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Since June 2000, first-home buyers (FHB), nationally, have averaged around 27% of purchasers in the market seeking finance—from a low of 19% (March 2007) to a high of 42% (May 2009).
A recent <a href="/news">Property Observer article</a> outlined the national situation for FHBs and noted the shallowness of the housing recovery in comparison to previous cycles. 
Focusing on NSW, FHB numbers have averaged some 26% of purchasers over the same period—a low of 11% (May 2013) and a high of 47% (May 2009). Since November 2013, FHB numbers have not exceeded 15% and have averaged about 12%.
The demise of NSW’s FHB is far more than an issue for market—it is the issue. FHB are the foundation market.
By and large, FHBs aspire to become upgraders, since property (or more precisely, the consumption of living space) is a normal economic good—the wealthier we become, the more of it we tend to consume. FHBs possess the momentum investors generally lack; to improve, to buy better, and move up the ladder. With a diminished base, up-graders must either sell into their own market or to investors.
Such momentum is necessary for the state, whose finances are bound to the market’s transactional volumes—Macquarie Street really needs to think that one through and come up with a less volatile revenue stream. Stamp duty in my opinion is a retrospective capital gains tax for the state—since it indirectly taxes the wealth made on the sale of an existing property at the time a new property is purchased.
How fair or sensible is it to tax FHB for wealth they haven’t yet earned? In this regard, stamp duty for FHB is a punitive tax; it sits closer to the suite of measures government employs to discourage self-harming activities, so society doesn’t stray too far from the straight and narrow. It’s surprising to see that first-home ownership is one of them.
In October 2012, the NSW government varied the FHB concessions and grants in the hope of stimulating housing supply and supporting a weak construction sector. Both the $7,000 cash grant and—far more importantly—the stamp duty exemption were replaced by the <a target="_blank" href="https://www.osr.nsw.gov.au/benefits/first_home/first_home_new_home/">first home-new home</a> scheme; increasing the grant to $15,000, raising the price thresholds, exempting stamp duty payment for new homes only.
Following the October 2012 where FHB represented 22.8% of the market, their numbers fell away precipitously compared to the same month a year prior:
<div align="center">
<table cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="top">
November
</td>
<td valign="top">
(14.6%)
</td>
<td width="53" valign="top">
 
</td>
<td width="50" valign="top">
February
</td>
<td valign="top">
(12.3%)
</td>
<td width="51" valign="top">
 
</td>
<td width="40" valign="top">
May
</td>
<td valign="top">
(11.2%)
</td>
</tr>
<tr>
<td valign="top">
December
</td>
<td valign="top">
(12.6%)
</td>
<td width="53" valign="top">
 
</td>
<td width="50" valign="top">
March
</td>
<td valign="top">
(11.5%)
</td>
<td width="51" valign="top">
 
</td>
<td width="40" valign="top">
 
</td>
<td valign="top">
 
</td>
</tr>
<tr>
<td valign="top">
January
</td>
<td valign="top">
(11.9%)
</td>
<td width="53" valign="top">
 
</td>
<td width="50" valign="top">
April
</td>
<td valign="top">
(11.3%)
</td>
<td width="51" valign="top">
 
</td>
<td width="40" valign="top">
 
</td>
<td valign="top">
 
</td>
</tr>
</tbody></table>
</div>
The NSW state government’s policy is failing and is flawed. The numbers speak for themselves, but who is speaking for the FHB?
Cash grants for the most part inflate property prices, ultimately harming those they purport to help—but they win votes, apparently. FHB, by and large, are not new dwelling purchasers; these dwellings more commonly are bought by up-graders and investors for differing reasons. The key factor in the purchase equation for a FHB is stamp duty and how this plays through the purchase transaction via the “funds to complete” scenario. The following table illustrates the situation faced by a FHB prior and post October 2012:
<div align="center">
<table width="460" cellpadding="0" cellspacing="0" border="0"><tbody>
<tr>
<td nowrap width="215" valign="bottom"></td>
<td width="85">
pre-FHOG change
</td>
<td width="64">
current situation
</td>
<td width="96">
Equivalent purchase pre-FHOG
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Price of property
</td>
<td nowrap width="85" valign="bottom">
350,000
</td>
<td nowrap width="64" valign="bottom">
350,000
</td>
<td nowrap width="96" valign="bottom">
460,953
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
FHOG
</td>
<td nowrap width="85" valign="bottom">
7,000
</td>
<td nowrap width="64" valign="bottom"></td>
<td nowrap width="96" valign="bottom">
7,000
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
NSW Stamp duty
</td>
<td nowrap width="85" valign="bottom">
0
</td>
<td nowrap width="64" valign="bottom">
(11,240)
</td>
<td nowrap width="96" valign="bottom">
0
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Legals
</td>
<td nowrap width="85" valign="bottom">
(900)
</td>
<td nowrap width="64" valign="bottom">
(900)
</td>
<td nowrap width="96" valign="bottom">
(900)
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Building &amp; pest inspection
</td>
<td nowrap width="85" valign="bottom">
(470)
</td>
<td nowrap width="64" valign="bottom">
(470)
</td>
<td nowrap width="96" valign="bottom">
(470)
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Lender's mortgage insurance
</td>
<td nowrap width="85" valign="bottom">
(2,469)
</td>
<td nowrap width="64" valign="bottom">
(2,469)
</td>
<td nowrap width="96" valign="bottom">
(4,066)
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Bank establishment fees
</td>
<td nowrap width="85" valign="bottom">
(600)
</td>
<td nowrap width="64" valign="bottom">
(600)
</td>
<td nowrap width="96" valign="bottom">
(600)
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Banks LVR
</td>
<td nowrap width="85" valign="bottom">
85%
</td>
<td nowrap width="64" valign="bottom">
85%
</td>
<td nowrap width="96" valign="bottom">
85%
</td>
</tr>
<tr>
<td nowrap width="215" valign="bottom">
Funds required to complete sale
</td>
<td nowrap width="85" valign="bottom">
49,939
</td>
<td nowrap width="64" valign="bottom">
68,179
</td>
<td nowrap width="96" valign="bottom">
68,179
</td>
</tr>
</tbody></table>
</div>
From the above it can be seen that FHB wishing to purchase a secondhand $350,000 property today will require an additional $20,000 deposit. But, it presumes that they will find a bank willing to lend on a 15% deposit—the banks wish to minimise their risk exposure by qualifying their borrowers. And the banks never lose, which is why lending to upgraders and investors makes so much more sense as they are a far less risky proposition.
Importantly, the table highlights that pre-October 2012, FHB who were in the market to purchase a $460,000 property are now restricted to those priced $350,000 and below. The inference being that FHB will have to consider areas that are cheaper because they are either further out or stigmatised so as to become affordable.
The following chart illustrates in a general way how this could result, by looking at the median 2-bedroom unit values for inner, middle, and outer ring Sydney.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2013/08/bregozzo-sept-2-big.jpg" title="Click to enlarge"><img src="/images/stories/2013/08/bregozzo-sept-2-small.jpg"></a>
This is a claytons solution, since the housing affordability problem is simply being transferred to the less affluent; what happens to the existing residents in these areas?
What the table doesn’t illustrate is the FHB’s life situation; how many are about to start a family (knock around $20,000 off what the banks are prepared to lend)? How many are working as contractual employees (higher mortgage insurance or deposit, if approved at all)? How many are in stagnant businesses where wages haven’t changed, for the better? How many carry education debt?
It would be fair to argue that for some (especially those who have started a family as tenants), October 2012 marked a line in the sand for home ownership. Not only have FHB been dealt a blow to their purchasing power, by delaying their entry into the market, they will fail to benefit from the compounding wealth effect of real estate.
There are long term implications here, unless of course, today’s generation of property owners are smart enough to work out how to transfer the affordability baggage to future generations.
<hr>
Martin Bregozzo is a <a href="https://au.linkedin.com/in/bregozzo" target="_blank">property economist</a> with extensive experience spanning all asset classes, across private &amp; public sectors; specialising in project feasibility and arguing the case for change.
Image opf Sydney courtesy of Michael Coghlan/flickr.
 
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mbregozzo-j6q7uYzhAT

The NSW first-home buyer demise lays a weak foundation: Martin Bregozzo

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GUEST OBSERVATION
The World Economic Forum recently released a <a href="https://www3.weforum.org/docs/WEF_Emerging_Horizons_Real_Estate_Profile_Prescriptions_Proposals_report15.pdf" target="_blank" rel="nofollow">report</a> as part of its asset bubble project.
It's actually worth the read, particularly the case studies. The key to asset bubbles lies in behavioural decisions and pricing: what causes the divergence of price from value for the (normally) level headed?
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Should governments intervene when a bubble is forming? A vexed question: bubbles are almost always acknowledged ex-ante – with the wisdom of 20:20 hindsight we hear the almost constant drone of, "we told you so". But, so few were those who foresaw the global financial crisis that it royally begs the question: how could the economists fail to miss something so big?
"Hubris" and "wishful thinking" were part of the response. Blind faith placed in the "wizards" of the banking world – trusting they actually knew what they were doing. And the bankers did little to bring their egos back to earth.
Also, failing to see the forest for the trees. Risk management practices were robust in the context of any individual deal, being outside of a reasonable remit to assess the global financial system when undertaking a risk audit. A house of cards was under construction. 
Distinguishing between cyclical periods of natural growth and unconstrained excess is challenging – even professional forecasters have famously botched it. Intervening too soon or by too much may nip economic growth in the bud or do more harm than good (think: London '74 or Australia '91). And besides this, there's the belief underpinning laissez faire markets: governments do best when they do nothing at all.
Booming property markets generally underscore booming economies, leveraging ever larger transactions in a kind debt-capital feedback loop. Governments typically fail to act (until its too late) as growing economies are typically what people and businesses want. It's seen as a hallmark of good government - albeit at the detriment of good governance. 
The property sector underpins the economy, with returns to capital finding some basis in the land rent. The scale of capital involved in institutional transactions is significant such that a few sensational losses can rouse the animal spirits, spreading fear and causing panic. Fundamentally, we need shelter and housing markets are coupled to the economy via the banking sector and the wage-mortgage/rent relationship. A healthy, growing economy generally resonates in an appreciating housing market.
Too many rules stifle growth, while too few fail to restrain our excesses as collectively we try to get ahead. How many haven't dreamed of the day when we finally shake that monkey from our backs? In this context, we return to our opening question, with the observation that price is what you pay, while value what you get.
Martin Bregozzo is principal and property economist at <a href="https://www.ow-capital.com" target="_blank">OW Capital Advisory</a>.
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Be mindful of value, price and exuberance: Martin Bregozzo 

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UrbanGrowth NSW, replacing both Landcom and the Sydney Metropolitan Development Authority, has the mandate to enable housing market growth by acting as the “development champion”.
It will do this via private sector investment by coordinating and delivering lead-in infrastructure and fast-tracking urban renewal projects.
Speaking at UrbanGrowth's recent conference in Penrith, UrbanGrowth chairman John Brogden stressed the need “… to deliver [for Sydney] the estimated half a million new homes needed over the next 20 years in an affordable and achievable way”.
No small task to achieve an average of 25,000 dwellings annually when the current 5-year average completion level is at 17,290 dwellings.
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2013/04/bregozzoapril8one.gif" rel="shadowbox"><img src="/images/stories/2013/04/bregozzoapril8onethumb.gif"></a>
A variety of stars need to align before Sydney returns to these levels — accelerating the approval process so as to reduce holding costs (e.g. cutting red and green tape), tackling the local affordability issue for differing market segments, and providing trunk infrastructure cost effectively or, better still, working out a way of doing so which doesn’t destroy project feasibilities.
Perhaps, to consistently produce housing at such volumes, it will require a fundamental change to our current housing delivery model — future-proofing it against GFC-style shocks — removing developer and transactional imposts, reducing the number of LGAs, re-weighting the community’s participation in the approval process so future generations aren’t denied their human right to shelter, and revisiting the government’s role in the land acquisition process.
The conference, which set out to tackle housing affordability and supply in NSW, also included a tour of UrbanGrowth’s 1,100-lot master-planned community, <a href="https://www.landcom.com.au/for-home-buyers/thornton-penrith.aspx" target="_blank">Thornton in Penrith</a>, as an example of small lot housing.
The site is located immediately north of <a href="/news">Penrith</a> station with lots falling within the 150m2 to 350m2 range and include a variety of housing types including terraces, detached cottages, and “Fonzie flats” — small studios built atop of garages — providing a variety of pricing entry points.
Reducing the land component of the developed product results not only in more dwellings within the estate but a (generally) lower price as well.
An interesting exercise would be to see the future capital appreciation of these dwellings compared to estates with larger lot sizes — since it is the land that appreciates over time, while the building/improvements depreciate.
Achieving smaller lot sizes required the cooperation and coordination of builders, council, and utilities providers all of whom needed to share in the project’s vision.
Michael Brooks, the keynote speaker and former CEO of REALpac, outlined how Sydney can apply Toronto’s lessons for fast-tracking the housing industry to accommodate a growing population.
High density clustered around transport nodes is an integral element — surprisingly, society hasn’t disintegrated as a result.
 
<hr class="system-pagebreak">
The Ontario Municipal Board, acting as an “independent and final arbiter of land use [where] decisions are vested in good planning principles” played an integral role in progressing the ability of Toronto to compete against other cities in the Americas.
Being staffed by “development experts” such as planners, architects, ex-mayors, and so forth has the benefit of “informed impartiality” — less political, more objectivity and generally disliked by both developers and the public … “usually a healthy indicator that something is working”.
Similarly, appeals to the board need a legitimate basis in planning and be in the community interest — all costs associated with vexatious/frivolous claims are charged to the claimant.
A recent decision by the board saw a mixed-use (street level retail, commercial, residential) high-rise project for Toronto’s city centre approved with zero parking spaces … now that’s food for thought!
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2013/04/bregozzoapril8two.gif" rel="shadowbox"><img src="/images/stories/2013/04/bregozzoapril8twothumb.gif"></a>
Returning to the completion levels of two decades ago is in essence a matching problem — matching the specific housing need with the feasibility of locational supply.
Living to the geographic margins of Sydney should not mean being marginalised.
This has nothing to do with the “us and them” tribal snobbery — Sydney’s west vs the east, north, and south… and the Shire.
Instead, the question is why some 200,000 people spend more than an hour (ideally) each day commuting by rail from their homes in west to jobs in the east.
How has the city (d)evolved such that the majority of residents are disenfranchised from the opportunities afforded to those in the east?
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2013/04/bregozzoapril8three.gif" rel="shadowbox"><img src="/images/stories/2013/04/bregozzoapril8threethumb.gif"></a>
Source: ABS, BIS Shrapnel
We have investigated locational mobility (given for the Penrith LGA) by examining the 2011 census data for the previous address up to five years prior.
The results indicate that the majority of relocations generally occur within an LGA and over short distances between LGAs.
The logic underpinning the observed spatial immobility resides in the social networks people form as their tenure in a given location increases.
 
<hr class="system-pagebreak">
Life-specific issues — children’s schools, employment or means of getting there, distances from the parental home, etc. — tend to reinforce this.
Equally, time strengthens such “ties to place”, increasing the need (or demand) to reside within a specific area, or close enough to it — a significant issue for developers as this is effectively rational of purchasers within a project’s catchment area.
For this reason, the outer fringe areas will develop incrementally. Further, the costs associated with moving — the largest of which is stamp duty — also act as a disincentive to relocate.
Future development needs to be strategically located within the immediate catchment of existing infrastructures, especially transport, so that the city can function.
If Sydney is to expand further outwards — vs upwards — a significant investment in the rail network and a re-weighting of commercial activities to the fledgling CBDs of Parramatta, Penrith and Liverpool must happen — and probably upfront if housing market dynamics are to support the construction of new dwellings to the city’s fringe locations.
Put simply, almost two decades of under-investment in transport and social infrastructure coupled with a mentality that concentrates opportunity to the harbour have ratcheted fringe land pricing to a point that is largely unaffordable for new housing purchasers in those catchments and in comparison to the existing stock in those locations.
And this is most evident to the southwest of Sydney.
Martin Bregozzo is a property economist with <a style="font-size: 14px;" href="https://www.bis.com.au/" rel="nofollow" target="_blank">BIS Shrapnel.</a>
 
 
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Addressing infrastructure issues is key to Sydney's future development

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Accepted economic theory suggests that cuts to interest rates stimulate housing markets and the economy, since lower mortgage payments open up the housing market to a larger pool of purchasers. The theory suggests that with more money in their pockets, consumers will either spend or invest. Housing serves two masters — arguably poorly — as an investment (a store of value) and a necessity (shelter).
As the number of commercial exchanges increase, opportunities emerge which drive the economy. Additional staff are hired as new businesses open and existing ones expand, which in turn creates further demand and spending — hopefully within Australia rather than as leakages to imports, travel or internet retail. Business funding costs are lower, which should benefit the whole economy, especially the credit-hungry construction sector, setting in train a strong multiplier, estimated at around 2.8 for NSW — i.e. for every $1 spent in residential construction another $2.80 is generated and spent elsewhere in the economy. Growth begets growth as the economy beats a path to its natural constraints. Or else inflation sets in. Or the RBA put up interest rates. Or there’s an election.
An initial boost to housing affordability occurs, as lower mortgage costs attract a larger pool of potential buyers — raising a paradox in Sydney, as affordability without additional supply is the last thing the city needs. Since housing supply is finite and slow to respond — i.e. increase — in the short term, this reduces the effectiveness of the “cheap money” as purchasers are crowded out of the market and prices are driven up. But, in an appreciating market, project feasibilities “stack up”, encouraging construction and new housing supply is (eventually) delivered. Anyone who has witnessed the glacial progress of a DA through council will note the overlap between the short and the medium term stories, which I hope I’ll be forgiven for.
Sound as this line of thinking may well be, we just haven’t seen the expected result in housing markets (or the economy for that matter) as median prices have generally tracked sideways despite successive RBA rate cuts. Why? Well, the short answer; “it’s the economy…” or more specifically, the rate cuts have mostly quelled vendor discounting, but have done little to exorcise our collective fears and pessimisms. Consumer confidence fits hand in glove with an appreciating housing market.
Put simply, the non-mining part of the economy — i.e. most of the rest of us — has been living in a phantom recession; while the economy in the macro sense has been spared widespread unemployment, some sectors (particularly currency sensitive ones) have contracted, while old economy retail is doing it very hard and confidence is at a low point. Under such a dark and heavy cloud, investors are unwilling to speculate (oops, invest) and their focus is on paying down debt — and specifically, shoring-up equity in the family nest egg by selling-off holiday houses, online discounted shopping, and so forth. Similarly, banks have reigned in risk, drip feeding token portions of the RBA rate cuts to existing borrowers while scrutinising every new loan application and strangling the economy of credit. And this is what is meant by low consumer confidence — a self-fulfilling Mayan prophecy of doom and gloom.
The current economic norm is an emerging cautious conservatism as the weight of funds shifts to wealth preservation mode with an aging population is likely to reiterate this. After the debt-fuelled orgy of the early noughties, borrowers are building buffers into their loans to uphold the one non-malleable constant of Australian investors — you don’t lose the family home. The <a href="https://www.rba.gov.au/publications/fsr/boxes/2012/sep/b.pdf">RBA reports</a> that some 15% of borrowers are ahead in their repayments by two or more years while 40% are ahead. The data indicates that borrowers who are ahead in their payments tend to be older and have higher incomes. This is consistent with where they are up to in their life’s journey — having had more time and/or income to accumulate such buffers and potentially fewer/diminished commitments (e.g. adult children). This is the Baby Boomer generation getting their pre-retirement house in order. Literally. The effects of this are visible in discretionary housing markets as holiday houses and hobby farms were jettisoned.
Returning to the interest rate story, there is a tenuous — at best — correlation between interest rates and house prices. The following chart examines the relationship between the change to interest rates and the change to the nominal median Australian house price — taken as the weighted average of the six capital cities. Quite an abstraction, to be sure, especially when the median house is the one you’ll never buy. Prices naturally fluctuate from month to month because of seasonality and other factors. Median nominal prices are a relatively crude instrument, because they aren't adjusted for inflation, they lump numerous local markets into broad geographical areas, and they don't account for variations in the mix of homes sold, a weakness that can tilt the median up or down. Nonetheless, median prices often are looked to as a broad measurement of housing market trends.
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2013/02/bregozzofeb25chart.gif" rel="shadowbox"><img src="/images/stories/2013/02/bregozzofeb25chartthumb.gif"></a>
For the past 32 years to 2012, the annual change to nominal house prices may be explained by changes to interest rates for some 37.8% of the time. But, the story doesn’t end here, what’s really interesting is that for part of the time the correlation is negative — when rates go down, prices go up and vice versa — while for part, a positive correlation, and for part of the time there is no correlation. And when the data is examined on a quarterly basis, the “relationship” becomes even more tenuous 12% correlation. Further, when comparing of the annual change to interest rates and real house prices the correlation is 20.7%.
<a href="https://www.propertyobserver.com.au/residential/interest-rates-do-little-to-influence-australian-property-prices-catherine-cashmore/2013011358683/Page-1?utm_campaign=newjonathan%2Fjoye&amp;utm_medium=aida&amp;utm_source=po&amp;utm_source=Property+Observer+List&amp;utm_campaign=b0ca95adfb-January_14_201313_8_2013&amp;utm_medium=email" target="_blank">Catherine Cashmore </a> rightly noted the low correlation between property prices and interest rates; surprising to many, but actually the topic of a number of academic papers. What needs to be recalled here is the statistics dictum, that: correlation does not imply causality. While interest rates have some impact on house prices, both are responding to (and participating in) something else—the economic cycle.
I think a more interesting discussion is around how the specifics of locality and population interact with the economic cycle as these are key drivers of price to a local level. So, should interest rates as a measure of the housing markets be thrown out the window? Well, not entirely, for there are (at least) two notable areas where they are still useful — the building cycle and housing affordability. There is a strong connection between rate cuts and the building cycle as interest rates are a short term driver of the construction cycles. And the connection between the cost of money, the supply of housing, prices and rents neatly returns us to the beginning of this article. Thanks for reading. 
Martin Bregozzo is a property economist with <a href="https://www.bis.com.au/" target="_blank">BIS Shrapnel.</a>
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Only a tenuous link between RBA rate cuts and house prices: Martin Bregozzo

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The outer-Sydney land market has moved into an early recovery phase of the property cycle – let’s say seven on the property clock – and Macquarie Street’s focus has shifted to supply side incentives, corralling purchasers toward new dwellings. The state’s growth engine lies in a healthy and vibrant land market; the critical ingredients of which are: measured supply meeting strong demand with rising prices, availability of credit, and market certainty.
For the better part of 2003-04 through 2008-09, Sydney’s developers have been “on strike” — their field thinned out as the business of being a developer became all too hard; with post-GFC funding constraints, diminished margins, uncertainty and delays in the approval process, increasing holding costs and the weight of government charges, levies, fees and taxes. The following chart illustrates the cost contribution to lot production: land acquisition 34% land preparation 11%, developer profit averaging 18% and government taxes some 26%.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2012/09/bregoz.gif" title="Click to enlarge"><img src="/images/stories/2012/09/bregozthumb.gif"></a>
The GFC had the real potential of being outer-Sydney land market’s coup de grâce – as lot production fell to only 1,400 lots – but for rapid intervention by both state and federal governments in the form of housing grants/incentives.
Broadhectare lot production increased for both 2009-10 (some 2,960 lots) and 2010-11 (at 4,200 lots), with NSW Department of Planning and Infrastructure reporting 4,230 lots released for 2011-12.
A slow correction to land prices from 2007-08 has underpinned future market growth; the outer-Sydney median land price peaked in 2004-05 before falling some 29.5% in real terms over the four years to 2008-09.
Since this time, growth has averaged 2.8% per annum with a 2011-12 median of $301,900. For development to occur, the market requires appreciating land prices. The recent growth in established outer-Sydney house prices will encourage more upgraders to sell and take up house-and-land packages over an established dwelling.
Demand is now sufficiently strong enough to drive price growth and maintain this momentum. Generally, land price growth is sharper during a residential upturn and remains flatter through a market downturn. Given the timing lags from planning through development to sale, developers are often caught short during an upturn, driving strong price growth. An over-supply then emerges, resulting in a period of price stagnation.
Overall, however, average price growth for land slightly outpaces that of houses. When house prices are outpacing construction costs, the residual flows back through to the residual value of the land – a clear link between demand pull inflation and asset pricing.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2012/09/bissept11.gif" title="Click to enlarge"><img src="/images/stories/2012/09/bissept11thumb.gif"></a>
When comparing the two periods 1992-97 and 2007-12 a trend away from the outwards expansion of the populace is evident, with the proportion of new dwelling approvals in the inner and middle rings increasing from 54% to 63%.
This is significant for the outer-Sydney land market as infill development tips the scales in favour of areas located closer to Sydney’s urban and commercial core; consumers adjusting their preference for “backyard, barbecue and big commute” to “balcony, park and lifestyle”.
The enhancement of satellite employment centres (such as Parramatta, Liverpool, and Campbelltown) would encourage the local income growth needed to service mortgages, broaden the economic base of these areas and in turn support the land market. Opportunity driving growth and growth driving opportunity.
 
<hr class="system-pagebreak">
 
Share of total dwelling approvals by inner, middle and outer Sydney
Click to enlarge
<a rel="shadowbox" href="/images/stories/2012/09/bissept111.jpg" title="Click to enlarge"><img src="/images/stories/2012/09/bissept111thumb.jpg"></a>
Source: ABS, NSW Department of Planning and Infrastructure, BIS Shrapnel
Not surprisingly, first-home buyers purchasing house-and-land packages are typically most active in the outer ring areas as opposed to the inner and middle-ring areas; the lower land costs meet their income and equity levels.
The first-home owner segment typically represents around 20% of total market activity; importantly, however, the first-home buyer activity provides a base load of activity facilitating the upgrader, changeover and investor market segments.
At current land prices, new houses are relatively unaffordable for first-home buyers, and a buoyant outer-suburban housing market is required for upgraders to sell their dwellings into. The north-west region has the greatest level of new lot production with some 37% of total lots produced over the 2000–2012 period and generally holding up better than the south-west (27%) and central coast (16%).
Hemmed in by the Blue Mountains to the west and the city to the east, Sydney faces a shortage of viable sites to the southern and north-western growth corridors, areas with disparate and fractured ownership patterns (mostly hobby farms and market gardens).
A program of strategic site consolidation, combined with an accelerated infrastructure delivery program, is needed to open up these areas to house the needs of Sydney’s future populations. But the good news story is that a corner has been turned, although lot production is still well away from, and possibly unlikely to ever get to, the 9,000 lots produced annually at the turn of the last decade.
Martin Bregozzo is a senior project manager and property economist at <a target="_blank" href="https://www.bis.com.au/">BIS Shrapnel.</a>
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Outer-Sydney land market in recovery phase of cycle: BIS Shrapnel's Martin Bregozzo

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What is passing through the mind of the Sydneysider approaching retirement age right now? Standing on the precipice of oblivion, or beginning to quaff the blissful serenity of freedom? ... unless, of course, the kids have moved back in with grandkids in tow.
The baby boomers – those born between 1946 and 1964 – constitute some 25% of Sydney’s population, and for the leading edge of this group – the “imminent retirees” – thoughts of retirement and downsizing are likely to be at the forefront of their minds. And they are beginning to make their plans. Around 80% of the baby boomers own their property outright and – significantly – many also hold investment properties.
With reduced super balances – read sweat and toil of the last 20 years – and no indication of any future success soon, for many, retirement may not be an option in the short to medium term. Indeed, a study by Merrill Lynch (2005) suggests that retirement will be “neither a life of full-time leisure or full-time work”. Similarly, a University of Tasmania study (2007) found that the most likely outcome will be “a phased withdrawal from the labour market over an abrupt cessation from work”. Instead of disappearing, the 65+ers will simply fade away.
The financial model adopted by retirement funds assumes that a retiree will survive on regular series of payments, in a special – almost magical world – where costs (such as electricity and petrol) remain orderly, until the invested capital, and coincidently the retiree, expire around the age of 85 ... but there is an awful lot of living to do in the intervening 20 years. And this is not a generation renowned for its thrift like its predecessors – a good news story for the retail and hospitality sectors. Not so good for any prospective 86-year-olds, or those banking on an inheritance, or those hoping to rise the corporate ladder by filling the retirees’ old positions.
Consequently, some baby boomers may opt to augment their retirement finances by selling the family home and downsize to a more affordable dwelling, while others may sell and move to enjoy the fruits of their next life stage.
Marketing to the baby boomer generation has focussed on larger apartments, with space and storage, good quality design, and offering security and lifestyle. Conversely, a 2001 study by BIS Shrapnel on Sydney’s empty-nesters found that preferences lay in single-level villas, acknowledging that stairs would become an issue in the future. Ideally, dwellings would have ample space, but small, low maintenance gardens – a place for barbecues and grandkids – or better still large balconies as an extension of the leisure-orientated living area with common area rooftop gardens.
A further common theme is that location is paramount – they will not be herded off to Sydney’s Never Never. While some may move away to be close to their children, to find a more affordable dwelling, or move to leisure/lifestyle areas, most prefer where they live and wish to remain there. Developments to accommodate this group need to be strategically placed (walking distance) from their local haunts. The majority will not, so it seems, relocate to the Gold Coast. These people want to live – and live it up – not simply exist.
However, the supply of land for new development in Sydney is tight. After taking into account the cost of land in the established areas and all of the changeover costs, downsizing to a new home doesn’t provide much change after selling your established home – even if the land isn’t as big as their current home. If new dwelling prices stymie the trade down activity of the baby boomer generation, what will be the impact on the market?
The underlying demand for the baby boomers’ family nest egg will come mainly from the Gen X demographic, with some 26% of Sydney’s population; aspiring to provide their children (Gen Y and Z) with something resembling a house with a backyard, sort of like the one they grew up in. But, if family homes are not freed up by the downsizing baby boomers, where will Gen X find their large family home? Chances are the answer lies to the new housing estates on the city fringes, where the land is available. This is likely to continue to diminish housing affordability in established suburbs, where limited houses will be put on the market, and Gen X demand will be pushed to Sydney’s outskirts. But will the Gen X-ers go there or will they opt to reside in apartments closer in?
Conversely, if the baby boomer generation does downsize en masse, then what impact does this have? House price pressures should ease as established housing stock becomes attainable for the Gen X buyers. However, unless NIMBY-ism attitudes and the planning rules were to change, how do you accommodate both the downsizers and the Gen X-ers in their current suburbs where land supply is tight? In addition to approving larger infill apartment projects, up-zoning to medium (or high) density would squeeze more housing out of the land, especially if neighbours co-operated, on-selling their properties as a single site to developers. Simon and Garfunkel cautioned against being “a rock ... an island”, by co-operating, many more should stand to benefit. Moral of the story: if the neighbours are around the same age, get to know them and encourage them to join the local IMBY chapter. Perhaps greed is good after all?
Sydney’s problem is one of undersupply, which has driven price growth. Specifically, an under-supply in the established communities people desire to remain in. Of course, poor planning, decisions of expediency, easy credit and dual income families have also played their part in driving price growth. Something needs to happen within “the system” so that all these people – baby boomers, Gen X, Y, and Z – can be housed; a greater intensity of land use, especially close to commercial and employment centres; a drive to consolidate the larger land parcels in the suburbs to facilitate medium to high density housing would be a (good?) start.
For other retirees, this will be all too hard; another report (Sweeney, 2006) pointed to “aging in place” for reasons centred around emotional attachment and the notion of the “nest egg” for Gen Y children. Most retirees still remain active, and a “seniors’ needs” refurb of the family home is likely to be a distant expense, some 20 years down the track. Perhaps, in the instance where the land is sufficiently large enough, a granny flat extending the family nest to accommodate the kids (and grandkids) on a permanent basis – maybe they’ll even pay for it! – would be cheaper than the commute to the Sydney’s fringes, just as long as it leaves enough room for the Winnebago.
It looks as though we’ve highlighted the issues facing the medium term outlook for the baby boomers – or have we? The truth of the matter is that this is the demographic that has changed the rules to suit their changing needs, why should retirement be any different? There is no one simple answer; this is an issue of lifestyle choice and locality and some of these choices require change – both subtle and dramatic. <a href="https://www.bis.com.au/reports/sydneys_baby_boomers_r" target="_blank">BIS Shrapnel</a> is looking to commence a study examining how the landscape will change, the effects on Sydney’s future housing market, supply and demand patterns, and any sub-regional socio-economic variations. It will flag the policy obstacles and highlight the desired dwelling types and locations.
All of this should be to the forefront of a manager’s mind; anyone involved in property – planning, development, investment, design, government policy, tourism … because the field is changing. New game, different rules. Are you prepared?
Martin Bregozzo is a senior project manager and property economist at <a target="_blank" href="https://www.bis.com.au/">BIS Shrapnel.</a>
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What baby boomers' retirement will mean for the Sydney property market: BIS Shrapnel's Martin Bregozzo

<a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> recently welcomed residents into Uno and Duo, marking the completion of the penultimate stage of its $1.2 billion West Village precinct in Brisbane's West End.

There are only two opportunities remaining in the two-tower stage known as The Allere Collection. Duo is fully sold out, but two penthouses have just been released in the sister tower Uno.

The sprawling penthouses, measuring upward of nearly 350 sqm, have been designed by renowned architecture firm Rothelowman to focus on multi-generational living. One penthouse has four bedrooms, the other five, as well as several living areas. A second entry to the apartments make them ideal for those with several generations living under one roof, allowing for greater independence and flexibility within the same home, an increasingly sought-after feature among extended families looking to remain connected without compromising privacy.

[smartcode_project:default project_id=114215 project_image_fid=5703]

Built by&nbsp;<a href="https://www.apartments.com.au/builders/hutchinson-builders">Hutchinson Builders</a>, one of the best in the construction game, Duo forms part of a connected, pet-friendly vertical community that brings together two architecturally aligned towers with shared rooftop amenity.

Rothelowman Principal Jeff Brown previously described the design philosophy as centred on connection.

“When thinking of ways to nourish a soul one needs connection to self, to nature and to community,” Brown said.

[smartcode_project:default project_id=114215 project_image_fid=204874]

That ethos is expressed through Duo’s rooftop offering, which includes a pool and heated spa framed by mature planting, a private dining room and residents’ lounge, and BBQ facilities. On the lower levels, residents have access to&nbsp;work-from-home spaces, a workshop, and a pet parlour.

The rooftop captures views across the Brisbane River and back toward the city skyline, positioning it as both a retreat and a social anchor for residents.

[smartcode_project:default project_id=114215 project_image_fid=364091]

Owners in Duo also have access to Uno’s rooftop amenities, effectively doubling the shared facilities within the community. At Uno, residents can use a second rooftop pool, additional private dining and entertaining areas, a teppanyaki grill, and the Paw Pavilion, an off-leash space designed for residents’ dogs. The reciprocal access reinforces the project’s “vertical neighbourhood” model, where common areas are intended to extend the footprint of each apartment.

[smartcode_project:default project_id=114215 project_image_fid=5710]

The Allere Collection sits within West Village, a 2.6-hectare mixed-use precinct just 800 metres from the Brisbane CBD. Delivered progressively since 2016 on the former Peters Ice Cream factory site, the masterplan now integrates heritage buildings, retail and dining, health and wellness providers, and open green space into an established inner-west address.

Sekisui has released the final stage of the development, Callista on Park, set to be completed in Q2 next year. With the first release now 95 per cent sold out, limited large-scale three- and four-bedroom residences remain, priced from $2.6 million.

[smartcode_project_cta:default project_id=114215]

Joel Robinson

Allere Collection residents move in as multi-award winning West Village enters its final chapter

Construction is underway at <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a>, the boutique residential development by <a>Excelon Projects</a> on Stephen Street in Yarraville, following the appointment of <a href="https://www.apartments.com.au/builders/balmain-co">Balmain &amp; Co</a> as builder.

The milestone marks a significant step forward for the 53-residence project, designed by <a href="https://www.apartments.com.au/architects/six-degrees-architects">Six Degrees Architects</a> with landscape architecture by Simone Bliss Landscape Architects, conceived around a strong focus on community, craftsmanship and connection to nature.

<a href="https://www.apartments.com.au/developers/excelon-projects">Excelon Projects</a>’ vision brings together 41 one, two and three-bedroom apartments and 12 townhomes arranged around a central landscaped garden, prioritising liveability in a low-rise, low-density format.

[smartcode_project:default project_id=144913 project_image_fid=297728]

Open-air corridors, a light-filled lobby and generous setbacks are intended to enhance day-to-day comfort while reinforcing the development’s community-oriented design approach.

Car parking has been located underground to prioritise shared green space and pedestrian movement through the site, allowing the landscaped garden to form the central organising element of the development.

Interiors incorporate custom pieces by Melbourne makers including leadlight pendants by Adadaz, hand-turned timber door handles by Auburn Woodturning, and blown-glass lighting by Ruth Allen, embedding a layer of local craftsmanship throughout the homes.

[smartcode_project:default project_id=144913 project_image_fid=297736]

Sustainability has also informed the design approach, with Yarraville Green targeting an average 7-star NatHERS energy rating. Passive design measures such as cross-ventilation and thermal mass aim to reduce reliance on mechanical heating and cooling, while rooftop solar panels will supply power to common areas and harvested rainwater will be reused for landscape irrigation.

Positioned along the quiet, tree-lined Stephen Street, Yarraville Green sits between Yarraville and Seddon villages, placing residents within walking distance of cafés, dining, boutique retail and the Sun Theatre.

Seddon Station is also a short walk away, ideal for residents seeking an inner-west address with strong amenity and transport connections.

Completion of Yarraville Green is anticipated in 2027.

[smartcode_project_cta:default project_id=144913]

Balmain & Co appointed builder as construction begins at Excelon Projects’ Yarraville Green

A long-stalled Mermaid Beach development site opposite Pacific Fair, previously earmarked for a twin-tower project, is set for a fresh development push with plans for a major mixed-use residential tower.&nbsp;

Billionaire garbo Ian Malouf's development company, REMI Residences, is proposing Project Elegance, a 44-storey tower with over 270 residential apartments and 88 short-term accomodation units at&nbsp;2065 Gold Coast Highway, Mermaid Beach, on the corner of Mermaid Avenue.

Malouf paid $23.76 million for the 3,783 sqm site in 2022, six years after it traded for $34.1 million when it was bought by Hubei United Investment Group.

 
<img alt="First Look: REMI Developments plans major mixed-use tower with 360 apartments at stalled Mermaid Beach site" data-entity-type="" data-entity-uuid="" data-widget="image" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Mermaid%20Beach%20da%20podium.png?VersionId=yRYSSPItvCA5ZeQ49LlwkQYVn7OhEqIC" /><img alt="" data-entity-type="" data-entity-uuid="" draggable="true" height="15" role="presentation" src="data:image/gif;base64,R0lGODlhAQABAPABAP///wAAACH5BAEKAAAALAAAAAABAAEAAAICRAEAOw==" title="Click and drag to move" width="15" />

&nbsp;

The design statement by DKO says Project Elegance "represents a holistic response to its coastal and urban context. It draws upon site, climate, and landscape to create a composed architectural outcome that prioritises occupant experience, public interface, and long-term viability via vibrant and active uses."

They say the subject site&nbsp;occupies a distinctive island parcel with three street frontages and prominent visual exposure to passing visitors.

"This unique position allows the development to form a panoramic dialogue with water and city, setting the foundation for a climate-responsive, site-specific architectural expression.&nbsp;The podium base, inspired by the region’s sandstone headlands and coastal setting, and adopts a sculpted and grounded character that provides a stable counterpoint to the slender tower above."

&nbsp;

<img alt="First Look: REMI Developments plans major mixed-use tower with 360 apartments at stalled Mermaid Beach site" data-entity-type="file" data-entity-uuid="4f088e10-6493-49d4-83cd-10fc039318ac" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Mermaid%20Beach%20da%20tower.png?VersionId=Sbglj0tNBqyvY5V_DlVH.bvjXi8kBbfl" />

Residents and guests would have access to multiple communal recreation levels. Plans include a shared recreation deck on level six, with a pool and three padel courts. There will be a residential-only pool on level seven, and an upper-level communal space only accessible by those buyers towards the top of the tower.

&nbsp;

Ground-floor commercial spaces are proposed to operate between 5am and midnight, contributing to an activated street frontage along the busy Gold Coast Highway corridor.

The site sits within the High Density Residential zone and a Light Rail Urban Renewal Area, where planning policy encourages higher-density development close to transport infrastructure and services. The planning report states the project aims to “ensure the efficient reuse of this centrally located property” and support the transformation of inner-city areas into “more vibrant, compact, interesting, connected and active” precincts.

&nbsp;

The proposal marks the latest attempt to unlock the high-profile parcel, which previously carried approval for the “Elegance” twin-tower development, a project that included more than 500 apartments but ultimately stalled after sales activity ceased in 2019.

REMI Developments has been increasingly active in the Gold Coast property market, with the Malouf-led group positioning itself around premium residential and lifestyle-focused projects as the region continues to attract both interstate buyers and international interest.

Malouf is one of Australia's most impressive entrepreneurs, having sold his waste business fore more than $500 million, having started only with a small truck at 18 years old.

First Look: Billionaire Ian Malouf plans Mermaid Beach tower

A State Significant Development proposal from Ecove Group could see two high-rise residential towers developed above an ALDI-anchored retail podium in Gordon.

The 28-storey towers, dubbed Eight 10, would become the tallest in the sleepy Upper North Shore suburb, which has been stirred by changes to the Low to Mid-Rise Housing Policy aimed at triggering greater density around transport hubs.

Ecove Group’s plans for 810 Pacific Highway, a 2,357 sqm site around 400 metres from Gordon railway station, include 180 apartments, 39 of which would be dedicated as affordable housing.

Architecture firm PBD said in its Design Report the site "presents an exciting opportunity to positively contributes to the surrounding context, enhances the overall urban experience."

<img alt="First Look: Ecove lodges State Significant Development plans for dual-tower “Eight 10” project at 810 Pacific Highway, Gordon" data-entity-type="file" data-entity-uuid="e50141fa-fb0b-44b3-bf9b-c6d87b993c3b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Eight%2010%20podium.png?VersionId=YTgQPBxNnmQwr6x2AJSpVZ1COqa.9oLQ" />

The site previously received approval for a development comprising 56 apartments above retail in 2018.

PBD noted in its report that the planning&nbsp;context for the site has "evolved significantly since the original consent was issued."

In April 2024, the Department of Planning, Housing and Infrastructure (DPHI) identified the site as being located within a Transport Oriented Development (TOD) precinct. In parallel, Ku-ring-gai Council progressed a preferred planning framework for Gordon Town Centre, including proposed amendments to the Ku-ring-gai Local Environmental Plan 2015 (KLEP 2015).

<img alt="First Look: Ecove lodges State Significant Development plans for dual-tower “Eight 10” project at 810 Pacific Highway, Gordon" data-entity-type="file" data-entity-uuid="cf65fb26-a163-41ea-a4d3-8ddbeabd67e4" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Eight%2010%20MAP.png?VersionId=vrQJzXSg3xRH.APBmtth5mA2adPmUPjc" />

PBD said the proposed development "responds to the amended KLEP 2015 and, in addition, seeks to utilise the floor space ratio and height incentives available under Chapter 2, Part 2, Division 1 of the State Environmental Planning Policy (Housing) 2021."

Late last year the first project in Gordon through the NSW Government's Housing Delivery Authority was approved. That was for 106 apartments across two connected seven to eight-storey buildings.

Ecove plans 28-storey apartment towers in Gordon

<a href="https://www.apartments.com.au/developers/graya">Graya</a> has set its sights on one of Brisbane’s scarce remaining riverfront development opportunities.

They have spent $17 million on an 810 sqm site across 16-18 Sandford Street, where it is planning SILK, a 15-storey apartment tower with just 22 apartments.

Planning documents outline a single tower designed to take advantage of the site’s northerly outlook toward the river and Brisbane CBD.

There will be eight two-bedrooms and 14 three-bedroom apartments on offer, each either half- or full-floor.

<img alt="Graya" data-entity-type="file" data-entity-uuid="059e1aa4-695c-4556-bafa-e8b5970c06f5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-03-12%20at%203.07.50%E2%80%AFPM.png?VersionId=tEqwv_m8HYhrXSCStOMFHvGZZ5WgKfEx" />

&nbsp;

According to the Town Planning Assessment, the proposal "showcases a high quality architectural and landscape design outcome that is enhanced by the amenity of the Brisbane River… and provides a subtropical design response that celebrates Brisbane’s climate and lifestyle.”

Ground level includes landscaped communal areas facing the river alongside a gym and outdoor garden space, while the rooftop terrace will feature multiple leisure amenities like swimming pools,&nbsp;dining and barbecue facilities, as well as outdoor relaxation and yoga spaces.

<img alt="Graya" data-entity-type="file" data-entity-uuid="93982dbb-9f27-409b-a319-bd6f458f9ea7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-03-12%20at%203.09.05%E2%80%AFPM.png?VersionId=gCaaW82pEBxMvXkVkEm4TC_o7_UXA82p" />

Architecturally, the tower form draws inspiration from the movement of water along the river edge. Design documentation describes the building as “a form sculpted by flow, shaped by shifting water,” with curved forms, varied materiality, and sculptural elements used to soften the building’s visual bulk. Sandstone, an iconic material throughout St Lucia, is reinterpreted through a mix of refined and split-face textures across the façade.

The Sandford Street frontage is intended to present an articulated façade featuring vertical landscaping and sculptural architectural elements, helping the tower integrate with the evolving high-density character of the riverfront strip while maintaining visual interest from both the street and river corridor.

Graya has continued to expands its footprint across South East Queensland, with projects under construction across both Brisbane and the Gold Coast.

Martin Bregozzo

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