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Did you know that one in three proposed residential projects never starts in Australia?
Did you also know that two out of five new projects selling off-the-plan across Queensland did not report a sale over the past six months?
Or that one in five new approved detached homes across Australia has yet to commence construction?  And did you know that this ratio lifts to one in two for new apartments and townhouses?
So what helps get a new project started?
There are seven things that – from our experience – help make a new residential development work.
Economically sound suppliers
Often a new project doesn’t proceed because the financial capacity of the developer and builder is much less than the project actually requires.  I have seen this many times.  Sometimes a developer’s latest project is the sum of all previous outlays.
One must view a new development as a business – a new 50 apartment project is typically a $25 to $30 million venue, yet it isn’t often treated as such.  If someone was going to get involved in a $25 million business, most would do a lot of investigation before they proceed.
Sadly, for some reason, that doesn’t always apply to new housing projects –  especially infill redevelopment sites, which are owned more often than not by specialist professionals (it’s their family home or an investment property).
Lawyers and solicitors, in particular, seem quite pig-headed about such matters.  Maybe that isn’t too surprising.  I do feel a writ coming on.
Project matches the site
Maximising development yield can often be a big mistake.  Too many developers still do this.  It is a logical thought process if the intention is to sell the site.  But that often backfires too.
If an owner really wants to develop the project, then it is often best to reduce the overall density and reduce your construction costs.  Building less is, more often than not, more when it comes to new housing.
Each project also needs to have its own USP or ‘unique selling points’.  I often ask a developer, on initial meeting, to explain their project’s USP to me.  Sometimes I get told “that is what we want you to do”.
Now whilst that might sound like a lucrative business opportunity for us, our experience is that we will most likely not end up working on that project.
What’s being built needs to match the site.  It is pointless trying to build an A-grade project on a C-grade site.  Even in the same street, sites are all different.
Time and effort must be invested in order to best match the built product with the site parameters.  Sadly, this often isn’t the case.
Limited construction costs
There is a simple matrix which helps to determine, quickly, if a new project has a chance of actually going ahead – ratio of construction costs to total sales venue.  If the construction costs are half (preferably less) of the gross realisation, then that new project has a chance of actually being built.
Quite a few recently completed residential projects – especially those conceived and committed to prior to the GFC – actually made a loss.  I often chuckle when I hear how rich developers are, how much money they make and how they rip everyone off.  Many are just scraping by.
Pricing
Project success needs fast pre-sales.  This often happens, not just by spending money on sales commissions or marketing, but because the pricing is right.
New residential projects sell best if they are priced at, or just below, the prices being achieved for more established property in the same area.  Potential buyers seem comfortable with this equation.
Buyers looking at a new apartment or townhouse expect a slightly higher pricing differential – between 10-20% less than the price of the established detached housing in the area.
Developers can achieve higher price points – especially on great sites – but in the main, this general rule applies.
Local market
The dwellings being offered need to be designed to suit the first two largest local occupier groups.  These markets are going to be, firstly an investor’s tenants and secondly (and importantly) potential buyers when it comes to resale.
So, if the largest local household group is say, single person households, followed by couples with no children – and assuming the site and general location supports such density – then buying a new one or two-bedroom apartment might have merit.
The product on offer needs to change according to local demographics.  See <a href="https://matusikmissive.com.au/2013/05/14/what-should-i-buy/" target="_blank">here</a> for more.
Valuation support
Unless it ‘sells and settles’ nothing happens in real estate.  That is so true and the key to getting sales (and settlements) is to have bank valuation support.
One of the first questions we ask about a new development that is seeking our assistance is about valuations.  Most of the time, developers have an overall project valuation (they need such to secure finance etc.), but not what the valuation industry call a ‘current market assessment’ for a selection of the dwellings to be sold.
Getting bank valuations done is vital when it comes to off-plan selling.  New prices do not have to match the valuations – a 5% (sometimes up to 8%) variation is acceptable – but the closer they are the better.  I like the 'within $10,000' rule.
Despite the public flogging that investment sellers seem to cop these days (yes, some deserve it), the more successful agencies selling investment property will only sell new stock priced within an acceptable range of independent bank valuations.
Flexibility
Many new residential developments take years to come to fruition.  Some take over a decade.  Even smaller infill projects – given the convoluted approval process these days – can take many years from concept to settlement.
Most new residential projects will go through several stages of the property cycle, some will go through several actual cycles.
In order to meet these changing conditions, new projects also need to be flexible.  This flexibility comes in a variety of forms – product, price, incentives, marketing and timing to name just a few.
Final word
We do need to tackle one elephant in the room – what I like to call ‘survival of the unfittest’.
Sometimes it is not the better projects that get built, but the projects that look best on paper.  Too often, new developments are promoted to such a degree and at such a high cost that sales are bought, buyers often duped, but presale targets are met.
More often than not, it is the project’s location that is hyped plus the timing of the property cycle that is oversold to investors, rather than the attributes of the project itself.
Promoters, advocates and forecasters have financial incentives to under-report problems/bad news and over-estimate benefits of the location, stage in the property cycle and sometimes the project itself.

<hr>
Michael Matusik is the founder of <a rel="nofollow" target="_blank" href="https://www.matusik.com.au/">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition. 
Read <a rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via<a rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
 
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michaelmatusik-49YzLvdmNv

Seven factors that kick start a new residential development: Michael Matusik

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Q: Where have all the first home buyers gone?
A: Nowhere - and they are not coming back.
For those interested in property matters, you've probably been bombarded by tales of woe about all those poor first timers who cannot get into the market.
Nasty investors.  Rich baby boomers.  Property bubble.  The need for more grants.  Chinese buyers.  Overseas migrants.  Poor town planning.  Capital gains tax.  The blame game will go on and on…
According to the latest official figures released recently – well for August – first home buyers (FHBs) accounted for 13.7% (always best to get the decimal point in) of all loans – a nine year low.  The long term average is about 20%.
Why?
For mine, reasons for this low level of interest include:
<ul>
<li>
They were brought forward.  The machinations with regards to the first home owners grant (FHOG) have interfered with the property cycle.  The FHOG is great politics, poor policy.  It is also inflationary and has resulted in fewer FHBs than would otherwise have been the case.  It needs to go away.
</li>
</ul>
If it wasn’t for the FHOG, this trend – the decline in FHB numbers – would have started more than a decade ago and the decline would have been far more gradual.  Demographics shape everything.
<ul>
<li>
Generation Y – the largest rental group – is more interested in travel and other lifestyle things than being saddled with a home loan.  They are partnering later, if at all, and history shows that unless one is getting serious about a relationship (and having children is being discussed or on the way), then the momentum to buy your first home is limited.  Renters have better things to spend their money on.  Also, they have more investment options – including their own portfolio of work – than their parents did.
</li>
</ul>
<ul>
<li>
Potential FHBs are happy to share accommodation, especially higher priced rental (and better quality/located) properties and experience the lifestyles that are outside their ability to obtain through home purchase.
</li>
</ul>
<ul>
<li>
HECS debt is also strangling FHB interest.  Under-employment is also having an impact.  Our employment situation is still somewhat shaky.
</li>
</ul>
<ul>
<li>
Expectations are out of whack.  Many FHBs want their first home to be like the one they currently live in.  Many still live at home – without paying rent or doing too much around the house.  There are plenty of options for FHBs to buy a property – for example, a third of all house sales in South East Queensland are still priced under $300,000 – but these properties aren’t good enough for many of today’s FHBs.
</li>
</ul>
We aren’t likely to see FHBs come back into the market at volumes as seen over the past two decades or so.  A new norm is being set.  If this comes true, then we are likely to see three market impacts:
<ul>
<li>
More renting.  But maybe not rental increases.  
</li>
</ul>
<ul>
<li>
Fewer sales made by existing property owners – especially those holding more affordable houses.  Investors might, for a period, replace FHB interest and buy some of these second-hand properties, but investor interest will not be as stable as FHB interest.
</li>
</ul>
<ul>
<li>
Less heat in the overall property cycle – quite ironic given the conversation of late.  A Sydney-centric recovery (boom?) only (so far).  It takes all three market segments – investors, second and subsequent buyers and FHBs – to move together to drive a strong market recovery.
</li>
</ul>
Those trying to sell second hand property – many of them looking to downsize and in more suburban locations – are the real losers here, not first home buyers.  Frankly, they have never had it so good.
Save your tears for something or someone else.
 
<hr>
Michael Matusik is the founder of <a style="font-size: 14px;" href="https://www.matusik.com.au/" target="_blank" rel="nofollow">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
Read <a href="https://www.matusikmissive.com.au/" target="_blank" rel="nofollow">Michael’s Blog</a> or follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank" rel="nofollow">Facebook</a> and <a href="https://www.twitter.com/michaelmatusik" target="_blank" rel="nofollow">Twitter</a> or connect via <a href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
 
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A new norm is being set, first home buyers aren't coming back: Michael Matusik

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A fair bit happened over the last two weeks.  So here is a quick update to help get your head in gear.  
Prices
Not a 'bubble', but home prices lifting from a low base in response to very favourable influences such as low interest rates, undersupply of new housing starts and strong population growth.
The latest house price results from RP Data – for the year to September – suggest a rather tame residential market.
<ul>
<li>
National growth 3.7%
</li>
<li>
Sydney 8.0%
</li>
<li>
Perth 7.6%
</li>
<li>
Melbourne 5.4%
</li>
<li>
Canberra 3.7%
</li>
<li>
Darwin 2.2%
</li>
<li>
Brisbane 1.1%
</li>
<li>
Adelaide -0.8%
</li>
<li>
Hobart -2.9%
</li>
</ul>
Remember that consumer price index – for 2012/13 – was 2.6%.
Over the past decade, Sydney home prices have only barely grown in line with inflation (up 2.7% per annum).  The current lift in prices since mid-2013 merely reflects investors and home buyers finally embracing attractive conditions.
<a target="_blank" href="https://www.propertyobserver.com.au/trends/housing-bubble-give-me-a-break-michael-matusik/2013092965340">Again</a>, for mine, what we are experiencing is the normal machinations of the property cycle.
Population growth
Australia’s population grew by 397,400 last year to reach 23 million.  A year ago the country’s residents increased by 367,000 people and during 2011 the yearly escalation was just 305,000 – the lowest rate of annual increase in a bloody long while.
Queensland’s population is growing by 93,000 people each year, similar to NSW.  Western Australia is seeing an 83,000 annual increase; yet Victoria remains the star, lifting its population by 102,000 new people over the last 12 months.
Queensland’s population growth is starting to stabilise – reflecting a plateau in the more labour intensive side of resource sector investment.  This should result in less interstate migration to Queensland, WA and NT in coming years.
More bums on seats might not be everyone’s cup of tea – but it does increase housing demand, which in turn should lead to more residential construction.  
Thankfully, new housing starts are starting to improve, albeit from a low base.
Housing construction
There were 163,000 new homes approved across Australia this year, which is 17,000 more than last year.
Most new starts are still detached houses (95,000) versus 67,000 attached dwellings.  But apartment starts are up 20% on last year, whilst detached housing construction rose just 6%.
A similar trend can be found in Queensland, with 30,000 new homes underway this year, against 27,000 during 2012.  Interestingly, new detached house starts are down 1,000 or 5% in Queensland, whilst new apartment construction is up 50% – 12,000 approvals in the 12 months to August 2013 versus 8,000 the year before.
 
New sales
In response to strong demand for established dwellings and rising population growth, new home sales are now starting to rise, up more than 20% on a year ago – the strongest growth in four years.
This is great news which hopefully can be sustained.
In August, house sales increased by 10% in Western Australia, 8% in South Australia, 7% in New South Wales, 4% in Queensland and 2% in Victoria. 
Confidence
The Westpac/Melbourne Institute index of consumer sentiment rose by about 5% in September - a three-year high.  This index is up 13% over the year.
Amazingly, cash remains the wisest place to put new savings according to the survey.  But this is falling.  The next highest was real estate (28%); followed by pay debt (14%) and shares (9%).
In support, the NAB business survey for August reported a lift in the confidence index to 27-month highs.  A further improvement is expected now that the election is out of the road.
The improvement in both business and consumer confidence now needs to be validated.  We need to start embracing the positives.  In the past five elections, confidence has lifted around the time of the poll.  But a few months later, other issues had taken over as confidence drivers.
It is important that the new federal government builds on the momentum that is developing.
Anyway, we will know more when Westpac releases its October consumer sentiment report.  The last consumer sentiment survey period straddled the election day so the October survey is the first monthly survey since September 7.  However the Roy Morgan weekly survey has continued to publish and it has been rising in recent weeks.

<hr>
Michael Matusik is the founder of <a rel="nofollow" target="_blank" href="https://www.matusik.com.au/" style="font-size: 14px;">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
Read <a rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via <a rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
 
 
 
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Accentuate the positive, good signs for the housing industry: Michael Matusik

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Housing bubble?  Give me a break.
I forewarned a few weeks back, that we might see an increasing detachment from reality as this residential market recovery takes hold.
I was thinking it would start in earnest sometime next year.  But it looks like I was wrong.  The loopers are already at it and in force.  Lord help us when we actually see some real heat in the overall housing market.
Just the normal noises
For the record, Sydney house prices are up 8.3% over the past 12 months according to RP Data, but were up only 1.2% last year and were down 2.4% in 2011.
As for the rest of the country, Perth is up 7.9% for the year but down 0.5% last month while Melbourne is up 5.4% for the year and the Brisbane-Gold Coast region is up a measly 1.8%.
Hmmm, a housing bubble indeed.
Yet we now have the IMF – yes those clowns – planning to visit Australia (to help get a suntan, I suggest, rather than anything else) to determine if Australia is in deep throes of a housing bubble.
It was just two months ago, when we were still waiting for Australia’s housing market to bust.
For mine, what we are experiencing is the normal machinations of the property cycle - nothing more, nothing less.
Valuations are often short at the recovery stage of the cycle.  They sometimes overshoot near the peak.  There are many issues regarding valuations in Australia.  We have written about them several times.  Go <a href="https://matusikmissive.com.au/2011/06/01/queensland-site-valuations/" target="_blank">here</a>, <a href="https://matusikmissive.com.au/2011/11/16/a-tale-of-two-buildings/" target="_blank">here</a>, <a href="https://matusikmissive.com.au/2012/02/22/bank-vals-101/" target="_blank">here</a> and <a href="https://matusikmissive.com.au/2012/05/16/modern-marketing/" target="_parent">here</a> if you have nothing much better to do.  
Development, redevelopment and renovations 
One of the problems with house price reporting is the way prices are measured and more importantly what influences the rise (or fall) of both median and mean house price figures.
New development or redevelopment often causes the middle and average price to rise, without seeing resale values increasing much at all.
This is what often happens around key infrastructure, such as railway stations.  New projects lift the median/mean values, whilst resale prices remain flat at the time of new development/redevelopment.  The same can be said about weekly rents.  Base property values/rents often rise faster closer to core infrastructure, but the overall residential cycle must be on the improve.
A similar trend can be found in many areas affected by flooding across Australia in recent years.  Many of these areas, especially in Queensland, have now been redeveloped.  This has seen new properties replace older stock.  Median/mean values have often risen as a result.  But many owners in these areas, who are trying to resell flood-affected but unimproved homes, cannot get much more for their property than they originally paid for it.  They are often getting less than they most likely would have if they sold just prior to flooding.
Median and mean housing prices are also affected in the same way when it comes to individual house renovations.
Many areas across Australia are experiencing a renovation surge.  Areas which are going through his swell of reno activity are seeing a strong lift in suburban median and mean prices.  But when you factor in the cost of the renovation itself (and especially if you include your time at a commercial rate), then the true uplift in financial gain is far less than the headline suburban price growth being touted.
It is true that a high and consistent proportion of renovation work across many homes in an area, is a good thing in terms of improving the underlying investment potential of a location.  It is another of<a href="https://www.propertyobserver.com.au/news/forget-hotspotting-lists-you-need-to-dig-a-lot-deeper-michael-matusik/2013092565254" target="_blank"> our key 10 measures which helps us determine the strength of a place’s underlying investment clout</a>.
Such activity suggests that owners are ‘placing money where their mouth is’, so to speak; which in turn often leads to more owner-resident resale interest; which increases the actual size of the resale market and in due course, can help get a much better price on resale.  But it takes time for the base value of property in such an area to increase.
New development, large scale redevelopments and major renovation activity cause median and mean values to rise.  But this isn’t the same as seeing the base value of the existing, unimproved housing stock increase in a certain location.
When we see rapid increases in the base value of residential property, and across widespread areas, then we are experiencing boom-like conditions.
I suspect that - outside of a certain areas in Sydney and Perth, maybe parts of Melbourne now – the base value of Australian housing isn’t increasing much at all.
But the IMF and the  newspapers will be telling you otherwise.
 
<hr>
Michael Matusik is the founder of <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.matusik.com.au/">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
Read <a rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via <a rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
 
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Housing bubble? Give me a break: Michael Matusik

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I am often asked about the latest hotspot.  Last week I gave several presentations – and after every one – someone asked for my list of ‘hot suburbs or areas’.
I generally reply, “I really don’t care about so-called hotspots.”
And then I ask two important questions.  Firstly, “are you a property speculator or a property investor?” Followed by, “what measure, do you think, is being used to judge an area’s heat?”
Everyone – well almost everyone – replies they are an ‘investor’ not a ‘speculator’ and they understand the need to hold property for considerable time to maximise their investment return.
As for my second question, few really have an answer.  Many are actually baffled by my premise.  Some even think it is irrelevant.   But I don’t.  It is, in fact, at the heart of the matter.
From my 25 years as a property market analyst, I know one thing is for certain – it is the easy things that get measured the most.  The things that should be measured rarely are.
And the easy things – and especially median or average prices on a small area/suburban basis – can be extremely misleading.  More often than not, they misrepresent what’s really going on, as they illustrate what sold during a reporting period, not – I repeat, not – a change in actual value.
Yet this is what most ‘hotspotting’ commentary – and all those silly lists – are judged on.  This unit of measurement is deeply flawed.  It is why hardly any of the suburban-based hot spotting forecasts actually come true.
What my tactics are
We use 10 factors to help determine a location’s base investment value and where that place might be in the property cycle.  A change in median or even average price doesn’t feature.  It isn’t even investigated.
Please note that we are not ‘hotspotting’ – we don’t do that – our approach is to try to determine the long-term investment potential of a place.
All locations – regardless of whether they are rated by someone as ‘hot’ or not – will experience every stage of the property cycle.  Over time they will see a downturn, a trough, a recovery, an upturn and  a market peak.  This pattern will also repeat over time.  Advice should be given depending on a place’s stage in the cycle.  Not just cherry-picking – and blindly – those areas on the up.
No area is immune.  No area is ‘bulletproof’.  You cannot discover locations where prices never go down.  They don’t exist.
We do use two factors to help determine price direction.  Understanding price direction is very important.  It forms one of five key measures as to where a place sits in the property cycle.
The first factor is ‘asking prices’, which is something <a target="_blank" href="https://www.sqmresearch.com.au/index.php">SQM Research</a> do very well and secondly, but importantly, we look at actual resales, i.e. the same property reselling over time.  We exclude, as best we can, those properties that have had a major renovation.  Likewise, we remove out-of-line sales such as those involving divorce, partial transactions and once-off events like flooding, for example.
It takes considerable time and effort to undertake our ten point locational analysis work.  It cannot be summed up in a spider map, thermometer or simple pendulum.  It is much more complicated than that.
More scrutiny
What really amazes me is how most property-related magazines pedal this stuff like it is candy.  It must work, as they would only do it if it helped sell copy.  It is little wonder that few Australians actually buy an investment property and fewer still buy a second or third one.
Many novice investors are being misled by all this glitter – a false promise that selecting an investment property is as easy as downloading a free app or buying the current copy of a $10 magazine.
Another truism that I have learnt about real estate is that if it sounds too good to be true, then it most probably is.
Maybe I shouldn’t really be surprised by this – but when an area is being declared ‘hot’ and has apparently experienced unbelievably high price growth over a short period of time, and that result flies in the face of common sense and overall market experience – why doesn’t the reporter question the result?  Why don’t they ask exactly what is being measured here?  Surely they should want to see the raw data?
The lack of scrutiny regarding the republishing of property information is a real concern to me.  It is getting worse.  But obviously not to some, as we recently found out.
Bulletproof?
To repeat, the information used to determine a place’s ‘heat’ is the problem.
To illustrate this point, we recently analysed in some detail all the Queensland markets selected in a recent article promoted as ‘bulletproof’.  Did you know that nearly every resale (importantly resale means the same dwelling reselling, and not a change in median price) in the Queensland unit suburbs nominated in this article actually made a capital loss.
Consistent new development, often by the same developer, artificially lifted the median values, whilst many buyers who have resold actually made a loss.
The same dynamic doesn’t apply to houses in those Queensland areas being paraded around as ‘bulletproof’, but as far as we can tell, many houses in these bulletproof suburbs underwent refurbishment (sometimes substantial ones) between sales, so looking at resale results here isn’t as good a barometer.  But I will wager that many owners spent more money fixing up these investment homes than they recouped on resale (after they paid all the fees/commissions), in these apparent bulletproof areas.
End note
I thought that most investors were over such lists, but recent debates and the number of times we have been asked about such in recent weeks, has forced our hand.
Please remember, all locations experience the <a href="https://matusikmissive.com.au/2013/03/19/why-does-property-cycle/">machinations</a> of the property cycle.  Buying a property isn’t just about its general location.  I do think that is the secondary consideration; an important one, true, but not the most vital thing.
Foremost, it is the property you buy; its price, quality; design, opportunity to value add, suitability to target market and depth of market are for mine, far more important.
And understanding such stuff is more complicated than making a list of ‘hot’ suburbs.
 
<hr>
 Michael Matusik is the founder of <a href="https://www.matusik.com.au/" target="_blank" rel="nofollow">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
 Read <a href="https://www.matusikmissive.com.au/" target="_blank" rel="nofollow">Michael’s Blog</a> or follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank" rel="nofollow">Facebook</a> and <a href="https://www.twitter.com/michaelmatusik" target="_blank" rel="nofollow">Twitter</a> or connect via <a href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
This article originally appeared on <a href="https://matusikmissive.com.au/">matusikmissive.com.au</a>.
 
 
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Forget hotspotting lists, you need to dig a lot deeper: Michael Matusik

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When 650-odd property types were asked “If you were considering a new property purchase, what three sources of property information would you go to first?” 
What do you think they said?  
Here are the actual results:  
<ul>
<li>
Realestate.com.au                        84%
</li>
<li>
Trusted website/blogs                75%
</li>
<li>
Domain.com.au                             40%
</li>
<li>
Google                                               39%
</li>
<li>
Agent website                                31%
</li>
<li>
Property signage                          25%
</li>
<li>
Printed material                           23%
</li>
<li>
Friend or colleague                     20%
</li>
</ul>
Property purchasing used to be largely a private affair.  Many would have asked their parents, friends or relatives for their opinion.  This might have been the only advice they got or needed to make a buying decision.  This was the norm not that long ago.  
Today it seems that buyers need much more certainty.  Seeking the views of others – even from those we really don’t know, but trust – seems to be the norm.  
Several ‘trusted’ blog sites were mentioned in our survey.  Our <a style="font-size: 14px;" href="https://www.matusik.com.au/" target="_blank" rel="nofollow">Matusik Property Insights</a> site were among them.  Thank you.  And we would have scored more highly in the rankings if we allowed comments and replies on the blog.  It seems that forums are more trusted than not. I have a different view.  So let’s say I agree to disagree.  
Moreover, our survey shows, to me, that property promotion these days needs to be much more ‘communal’ rather than direct &amp; monopolistic.  The monologue tone of too many property marketing campaigns is obviously not working as well as the spin doctors would have us (or their clients) believe.  
Trusted third party professional support is needed.  
To find out how we can help go <a href="https://matusik.com.au/best-use/" target="_blank">here</a>.  
As Bob Dylan croaks – “I got eight carburettors, boys I’m using ’em all” – so too should vendors &amp; developers when it comes to promoting property.  A multi-faceted marketing campaign is needed &amp; one that includes – no, it need to be front &amp; centre – social media.  
There are many barriers delaying property’s move to a more social, communal promotional platform.  The biggest is the current way property sales are renumerated.  
How does one determine the true source of a lead in such a melting pot?  How can a property buyer continue to be ‘owned’ by a marketing group or agency?  
She’s my client!  I have known them for years!  If I don’t get the full wack I’m taking my client elsewhere!  My database is bigger than theirs, so I am the best agent for the job.  
If this sounds all too familiar, then maybe it is time to think about change.  
My father told me years ago that you will go broke trying to change the market.  It is best to find out what the market wants and how it behaves and adjust accordingly.    
 
<hr>
 Michael Matusik is the founder of <a rel="nofollow" target="_blank" href="https://www.matusik.com.au/">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.
 Read <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via <a style="font-size: 14px;" rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
 
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Who do you trust to get your property information from? Michael Matusik 

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In recent weeks we have received several replies about how unaffordable housing is in Australia.
Lots of ‘facts’ were dished up.  More like urban myths, if you ask me.  These included house prices being seven-plus times average earnings; the drop in net household wealth and overstretched borrowers.
Bollocks.  
By many measures, we are a very wealthy nation.  This has recently been confirmed by two studies –  Credit Suisse's "<a href="https://economics.uwo.ca/news/Davies_CreditSuisse_Oct12.pdf" target="_blank">Global wealth report</a>" and the ABS's "<a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyReleaseDate/ABDECB2B70579A67CA25715C001A3C71?OpenDocument" target="_blank">Household wealth and wealth distributi</a><a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyReleaseDate/ABDECB2B70579A67CA25715C001A3C71?OpenDocument" target="_blank">on</a>".
In short – as these hyper-linked reports are long ones – Australians are now comfortably the richest population in the world, with a median wealth of US$194,000 per adult.
Every 14th person you run into in Australia – that’s about 1.6 million of us – falls within the richest 1% of the planet’s wealthiest people.
The Australia Bureau of Statistics has found that one in five Australian households are now ‘millionaire’ families.  This is up from 15% eight years ago.
Wealth (assets less liabilities) of the ‘average’ Australian household stood at $728,000 in fiscal 2012 (the latest figures available).  While down about $30,000 on the previous peak two years earlier, wealth has likely rebounded to record highs over the past 12 months due to rising share and house prices.
Average Australian household assets totalled $858,000 last year, whilst total liabilities averaged just $130,000.
The value of the family home accounts for around 40% of net worth.  Superannuation and investment property tie for second place with 15% each.  The average outstanding home loan was $74,700 in 2011/12, with investment property loans averaging just $42,100.
So we are very well off.  There are differences in the degree of wealth between capital cities and regional areas, but just because consumers are not actively spending at present doesn’t mean that they are unable to spend.
Way too much attention is paid to household debt (most of the time incorrectly so), yet our household assets continue to grow at a much faster rate.  Australian household wealth is at a record high.
Income ratios
The perception that median property prices are 6 to 7 times earnings is way, way off.  At present, when using ABS figures, it is well under 5x.  The 25 year average is just above 4.5x.  So we are close to the long term average.
Also, if you use the ATO figures for income and not the census – as it is much harder to lie to the ATO than the government statistician (and one in eight households didn’t fill in the income question on the 2011 census form) – you will find household wages are actually 14 times higher than the ABS reports.  Better still, use the ATO income figures for couples aged in their late 20s to mid-30s, and you find even higher wage levels.
So on this measure, housing isn’t unaffordable.  It, at worst, has gone back to the long-term average.
Mortgage size
For mine, it is the size of the mortgage versus asking dwelling prices which is much more telling.
Today, this ratio is at a 10 year low (lower now than in late 2002).
We use household equity to purchase things.  Housing in Australia isn’t just shelter; it is a means of leveraging.  Right now, there is an enormous amount of leverage to be had.
Just because households are not leveraging at present, doesn’t mean they can’t or won’t.
Overstretched borrowers
Who, indeed, are these overstretched borrowers?
Today, according to new figures released by the ABS late last month, just 14% of Australians’ household income is spent on housing costs.  This has changed little in the last 15 or so years. 10 years ago the average cost of housing was 12% of income.
Little change has been seen regarding tenure over the past decade – owners with a mortgage still pay about 18% of their income on housing costs; whist renters pay about 20% on average.
There has been little variation over time, too, when it comes to dwelling type, with detached house owners forking out 13%; town house owners paying 17% and those paying off an apartment shelling out 20%.
First-home buyers 
Most importantly, there has been a change in housing costs for the 25 to 34 year group.  This, typically, first home buyer segment is currently paying 21% of its household income on housing costs.  In 2005/06 this group paid, on average, a quarter of its income (25% to make it very clear) on housing.
When looking at the renters in this 25 to 34 segment, today the ABS tells us that they, on average, pay 19% of their household income on housing costs.  Whilst in 2005/06 – the last time this official housing cost study was done – this rental group was paying 17%.
Single households
In contrast, there has been an increase – although slight – when it comes to single person households.  Today, lone person households spend 19% of their income on housing, compared to 16% 10 years ago.  Yet in the mid-1990s, when housing across much of the county was perceived to be very affordable, this demographic sector was paying 18% of their income on shelter.
End notes
Today, four out of five households (82%) pay less than 30% of the income on housing.  One in eight households pays between 30 and 50%.  Just 6% pays more than 50%.  Again, this has changed little in recent years.
On these measures Australian housing isn’t unaffordable at all.   Importantly, first-home buyers are now paying much less now for housing (i.e. owner occupation) than they were seven or so years ago.
As we noted a few weeks back – see <a href="https://www.propertyobserver.com.au/renovating/renovations-are-more-popular-than-off-the-plane-beacause-peoplehave-more-control-over-their-home/2013081263672" target="_blank">here</a> and <a href="https://www.propertyobserver.com.au/economy/depsite-positive-property-outlook-there-are-still-breaks-on-the-economy-michael-matusik/2013082164429" target="_blank">here</a> – there is more going on with housing demand than meets the eye.
Maybe housing – and in particular, new housing – isn’t perceived to offer ‘value’ for money.  That is quite different from being unaffordable.  Maybe potential first-home buyers can, statistically speaking, afford to buy a home, but the banking process – deposits saved by the borrower and full-time work/long contract employment – prevents them from doing so.  Maybe this needs to change.  Or – heaven forbid – Gen Y, to label them some way, might need to take fewer options if they really want to buy a home.
Yet for mine, when it comes to first-home buyers (and housing affordability in general) buyers have now become way too choosey.  
Michael Matusik is the founder of <a style="font-size: 14px;" href="https://www.matusik.com.au/" target="_blank" rel="nofollow">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.  
Read <a style="font-size: 14px;" href="https://www.matusikmissive.com.au/" target="_blank" rel="nofollow">Michael’s Blog</a> or follow him on <a style="font-size: 14px;" href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank" rel="nofollow">Facebook</a> and <a style="font-size: 14px;" href="https://www.twitter.com/michaelmatusik" target="_blank" rel="nofollow">Twitter</a> or connect via <a style="font-size: 14px;" href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
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Housing isn't 'unaffordable', it's just not value for money: Michael Matusik

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Small things; incidental stuff; anecdotal evidence is what I like to look for.  Data is nice too, but too much data bores.  Stories, tell-tale signs, glimpses of change often mean much more.  
Several things in recent weeks have convinced me that things have now changed.  A residential recovery is on its way. 
It often is a news item – something that really should only get local attention – like calling a marginal, unknown female politician “sexy” – that gets a life of its own and announces that a race is underway.  
One such article was about a new <a target="_blank" href="https://www.theage.com.au/business/property/micro-living-in-the-big-city-is-not-for-everyone-20130818-2s51z">micro-apartment</a> development in Melbourne.  No big deal.  But when we get invited by several media outlets to comment then maybe the mindset has shifted.  The number of online replies and the amount of social media reply supports this muse.
You can see a similar trend with the “Sydney boom or not” <a target="_blank" href="https://smh.domain.com.au/real-estate-news/sydneys-strong-but-its-not-a-property-boom-20130819-2s7bj">conversation</a> over recent weeks.  
Another, more localised indicator is golf.  Golf?  
See, I haven’t played a game in over 18 months.  Lost interest.  Work got in the way.  Mind elsewhere.  
Most with whom I played, felt the same way.  But in the last month or so, the invites for an early or late round are starting to come.  Hmmm, are things looking up?  
Finally, I like to go to auctions.  I hang in the back of the crowd.  I like to play ‘nearest the pin’ – see, golf is never really that far away.  I am often pretty close – within a few per cent of the final price – but of late I have been way, way off – missing by a wide mark &amp; always on the low side.  Last weekend I was close to six figures off the mark.  Six figures!  
Just as well I am getting invited to play some golf, as my auction performance of late is quite humiliating.  
Some facts &amp; figures  
Re this talk of recovery – if the micro-apartment &amp; Sydney boom media attention are bellwethers - I fear we could get more disconnected than usual from reality.  
So in this spirit it is timely to outline some truths about the Australian housing market.  
Here goes.  And yes, this list does include data.  I hope you don’t get too bored!  
*     One in every seven Australian households owns one single residential investment property.  Just 480,000 households own two rental properties; with 162,000 or a paltry 2% of Australian households owning three or more investment homes.  These volumes have changed little over the last two decades or so.  
So everyone isn’t buying an investment property.  Whilst it will be an investor-led recovery, there isn’t a massive need to rush.  
*     Three-quarters of our housing is detached.  One in eight homes is attached (duplex or townhouse for example).  The same proportion applies to apartments.  1% of our homes are caravans, boats or similar.  These percentages have also not changed in decades.  
We are suburban.  Most live in a suburban setting.  Some suburbs might be going through gentrification, which is good for the locals and investors too.  But not everyone is moving downtown or into apartments.  In fact, only a limited number actually do.  
*     Household size is increasing, not in decline.  And whilst there are smaller apartments downtown, overall the size of our new homes is growing.  Just 4% of Australia’s homes have one-bedroom and 15% have two-bedrooms.  This mix has also not changed in decades.  
What has changed in recent years the number of three and four-plus bedroom dwellings.  Today 42% of our dwellings have three-bedrooms (it was 48% 10 years ago) and 39% of our housing stock today contains four or more bedrooms.  Up from 33% in 2001.  
*     Whilst, statistically, half of Australia’s households either live alone or as a couple without children at home, very few people actually live alone or even in groups of two.  The census tells us that just one in ten people live alone; one-quarter of us live in groups of two; 40% in groups of three or four and another quarter in groups of five or more people.  
We are tribal.  Density must be offset.  Living independently is quite different from living alone.  
*     One in ten of our private dwellings is occupied.  They aren’t all apartments on the Gold Coast, in Noosa or batches at Bateman’s Bay.  Many are suburban homes.  At present, a quarter of our population growth comes from overseas.  Many of these are returning expats, who are increasingly attracted back due to the lower Australian dollar.  Asian investors will often buy before migrating and they too often don’t rent out their properties.  So some (maybe many, who knows?) migrants will move back into their empty homes.  
Whilst higher population growth leads to expanding housing demand, there isn’t always a direct mathematical relationship.  
*     There’s a lot of research which indicates that on average, travellers operate within a fixed time budget.  It seems to be around 30 minutes (one way) for the typical work commute in Australia.  We are prepared to travel further for leisure.  
When given a reduced travel time (e.g. better infrastructure) commuters tend on average to spend the time saving on travelling to more distant but better jobs, or as is more often the case, to a better residential property/location.  
So an improvement in access to places of work doesn’t always mean better price growth.  It doesn’t hurt.  But its multiplier impact is limited.  Ironically, new infrastructure projects often help property values further afield than most advocate.  
Note I said “recovery” and not “boom”.  A plus 20% lift in values over the next three or four years isn’t a boom.  Only if prices rise that much within 12 to 18 months would the “boom” title be justified.
 
<hr>
 Michael Matusik is the founder of <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.matusik.com.au/">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.   Read <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.matusikmissive.com.au/">Michael’s Blog</a> or follow him on <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts">Facebook</a> and <a rel="nofollow" target="_blank" href="https://www.twitter.com/michaelmatusik">Twitter</a> or connect via <a rel="nofollow" href="https://www.linkedin.com/in/michaelmatusik">LinkedIn</a>.
 
 
 
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Of mystics and statistics, a residential recovery is on the way: Michael Matusik

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Here is a good question for you.
Which industry is Australia’s largest?
One might think it would be mining, given the amount of airplay it gets.  But with about 8,500 business operations you would be way, way off.
Have another go. Public administration? Wrong. Professional services? Incorrect. Retail? No.  
The answer is construction, with just under 350,000 businesses operating across the country.
One in every sixth business in Australia builds something.
Sadly, however, the building game must be on the nose because 5,575 construction-related businesses stopped trading over the last 12 months alone.
According to some great work by Craig James and his economic team at Commbank, we know that 1,840 residential property operators closed their doors last year. A further 680 home builders shut up shop. So did the same number of brick layers. Plasterers broke the trend with just 630 operations laying down their trowels.
Talk about the wheels falling off the ute.
Australia’s dwelling construction rate – measured as the number of new homes built per capita – is at record lows.
Since I was knee-high to a grasshopper, the average Aussie build rate has been eight new homes per 1,000 head of Australian population. This rate, like all things in the construction game, has peaked and troughed, but since the mid-1990s it has been on a steady trend down. Today it averages just six.
This might not sound like much.  So let me put it to you another way, we are now building 25% less homes than we used to.
New property has never been our first choice. This applies across the spectrum – whether you are buying for the first-time; upgrading or downsizing; or buying for investment.
The statistics suggest that just one in every five first homes purchased is new. It is even less for investors, with 85% buying a resale instead of a new dwelling. Second and subsequent owner-buyers, seem a little keener for something new, with one in four opting to buy new digs rather than something older.
The Commsec analysis also shows that there has been a major increase in the number of Australians starting their own superannuation funds.
Apparently there are now 75,000 superannuation funds in operation across Australia. This segment is growing by about 5,000 new businesses each year.
As a result of this growth – and in direct contrast to residential property operations – Australia’s non-residential property sector is increasing in size, up by 300 new businesses last year, to 57,000 operations Australia-wide.
Also, the bulk of Australian workers are employed by small or medium-sized businesses.  In fact, 61% don’t employ any staff at all. A further 24% employ just a few people. Just one in every 20 Australian businesses employs more than 20 people.
As one would expect, most businesses are located in NSW (33%); followed by Victoria (26%); Queensland (20%); Western Australia (10%) and South Australia (7%).
Business numbers grew the most in Victoria (up 8,000 new firms), then followed by NSW (up 4,000) last year. Business numbers fell last year in Queensland; South Australia; Western Australia and Tasmania.
Talking a longer view, there have been 70,000 new business start-ups across Australia over the past five years – 32,500 were in Victoria; 21,500 in NSW; 7,300 in WA and just 4,000 in Queensland.
For more information from the economics team at Commbank, go <a href="https://www.commbank.com.au/corporate/research/economics" style="box-sizing: border-box; border: 0px; margin: 0px; padding: 0px; color: #444444;">here</a>.
Job creation – and that means new business operations – is very important when it comes to the overall health of the property market. With new business market shares like this, it is little wonder that the Sydney, Perth and now Melbourne residential markets are doing so well.
There has been very little national conversation about getting more housing starts underway. Sadly, not a peep out of either side of federal politics. Precious little meaningful dialogue is coming from state or local government, too.
Interest rates need to continue falling in order to (hopefully) lift housing starts.
One thing to consider is allowing superannuation funds – with the right caveats – to invest more easily in new housing construction. It is starting to happen. It can be a great and secure investment. Unlocking this potential is one way forward.
Post the September 7th  election, it is small and medium-businesses that will make Australia work. Wind back the legislation. Make it easier for us to operate. 
It is a 24/7 world – no penalty rates, leave loading, mandatory sick leave or (within reason) minimum set hours. Cut the red tape. 
The vast majority (like 99%) of employers aren’t shitty bosses, they reward good staff. Allow us to employ more.
<hr>
Michael Matusik is the founder of <a style="font-size: 14px;" target="_blank" href="https://www.matusik.com.au/" rel="nofollow">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.  
Read <a target="_blank" href="https://www.matusikmissive.com.au/" rel="nofollow" style="font-size: 14px;">Michael’s Blog</a> or follow him on <a target="_blank" href="https://www.facebook.com/ThinkMatusik?fref=ts" rel="nofollow" style="font-size: 14px;">Facebook</a> and <a href="https://www.twitter.com/michaelmatusik" target="_blank" rel="nofollow" style="font-size: 14px;">Twitter</a>  or connect via <a href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
 
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The wheels have fallen off the construction industry: Michael Matusik

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Last week we wrote a positive piece suggesting the probable direction of the Australian residential housing market in the next period of time.

Just as there are <a target="_blank" href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCwQFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Ftrends%2Fseven-reasons-why-prices-might-rise-25-in-select-australian-east-coast-cities-over-next-three-years-michael-matusik%2F2013081464226&amp;ei=J1sUUpCBO5GuiQf4jIDYBg&amp;usg=AFQjCNE75qbMSDX8CT63aC-_0EmBbiLUuw&amp;bvm=bv.50952593,d.aGc">positives behind the market’s likely upward momentum</a>, there are also negative influences applying a brake.
The market – outside of Sydney – is very much stop-start.  It is currently, for mine, best summed up as “two steps forward, one step back”.
So, what are some of these brakes?  They include:
<ol>
<li>
Low overall confidence.
</li>
<li>
Poor governance.
</li>
<li>
Low employment growth.
</li>
<li>
Slow wages growth.
</li>
</ol>
The first two are intensely connected.  Yet a federal election done and dusted doesn’t mean that we all will become cock-a-hoop on the 8th September – although beating the Springboks on the 7th might help. 
But there is little doubt in this writer’s mind that a change of government will help. A majority government would do wonders, but a sympathetic Labor opposition leader would go a long way to reversing some of the overzealous policies of recent years.  Listen up Bill! But we are in for a tough haul regardless of outcome, so steel yourselves for some hard terrain ahead.
The latest figures from the Australian statistician suggest that 123,000 new jobs were created across Australia since July last year.  One in three new jobs was full-time.
This is not enough, if you ask me.  More full-time jobs need to be created.  Until this happens, more interest rate cuts are on the agenda.
We also might be seeing a baton change with regard to where jobs are actually being created.  <a target="_blank" href="https://www.propertyobserver.com.au/trends/employment-statistics-are-an-important-indicator-for-residential-property-michael-matusik/2013070362958">As discussed a few weeks back,</a> this is important when it comes to residential demand and market momentum.
New South Wales is still the king pin – with 64,000 new jobs.  Victoria created 24,000 new jobs, too.  But Western Australia is slipping – and with a third of its economic output directly connected to mining, one should expect as much – with 19,000 new jobs.  True, this isn’t a figure to be sneezed at, but it is less than it once was – much less, in fact.
South Australia and Tasmania are still losing work.  Canberra and the Northern Territory are treading water.
And that leaves Queensland.  Maybe it is a flash in the pan, maybe the stars aligned against Rudd &amp; Beattie a few weeks back, but the latest seasonally adjusted labour force figures from the ABS (which are typed out in some crusty old font I might add, just to help exemplify their officialdom), show that 26,000 new jobs were created in the Sunshine State over the last 12 months. 
And here is the truly amazing part: half of them (okay 46% – I get carried away sometimes) were full-time.
“Go Newman!” one might exclaim.  Or was it an anomaly? But staring at page 10 of ABS publication 6202.0 shows me that more jobs – especially full-time ones – have been added every month in Queensland since March this year.
So, maybe things are going to slow down out west, up north, in Canberra and across the Great Australian Bight? 
Maybe they will get hotter in NSW, Victoria and Queensland?
And before I move on, under 10% of Queensland’s economy is about mining.
Wages, too, are growing too slowly.  In fact, they are increasing by just 3% per annum.  Petrol prices seem to go up by that much on a daily basis.
You have to remember back to when you wore short pants or a pleated skirt to recall such a measly increase in the average pay packet.  Well, at least you would have to think back to 2000.  It was a long time ago.
Again, this means the RBA should maintain its easing bias.
It is also clear that the Australian economy has changed.  Whilst rate cuts are welcome, something much more is needed to correct the health of the domestic economic landscape.  
Did you know that eight out of 10 Australian households (that have a taxable income) do not – I repeat, do not – own an investment property?
Furthermore, just one in every seven Australian households owns just a single residential investment property.  Just 480,000 households own two rental properties (5%), with 162,000 or a paltry 2% of Australian households owning three or more investment homes.
This is a roundabout way of saying that very few people actually buy investment housing in Australia and even less buy more than one.
But if you go online and read the comments section of almost any investment property-related blog or website, one would think that everyone in Australia owns an investment property.  In fact, some leaving their replies have such strong opinions that they must own a great many of them, so deep are their convictions.  Or that’s what they would have us believe.
I am against censorship – I believe we have the right to think what we want, and within reason, share it with others – but for mine, unless you supply your full name on a blog or website reply, it isn’t worth reading.  Sadly, too few apply this benchmark.  And far too many are influenced by what they read.  And much of what they read is absolute bunkum.
Remember – empty vessels make the most noise.
 
<hr>
 Michael Matusik is the founder of <a href="https://www.matusik.com.au/" rel="nofollow" target="_blank" style="font-size: 14px;">Matusik Property Insights</a>, which has helped over 550 new residential projects come to fruition.  
Read <a href="https://www.matusikmissive.com.au/" rel="nofollow" target="_blank" style="font-size: 14px;">Michael’s Blog</a> or follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" rel="nofollow" target="_blank" style="font-size: 14px;">Facebook</a> and <a href="https://www.twitter.com/michaelmatusik" rel="nofollow" target="_blank" style="font-size: 14px;">Twitter</a>, or connect via <a href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
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Depsite positive property outlook, there are still breaks on the economy: Michael Matusik

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;

Joel Robinson

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;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

Michael Matusik

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