolve the issue and allow commerce to continue.
They do not address the core of the problem: foreign, absentee owners invest to collect the economic rent accruing to land from the activity of residents. They are not resident, so do not contribute to this activity.
As a parallel, Ireland suffered for centuries from absentee English landowners demanding rents in currency which they spent in London – a constant economic drain that beggared the country.
Why not use that recently-discovered federal land registry to charge them land tax at the state rate for the privilege of capturing the value from our soil and toil?
The maximum State Land Tax rates are: NSW 2.0%, Vic 2.25%, SA 3.7%,  QLD 1.75%, WA 2.67%, TAS 1.5%,  ACT 1.23%.
Prosper did not make a submission to the inquiry, despite our very strong interest in the matter.  We saw it as a witch hunt with a twist to enable the government to brand its critics racist.
Ed Husic for the ALP played the race card and leapt blindly into the Liberals trap, the damn fool. <a href="https://www.macrobusiness.com.au/2014/11/alp-dill-opposes-enforcing-foreign-propery-regime/">Leith van Onselen shreds him here.</a> I can only wish the ALP’s parliamentarians had the vision and statesmanship of Andrew Fisher. We wouldn’t have a land bubble – or this fight over foreign interests.
David Collyer is policy director of <a href="https://www.prosper.org.au/" target="_blank">Prosper Australia</a>.
David ran as a Senate candidate for the Australian Democrats in the 2013 federal election.
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The FIRB review failed to address the core problem - foreign absentee investors

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Peter Wargent used Property Observer a few weeks ago to have a chortle over my February 2012 prediction of a steep and imminent land price correction.
<a target="_blank" href="https://www.propertyobserver.com.au/economy/average-investors-are-notoriously-poor-at-timing-property-market-cycles-pete-wargent/2013080863794">He gloats: “Since the property market troughs in mid-2012, unfortunately, prices have not fallen by 20% or even 15%.”</a>  
Hmmm.  Prices still remain well short of the 2010 peak.  Add three years of insistent 2-3% inflation to the following graph and the real price changes start to hurt.      
<img alt="collyer_aug_28_one" height="281" width="470" src="/images/stories/2013/08/collyer_aug_28_one.png"> 
Clearly, my call was courageous. The bursting of The Great Australian Land Bubble has not yet happened.  The economic catastrophe for the heavily indebted and the banks remains dead ahead.  
I have been warning young home buyers against borrowing heavily and signing away their lifetime earnings to buy a house in a market climax.      
<img alt="collyer_aug_28_two" height="250" width="470" src="/images/stories/2013/08/collyer_aug_28_two.png">
I urge them to rent, which is an absolute bargain compared to buying.  If a negatively geared property investor wants to subsidise my lifestyle, I’ll have his dollar.  
I urge them to save a giant deposit.  If rent is dead money, then by the same measure so are interest payments.  There is no point exchanging paying rent on a house for paying economic rent to a bank.  
I urge them to build up their credit rating so they have ready access to loans in the future.  
And I urge them to await the inevitable correction.   A detailed explanation of these forces, which every Property Observer reader should know and understand, is <a target="_blank" href="https://www.prosper.org.au/2013/02/22/a-long-ugly-list-of-house-price-precedents/">here</a>. 
Peter Wargent cites various mainstream forecasters who see modest future rises and asks ‘what happens if the market forecasters are right?’  
If they are right, renting will continue to be an eye-popping deal.  
I am staggered that negative gearers are prepared to stick fistfuls of dollars into tenants’ pockets, month after month, year after year.  1.5 million ‘owners’ have 1.8 million rental properties, a little over one each. Almost all are middle income earners. 
They pay a very high price to reduce their income tax, as the graph below shows.    
A detailed critique of Negative Gearing can be found <a target="_blank" href="https://www.prosper.org.au/2012/10/04/written-off-negative-gearing-report/">here</a>.      
<img alt="collyer_aug_28_three" height="250" width="470" src="/images/stories/2013/08/collyer_aug_28_three.png">
The proportion of rental investors among buyers in the residential market is now around 35%.  They will never make a decent return at current price to rent ratios.  
Wealthy people do not enter into deals with low cash returns and big borrowings on fragile, high maintenance assets like houses.  If they love bricks and mortar, better returns are available in commercial property, without the stress.  
Peter Wargent asserts: “More than anything, my message was to do something by spending less that you earn and investing in a diversified portfolio of assets rather than fail conventionally by doing nothing.”  
Agreed.  This sentiment is central to achieving future financial independence.  
So, avoid lumpy illiquid assets, after-tax debt, poor returns and high risk.  I think this exactly describes Australia’s residential property market.  
Don’t Buy Now!
<hr>
David Collyer is campaign manager of <a target="_blank" href="https://www.prosper.org.au/" rel="nofollow">Prosper Australia</a>.
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In the current market young buyers should save and rent, don't buy now! David Collyer

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Young would-be home buyers who took Prosper Australia’s advice – Don’t buy now! – exactly a year ago have typically saved themselves $58,000.
I congratulate everyone who stood aside from this dreadful Ponzi scheme known as the Australian property market.
These savings are staggering – they are genuine and they are conservatively calculated. For home buyers who waited, it is as if someone just slipped this much in their wallet.
It would take years to save $58,000 from after-tax earnings.
Consider a typical Melbourne first-home buyer couple with a 20% deposit ($120,000) ready to buy a home at the median $585,000 a year ago. Instead, they waited.
Their savings:
Melbourne median house prices have fallen 6.1% (ABS) – $35,000
The difference between Melbourne median rents $17,680 (TUV) and interest at 7.46% (WBC) on a $465,000 mortgage (ignoring stamp duty, principal repayments, rates, insurance, depreciation and repairs) – $17,009
Interest earned on $120,000 savings at 5.5% (ignoring tax) – $6,600
TOTAL: $58,609
There is a further long-term benefit not included above: the smaller required mortgage would leave an extra $250 per month interest in a buyer’s pocket, or $41,000 over a 25-year loan. This money would be available at the buyers’ discretion for living expenses or to accelerate principal repayments.
This is not a cue to immediately buy a house.
Prosper expects house prices to fall much further. We repeat our forecast made February 23 of house price falls of at least 15% and possibly 20% this calendar year.
A fall of this size will deliver massive further savings to those who resist the temptation to commit to a working life of toil lived 90 days from bankruptcy.
We urge prospective home buyers to focus on saving as large a deposit as possible. Avoid exchanging renting a house for renting money from the bank. That is not the path to economic freedom.
Don’t buy now!
David Collyer is campaign manager of <a target="_blank" href="https://www.prosper.org.au/">Prosper Australia</a>.
 
 
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First-home Melbourne buyers who didn't buy last year saved $58,000: Prosper Australia

Growing national developer Time &amp; Place has announced its fifth new apartment development.

With two projects in Manly and two upcoming in Surry Hills and Potts Point, the developer, which expanded beyond Melbourne just a few years ago, is now heading to Mosman. It is planning 53 new apartments on Redan Street.

The 3,233 sqm site, spanning <a href="https://www.apartments.com.au/new-apartments/40-48-redan-street-mosman-nsw-2088">40–48 Redan Street</a> with frontage to Redan Lane, is located just under 400 metres from Spit Junction Town Centre. It is reported the developer paid around $100 million for the five-site amalgamation.

Time &amp; Place, founded by Tim Price and backed by James Packer’s private investment firm NPACT, has submitted the project as a State Significant Development through the NSW Government’s Housing Delivery Authority pathway.

Of the 53 apartments, 42 will be released to the market, with the remaining 11 allocated as affordable housing in line with NSW Government requirements.

fjc Studio has designed the building. In its Design Report, the architect said the diverse mix of dwelling types and sizes, including 11 two-bedroom affordable housing units, 40 three-bedroom apartments, and two four-bedroom residences, will support a broad demographic, including families, downsizers, and key workers.

The development will rise to nine levels, a height encouraged by the NSW Government due to the site’s proximity to Spit Junction, which has been identified as a low- to mid-rise centre. Developments within a certain proximity to these centres are permitted increased height.

fjc said the project “achieves an appropriate density outcome for its setting by balancing increased housing supply with strong amenity performance,” adding that it “makes a measurable contribution to NSW housing supply targets through the delivery of additional dwellings and dedicated affordable housing.”

The new development will replace five existing two-storey homes.

“By aligning with the objectives of the Housing SEPP and applying careful architectural and urban design principles, the development provides high-quality residential accommodation that integrates sensitively within its established Mosman context and delivers enduring benefits to residents and the wider community.”

Mosman has become increasingly popular with developers in recent years.

Developer Abadeen has been particularly active, with Mosman Residences currently on the market and under construction on Clifford Street. It also has an upcoming Burran Avenue project, comprising just three apartments on the Balmoral Slopes, and recently secured the Midas and Honeysuckle nursery site on Military Road.

Prosker Property has a project on Redan Lane, just a few doors down from Time &amp; Place’s proposed development.

Developers including Toohey Miller, DARE Property Group, and WINIM also have projects underway in the area. In 2024, a five-year target was set for the Mosman LGA to increase housing supply by 500 dwellings by 2029.

Time &amp; Place entered the Sydney market with Two Tides, its under construction Manly development. Given its sales success, it has secured another development in the area, more boutique, facing the beach on North Steyne.

They are hoping to launch their redevelopment of The Chimes in Potts Point this year, and next year will look to take to market Marlborough House, an adaptive re-use of the landmark David Jones warehouse in Surry Hills.

Joel Robinson

Time & Place to take on Mosman apartment market

Brunswick’s civic heart continues to consolidate around the Merri-bek Arts and Culture Precinct, where a growing cluster of cultural institutions, recreation facilities, and public infrastructure has created one of the inner north’s most defined community hubs.&nbsp;

Within this evolving precinct, <a href="https://www.apartments.com.au/new-apartments/saxon-street-by-milieu-brunswick-31-saxon-street-brunswick-vic-3056">Saxon Street by Milieu</a> introduces new housing directly alongside the civic anchors that shape daily life in the suburb.

At 31 Saxon Street, the project sits immediately beside Brunswick Baths and within moments of Brunswick Library and Town Hall, longstanding institutions that support both community services and everyday amenity.&nbsp;

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Next door, the newly delivered Balam Balam Place arts precinct has emerged as a central piece of Merri-bek Council’s cultural strategy, bringing together creative studios, exhibition spaces, maternal and child health services, and community programming in a purpose-built civic facility. Together, these destinations have reinforced the surrounding blocks as a focal point for public life in Brunswick.

This part of <a href="https://www.apartments.com.au/developments/brunswick-vic-3056">Brunswick</a> forms a key pocket within the suburb’s designated Major Activity Centre, where long-term planning has prioritised walkability, civic investment, and increased housing supply close to transport and services. The surrounding street network reflects that strategy, with compact blocks, established retail corridors and active transport links supporting a lifestyle that is largely navigable on foot.

Within a few minutes’ walk, Sydney Road delivers one of Melbourne’s most recognisable streets, known for its long-running mix of independent retailers, international dining venues and everyday convenience. Tram routes along Sydney Road provide frequent connections south toward the CBD and north through Brunswick and Coburg, while Jewell Station on the Upfield line sits within roughly a ten-minute walk, offering direct train access into the city.

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Active transport also plays a significant role locally. The nearby Upfield Bike Path forms a key north–south cycling corridor linking Brunswick through Parkville and into the central city, reinforcing the area’s reputation as one of Melbourne’s most accessible inner-urban neighbourhoods for cyclists and pedestrians alike.

The surrounding civic cluster extends beyond cultural infrastructure. Siteworks, a nearby creative hub supporting artists and community organisations, adds to the concentration of cultural activity in the immediate area. Educational institutions such as Brunswick North Primary School, Brunswick Secondary College and RMIT’s Brunswick campus are also within easy reach, contributing to the suburb’s diverse resident base spanning families, students and professionals.&nbsp;

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Designed by <a href="https://www.apartments.com.au/architects/jackson-clements-burrows-architects">Jackson Clements Burrows Architects</a> in collaboration with <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> and landscape architects <a href="https://www.apartments.com.au/landscape-architect/oculus">OCULUS</a>, the nine-level building has been shaped to respond to the surrounding streetscape, with lower levels aligning to the street and upper storeys stepping back to soften its scale and improve solar access.&nbsp;

Curved balcony forms reference nearby heritage architecture, while the development’s public realm improvements include a widened footpath along Saxon Street to strengthen pedestrian connections between the precinct’s civic sites.

Sustainability also underpins the project’s approach. The building is designed to operate entirely on electric infrastructure supported by rooftop solar, with an average 7.5-star NatHERS energy rating and EV-charging readiness across the development. Shared resident amenities will include a landscaped rooftop terrace with barbecue and covered dining areas intended to encourage informal interaction between residents.

Saxon Street marks developer Milieu's fifth project in Brunswick and continues its focus on design-led infill housing across Melbourne’s inner suburbs.&nbsp;

Construction has commenced through reputable builder Manresa, who will complete the project in 2027.

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Saxon Street by Milieu connects residents to Brunswick’s cultural and civic core

Within <a href="https://www.apartments.com.au/new-apartments/candela-ivanhoe-40-upper-heidelberg-road-ivanhoe-vic-3079">Candela Ivanhoe</a>, <a href="https://www.apartments.com.au/developers/salter-brothers">Salter Brothers</a>&nbsp;takes a different approach to larger residences, moving away from the constraints of a single level.

In Grand Residence 3.05, known as the Lustre, plays out across two levels, with a mezzanine configuration that is uncommon in apartment living.

Lustre is a four-bathroom residence where the layout creates a clear distinction between shared and private zones, with uninterrupted views toward the Dandenong Ranges extending the sense of openness from the main living areas.

Entry is to the primary living level, where the kitchen, dining, and living areas are arranged as one continuous space. Timber flooring runs throughout, with a fireplace set within the living zone. Full-height glazing brings in natural light, supported by double glazing that improves thermal performance.

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The kitchen is configured as both a working and social space. A large island bench provides seating, while a walk-in pantry extends storage beyond typical apartment expectations.

Gaggenau appliances, including a 900mm gas cooktop and 600mm oven, are integrated into a layout that connects directly to the adjacent dining and living areas, and outward to the terrace. This balcony includes a built-in BBQ, reinforcing the apartment’s capacity to accommodate larger gatherings without compromising internal space.

A dedicated laundry room, powder room, and a wine cellar area sit discreetly off the main living zone, ensuring that functional requirements are resolved without encroaching on primary living areas. The master suite is also located on this level, designed as a retreat with a walk-through wardrobe and an ensuite that includes double vanities, a bath, and a dedicated dressing table.

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The mezzanine level introduces a second layer of living, rather than simply additional bedrooms. Two large bedrooms with built-in robes are positioned alongside a central bathroom, while a secondary lounge and study area create a self-contained zone suited to children, guests, or extended family. A large storage room further supports long-term usability, addressing a common shortfall in apartment design.

This separation of levels is central to how the residence functions day-to-day. It allows the lower level to operate as the primary entertaining and living space, while the upper level provides privacy and flexibility. The result is closer in feel to a townhouse or standalone home, but with the benefits of apartment living, security, and low maintenance.

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Candela is close to 80 per cent complete, with Ironside delivering construction ahead of its expected October 2026 completion. The development comprises 58 residences, with a strong owner-occupier profile and a mix of one to four-bedroom apartments and loft-style townhouses.

Candela has exclusive access to private amenities, including a residential lounge and rooftop terrace. A charming café and a lifestyle wellness centre are located on the ground level, designed to foster community connection and extend the living experience beyond individual apartments without competing with the scale of homes like Lustre.

Candela, positioned in the heart of Ivanhoe Village, reinforces the practicality of the address. With a Walk Score of 90, residents are within immediate reach of cafés, retail, parklands, and Ivanhoe Station, while also benefiting from proximity to established schools and healthcare services.

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Inside Lustre: Grand Residence 3.05 at Candela Ivanhoe

<a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a>’s <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a> is being shaped around a simple but increasingly rare premise in apartment development: that the built environment should actively support residents’ wellbeing.&nbsp;

Located on the former ABC Studios site on Gordon Street in Melbourne’s south-east, the new neighbourhood sits on an expansive 11,740 sqm site neighbouring the heritage-listed Rippon Lea Estate, whose gardens date back more than 140 years.

Rather than positioning wellness as an add-on amenity, the development integrates it into the physical planning of the site. Architecture by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> is arranged across six low-rise buildings set within extensive landscaping designed by <a href="https://www.apartments.com.au/landscape-architect/oculus">OCULUS</a>, with more than 40 per cent of the land dedicated to gardens and green space. Walking trails, pocket gardens, and mature trees are threaded between buildings, creating a network of green corridors that encourage residents to move through the precinct on foot and spend more time outdoors.

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Milieu has intentionally framed these gardens as an extension of the neighbouring Rippon Lea Estate. More than 16,000 new plants will be introduced across the site, with species carefully selected to protect and complement the area’s ecological significance. The approach focuses on strengthening existing environmental conditions while establishing new habitats that support native wildlife, reinforcing the role of the landscape as both an active ecosystem and a defining element of daily life.

A private resident gate will provide direct access to the historic grounds during opening hours, allowing residents to move seamlessly between the development’s landscaped gardens and the estate’s expansive lawns, lakes, and mature trees. The project’s gardens will also be maintained by the same gardeners responsible for Rippon Lea, reinforcing the visual and ecological continuity between the two landscapes.

Complementing the landscape is a dedicated wellness hub designed to support everyday health and recovery. Residents will have access to a gym alongside yoga and Pilates studios, while mineral pools and infrared saunas provide spaces for relaxation and restorative wellbeing. Shared lounges, workshop spaces, and pet care facilities expand the concept of wellness beyond fitness, creating opportunities for social connection and community interaction within the precinct.

Environmental performance is another key component of the project’s wellbeing focus. Elsternwick Gardens will be entirely fossil-fuel-free, with homes designed to operate on renewable electricity rather than gas. Passive design strategies, including cross-flow ventilation, high-performance insulation, and thermally broken double glazing, are intended to maintain comfortable indoor temperatures while reducing energy demand. Solar photovoltaic systems will power common building services, while rainwater harvesting will help irrigate the extensive landscaping across the site.

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Milieu Founder and Managing Director Michael McCormack says the scale and setting of the project allowed the team to take a different approach to urban apartment living.

“This site represents a once-in-a-lifetime opportunity to build something truly special,” McCormack says.

“Through that process, we arrived at a design that centres on a fully realised natural landscape – a series of private, interconnected gardens that encircle the homes and extend seamlessly from Rippon Lea Estate.”

Elsternwick Gardens will comprise three residential offerings, Gordon Place, Ripponlea Terrace, and The Garden Pavilion, each designed for owner-occupiers and shaped around high-quality interior design by Woods Bagot, K.P.D.O., and Flack Studio. The first stage, Gordon Place, includes one-, two-, and three-bedroom apartments designed with a strong focus on indoor-outdoor living and sustainability.

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Milieu recently appointed <a href="https://www.apartments.com.au/builders/brady-constructions">Brady Constructions</a> to deliver the project, marking a key milestone for the development. The appointment follows the demolition of the former studio buildings on the Gordon Street site, with construction progressing toward the delivery of the nature-led community.

Situated between the established villages of Elsternwick and Ripponlea, the development balances its garden setting with strong urban connectivity. Residents will be within walking distance of cafés, restaurants, and local retail, while nearby train and tram connections provide quick access to Melbourne’s CBD and the beaches of Elwood and St Kilda.

With construction underway and the first residents expected to move in by early 2027, Elsternwick Gardens represents a growing shift in apartment development toward environments that prioritise wellbeing as much as density or location. By placing landscape, sustainability, and shared spaces at the centre of the design, Milieu is positioning the project as a residential neighbourhood where wellness is not just promoted, but built into the structure of everyday life.

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Elsternwick Gardens' wellness-first design strategy

Brisbane-based developer <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a> has made a striking debut on the Gold Coast, officially unveiling its $250 million COMO development in Varsity Lakes, a lifestyle-driven residential project anchored by an extensive rooftop wellness and activity precinct.

Having recently launched to market, construction has already been fast-tracked by <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a>, ensuring momentum continues on what is set to become a landmark residential address for the growing Varsity Lakes community.

Located at 22 Lake Street, Varsity Lakes, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels, comprising one-, two- and three-bedroom residences designed for modern living. However, it is the project’s rooftop amenity offering that sets COMO apart.

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Designed as a dedicated wellness and recreation hub, the rooftop will feature a 25-metre lap pool, fully equipped gymnasium, and multiple pickleball and paddleball courts - amenities rarely seen in boutique apartment projects.

Residents will also have access to a sauna and plunge baths, while landscaped gardens and relaxation zones will provide tranquil spaces overlooking sweeping panoramic views across the Gold Coast skyline.

The rooftop precinct has been designed to function as the social and wellness heart of the development, encouraging residents to embrace an active, balanced lifestyle within their own building.

&nbsp;

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Red &amp; Co director David Laverty said the amenity offering was central to the project’s design from the outset.

“Amenities were at the forefront of our decisions,” Laverty said.

“Buyers today are looking for more than just an apartment - they want a lifestyle that promotes health, connection and balance.

“The rooftop at COMO has been designed to be the epicentre of that lifestyle, with a suite of wellness and recreation facilities that are quite unique for a boutique development of this scale.”

&nbsp;

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Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the residences prioritise liveability, featuring spacious layouts, 2.7-metre ceilings and high-quality finishes throughout.

The development sits beside Bond University, placing residents within walking distance of education, retail and dining options within the vibrant Varsity Lakes precinct, including Robina Town Centre, Varsity Lakes Train Station and a range of leading schools.

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Laverty said the location was a key driver behind Red &amp; Co’s decision to bring the project to the Gold Coast.

“<a href="https://www.apartments.com.au/developments/varsity-lakes-qld-4227">Varsity Lakes</a> was a clear choice for us to invest in as it’s a lifestyle hub that seamlessly blends lakeside living with urbanity,” he said.&nbsp;

“Como will capitalize on this great location, delivering a project that not only creates premium homes, but a lifestyle defined by community, wellbeing, and connectivity.”

Red &amp; Co has delivered more than 500 apartments and townhouses across 26 projects in Brisbane in recent years, with COMO marking the company’s first major Gold Coast development.

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David Collyer

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