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I’m not going to talk about interest rates and the RBA’s decision not to cut them this week because every man and his dog has an opinion on that right now.  Rather, I’m going to talk about being present in your investing.

Being present is what you experience when you are completely focused on this very moment. Often our thoughts and feelings are focussed on the past, which has already gone, or the future, which hasn’t yet happened.
The way I see it, our cash rate is 4.25% at present and that’s pretty damn good in the scheme of things.  Yes, it would be nicer at 4%, but let’s not worry about a few dollars in extra costs if you can make a great rental return like most investors are doing right now – in the present.
Australia has escaped a lot of the wrath of the GFC (round one anyway) and we are lucky to have our mineral resources to thank for that.  Yes the cash rate is only 0.25% in the USA, but its housing market is up the creek without any paddles. Yes, the cash rate is only 1% in Europe, but Europe is waiting for the GFCs round two, and there is a 10.4% unemployment rate in the 17 countries of the eurozone as reported by Reuters.
Look, I’m no economist, I really can’t comment on what’s happening overseas, and it is unfair to compare our interest rate or economies right now with theirs.  All I can comment on is what’s happening in the regional towns Property Bloom is developing in presently.
If I were to give you a quick overview on these towns in the Hunter Region of NSW this is how it go: strong, diverse economies, low unemployment, high demand for rental property, decent quarterly increases in median prices and awesome average annual growth of median prices of more than 12%.
I was taught that paying interest is a cost of doing business and as long as we’re not paying 18% like my parents did in the late ‘80s then I’m happy.
When it comes to property development funding you might (but not always) need to pay a little more, but if you get good accounting advice (and I’m not an accountant) the interest you pay should be a tax deduction together with paying an experienced project manager to manage your development. Consultant costs such as this and others can be taken up in the depreciation schedule.
When it comes to analysing the rental returns once you have completed your development it’s pretty simple.  If you are getting a higher net yield than the cost of your borrowings – the interest rate plus any fees – then you are out front.  If you decide to lock into a fixed rate and think that your rental return can be increased slowly over time while your rate is kept steady, you will find peace of mind in holding your dwellings and taking advantage of the depreciation benefits that a new build will bring and hopefully some good capital growth to come.
My advice right now – in the present – is not to get caught up in external (and particularly global) events that you have no influence over. Focus on the area you want to invest in and study it. Find out what is happening that will boost the local economy (infrastructure projects, new employment opportunities, etc.) and become an expert in that area. Look at what’s already happened or planned for the short term. Become present in your town and understand the dynamics of now, not of what may be.
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
 
 
 
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Focus on the present with property investment

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The Year of the Dragon. 2012, has the potential to breathe life-shaping fire, to be magical and even mythical.
So as we approach the first day of 2012 under the Chinese Astrology Year – February 4 – we can look forward to a “year of great deeds, innovative ideas and big projects. This will be an advantageous time to begin new projects in business and socially”.
“The Year of the Dragon will bring excitement and big ups and downs in our lives,” according to one online site. 
I’m happy to say I’m a Dragon. After reading various overviews, I think it’s a pretty cool sign – I’m told it’s one of the most powerful and lucky signs in the Chinese zodiac. This is the Year of the Water Dragon, with water having a calming influence on Dragons’ fearless temperament, and also making them more perceptive of others. That’s good.  This also links into my Pices status. I do love a swim in the ocean!
It’s all fun and games to check in on our horoscopes –I always read mine in the Sunday paper – but really it’s up to you as we move into a new year to set down exactly what you want to achieve and not just leave it to chance, or Dragons, or any other belief.
Property development is like what we can expect this year from the Year of the Dragon: it is exciting, it does bring ups and downs (plenty of those) and hopefully in the end, it’s rewarding.
How can we sure up our property development results? I think it comes down to few simple rules:
<ol>
<li>Conduct massive due diligence before you decide to buy. You need to understand exactly what is permissible and what the local market needs in housing.  You should understand the local economics, where the employment is coming from and what projects are in the pipeline that can affect your development.  You should know the suburb inside out so that when a good deal comes along, you can jump on it.</li>
<li>Know what the potential outcome should be. Study rents and sales results in the suburb so you know what your dwellings will return/sell for. Put this into a simple feasibility spreadsheet. </li>
<li>Have a good property accountant who can check over your numbers and advise on the correct structure to purchase under to maximize your tax situation.</li>
<li>Have your finance pre-approved before you start looking so that you can move quickly to secure a good property.</li>
<li>Check out local builders, surveyors and tradies so you can quickly set up your development team.</li>
<li>Negotiate everything; purchase terms, deposit, renovation costs, building costs, agent management fees, etc. Each discount you get will lead to a better bottom line. Be careful not to “screw” your suppliers, as it needs to be a win-win situation for all. </li>
<li>Project manage your development closely so you can ensure it’s moving along as quickly as possible. This takes lots of time and patience. If you don’t have them, use a professional project management fire (like Property Bloom). </li>
<li>Consider holding property. It’s my opinion if you go to all the trouble and time to develop property the benefits of holding can be massive, especially in a few years time when you look back and ask yourself, “Why did I sell?”. Of course you need to have a good yield and depreciation benefits to support your holding costs. </li>
</ol>
So why not take advantage of the Chinese astrology forecast and make 2012 a year of great deeds, innovative ideas and big (property development) projects?
Jo Chivers is director of <a title="Property Bloom" target="_blank" href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
For more on what's set to unfold in the Year of the Dragon, <a href="https://register.propertyobserver.com.au/foreign-investment-in-australian-property-markets/" target="_blank">download our free eBook</a>.
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Get fired up for property development in the Year of the Dragon

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As we moved into the new year of 2012, I found myself celebrating another milestone.  Right now, the NSW planning system is undergoing the biggest change in 30 years. One of the councils we work under finally gazetted a new LEP – Local Environmental Plan.  The NSW government is changing the way that LEPs are developed and approved for our communities.  This means many councils are undergoing a change to their LEPs. 
One of the biggest challenges of a property developer is keeping up with council regulations.
If you’re thinking of renovating, extending, building new dwellings, demolishing or subdividing you will need to lodge a development application (or DA) with your local council.  But even before you are ready to put your DA together, you must have a good understanding of the council’s LEP.
Something very important you should ask your council is whether there is a draft LEP in existence. A simple search of its website should tell you what’s in the planning pipeline.
There are no general regulations that apply throughout Australia – so as a developer, you must contact your local council for specific details relating to what you want to do.  DAs allow councils to assess whether your plans are appropriate for the area based on their LEP and development control plan (DCP).
This brings me to share an interesting period we’ve had with several Hunter councils as they went through the process of introducing new LEPs.
A LEP is a legal instrument that imposes standards to control development. These plans determine the areas in which various types of development can be considered and which areas of open space and environmental sensitivity need to be protected.  These plans can have a profound and lasting impact on communities. 
A LEP generally comprises a written document and accompanying maps. LEPs apply to a particular area, generally the whole, or part of, a local government area. 
Most LEPs remain in force until they are amended or repealed by an amending LEP. The process to amend an LEP is massive.  We’ve been waiting for one council to draft and finally implement its LEP for five years!  There were many changes and each time a new edition of the draft LEP went on exhibition, we had to study it.  Finally, the LEP was gazetted. When the draft LEP is gazetted, it takes over from the current LEP as the primary environmental planning instrument. 
In the case of our Hunter council, the new LEP will provide more than 1,000 additional residential lots at eight sites across the local government area. In addition the LEP zones new employment land, which will encourage job creation in close proximity to the existing centre of town, while protecting the environmental values of the area.
The LEP also identifies planning controls for a major new town. For a developer, this is very important information. A whole new town will impact greatly on the economy and the demand and availability of housing, so you can see it’s crucial for you to know of any changes to your council’s planning process.
Importantly we’ve found that as the new LEP comes in there is a big grey area. DAs that were submitted prior to the date that the new LEP was gazetted will continue to be assessed under the old LEP and the old DCP, with due consideration of the new LEP. What the?
This may sound a bit confusing but as a developer it’s your responsibility to get a handle on the requirements of your council. I’d suggest you use a planning consultant with a strong understanding of your council’s requirements if you don’t have the time. Remember, the planning phase is just one of the many phases you’ll journey through as a developer. It’s a time-consuming pursuit but one that can bring many rewards.
Jo Chivers is director of <a title="Property Bloom" target="_blank" href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
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What a new local environment plan can mean for your development

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Just in time for Christmas we’ve received the results of the National Housing Supply Council’s State of Supply Report 2011. 
The <a target="_blank" href="https://www.nhsc.org.au/supply">council’s report</a> provides independent and consistent data on housing supply, underlying demand and the supply-demand gap, as well as affordability. The report has become a trusted resource for both government and industry. 
With <a target="_blank" href="https://www.propertyobserver.com.au/residential/michael-matusik-dismisses-housing-undersupply-findings-as-spin/2011122152932">so much debate going on with whether there actually is an undersupply of housing</a> or not, this report gives some real weight to the argument. In fact, it’s pretty clear. 
The council projects that there will be a shortfall of more than 600,000 dwellings nationally in the next 20 years. 
Wow. That’s a lot of housing that will be required despite “weaker market conditions” that are being touted right now.  But I’m not really seeing “weaker” conditions. In the areas Property Bloom develops things have started to move.
Just this week we found a fabulous development site.  It is a solid three-bedroom house on 1,012 square metres with two street frontages (there’s the twist).  This potential development site had plenty of interest, so much so that we had to race to exchange in order to secure it and take it off the market before Christmas.  The agent received more than 30 enquiries in under a week.  On this site we’ll build a three-bedroom duplex – two attached three-bedroom villas – for our clients.  So we’ll create three properties from one. 
This is where I make the familiar reference to the two-speed economy.  You will find that in any large region where there is lots of employment opportunities – as we see in the Hunter region of NSW – there will be strong demand for housing. 
But it’s not just any housing that’s required. We need to tailor to the needs of the community.  The State of Supply Report uncovers that the numbers of households comprising couples without children and lone-person households are projected to grow much more rapidly in all regions than are the number of households that are families with children.  With an aging population this all points to a need for smaller dwellings. The projections suggest that most regions can expect a greater relative increase in demand for flats than for separate houses. 
Here’s an important point:  “Demand for private rental dwellings may well increase more sharply than is projected, due to social housing stock not increasing in proportion to increased underlying demand.”  What is that telling you, investors?  Rents will continue to increase, combine this with interest rates dropping, buy in the right area and you should end up with a very strong yield. 
With affordable housing in great demand, Property Bloom addresses this by developing properties, renovating houses and then building a granny flat. This strategy can be turned over very quickly and we basically double the housing capacity for that property and create a 9% gross yield for our clients.
By building villa developments in large regional towns like Muswellbrook, Cessnock and Maitland we are also providing good-quality, affordable dwellings. These are quickly snapped up in the rental market.
So if you are looking for to give yourself a Christmas present, consider developing property, or at least purchasing one, in areas where there is an under supply and strong demand. You’ll not only be doing yourself a favour, but also the communities you are investing in and assisting with the shortfall of housing.  Merry Christmas!
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
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All I want for Christmas is some new housing

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As we look back on 2011, Property Observer is republishing some of our most noteworthy stories of the year.
 
Personally, I am really bullish on the investment property market for 2012.  Please note my reference to “investment” market, as I do see a split between the owner-occupier markets and think these may remain subdued or perhaps grow slowly.  It’s property investors who will dive into action and stimulate the market into a steady capital growth wave.
While some of the points I base my predictions on relate to the national market, most relate to the Hunter region of NSW where Property Bloom develops property.  It’s where we focus our research efforts. The Hunter Region has one of Australia’s largest regional populations.  It is also within about a two-hour drive from Sydney, so we are not talking boondocks here.  It’s made up of five major cities or centres: Newcastle, Cessnock, Lake Macquarie, Maitland and Port Stephens.   However, smaller towns like Singleton and Muswellbrook have become major contributors to the region’s economy primarily due to their large coal mining projects.
Here are some of the facts that I have built my 2012 forecast for the investment property market:
-           Major banks decide to pass on the full 0.25% cut last week. According to Westpac’s chief economist, we will see another 0.5% cut by June 2012.
-          Tight labour markets in the Hunter region
-          Federal government funding just announced  in training to increase skilled labour
-          Major regional capital expenditure, particularly resource sector related or transport related initiatives will be a driving force in the Hunter economy over the next few years. Planned expenditure of over $3 billion in the Upper Hunter alone in the areas of mine expansions, rail and wharf investment, on top of a $1.7 billion Hunter Expressway roads project in the Lower Hunter.  These major projects are expected to also flow on to small-medium businesses in the area.
-          Low vacancy rates and still falling, in November we saw a drop of 0.3% to 1.4% in the Hunter Region and the Sydney Metropolitan area vacancy rate is also just 1.4%.
-          High yields. In most towns we develop in the projects finish with a 7-9% gross yield.
-          Shortage of housing.  We have seen four declines in five quarters, with total new dwelling commencements declining 11.5% in the September 2011 quarter.
To me these conditions are ripe for investors to take advantage of lower holding costs as interest rates drop.  There is one massive factor that will impact what happens in 2012, and that is consumer sentiment.  With the continued doom and gloom messages coming at us from Europe and other international markets and the dissatisfaction with our political leaders right now, I think this will also impact on consumer and investor confidence.
I see a fantastic opportunity for savvy property investors over the next 12 months to take advantage of the current environment and get in early before the mainstream investors hit the market, because when this happens it will increase demand, which will result in higher prices and translate into capital growth.
Let’s take it one step further. By developing property in this environment, you can fast-track your portfolio by creating up to three properties from one.  You can create more, but keeping to three or fewer minimises risk and works within the current lending criteria. Banks will lend on building up to three new dwellings on one title right now.
Developing property is exciting, but if you can develop at the right time when the market is moving into a growth phase, then you will see the real benefits of creating equity through the development process whilst also completing your development in time to catch the next capital growth wave. Happy surfing in 2012.
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development. 
 
 
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Investors will dive into the market in 2012

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One of the easiest and most successful small development strategies I’ve used over the years is the old corner block development. We can create around $290,000 by investing $634,000, that’s a whopping 46% return.
By using this strategy you can also create a really cheap block of land.  Developing is all about creating.
But before you start you’ll need to clarify a few things.  What is the minimum lot size in the area you are developing in? What is the land zoned – low or medium density?  Different councils use different terminology, but basically low density usually means two or fewer dwellings are allowed on one title of land.  Medium density is three or more on one title.
You’ll also need to check the council requirements around dual occupancy and medium density. Things like minimum private space requirements and setbacks may discount some corner blocks if they are not large enough to accommodate a duplex and the existing house, or two duplexes. Basically we need to get three (or more) dwellings from one corner block. So it’s important to use a consultant with strong understanding of the local council requirements if you are not up on them.
Once you are clear on this, you can start your search.  In one of the towns we develop in the minimum lot size is 450 square metres. So to be able to subdivide a corner site, you would need a minimum of 900 square metres.  Now this is not always set in concrete, the council may consider a slightly smaller land size, as long as you can show you will be developing and building within its development control plan guidelines. By this I mean you may need to build first and subdivide later or incorporate the subdivision into your development application to build. This is actually my preference, as to subdivide a block upfront takes a lot longer and is more expensive than tying in the subdivision with your development application to build.
However, there are reasons why you may need to subdivide up front. One may be to meet zoning requirements.  We’ve had to do this recently in a low-density zoned area where we found a 1,012-square-metre corner block with a house on it.   We wanted to keep the house, renovate it and build a duplex facing the other street.  In this location, we couldn’t apply to build a duplex on the block as this would be looked at as a three-villa development: the house (1) and the duplex (2 villas).  The zoning requirement was that you could only build two dwellings on this land, so the house plus one other.  Our solution was to subdivide the block and then applied to build a duplex (two dwellings) on the newly created lot.
So here is how it stacks up in this town:
Three-bedroom in need of a large renovation on 1,012-square-metre block – $210,000
Renovation costs $60,000
Set up, stamp duty, legals, surveys &amp; reports: $11.000
Subdivision costs: $23,000
Cost to build duplex after subdivision registered:  $330,000
Total Cost: $634,000
End value of the house on 400sqm after full renovation:  $280,000
End value of the two new villas @ $320,000 each:   $640,000
Total end value of the three properties:  $920,000
Less total costs of $634,000
Equity Created:  $286,000 
(note: holding costs are not included as house rent and depreciation offset interest costs)
So what about that cheap block of land?
Well, you can see that we purchased the house for $210,000, set up costs of $11,000 plus spent $60,000 on the reno.  The subdivision costs were $23,000.  Total cost of the house renovation and subdivision is $304,000.
The renovated house on only 400 square metres will be valued around $280,000.  So if we take the costs away from the end value we are paying just $24,000 for the other block of land where we can build our duplex.  So the land cost is only $12,000 per dwelling.
And that’s why I love the old corner block development.
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
 
 
 
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How to create a cheap block of land

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As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
 
A dual-occupancy development is a relatively low-risk way to dip your toe into property development.  The simplest dual-occupancy is building a duplex.  A duplex is two attached villas/units.  So this is almost like building one larger house.
Another type of dual occupancy is to build a second dwelling behind or next to an existing house.
But my preference is to build two freestanding dwellings.  At Property Bloom we look for nice corner blocks that will allow us to build two free-standing villas or houses.  By “nice” I mean a flat block.  Each dwelling will have its own street frontage and face a different direction. You can then simply subdivide so that each villa ends up on its own, albeit smaller lot. The dual occupancy will then appear to be two separate single dwellings.  While each will be on a smaller lot than perhaps the other homes in the street, they may be valued not too much less than the same size dwelling on a larger block.
The wonderful thing about a dual-occupancy development is that the build costs may not be that much more than building one larger house.  However, the land cost is halved for each dwelling. This is how the numbers stack up and we can create over a $100,000 in equity through building a dual occupancy in the large regional towns we choose to develop in.
Let me take you through the figures on a dual-occupancy development we currently have available. Last week, we were offered first option to secure the best lot in a new land release in an upmarket estate in the town of Muswellbrook.  We quickly secured an 892-square-metre lot that was virtually flat.  There will only be three dual-occupancy sites offered in this release, so that means that the majority of dwellings will be houses and probably built by owner-occupiers rather than investors in this particular estate. That’s a big tick for when we complete the villas and clients rent them, as there will be less rental property in this area competing.
The cost of the land is $160,000, pretty cheap for almost 900 square metres of corner block, eh?
Bonus: The lucky client may not need to pay any stamp duty under the <a href="https://www.osr.nsw.gov.au/lib/doc/factsheets/ofs_hbb1.pdf" target="_blank">NSW Builders Bonus scheme:</a> 
Set up costs include; solicitor fee, contour survey and soil test:  $3,000
Estimated cost to build two freestanding three-bedroom, two-bathroom villas with double lock-up garages: $450,000
The build cost above includes all costs associated with the development; council fees and charges, design costs, turnkey building costs and even subdivision. We request that our builder loads everything into the building contract so clients can maximise their construction finance.
Contingency and holding costs:  $15,000
Property Bloom strives to minimise holding costs (interest on the land) paid by negotiating a low deposit and an extended settlement period on the purchase of the land.  During the settlement period we work fast to design the project, prepare and lodge the development application with the council and generally we can obtain development application consent before our client settles on the land.  This means we can swing quickly into action to obtain the construction certificate and then start to build. The build phase is approximately six months for a dual occupancy.
Total estimated costs for dual-occupancy project:  $628,000
Estimated end value of each villa:  $370,000 each or $740,000 for both
To find out the equity created in this project we take the estimated end value of $740,000 (for two villas) away from the total costs of $628,000.  This leaves $112,000.  Not a bad result within a 12-month period.
The rental return expected on the two villas is $450 per week or $900, giving a gross yield of 7.5%.
Jo Chivers is director of <a title="Property Bloom" target="_blank" href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
Photograph of Property Bloom duplex in Hunter region, NSW.
 
 
 
 
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A dual-occupancy development is twice as nice

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If you are a property investor looking to take the next step into developing property, then there’s never been a better time.  Just take a quick look at the current market conditions and you’ll see what I mean.
Australia’s housing shortage is likely to get much worse before it gets any better because construction of new housing continues to fall well behind the number of properties required. We are seeing Australia’s population growing although the ABS reports that at March 2011 growth had slowed slightly over the previous year.  But we still grew by 312,400 people. In contrast, there was a 7% decline in new dwelling commencements (nationally) over 2010-11 to 154,877.
Then there is the continually rising demand for rental properties. The national vacancy rates are now 1.8% and a lot lower in most of the areas of the NSW Hunter Region, where Property Bloom is developing. There is massive demand for new rental stock, and tenants will pay a premium for brand new.
And here’s a tip for what to build:  The changing demographics of Australia – particularly a smaller proportion of couples with children and ageing of the population – is likely to increase underlying demand for smaller dwellings proportionally more than demand for separate houses.
The government’s National Housing Supply Council’s 2010 State of Supply report concludes:
<ul>
<li>Underlying demand has continued to grow since the last report (by more than 200,000 households) and is projected to increase further by 2029 (by 3.2 million households to 11.8 million);</li>
<li>Supply is not responding to this increase in demand (and that the impact of the global financial crisis on residential development in 2008-09 is likely to reduce dwelling completions in the next few years);</li>
<li>State and territory data on future infill and greenfield supply may be higher than actual delivery of lots (contributing to a larger gap);</li>
<li>The gap between demand and supply has continued to increase and will continue to increase without any changes to demand and/or supply;</li>
</ul>
So the writing is on the wall. We need more housing and depending on where you are developing, villas or units will be in demand.  It’s a perfect time to step up and become a developer.  But if it’s your first time, you should use a project manager to guide you through the development process.
At Property Bloom we start by finding suitable and affordable development sites for clients in the right locations where there is good demand for new dwellings.  Then through a detailed process, we’ll guide the project to a result of building anywhere from two to six new villas, more if clients can finance larger developments.  In some areas we are building larger houses, as this is what is in demand right now.  The total cost of a typical development is $650,000, around the price of a two-bedroom unit in Sydney. 
While all the hard work is taken care of, clients can be as involved as they like in the process.  We have some clients who are first-time investors and need their hand held through the process. Others want to learn the development process so they can do it themselves next time. At the other end of the scale there are experienced investors who work in demanding jobs who don’t have time to source development sites for themselves, let alone manage the entire process.  Property Bloom has managed over 45 developments, so we have a tried and tested system in place. 
Using a project manager to handle your development means you are handing over all the detail to someone with the experience needed to successfully manage your investment.  Some of the responsibilities of a project manager include:
<ul>
<li>locate suitable sites</li>
<li>run feasibilities on potential development opportunities</li>
<li>brief designers and work with them ensure the site is optimised through good designs</li>
<li>consult with architects, engineers and other technical workers to make sure that design intentions are met.</li>
<li>interpret plans, estimate costs and recommend reliable suppliers</li>
<li>manage the planning phase to ensure the fastest possible approvals</li>
<li>study building contract documents and negotiate with building owners and subcontractors </li>
<li>manage construction methods and procedures </li>
<li>co-ordinate the supply of labour and materials </li>
<li>direct site managers and subcontractors to make sure standards of building performance, quality, cost schedules and safety are maintained </li>
<li>control payment to subcontractors by valuation of completed works </li>
<li>communicate effectively and report accordingly</li>
<li>keep project budgets</li>
</ul>
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
 
<ul></ul>
 
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Property development is needed to address the housing shortage

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The definition of a developer’s nightmare is: hearing that your builder is going into liquidation.  So what happens when a builder you’re using does go into liquidation? 

With the announcement of Cosmopolitan Homes in NSW going into liquidation last week, I thought I’d share what I know about this topic. 

When your builder raises a contract, it also needs to raise insurance. The policy that is most important is the home warranty insurance.

[smartcode_project:default project_id=6284]

Home warranty insurance is issued to the developer/homeowner to protect them against loss due to non-completion, defects and breach of statutory warranties by the builder. It is legally required and is only triggered if a builder dies, disappears or becomes insolvent before completing the home or fixing the defects.

I’ll repeat: you can only claim on this policy if your builder dies, disappears or becomes insolvent.  These are pretty drastic outcomes for the builder, but can also have dire consequences for you.

I think we all understand what ‘dies’ means.  ‘Disappearing’, well I’m not sure how this is legally defined, I couldn’t find an explanation. How long does he have to be gone for?  Does a three-month trip to Vegas count?  What I do know more about is the process of ‘becoming insolvent’, and it can be quite drawn out.

If you find yourself in the situation where your builder has gone into voluntary or court-appointed liquidation, the good news is you are most likely covered by home warranty insurance. The bad news is your cover may not be enough to complete your building works. 

I’m going to let you into a little-known fact:  Your home warranty insurance policy only covers 20% of the builder’s contract and up to a maximum of $300,000 for incomplete work.  So the stage your builder goes broke is very important, but totally out of your control. I’ll come back to this.

Going into liquidation is not easy for anyone. For voluntary liquidation the builder needs to acknowledge that he just can’t keep trading. There can be a period of denial as he comes to terms with this. He should not be trading while insolvent because that’s against the law.  Signs of distress may include: delays in completing the stage of build and disgruntled tradies who have not been paid or are continually having to chase payment and the builder being over anxious for his next drawdown. So when the builder finally faces reality and goes into liquidation, he needs to appoint an accounting firm to manage this process.  They will be known as the liquidators. Their job is to notify all “creditors” of the situation.  A creditor will be you if you are under construction with the builder and anyone else he owes money to like staff, contractors and suppliers.

The builder may be put into court-appointed or official Liquidation. This is when someone applies to the court that a company should be wound up in insolvency. If this happens the court will appoint a liquidator.

Either way, before you can make a claim under the home warranty insurance policy, the status of the company must change from “registered” to “under external administration and/or controller appointed” on the ASIC website. Once the company’s status has been changed, you can lodge your claim.

When you make your claim, you’ll be asked to complete a schedule of payments you’ve made to the builder up to this stage. You’ll know how much you have left in your construction loan account. So then it’s a roll of the dice to see if you can complete the works with the insurance payout.

The insurance company will appoint an assessor who will inspect the site and put a building schedule together for the works that are outstanding. This is sent out for tender to builders on the insurance company’s panel and you can also get your own quotes.  This is when you may discover that the works required to complete the project may not be covered by the claim and what’s left in your construction loan.  With just 20% of the original builder’s contract to play with, there really isn’t a good time for your builder to shut down.

How can you avoid the situation of a builder going broke? Well you can certainly do your research on them before signing up. Get a list of their tradies and talk to them about how they are treated by the builder. Does he pay on time? Is he good to work for?  How long have they been working with him? Talk to past clients and ask how their experience was.  Check the Department of Fair Trading website for any past complaints and the ASIC website to see how long the builder has been trading and his status. 

At the end of the day, you will need to trust yourself and go with how you feel about a builder. After all, we cannot know everything that is going on with a company. When you find a good builder, stick with him! 

Interesting links: 

<a href="https://www.propertyobserver.com.au/https://homewarranty.nsw.gov.au/portal/server.pt/community/a%3Bhome/255">https://homewarranty.nsw.gov.au/portal/server.pt/community/a%3Bhome/255</a>  

<a href="https://www.fairtrading.nsw.gov.au/">https://www.fairtrading.nsw.gov.au</a>  

<a href="https://www.search.asic.gov.au/gns001">https://www.search.asic.gov.au/gns001.html</a>

Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
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What to do when your NSW builder goes into liquidation

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With this week’s RBA interest rate cut, I found myself pondering on the impact this may have on the “property clock”. 
We’ve all heard the old saying that “property runs in seven-year cycles”.   While I agree property does run in cycles, the fact is we can’t make a generalisation for the entire property market and cycles vary in length. There is not one property cycle, but many. We need to study the areas we are interested to invest in to get an understanding of its individual property clock. In addition to micro events that will affect a cycle  like the opening of a new supermarket in the area for instance (the effect is an increase in jobs and people wanting to live there), there are also macro events that impact on the cycle.  An obvious example is the impact that the GFC had on property cycles. 
Part of my research process is to track specific postcodes in the areas we develop in closely. I collect the quarterly median price growth data and put it into a graph. I like to see a visual of what’s been happening.  So looking back on one of my graphs, I can see a distinct peak in growth that started in 2002 and continued through 2003.  Since then, we’ve seen this area’s median price plateau, and then small incremental growth spikes occurred, until a larger one in 2009 as a result of the government’s first-home owners grant, which enticed more sales. From 2009 until now, there has been some decent growth. In the past 12 months to August this postcode grew by 8.92% and right now the first-home buyers are back in the market encouraged by the RBA’s rate cut. This rate cut is physiologically representative of far more than the 0.25% cut we received.  We’d been told for a year or more to expect more rate increases. This had everyone sitting on their hands, and even saving while they watched and waited. Now the RBA goes the other way and a big sigh of relief blew over the country. 
If we now take a look at the Property Clock below, and I relate it to this particular postcode in the Hunter region, then I can guess that we’ll see some substantial growth in the median price soon.
<img src="/images/stories/jochiversnov3.gif"> 
Why?  Well this suburb (keep reading and I’ll reveal its name) has a very strong rental market so yields are increasing and there is an undersupply of rental properties. I’m expecting to see more investors coming into this market once they realise the strong returns.  You see the median price is just $238,000 and the median rent is $280 per week.  But Property Bloom completed projects in this suburb rent for $380 per week. 
I believe the Lower Hunter Region is around the 7.30 stage of the clock.  There is not a shortage of stock yet but the very good properties are selling quickly.  And there is certainly a new dwelling stock deficiency here. 
A Property Bloom development will typically takes 12 to 18 months to complete, and during this time demand is likely to strengthen and rents to continue increasing (due to limited rental stock).  And if we do see more rate cuts, then I believe we will move to 9 o’clock very quickly. So it is a great time to be developing and adding value to property. If you time it right, you can create some good equity then ride a wave of capital growth. 
Add to the mix the government’s NSW home builder bonus scheme, which waives stamp duty on off-the-plan purchases of new homes up to the value of $600,000 and on land up to the value of $400,000.  <a target="_blank" href="https://www.osr.nsw.gov.au/benefits/nbb/">This bonus</a> is due to stop July 2012, so do not waste time if you want to take advantage of this bonus.
Savvy investors are always one step ahead of the general market. You can make an educated call on when you enter the market by studying the property clock – so are you savvy or mainstream?  By the way, the suburb I’ve been talking about is Cessnock.
Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
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Learn where your region sits on the property clock before you begin your development

Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Mortgage relief? NAB forecasts RBA rate cut, not hike, after softer economic conditions

A local downsizer has splashed $6.5 million on a penthouse in Perifa's Alex &amp; Willow development in Crows Nest. 
&nbsp; 
The purchaser sold their long-held family home in the area before embarking on a six-month search for the right apartment. After inspecting a range of options across the Lower North Shore, the buyer returned to <a href="https://www.apartments.com.au/new-apartments/alex-willow-crows-nest-82-90-alexander-street-crows-nest-nsw-2065">Alex &amp; Willow</a>. 
&nbsp; 
The buyer profile reflects the project’s broader purchaser mix. <a>Alex &amp; Willow</a> has attracted predominantly local downsizers looking to transition from larger homes without compromising on space or quality, alongside a smaller cohort of upsizers and investors drawn to the project’s location and design credentials. 
&nbsp; 
The milestone sale comes as the project, developed by&nbsp;<a href="https://www.apartments.com.au/developers/perifa">Perifa</a>&nbsp;and delivered by <a href="https://www.apartments.com.au/builders/versatile-made-construction">Versatile Construction</a>, both part of Versatile Group, reaches 60 per cent sold.

[smartcode_project:default project_id=6680 project_image_fid=371325] 
&nbsp; 
Eddie Mansour, Managing Partner of <a href="https://www.apartments.com.au/project-marketer/ray-white-projects">Ray White Projects</a>, said the result demonstrates not only a headline price but also depth of demand. 
&nbsp; 
“This is an exceptional outcome and a clear reflection of sustained buyer demand for premium, well-located downsizer product,” Mansour said.

“We’re seeing a consistent pattern of local homeowners selling family residences and reinvesting into high-quality apartments that allow them to remain within their community. Alex &amp; Willow has resonated strongly with this group because it offers genuine scale, thoughtful design and immediate proximity to the village.” 
&nbsp; 
The sale reflects a broader and consistent trend of local downsizers actively seeking high-quality, low-maintenance residences close to established village centres. Agents report that demand for this product type has remained resilient, particularly where developments offer a rare combination of scale, design quality and walkable amenity. 
&nbsp;&nbsp; 
Fabrizio Perilli, Managing Director of Perifa and Versatile Group, said the sale marks a defining moment for the project. 
&nbsp; 
“The penthouse sale is a strong endorsement of the quality we have delivered, alongside our partners, and the clear demand from local downsizers for premium, boutique residences in this location,” Perilli said.&nbsp; 
&nbsp; 
“Most importantly, we’re proud to see the Alex &amp; Willow community beginning to take shape. As we move closer to completion, we’re looking forward to welcoming residents and seeing the project come to life.”&nbsp;

[smartcode_project:default project_id=6680 project_image_fid=338516] 
&nbsp; 
Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettleton Tribe</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richards Stanisich</a>, Alex &amp; Willow is a boutique collection of generously sized two- and three-bedroom residences in the heart of Crows Nest village.&nbsp;

Completion is slated for early 2027.

[smartcode_project_cta:default project_id=6680]

Alex & Willow, Crows Nest penthouse sells off the plan for $6.5 million

Fresh from launching the first stage of its Wollongong precinct, <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, builder-developer Urban Property Group has unveiled plans for the next phase of the masterplanned community.

Now on public exhibition through the NSW Government's Housing Delivery Authority pathway is a State Significant Development Application for a further 657 homes on the prominent gateway site opposite Beaton Park.

The proposal comprises three buildings, including two build-to-sell towers rising 25 and 30 storeys, delivering 391 apartments, alongside a 12-storey co-living building with 266 residences, making it one of the largest co-living proposals currently planned in regional New South Wales.

Of the apartments proposed in the build-to-sell towers, the majority, 310, are two-bedroom dwellings. The balance comprises 44 one-bedroom apartments and 37 three-bedroom residences. Apartment sizes range from around 50 sqm for one-bedroom homes to approximately 90 sqm for three-bedroom apartments.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="19347059-1612-41a0-9c74-b86a657237f8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%2010.02.18%E2%80%AFAM.png?VersionId=sWXnaCcA.cIC6N8YT1dg5pJ2e1V3Z6z7" />

The submission says the proposal has evolved significantly from its original Housing Delivery Authority application following extensive consultation with the State Design Review Panel and Wollongong City Council.

The final scheme has been designed to align with the emerging vision for the Flinders Street Precinct, an area identified by Council as a future high-density mixed-use neighbourhood capable of accommodating substantial housing growth close to transport, employment and community infrastructure.

According to the design report prepared by COX Architecture, the development aims to "deliver a built outcome consistent with the future character of the Wollongong CBD while responding to the site's unique constraints and opportunities."

"Our vision for the next phase of the site evolution in Wollongong is grounded in three design pillars that guide the design response: place, natural environment and celebration," COX said.

"Inspired by its surroundings and grounded in the stories of place on Wodi Wodi Country, the design proposal acknowledges the established character of its setting while creating a unique and timeless identity that sits harmoniously within it.

"The design proposal responds to its specific site conditions, acknowledging the vegetation, climate, wind conditions and solar access of the site."

The architecture responds directly to the site's position between Wollongong's urban core and its natural landscape setting.

COX identified views towards Mount Keira and the Illawarra Escarpment as defining features of the site, while the upper levels of the towers will also capture expansive views across the city and out to the Pacific Ocean.

The design team has positioned the tallest buildings closer to the rail corridor, where overshadowing impacts can be better managed while establishing a landmark built form on the northern approach into the city.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="79580d5b-500c-4ebf-9629-797146a4a694" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.51.59%E2%80%AFAM.png?VersionId=WbTB1EKSG.KDfsfz0F3wp1QVa2oCMGR5" />

Urban Property Group secured the 11,000 sqm Smith Street site in 2022 and has since progressed plans for the broader Keira Place precinct.

Construction recently commenced on the first stage of Keira Place, which will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, alongside activated ground-floor retail and commercial space.

Urban Co-CEO Patrick Elias said the commencement of construction marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/groundbreaking-marks-start-of-construction-at-keira-place-in-wollongong-cbd">Groundbreaking marks start of construction at Keira Place in Wollongong CBD</a>

&nbsp;

&nbsp;

&nbsp;

Jo Chivers

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