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Interest rates have already fallen to a point where investors are being enticed to act, and when investors come out, so do the property marketers ready to sell.
But when you’re leafing through the glossy brochures and touring the display suites, remember that today’s financial benefits could be tomorrow’s financial headaches. These benefits are nothing new to the market as they are rolled out each time investors get active. Here are the most common ones to look out for.
Depreciation benefits
Buildings and their contents depreciate (decrease) in value, while land appreciates (increases). When you buy a new property, the tax office will enable you to defray part of the purchase price by allowing you to claim depreciation on certain items. This can be helpful in increasing your cashflow, particularly during the early years when the property is likely to be negatively geared.
However, the downside is that most of the depreciation you can claim comes from fittings and fixtures like the oven, air-conditioner, blinds and carpets, which fully depreciate in five to 10 years. Furthermore, depending on the way you calculate your depreciation allowance, the amount you can claim may decrease each year. This means it will cost you more to hold the property as each year goes by.
Claiming depreciation can also have a hidden tax consequence because it will also increase the amount of capital gains tax you pay when you sell. I’m not saying you shouldn’t claim depreciation – but you should be aware that it may have financial consequences later down the track.
Stamp duty savings 
When you buy property off the plan in Victoria, you will only be liable to pay stamp duty on the property’s value on the date of purchase. If construction is partially completed, you’ll only pay stamp duty on that portion of the building, plus the land value. If construction hasn’t begun, you’ll only pay stamp duty on the land value.
Whilst this can help considerably when you first buy a property, it’s only a one-off saving that won’t help you after the loan has settled and you have to make repayments. What’s more, when you come to sell the property, potential buyers won’t have the same benefit of a stamp duty reduction, so there’s less incentive for them to buy it.
Rental guarantees.
When you buy a property new or off the plan, the developer will often undertake to provide a guaranteed level of rent each week for the first year or two that you hold the property. This kind of guarantee generally applies even when the property isn’t tenanted, because the developer picks up the tab.
Although it is reassuring to have certainty of rental income during the early stages of holding an investment property, there are two significant downsides. First, you’ll pay a premium to secure the rental guarantee; the developer will build it in to the sale price. Second, in accepting a guaranteed rent level, you’re insulated from market forces. Once the guarantee expires, the amount of rent your property can command will depend on a range of factors including supply and demand.
As newer properties come on to the market and tenants have a wider choice of places to live, the market rent for your property could fall. This is a particular risk in areas like the CBD and Docklands, where there’s likely to be a substantial amount of new construction.
Remember also that when you’re no longer protected by the rental guarantee, you’ll have to have sufficient cashflow to hold the property during periods when your property is not tenanted.
In summary, don’t let short-term benefits hold too much sway when you’re choosing an investment property. Focus instead on the long-term factors that will influence capital growth and rental demand: land values, demographic trends and the balance of supply versus demand. If these factors don’t add up, move on to another property.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/" target="_blank">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
This article first appeared on Property Observer in May, 2013.
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Don't buy an investment property based on short-term benefits

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When you look at the two properties below what differences do you see?
<img src="/images/2014/07/02/south%20yarra%20jul%201%20one.jpg" alt="">
<img src="/images/2014/07/02/hawthorn%20july1%20%20one.jpg" alt="">
On the surface they are obvious in that one is brand new in a highrise building while the other is old and in a smaller block.
However from a property investors point of view the major differences are not the physical attributes of the properties but more in the way they are marketed and sold.
During the last investor fuelled property boom incentives such as stamp duty savings, depreciation benefits and rental guarantees were the main marketing tools used to help sell property. However this time around many investors have woken up to these tactics so the marketing has become more imaginative.
Property investors are being lured into buying apartments in the first property with<a href="https://www.propertyobserver.com.au/victoria/vespa-offer-to-entice-buyers-to-south-yarra-one-bedroom-apartments/2013071662673" target="_blank"> the offer of a free Vespa</a> or Mini. But these things are not free as they will be paid for in the over all purchase price.
I saw another ad that <a href="https://www.propertyobserver.com.au/news/melbourne-units-sell-with-bonus-qantas-frequent-flyer-points-enough-for-three-return-first-class-flights-to-singapore/2013082864650" target="_blank">offered buyers one Qantas frequent flyer point for every dollar they spent</a> on the property. So if you paid $500,000 on an apartment you would receive 500,000 frequent flyer points, enough to get a couple of people around the world.  For the record you could buy a couple of around the world tickets for around $5,000.
While receiving a Vespa or a holiday sounds great the problem with these incentives are they add no ongoing value to the property.
By contrast the Hawthorn property is sold in a completely different way. All the agent had to do was tell people it was available and the market did the rest. When this property went to auction, four bidders attempted to buy it and it sold under the hammer.
The property sold itself because of what it was and where it was and the agents did not have to dress it up with marketing hype.
Alarm bells should be ringing for property investors when they see these kinds of incentives on offer. The value of good investment property is underpinned by psychical attributes such as location, land size, land value and property style.
When looking for an investment it is vital to focus on the things that do not change over time. You cannot lift a house and land up and drop in in a more desirable or handy location a few years after you buy it. Further you cannot change the orientation of the land, the position in the block of apartments or what surrounds the property. Finally you have no control over the supply of new property coming onto the market around you.
Good investment property is often very hard to buy because you are put in a competitive environment, while risky investments are often easy to buy.
My advice? Buy a good property and pay for the toys and holidays yourself.
Mark Armstrong is a director of <a href="https://ratemyagent.com.au/" target="_blank">ratemyagent.com.au</a>, Australia’s number one real estate agent rating website.
This article was originally published on Property Observer in September 2013.
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Investors need to be wary of the new breed of property marketing incentives

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The federal budget certainly sent shock waves through the economy, but according to the ANZ-Roy Morgan consumer confidence index it appears to be recovering.
Consumer confidence has improved a further 2.4% over the past week, bringing the total improvement in confidence to 6% over the past month.
Also helping investors feel comfortable is the fact ME Bank are still offering a three year fixed rate at 4.69%, which gives investors more confidence about the future.
Property investors have already begun to re-enter the property market, but these two events are only going to add to the momentum. They will begin to change their thinking from ‘if’ they should buy property to ‘what’ they should buy and will be torn between the logic of two radically different investment strategies.
One says it’s always best to buy property that’s positively geared. This means that holding costs like council rates, insurance, maintenance and interest on the loan are less than the rental income received.
The second argument says it’s better to buy property that’s negatively geared, meaning that holding costs are greater than the rental income received. You fund the shortfall from your own pocket, giving you a ‘negative income’ which you then claim as a tax deduction.
In reality, these arguments are doomed to go around in circles. There’s no one right or wrong answer that applies to every investor. Each purchasing strategy has its upside and downside; both of which should be considered before making a decision.
Let’s start by looking at positively geared property. Generally speaking, the high-buy in price of most properties in capital cities means that to buy a positively geared asset, you must purchase in a regional or rural area where prices are lower. This may leave you with a relatively modest mortgage, making it easier to enter the property market, and easier to fund the holding costs from rental income alone.
The downside, however, is that positively geared property may have a lower capital growth rate. Every property’s value is determined by the ratio of two components: the land and the building. Land appreciates, or grows in value; whilst buildings depreciate or fall in value.
In regional and rural areas, land values per square metre tend to be low because there’s plenty of land available compared with the level of buyer demand. This means the building accounts for most of the asset’s value. The building may lose value faster than the land can gain value—hampering long-term capital growth.
Let’s compare this with buying negatively geared property. When the buy-in price is high, the land value probably is. This is the upside of negative gearing; you’re more likely to have purchased in an area with a limited supply of land relative to buyer demand. The land component makes up a higher proportion of the property’s overall value, giving the asset strong capital growth potential.
On the downside, buying a negatively geared asset means that whilst your long-term risk may be lower, your short-term risk may be higher because you have to find a way to fund the difference between holding costs and rental income from your own pocket. This can create cash flow pressure, particularly if you incur an unexpected expense such as an interest rate rise or urgent repair.
In short, it’s a case of short-term gain and possible long-term pain (positively geared property) versus short-term pain for possible long-term gain (negatively geared property). To decide which is right for you, it’s important to assess your financial circumstances.
First, consider your level of disposable income. If you have spare cash to cover the difference between your holding costs and rental income, buying a negatively geared property may be appropriate. On the other hand, if your budget is tight, negative gearing may be too hard an ask, and a positively geared property may be a better way to go. The capital growth won’t be as strong, but at least you’ll be in the market.
Second, consider how long you’ll be earning a good income. To ride out market fluctuations and recoup purchasing costs, property should be viewed as a long-term investment; at least seven to 10 years. If you’re close to retirement and a substantial drop in income isn’t far away, adopting a negatively geared strategy may not be viable. In this case, you should consider investment options that don’t require you to contribute funds from your own pocket. By contrast, if you’re many years away from retirement, you may have enough income over the long-term to fund the shortfall from your wage or salary. 
Whichever gearing strategy you choose, go into it with your eyes open.
Mark Armstrong is a director of <a href="https://ratemyagent.com.au/" target="_blank">ratemyagent.com.au</a>, Australia’s number one real estate agent rating website.
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Positively or negatively geared property: Which strategy will work best for you?

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It has been the hot topic of conversation around the dinner table for months – should we sell the family home and move.
The pros and cons have been weighted up and the decision has been made. Now the hard part of the process starts as its time to put your most prized asset on the market.
Here, we present four key steps to help maximise your sale price whilst minimise the headaches.
<ol>
<li>
The first step is to choose the appropriate selling agent. You need to do this based on the skills of the agent as an individual, not the reputation or branding of the real estate agency they work in. A glossy appraisal kit may look appealing, but it’s the individual agent who’ll be conducting the marketing campaign and negotiating the sale on your behalf, so try to look beyond the surface to find the substance. Find out who is selling the most property in your area and read agent reviews that have been posted by past vendors. The trick is to find an agent who has the experience and reputation required to get you the best possible price but at the same time is not so busy that you simply become a number. It’s wise to shortlist and interview two or three agents before making your choice. 
</li>
<li>
Once you have chosen the best agent it is time to negotiate the fee structure. Most agents will try for a flat commission, varying from 1 to 3% of the sale price. However, don’t feel you have to take this as a given. It takes the same amount of legwork to sell a property on the lower or middle rungs of the ladder as it does to sell a property on the higher rungs. Therefore, the fee should be similar in dollar terms. This means that even if you agree to a flat commission, the percentage amount should decrease as the value of the property increases. For example, a 2% commission on a property selling for $500,000 is $10,000. However, if your property is at a different level of the market and sells for $1 million, a commission of 1% will be the same amount in dollar terms. Alternatively, you may want to negotiate a stepped commission that rewards the agent for achieving a higher sale price. As an example, if your property is worth around $400,000, you may agree to pay 1.5% if the agent achieves that amount, or 2% if they achieve $450,000. 
</li>
<li>Third, negotiate the marketing budget. Most agents will recommend a budget of one per cent of the property’s value. As with the selling commission, this percentage should decrease as the property’s value increases. And make sure you’re getting true value for money. Ask the agent to demonstrate that the marketing campaign they’re recommending is genuinely appropriate for your property’s location, architectural style and price level. It’s possible that an equally good result could be achieved with a more economical campaign. </li>
<li>
Finally, make sure you’re clear about two figures: a) the price you’d like to achieve; and b) the price the property is likely to achieve when it’s put to the market. If the gap is too wide, you may need to revise your expectations. If the gap is narrow, stand firm and give your agent clear instructions about the minimum price you will accept.
</li>
</ol>
In a nutshell, remember that the aim of the game is to minimise your selling costs and maximise your selling price. By keeping this in mind and following the steps above, you’ll be well on the way to achieving that goal.
Mark Armstrong is a director of <a href="https://ratemyagent.com.au/" target="_blank">ratemyagent.com.au</a>, Australia’s number one real estate agent rating website.
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Four key steps to maximise your sale price whilst minimising headaches

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First home buyers are fighting with a 100 pound gorilla with one arm tied behind their backs as they compete with investors who have the luxury of negative gearing and superannuation funds.
But laws around negative gearing and super are unlikely to change so it’s time to revisit the issue.
I believe the answer lies in rethinking superannuation laws and first home buyer grants.
Historically the family home has been the corner stone of ones wealth but this is in danger of being lost. Superannuation was implemented to help people self fund their own retirement and compliment the wealth in their family homes. I believe that allowing first home buyers to access their super and assist them in laying that foundation keeps within the spirit of superannuation.
 A worker who earns the average Australian income of $50,000 a year will have around $36,000 in super by the time they are 30 not including any return on their investments. As a couple that is $72,000! They also have the benefit of diverting more of their income into a tax-sheltered environment. It would not be unreasonable for a first home buying couple to have in excess of $100,000 in super by the time they want to purchase their first home.
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Buying a property is only the first step to home ownership. Keeping up with the mortgage payments is where the real pain starts to bite.
</blockquote>
A large deposit like this would mean first home buyers have more equity in their home and as a result in a more stable financial position. It would also save a significant amount in interest. For example if a first homebuyer had a $100,000 deposit they would only need to borrow around 80% of the property value rather than 90% or more. On a $500,000 home that would save them $2,500 to $3,000 per annum in interest.
They would also avoid paying a hefty mortgage insurance bill of around $5,000 to $10,000 in most cases.
Buying a property is only the first step to home ownership. Keeping up with the mortgage payments is where the real pain starts to bite. If governments really want to help with home ownership they should look at providing ongoing assistance and review first home buyer grants.
First home buyer grants have evolved over the years but on average they provide first home buyers with around $10,000 cash or stamp duty saving benefits. Rather than paying first home buyers a lump sum payment that is usually paid to the banks for mortgage insurance, I believe annual payments will be more effective and a better use of taxpayer money. An annual payment of $2,000 a year for the first five years would help first home buyers establish themselves in the market.
While the devil is in the detail the points outlined above provide a win-win outcome. The government wins as it helps solve first home buyer affordability at no extra cost. The economy wins, as more money will flow into the important building industry. First home buyers win as they will enter the market without paying mortgage insurance and save around $5,000 per annum in holding costs for the first five years.
There is a potential downside in that it would place further pressure on property prices. However this is already happening even without first home buyers and these ideas will go a long way to levelling the playing field between first home buyers and investors.
They would help young Australians into the market and start the process of building wealth in one of our most powerful tax-free investments – our home.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
This article was first published on Property Observer in October, 2013.
YOU MAY ALSO LIKE TO READ:
<a href="/expert-insights/buying/exclusive-first-home-buyer-picks-from-the-experts">Exclusive: First home buyer picks from the experts</a>
<a href="/expert-insights/investing/how-will-rising-student-debt-affect-first-home-buyers">How will rising student debt affect first home buyers?</a>
<a href="/expert-insights/buying/the-national-guide-to-first-home-buyer-grants">The national guide to first home buyer grants</a>
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It's time to re-think first home buyer grants

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If you’re empty-nesters still living in the suburban home where you raised your kids, you may be planning to downscale to a lower maintenance home closer to the CBD and cafe culture.
The inner suburbs are more expensive than where you’re currently living, so you’ll need to maximise the profits from selling the family home to get a foothold a different market.
You face a choice. Should you play it safe, do a few cosmetic renovations to bring your home up to scratch and sell it pretty much ‘as is’ in the hope that strong demand from buyers will bring you a good sale price?
Or should you take a more aggressive approach towards increasing your potential profit by demolishing your old home, building two dwellings in its place and selling them on individual titles?
Many people think that subdividing is a sure way to make more money than simply selling a property in its current form — but like many ‘sure things’ in property, it ain’t necessarily so.
Working through the figures is the only way to make an informed decision. 
Start by getting a firm quote for demolishing your home and levelling the site. Factor in the cost of obtaining the appropriate council permits, and the fee an architect or draftsperson will charge to draw up plans for the subdivision.
Next, obtain an accurate costing for the labour and materials required to build the two new properties. Add a margin of at least 10% for unexpected changes and costs that may crop up when the job is underway.
Then, calculate the cost of interest. Even if you’ve paid off your home, the chances are that you’ll have to borrow money to fund the subdivision. Remember: the longer it takes to complete the subdivision and sell the properties, the more interest you’ll pay on top of the loan amount. It’s worth adding a margin onto the time you estimate the project will take.
Now, work out the rental cost. You’ll need a place to live while the project is underway, so speak with local property managers to find out the likely cost of renting a suitable property in your desired location. Paying rent as well as interest on the subdivision loan could make things tight financially, so it’s important to work out whether you can afford the additional outlay.
You’ll also need to calculate the cost of selling the new properties, including the real estate agent’s fee and marketing costs. These expenses can be significant, so it pays to negotiate a competitive commission with the agent and to satisfy yourself that the recommended marketing campaign will deliver the best value for your dollar by maximising the properties’ exposure to the right buyers.
Then, consider your tax liability. You’ll incur capital gains tax (CGT) when you sell. This could eat significantly into your profit, so seek advice from your accountant as to the exact liability that will apply in your situation.
Finally, ask local real estate agents for an appraisal of what your home is worth in the current market. 
It’s a common mistake to calculate the potential profit of a redevelopment by using the value of the property as it stood when you bought it. The land will have grown in value since then, so using the original value could lead to an over-inflated estimate of the profit margin — and bring you crashing down to earth when you actually sell. Make sure you use the property’s value in today’s terms. 
Once you have gone through these steps, you’ll have a clear idea if the project stacks up in financial terms. If not, it may be best to opt for the simpler route, undertake a few cosmetic renovations and sell your family home ‘as is’.
MARK ARMSTRONG is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
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False profits? Why subdividing isn’t always the best option

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Congratulations — you’re having a baby! Your head will be full of plans for medical check ups, baby names, cots and prams.
In the midst of all the excitement, there’s one issue many expectant parents overlook. If you’re taking leave from paid employment to be with your child, how will this affect your finances? Will you be able to afford your mortgage and other living expenses, or will you need to reshuffle the deckchairs?
All too often, parents leave these considerations until after the baby is born, their income is significantly lower, and they’re struggling to meet their commitments.
That’s why, after you’ve called your family and friends to break the good news, it’s important to contact your lender, broker or financial adviser and put plans in place to ensure you can fund your new lifestyle.
<blockquote>
All too often, parents leave these considerations until after the baby is born, their income is significantly lower, and they’re struggling to meet their commitments.
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If you have a mortgage and think your finances may be stretched, speak with your adviser about reducing your repayment amount. It’s particularly important to do this well ahead of your baby’s birth, because — regardless of whether you’re varying the terms of an existing loan or changing to a different one — lenders use a ‘snapshot’ approach when assessing your application.
This means you must present yourself and your finances in the best possible light — which is why the best time to apply is when you’re still earning the maximum possible income, not after the birth when your income has dropped substantially. The last thing you need on top of sleep deprivation and wet nappies is to be forced back to work early because of financial pressure!
There are several ways to reduce your repayment amount.
Extend your loan term.
Let’s say you have 23 years left on a 30-year principal and interest loan of $300,000 at the standard variable rate of 5.9%. Your minimum monthly repayment will be $1,989. By extending your loan term back to 30 years, the amount would drop to $1,779.
Change from principal and interest to interest only.
Loans for owner occupiers are usually structured so that you pay off a small amount of principal alongside the interest. This helps reduce your loan balance faster than if paying interest alone. However, when your income drops after having a child, changing to interest only can ease the squeeze. Using the example above, the borrower’s new repayment would be $1,475 — a saving of a further $304 per month.
Renegotiate your interest rate.
The home loan market is constantly changing so if you’ve had your loan for more than two years, there may be a better option out there. For example, many lenders will offer a discount of 0.7% or more off the standard variable rate.
By extending their loan term, changing to to interest only and negotiating a discounted rate, our $300,000 borrower will pay $1,300 per month — freeing up a massive $689 to help meet expenses while their income is reduced.
Find your safety net.
Make sure your loan includes a redraw facility. If your property has increased substantially in value since you bought it and/or you’ve made extra repayments, a redraw facility can help you access these funds. Alternatively, you may be able to establish a line of credit, enabling you to draw on some of your equity to fund living expenses if required.
By planning your property and loan commitments well ahead of time, you can stop worrying about your finances and concentrate on something far more important — your new son or daughter.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
This article was first published on Property Observer in November 2013. 
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How to stop your bundle of joy burning a hole in your pocket

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You’re sitting around a table with friends one night, downing a couple of glasses of red. The conversation turns to property investment, and how hard it is to get into the market. Emboldened by the wine, someone suggests beating the affordability barrier by pooling your resources and buying a property together.
In principle, it’s a great idea. By clubbing together, you’ll be able to afford a better quality investment property than you could as individuals. What’s more, your individual share of the mortgage is likely to be smaller than if you’d purchased on your own, which gives you more room to breathe financially.
Buying with friends can work well — provided that everyone has clear and consistent expectations before entering into the arrangement. It’s wise to draft a written agreement covering the key aspects and likely eventualities of the arrangement. You can do this yourselves, however it can be a complex undertaking so it may be best to see a solicitor with a specialist knowledge of contracts.
One of the most important considerations the agreement should cover is how long you intend to hold the property. Is this a short-term proposition, e.g. three to five years, or a long-term commitment?
<blockquote>
Remember, if you're planning on buying with friends you are entering a business deal, not a social arrangement.
</blockquote>
Ideally, you should hold residential investment property for at least seven to 10 years to ride out market fluctuations and make the most of compound capital growth. However, even with the best of intentions, unforeseen changes in the lives of the owners means there may come a time when it’s no longer appropriate or viable for one of them to continue the arrangement.
For this reason, the written agreement should address a range of possible life changes. For example, what will happen when one owner wants to sell their share of the property and free up funds to buy a home of their own to live in, start a family, or return to full-time study? What if one owner wants to buy the others out? How will the price be determined? What will happen if one owner loses their job, can’t work due to illness or injury, or dies?
The agreement should cover the dollar amount each person will commit to the investment, and the ownership split in percentage terms. It’s also worth including a reference to the terms of the contract you and your friends have with the lender. If you are borrowing money for the purchase, the lender will consider each of you ‘jointly and severally liable’ for the debt.
In other words, if one of you is unable to meet your repayments, the lender can hold the other borrowers liable for your share of the debt, and can take action to recover it from them.
To minimise this risk, each borrower should take out the relevant insurances such as life insurance and income protection insurance which will help cover their financial commitments in the event of illness, injury or death.
Your agreement should also detail nuts-and-bolts issues such as who will have responsibility for day-to-day management of the property.
Who will deal with the lender or broker, liaise with the property manager and (if relevant) Body Corporate? Who will ensure that council rates bills, insurance premiums and maintenance fees are paid on time and in full? If you have to make an insurance claim and you find out your policy has lapsed, no-one wants to hear the fateful words: “I thought you were handling that.”
The written agreement should also detail the procedure to be followed if there is a dispute amongst the owners. Whilst this may sound a little rigid or over-the-top (after all, you wouldn’t be buying with them if you didn’t think you could resolve problems) it’s important to look at the agreement in the cold light of day.
Remember: you are entering a business deal, not a social arrangement. The shared values and common interests that bind you together as friends won’t necessarily translate to a business environment.
When you buy with friends, you may benefit initially by spending less than you would on your own, but you also carry a greater risk of the venture failing due to conflicting expectations about managing change.
There’s little point risking a friendship over money—so for everyone’s sake, agree on the terms of the deal, put it in writing and then get on with business. This way, you’ll not only stand to gain financially, but maintain your friendship as well. 
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
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Buying with friends: A good idea in principle, but can it work in practice?

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The RBA left the cash rate at 2.5% for the ninth month in a row, which is good news for property owners. 
However it always surprises me how people focus on the short-term movement in interest rates when deciding if they should transact in the property market. The reality is if a 2% increase in interest rates forces a property owner into a position where they have to sell then maybe they should not buy at all.
The main requirement of investing in property is to be in a position where you can hold the property for the long-term and to buy something that grows in value.
I’ve said it time and again that the residential investment property is a long-term proposition. The property market takes around seven to 10 years to move through a full cycle; from low capital growth/high rental yield, to high growth/low yield and back again.
Despite this, many property investors choose locations and property styles with little potential to survive and thrive throughout market fluctuations. Some investors choose locations that lack the long-term underlying demand to drive capital growth, whilst others choose property styles that don’t reflect trends in the way people want to live.
In other words, the property investment decisions that look good today may not prove so attractive in five, 10 or 20 years’ time. It’s essential to understand the nature of long-term economic and demographic trends, then select assets accordingly.
Interest rates rise and fall, but in the long-term, dwindling oil reserves and rising petrol prices will be a key economic trend influencing the property market. In the coming years, rising prices at the pump will make outer suburban living and commuting less feasible and less appealing. This will curtail the urban sprawl and increase demand amongst homebuyers for property in the middle suburbs close to public transport corridors, shops and schools.
At the same time, rising property prices in the inner and middle suburbs will put homeownership beyond the reach of more Australians, or at the very least, delay it significantly. Figures from the Bureau of Statistics tell us that the proportion of households renting from private landlords in Melbourne has increased from 22.8% in 2001 to 27.2% in 2011. Sydney is trending a similar way with almost 32% of its market inhabited by tenants.
The increase in tenant demand is not unique to Australian cities. Major global cities such as London and New York have 50% or more of their property tenanted. I am not suggesting we are a London or New York just yet but we are following a similar path and there’s every reason to expect that this trend will continue.
Because many tenants want to maintain the trappings of an urban lifestyle, the trend away from homeownership will increase demand for rental properties within walking or short driving distance from trams, trains, shops, cafes and entertainment precincts. For those that can afford to buy in these areas will also be their preferred choice. This two pronged demand from home buyers and investors will further boost capital growth prospects in the inner and middle suburbs.
Delaying having children is another trend set to influence the residential market well into the future. The median age for parents is 28.9 for women and 33.1 for men and women currently have an average of 1.9 children, compared with 2.8 in 1981.
This trend has resulted in the average number of people per house almost halving over the last 100 years from 4.5 in people to 2.6. In addition single person households have jumped from 22.9% to 24.4% over the last 10 years.
The shrinking size of the family unit means that demand for low maintenance, compact dwellings will increase, whilst demand for the conventional sprawling home on a quarter-acre outer suburban block will soften.
When you look at all these trends in their entirety, it’s clear that pockets of the middle suburbs close to public transport, shops and schools will provide feasible long-term opportunities for residential property investment, particularly for investors who have been priced out of the tightly held inner suburbs.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
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Future-focused investing

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Think about the people you know who have bought investment properties. Chances are that at least one of them claims to have bought their property ‘below market value’.
Strictly speaking, it’s impossible to buy below market value, because a property’s market value is ultimately determined by one thing: the price you pay for it. When someone says they’ve bought below market value, what they really mean is that they purchased the asset for a lower price than other properties in the area, or that they bought it at a lower price than would have been possible six or 12 months previously.
Let’s take the first scenario. If you buy a property for less than others in the area are worth, that doesn’t mean you’ve secured a bargain. It may just mean you’ve bought a second-class asset. For example, if other properties in the area have sold for around $450,000, but you buy one for $400,000, perhaps its value has been compromised by a poor structural condition or noisy main road location.
Under the second scenario, buying a property for less than it would previously have been worth doesn’t necessarily mean that you have bought well. It could simply mean that property values in the area are declining. There are two possible reasons for this. First, there’s less demand than supply. In this situation, vendors are competing strongly for the attention of fewer buyers, so they’re more likely to discount their asking price.
If you buy into a market like this, it’s vital to ask yourself two questions: how much more will prices fall, and how long will it be until the trend reverses? In other words, how much money will you have to lose, and for how long, until your asset starts working for you?
The second possible reason for buying a property for less than its previous market value is that the asset has a low land-to-asset ratio – in other words, the building makes up the bulk of the asset’s value.
Land appreciates (grows) in value, whilst buildings depreciate. If you buy a property for less than its original sale value, chances are that the building’s value is falling faster than the land’s value is growing.
The net result? An asset that will continue to lose value after you’ve purchased it, until all the depreciation has been used up. Meanwhile, you’re paying holding costs like interest, rates and maintenance, on a property that’s delivering nothing in return.
Instead of buying property that is cheap and will remain so because of poor location or high depreciation, focus instead on researching the market to identify properties that represent good investment value.
What does this mean?
First, it refers to the quality of the asset. Properties in established areas with adequate infrastructure like public transport, shopping precincts and leisure facilities tend to have a limited supply of properties in the face of strong demand from investors, home buyers and tenants alike. This supply–demand ratio increases land value and improves capital growth potential.
Second, good investment value means researching the local market to find out the recent sale prices for properties of comparable land size, number of bedrooms and degree of renovation. Once you have determined what you believe is the property’s fair value as an investment asset, stick to that limit and walk away if the bidding or negotiation goes beyond it. Overpaying never represents good investment value, no matter how high the asset’s quality.
It’s true that high quality assets generally cost more than poor ones, so if your research shows that you may be priced out of a certain type of property, it’s better to compromise on the size of the accommodation (e.g. two bedrooms instead of three) rather than the location.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
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Buying ‘below market value’: What it really means

<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, Castile, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Mark Armstrong

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