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Spare a thought for property writers in Australia; it has become increasingly obvious that the pressure of having little to write about is taking its toll.
The cash rate together with the inner workings of Australia’s Reserve Bank (RBA) has always remained a fascination for many, although with the next rate rise possibly not until sometime in 2016 – a new search for a property headline has begun in earnest.
Enter the rise and rise of the ‘property bubble’ – although I am quite sure in my 30 years of working in the real estate industry, I am mystified. I have never seen a ‘property bubble’, although I have seen plenty of booms. When a bubble bursts it simply disappears so what can we then expect with a ‘property bubble’? The simple truth when I advance this line of questioning is "well you know what I mean". Well, sorry I don’t, because there is no such thing as a ‘property bubble’ and if you knew anything about the intricacies of property machinations you wouldn’t be writing that in the first place.
We need to go back to find where this recent illusion otherwise known as a ‘property bubble’ emerged from. It has made cameo appearances for over a decade now in Australia despite never bursting. Australia’s mortgage market currently sits at around the $1.3 trillion mark with the Big Four banks holding approximately 80% of the book value. The Murray financial system inquiry has created plenty of argy bargy between the RBA, the Australian Bankers’ Association and the smaller lending institutions as to exactly what is the best practice that Australia needs to adopt – the final recommendations will be delivered to the federal government in November this year.
We can’t ignore Lindsay David’s thought ‘bubbles’ either, who recently penned a book Australia: Boom to Bust, where he warns that Australia has three shaky pillars which he believes are all in a state of collapse – real estate, resources and our banks.
No housing bubble, is the big bank economists’ conclusion which is exactly where I sit given collectively when you have 80% market share their internal data would provide them with the most accurate positioning – over those who are simply speculating.
To further this train of thought I looked at <a href="https://www.roymorgan.com/" target="_blank">Roy Morgan Research</a> who are constantly drilling down and probing the Australian property markets.
<img src="https://www.rwm.com.au/files/2014/08/27-08-2014-4-15-20-PM.jpg" alt="27-08-2014 4-15-20 PM">
"In July the satisfaction level of the personal customers of the banks remained close to the record high of 82.2% set in June, falling only marginally to 82.1%."
If the borrowers were having problems with their lenders the approval ratings would be plummeting not increasing. Although we need to put this into greater perspective – given there are too many property commentators distorting the truth – their anger and resentment is at an unprecedented level.
<img src="https://www.rwm.com.au/files/2014/08/27-08-2014-4-22-33-PM.jpg" alt="27-08-2014 4-22-33 PM">
Back to Roy Morgan Research – “Over the last four years the number of investment loans in Australia has grown by 37% compared to an increase of only 4% in the number of owner occupier loans. In 2010, just under a million (954,000) Australians [aged] 18 plus had an investment property loan compared to 1.31 million as at March 2014. This growth represents an increase of 37%. Over the same period the number of Australians with an owner – occupied home loan increased from 4.66 million to 4.83 million, an increase of only 4%.”
Based on this information the ‘property bubble’ must be our Baby Boomers running amok by boosting their self-managed superannuation funds care of a very generous federal government who encourage investment in Australian properties by offering substantial tax relief via negative gearing. Then of course we must not forget that old chestnut that Australian property holdings can be approximately divided into thirds – one third rent, the next third own with a mortgage and the final third own without a mortgage.
As recent sales have clearly proven there is no shortage of people wanting to invest in Australian real estate – both local and overseas. So then apply the 'KISS theory' (keep it simple stupid) – when you see an oversupply of properties on the market then market conditions are moving from a vendor to a buyers’ market.
RWM Research started recording the number of properties on the market weekly back in mid-2011, so it’s interesting to see what the highest number of properties on the market since then have been:
<ul>
<li>Mosman Houses – 168 on 10 November 2011. Today 69.</li>
<li>Mosman Apartments – 138 on 10 November 2011. Today 51.</li>
<li>Cremorne Houses – 24 on 16 December 2011. Today eight.</li>
<li>Cremorne Apartments – 44 on 3 November 2011. Today 15.</li>
<li>Neutral Bay Houses – 22 on 1 March 2012. Today five.</li>
<li>Neutral Bay Apartments – 101 on 17 November 2011. Today 31.</li>
</ul>
It is very clear that based on the current numbers the banks should have absolutely no concerns given it is very clear that what we have today is very much a vendors market.
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robertsimeon-hRNTwJyXkQ

 For my next trick: The great property 'bubble' illusion

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It’s hardly surprising that the Reserve Bank of Australia (RBA) decided to park the cash rate indefinitely, given the complexities associated with Australia’s fascination of owning real estate. 
When one looks closely at the RBA data, our household debt has now climbed to a record $1.870 trillion. Its cause has certainly not been assisted by the avalanche of "<a href="/expert-insights/autopilot-investing-a-major-problem-for-the-property-market">autopilot investors</a>" which led the RBA to announce this week that it has concerns about ‘significant’ uncertainty.
Of great concern globally, is that all the central banks presently have their respective cash rates parked at close to zero which has resulted in even greater debt, even though growth keeps trending well below expectations. It is becoming quite clear that those who subscribed to the modern theory that short-term pain would be exceeded by significant long-term gains, have been proved wrong. When growth is trending at below expectation levels, so too are wages, which is why Australia has a ‘significant’ problem. It reminds me of the saying: 'After all, life is really simple, we ourselves create the circumstances that complicate it.'
Once upon a time cash was king – today, debt is king. If you cast your minds back to last year when RBA governor Glenn Stevens addressed the Wall Street Journal he said recession in Australia has a “more or less” 100% probability; only timing is uncertain. It has become clear that a record low cash rate for many has become a 'fool's gold'. Having said that, the money lending market has expanded to unprecedented levels with Coles and Woolworths the latest to apply for entry into the home lending markets.
When one looks a bit deeper into the demographic property markets (over bundling them all together to hide the weak performers) the top end markets have clearly demonstrated a much more cautious outlook. Without a doubt they were the hardest hit during the global financial crisis (GFC) although this time around they are throwing caution to the wind.
I would not be alone by saying the eagerly awaited detailed release of the Murray financial system will make for riveting reading given it is the first inquiry in over 17 years for the property industry – which is absolutely ridiculous. It’s already been announced that the former CBA chief wants to “leave his mark” by setting stringent lending guidelines as against the current format of the 'Big Four' banks boasting who has the greatest market share in Australian property – combined they hold nearly 80% of the overall debt.
<img src="/images/2014/08/25/simeon%20aug%2025%20one.jpg" alt="">
When the RBA does decide to raise the cash rate there will be a tsunami of bad debt which explains the latest RBA decision to park the Australian property market (for the time being). Globally the property markets are cactus – Alan Kohler wrote a great piece this week – '<a href="https://www.businessspectator.com.au/article/2014/8/18/global-financial-crisis/world-must-inflate-or-bust-australia-mustnt-join" target="_blank" title="The world must inflate or bust; Australia mustn’t join in.">The world must inflate or bust; Australia mustn’t join in</a>'. “The world’s central banks are overly trying to increase inflation because it’s the only realistic solution for the world’s (still) excessive debt, and the Reserve Bank of Australia will soon have to decide whether to join in or bear down on inflation with relatively higher interest rates.”
“A central banker on one panel noted that, in his view, too much is being asked of monetary policy; the main thing that low interest rates and quantitative easing are producing at the moment is more risk taking by financial institutions.
“That’s the problem with too much debt: the only easy solution is more debt, which is no solution at all.”
I have never been a fan of mortgagee in possession sales as they clearly demonstrate a panic mentality which inevitably results in heartbreak together with considerable capital losses. Having worked through the boom of the late 80s and then the “recession we had to have” in the early 1990s, we don’t appear to have learnt much.
I would prefer to see when a home owner is deemed to be in financial difficulty that the property (principal place of residence only) is placed into quarantine for five years. When the property value recovers only then is it sold – with the parties deciding (depending on the circumstances) if it is mutually agreed that it be rented out over that period. If this were to happen maybe then a home loan may be scrutinised much more closely – as against what we are seeing and reading today.
In a perfect world the authorities would make such an announcement sooner rather than when the proverbial hits the fan.
The lending institutions could make the landing a lot softer when and if a recession eventuates.
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With the RBA's help, debt has become king

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It’s actually quite embarrassing to read some property market commentaries, given that some believe a market crash would be a service to the Australian economy.
There is a significant problem in that commentators are struggling to identify the difference between an investor and a home buyer – for example NSW real estate investors now make-up approximately 50% of the Australian property investor market. This is what happens when you have a record low cash rate and a share market that still has “mum and dad” investors sceptical – hence real estate has become the preferred investment vehicle.
The International Monetary Fund (IMF) recently reported that Australia (based on income ratios) had the third most overvalued property market in Quarter 4, 2013. So we need to analyse the cause much more closely.It’s very hard to go past negative gearing. A recent IMF report revealed that three countries that strongly favoured negative gearing investment – Australia, New Zealand and Canada – were all ranked in the top four most overvalued real estate markets globally.
For the majority closely watching the property markets, the major problem is that we are seeing “autopilot investing” where investors simply follow trends and jump straight in without the required due diligence. With so much being written about “that” inevitable crash, there very well may be a soft landing as the demographic market under the greatest scrutiny is the investor market – which must not be confused as the home market.
When Australia introduced its capital gains tax back on September 20, 1985 (yes, 30 years ago next year) there were calls that this would decimate the investment markets, which turned out to be not the case. If you look at the property market now approximately 90% of the market would attract capital gains tax. Any changes to negative gearing legislation would be retrospective (as all previous taxes were) so the current investors would qualify, so that is one redeeming factor.
<a href="https://www.rwm.com.au/files/2014/08/12-08-2014-3-48-17-PM.jpg"><img class="aligncenter size-full wp-image-104645" src="https://www.rwm.com.au/files/2014/08/12-08-2014-3-48-17-PM.jpg" alt="12-08-2014 3-48-17 PM" width="632" height="276"></a>
With the Murray Financial System Inquiry now all but complete, many will anxiously await the handing down of the tax white paper where it is all but guaranteed that negative gearing and capital gains tax will be front and centre. In fairness, most would agree that this white paper is not before time, although we also must remember that investing in Australian real estate is also part of our culture unlike so many other countries where renting is the preferred option.
You can’t keep comparing the Australian real estate markets to the USA given it was well documented that a major contributor to the global financial crisis (GFC) was subprime, where the lenders had absolutely no recourse, compared to Australia where the lenders recover/bankrupt the respective parties in the event of serious default. It should also be remembered that during the GFC, <a href="/news">Mosman</a> was identified as the number one contender for the highest delinquencies – yet it turned out to record one of Australia’s lowest delinquency rates.
We have also seen (for those bothering to apply) the Foreign Investment Review Board (FIRB) record for the past three quarters to March unprecedented approvals which surged 93%. A problem is this is mistakenly confused with the home markets where the traditional markets would struggle to get a bronze medal (if such an award existed) given the top end markets are still struggling. The Asian buyers have now come to the realisation that they paid over the odds so again we are seeing more caution from that demographic.
If you look closely at the home market over the past two months in the majority of instances the stock levels have been at all-time lows, which is hardly a sign of a bubble. We expect this to change as we enter spring where we expect to see a much stronger home market, although the definition of strong still remains to be determined.
We can expect to hear how that little bubble has again evolved into a massive tsunami – where an impending property collapse is just moments away. Of course there is just the one problem with that analogy, home owners follow their demographic property markets closer than many give them credit for.  Only when you start to see supply reaching unprecedented levels would you have a justifiable reason for concern.
When I hear someone discussing the “tsunami bubble” I always respond: why is not reflected with current supply levels? Naturally, the response is that all property owners are on “autopilot ignore”. This obviously must be the case, although they quickly forget that whenever a real estate agent makes a sale they are letter-boxing that demographic market almost immediately – so that destroys that argument.
The only things holding back the home market is that “autopilot owners” aren’t that impressed with the prices so they’re staying put (for the moment). What happens next is anyone’s guess.
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"Autopilot investing" a major problem for the property market

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It’s always refreshing to read an intelligent report, so when the Centre for Independent Studies released <a href="https://www.cis.org.au/images/stories/issue-analysis/ia146.pdf" target="_blank" title="Eight Housing Affordability Myths">Eight Housing Affordability Myths</a> by Dr Stephen Kirchner, we finally got to see why Australia’s housing debate is long overdue.
The only problem that comes from such a precise paper is that it will require government intervention which, as most would agree, is where the problems start. They just don’t get it – if they did, we would not have the glaring problems that we see today. Some of the interesting points raised are:
<ul>
<li>Housing consumption and investment are both taxed and subsidised by all levels of government. The net effect of these taxes and subsidies on housing affordability is difficult to determine as it depends on the benchmarks used to assess what is taxed and what is subsidised.</li>
<li>Housing affordability is a relative rather than an absolute concept and there is no unique way of measuring housing affordability.</li>
<li>Much commentary on housing markets focuses on dramatic, ‘short-term’ changes in house prices, failing to put these changes into ‘long-term’ context.</li>
<li>The supply of new land for housing has declined over the last decade, with the average number of lots produced in the five largest capital cities declining by 21%.</li>
<li>The long-run increase in the price of new land for housing is indicative of the failure of state governments to increase land supply to accommodate rising demand for new housing.</li>
<li>A fundamental principle of economics is that if you tax something more heavily you will get less of it. This principle is well understood in relation to markets in goods and services, but it is often forgotten in relation to housing.</li>
</ul>
Some will argue that today, we are seeing two very clear markets; namely the principal place of residence and the investment market which in Melbourne and Sydney has gone berserk.
More confusing, is that we keep reading reports that consumer confidence is in a downward spiral even though investors are in an absolute feeding frenzy for off the plan properties and to such an extent, that they will pay over and above the asking prices.
Now let’s bring out those conspiracy theories. It is clear that since the global financial crisis (GFC) that the mum and dad investors have stayed well clear of the share market and will continue to do so simply because they don’t trust it. This massive investor shift is now driving property values upwards and creating an unprecedented financial burden on the federal government in terms of negative gearing subsidies and Australia is just one of a few developed countries that allows negative gearing.
<a href="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg"><img class="aligncenter size-full wp-image-57102" src="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg" alt="3-07-2014 3-44-05 PM" width="683" height="252"></a>
<a href="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg"><img class="aligncenter size-full wp-image-57104" src="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg" alt="10-07-2014 9-33-53 AM" width="630" height="312"></a>
Today, 1.2 million negatively gear with the Australian Tax Office statistics revealing that property investors claimed $13.2 billion in losses in 2010/11 which was up from $10.1 billion the year before.
Given the huge run on investment property over the last few years it will be frightening to see what the negative gearing figures are for 2012/13 and 2013/14. <a href="https://www.businessspectator.com.au/article/2014/7/9/australian-news/why-negative-gearing-australias-biggest-policy-failure" target="_blank" title="Why negative gearing is Australia’s biggest policy failure ">Why negative gearing is Australia’s biggest policy failure </a>– “It is difficult to find a government policy that has been less successful at meeting its objectives than negative gearing on residential property. But unfortunately that is the nature of housing policy in Australia, where sound policies are ignored in favour of policies that encourage speculation, reduce home ownership and redistribute wealth towards the already affluent.”
Negative gearing by property investors reduced personal income tax revenue in Australia by $600 million in the 2001-02 tax year, $3.9 billion in 2004-05 and $13.2 billion in 2010-11 – so this itself leaves a pretty good clue as to how popular it has become. Negative gearing was introduced back in July 1985 and many argue that today, it is no longer relevant. Investors have taken the first home buyers out of the market and they can’t compete as it is not a level playing field.
<a href="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg"><img class="aligncenter size-full wp-image-57106" src="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg" alt="9-07-2014 4-11-47 PM" width="573" height="345"></a>
Then you have the foreign investors where an inquiry is currently underway, although the only way to really see what is happening is to extrapolate the relevant stamp duty records and cross pollinate this data – every sale in Australia pays stamp duty although for some strange reason this point has been missed by the inquiry. This data is readily available – although I doubt it will ever see the light of day.
So the debate should be “what benefit is negative gearing to the Australian economy when nearly all the other advanced economies don’t permit it”. Australian property markets would be decimated if it was abolished and would take the banks with them given the significant borrowings on each investment property which are crucial to maximise the negative gearing subsidies.
When the government brought in the GST in July 2000, this immediately brought about the decline of property developers as they had to pay the 10% GST on the construction costs. Maybe a possible answer is to remove the GST on construction, to see more construction which will increase employment and off-set this by scaling back negative gearing subsidies. In the long-term, this would lower property prices more particularly in the property investment sector. Or, do you place a limit on the number of investment properties allowed that can qualify for negative gearing subsidies?
Now we need to see a politician brave to start this conversation. Better still the Abbott government might even decide that they now need a Housing Minister.
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Why Australia urgently needs a housing debate

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There goes another financial year where for all intents and purposes profits should have been up and back to pre-global financial crisis (GFC) levels.
Some a step further by posting all time record profits given their respective graduation from the GFC together with the valuable lessons learned, which were then adopted then executed.
Having said that we should closely look at <a href="/expert-insights/finance/the-reserve-bank-s-four-prevailing-views-on-the-property-market-glenn-stevens">the Reserve Bank’s four prevailing views on the property market </a>as each and every point raised is not just a concern but more of a forecast which in all probability will eventuate.
The most important message from Glenn Stevens is aimed squarely at property investors: “Investors should take care in the Sydney market, which is the main area where a large increase in borrowing has been occurring. The total value of credit approvals for investor loans in New South Wales was about 130% higher than in 2008, and it is the investor segment where there has been evidence of some increased level in lending with loan to value ratios above 80%.”
Now whilst we are on this subject in many ways the investor demographic in Sydney to me is like one big Ponzi scheme.
This week we saw headlines like “Sydney property market posts new figures showing a 15.4% growth over the financial year”. Whilst to a degree this may be correct the methodology is false, misleading and entirely wrong as the method is based on the median (middle) price where real estate in Australia is the only country which uses this calculation method.
Firstly, Sydney at a guess is made up of over 700 suburbs – so by throwing in the wealthiest suburbs that recorded $30 million and $40 million sales with suburbs which record $300,000 and $400,000 sales, it’s pretty clear this methodology is flawed to such an extent it implies false conclusions.
The debt trap is what Glenn Stevens is alluding to and those unsuspecting highly geared investors thinking 15% growth are badly advised where, depending on their gearing, they could find themselves in all sorts of trouble.
Real estate is not that hard to calculate so long as you know what are the correct numbers you should be calculating when it comes to reading and understanding a demographic market. The only way this can be done correctly is to look at individual markets such as a particular suburb – I will use my specialist market, <a href="/news">Mosman</a>, which has approximately 4,800 houses.
Next you need to ascertain how many houses are on the market each week where this week there are 63 houses, last week 74 houses and twelve months ago there were 63 houses for sale. Next work out how many houses sell each year:
<ul>
<li>2011/12  – 297 houses sold for a total value of $829,747,992. Average price $2,793,764</li>
<li>2012/13 – 306 houses sold for a total value of $846,621,000. Average price $2,766,735</li>
<li>2013/14 – 365* houses sold for a total value of $1,045,514,637. Average price $2,864,424</li>
</ul>
*These figures will get higher as more properties settle and the sales data becomes available.
Before the GFC the Mosman market was running at full steam when it cracked the $1 billion mark in value sales so we are now back at near full strength based on current market conditions. Also, when the market is running at capacity it usually trades at ten per cent of the total stock 4,800 houses equals 480 sales per year. Over the period of the GFC the numbers of houses sold dropped back to between five per cent (240 houses) and seven per cent (336 houses).
The problem is that the vast majority shoot from the hip when making these investment decisions over those who actually study the relevant data, although they will all admit their decision was data driven.
<a href="https://www.rwm.com.au/files/2014/07/25-06-2014-1-22-43-PM.jpg"><img class="aligncenter size-full wp-image-47338" src="https://www.rwm.com.au/files/2014/07/25-06-2014-1-22-43-PM.jpg" alt="25-06-2014 1-22-43 PM" width="625" height="288"></a>
Source: The Economist's <a href="https://www.economistinsights.com/sites/default/files/Decisive%20Action%20-%20How%20businesses%20make%20decisions.pdf" target="_blank">Decisive Action: How businesses make decisions and how they could do it better</a> via Forbes. 
Recently, I read this interesting piece – <a href="https://www.forbes.com/sites/rogerdooley/2014/06/12/clueless/" target="_blank" title="Are you the one executive out of ten who isn’t clueless?">Are you the one executive out of 10 who isn’t clueless?</a> 
It’s interesting to compare to what happens in real estate given so few fully analyse real estate markets comprehensively. Also, one can’t rule out being persuaded by false and incorrect data given the majority of investors in real estate would be fixated on graphs like this one.
<a href="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM.jpg"><img class="aligncenter size-full wp-image-47340" src="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM.jpg" alt="3-07-2014 3-44-05 PM" width="683" height="252"></a>
Naturally, so long as our economy keeps performing above expectations then there is nothing to worry about however, when I read this yesterday: <a href="https://www.businessspectator.com.au/article/2014/7/3/international-news/setting-stage-lights-europes-second-crisis" target="_blank" title="Setting the stage lights for Europe’s second crisis">Setting the stage lights for Europe’s second crisis</a>. The lessons from the GFC resonate strongly – pay down debt.
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Sydney's investor demographic is like one big Ponzi scheme

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There is certainly a strong argument against the way in which data is delivered in Australia, given the choice is to bundle data collected as this paints a worse positioning – such as “Sydney house prices” where this data is totally irrelevant.
If all the Sydney house price data were to be broken down into the 18 regions (which should happen) then the data would hardly raise an eyebrow given it would identify minimal changes. Having said that, it would not create a headline as profound as “Sydney house prices” which further explains why defective data is often the preferred weapon of choice in mainstream media.
Last week I wrote <a href="/expert-insights/we-need-to-consider-different-interest-rates-for-different-sectors-of-the-market">why the Reserve Bank of Australia (RBA) should be trialling different cash rates</a> across Australia given we have some demographic markets booming and others in serious decline. Which gets one thinking on how the RBA managed before we had today’s available technology to produce such amazing data.
RP Data produced this week one of the most amazing data releases that the Australian real estate industry has ever before seen - a quarterly assessment of realised gross profit based on dwelling re-sales over the March quarter of 2014, released June 2014.
“Over the first quarter of 2014 RP Data recorded 64,518 residential property re-sales nationally. The gross value of the losses associated with these loss making re-sales totalled $381.1 million. Conversely, 90.2% of all March 2014 quarter re-sales recorded a gross profit relative to their original purchase price. The gross profit from these re-sales equated to $12.2 billion.”
<a href="https://www.rwm.com.au/files/2014/06/26-06-2014-10-34-57-AM.jpg"><img class="aligncenter size-full wp-image-37608" src="https://www.rwm.com.au/files/2014/06/26-06-2014-10-34-57-AM.jpg" alt="26-06-2014 10-34-57 AM" width="624" height="299"></a>
Source: RP Data.
“Lifestyle regions continue to show the largest proportion of loss making re-sales, particularly within the unit markets as opposed to the detached housing markets. Queensland’s Wide Bay region has recorded the largest proportion of loss making re-sales with 30.6% of all March 2014 quarter re-sales transacting at a price lower than what the home was purchased for. It is important to note that while loss making re-sales remain a high proportion of the market, in many of these regions the proportion of these sales is now trending lower.”
It would be fascinating to see what would happen if an area such as Wide Bay had a much lower cash rate that would further entice buyer interest?
<a href="https://www.rwm.com.au/files/2014/06/26-06-2014-10-37-51-AM.jpg"><img class="aligncenter size-full wp-image-37609" src="https://www.rwm.com.au/files/2014/06/26-06-2014-10-37-51-AM.jpg" alt="26-06-2014 10-37-51 AM" width="650" height="292"></a>
Source: RP Data.
Again,  we see Sydney listed on its own despite it having approximately 18 regions, so I don’t exactly understand why Sydney is not broken down into regions. If you are searching to buy a home nobody types in Sydney as their keyword search. It would be even easier to break this data down further by postcode results which would then deliver exacting data results.
Just in the last week we have seen Darling Square in Sydney sell out, which is an amazing result given it is a 40 storey tower so 357 apartments selling in just a few hours is unprecedented.
Then again, just a few months ago the first stage of the Barangaroo development also sold 159 apartments in a few hours – and it should be remembered these all sold at the asking price. One must wonder, just what effect the House of Representatives inquiry into foreign investment of Australian residential real estate played in these sales as it continues to unveil massive loopholes. Already it has been revealed that the Foreign Investment Review Board has failed to police those properties purchased by temporary residents who must sell within three months of departing Australia. Like hello, why would you sell when there is no watchdog?
Then a senior Bureau of Statistics official revealed this week they read trade magazines and newspapers to keep on top of the amount of foreign investment in Australia’s residential property. The sad reality is that the government has absolutely no idea what is happening here, although every sale in Australia attracts stamp duty, so they are yet to work out how to collate this data even though the answer sits directly in front of them – our data dummies.
Given this is happening via many loopholes, there is absolutely nothing the Australian government can do until they pass legislation which puts an end to these practices. In the meantime the inquiry continues and, as many of us predicted well before, foreign investors have clearly outsmarted the Australian government. If proven correct, one can safely assume there will be a buying spree if, and when, the government decides to act on this.
NSW and Victorian governments recording record stamp duty receipts obviously flew well under their radars – although not for property observers.
The data is clearly there although for some strange reason when it comes to analysing data we are seeing plenty of dummies.
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Australians are treated like dummies when it comes to data

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Has the time come that the current methodology of real estate in Australia (which is seriously flawed) is ripe for demolition and an entirely different business model should be built to replace what we have today?
Let’s imagine a massive jigsaw puzzle scattered across the floor and we’re trying to make some semblance of this mess.
Let’s start on the basis that currently in Australia one third rent, the next third own with a mortgage and the final third own their home without a mortgage. Now, the Australian real estate market consists of thousands upon thousands of niche markets, yet for some strange reason under the Reserve Bank of Australia those with mortgages all share the same cash rate despite some of these markets booming and other markets posting negative capital growth.
Is it not time to be seriously looking at different cash rates based on the different niche market performances? For example, the Sydney residential market is overheated and should be paying a higher cash rate to slow the markets down; this would then avoid the inevitable crash in some of its niche markets. Why aren’t we looking at a model that would test some markets to see if such an example could work, after all we have a few thousand we could choose from?
Why does the rest of the world apply a tax on the profits, although Australia opts for a system where no tax is paid? Would it not make sense to see interest payments and improvements tax deductible if they looked at such a model? Why are home owners hit with stamp duty when this was supposed to be axed when GST was introduced in 2000 and why are there not concessions on stamp duty after a home owner pays their first stamp duty? Why do the state and territory governments offer first home buyer grants when it would make far better sense to offer a lower interest rate? When a home owner falls into financial difficulties, why don’t we have a distress rate until the owner (and the market) sees better times?
Back in the recession of the early 1990s we saw carnage with mortgagee-in-possessions only to see prices restored in just a few years. The losses incurred by home owners and the banks could have easily been avoided if it had been agreed to adopt a more patient approach where every party would have been much better off.
Given we now live in a society where thanks to the computer/technology age we have much simpler and clearer data we can have much more accurate positioning that enable us to see the bigger picture.
We are getting a clearer picture of overseas’ buyers using vast loopholes to purchase Australian property, yet the governments have done nothing about this for years. Every sale of real estate in Australia pays stamp duty so why are these details not being extrapolated to get a precise position on what is happening to Australian real estate? Why does this need to be handled (badly) by the federal government when it would make more sense that the state governments took this responsibility over?
Of course, such discussions are like opening Pandora’s Box however, we really need to start a conversation where hopefully rational ideas will evolve and grow.
We are witnessing massive infrastructure spends across Australia with the states and territories selling off assets simply because they are in a poor financial position, which brings us back to why this entire process is broken. These assets should be purchased by the Future Fund as a custodian until the relevant states and territories can buy them back.
The problem in Australia is that we have significantly broken systems that require a total overhaul although it’s becoming quite clear the preferred methodology is more like buying a home then selling when everyone says you must sell first – then buy.
I’m not sure about you, but I would love to see alternate real estate models for Australia and a test case of separate cash rates for different markets would be a fascinating experiment based solely on the performance of an individual niche market.
What remains to be seen is how many Australians believe the entire property system requires overhauling? When I see the NSW government announce a higher than expected $1 billion stamp duty windfall the pennies really do start to drop.
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We need to consider different interest rates for different sectors of the market

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As stories go, there won’t be many bigger this year than the offshore investors who appear to be buying Australian real estate without Foreign Investment Review Board (FIRB) approval.
Back in March 2014 I wrote: <a href="/expert-insights/investing/the-end-of-the-great-chinese-property-splurge">The end of the great Chinese property splurge?</a>. This was gathering momentum as I heard that the federal government was about to announce an inquiry headed by federal MP Kelly O’Dwyer – probing offshore sales in Australia. In fairness I have watched this for quite a few years now and it was just not adding up – well not until now anyway.
The House of Representatives economic committee report has suggested that lawyers and relatives have been provided a passageway that bypasses FIRB approval as foreign investors believe the $85,000 fine for such a breach is simply the “cost of doing business in Australia”. It should be noted that since 2010 there have been no prosecutions, which is understandable as prior to this inquiry the government had absolutely no idea that this new Australian real estate acquisition method actually existed, let alone had become widespread.
Over the past 48 hours we are starting to get a clearer picture –<a href="/news/firb-powerless-to-identify-or-stop-illegal-residential-purchases-as-chinese-investment-surges"> FIRB powerless to identify or stop illegal residential purchasers, as Chinese investment surges.</a> 
This is not the first time the federal government has been found wanting. I remember back in the early 1990s when the Australian Taxation Office (ATO) wrote to every real estate agency in Australia demanding a comprehensive list of every landlord transaction, rents received, tenants names, full disbursements together with every sale we had made dating back five years (the government back then was then moving into the computer era.)
There are a number of interesting points that I have observed in recent times; the first of which is that each and every property enquiry is actually home-grown. The suggestion that Chinese buyers are looking at China’s largest international property website <a href="https://list.juwai.com/?ag_kwid=504-3-1d922c23cb56ad27.0b2639f826f4bfa3&amp;gclid=CjgKEAjwn-WcBRD61NHM-uqDrm4SJADrP4tPf9IcWh5ZVBKDht7Df4L3GWPa66SNUdaaWJ-tGCWYC_D_BwE" target="_blank" title="Juwai">Juwai</a> simply does not stack-up. We have been paid subscribers to the Juwai website for a few years now and have never yet received a single enquiry – I have also spoken to a number of other agents/agencies who all say the very same.
To try and put this into perspective it’s vital we look at exactly what’s happening here given some agencies have spruiked that such an overseas market exists when the vast majority all confirm the actual contact comes from residents here in Australia – via the Australian property portals. I am yet to speak to an agent who has received an enquiry from a Chinese property portal so that should dispel that myth of where vendors should be redirecting advertising monies.
Another factor that requires consideration is that earlier in 2014 the Canadian government immediately axed its 28 year old visa scheme designed to attract wealthy foreigners to the country. Maybe it’s just a coincidence. However, Treasury advised the Inquiry that there is currently a surge in applications – 10,244 in the nine months to March 2014, compared with 6,567 in the entire 2012/13 year. When you’re buying a multimillion dollar home a fine of just $85,000 is insignificant when one looks at the big picture.
Given these recent revelations, many would now argue the fine should be a proportion of the purchase price, should the Abbott government decide to act on these revelations.
<a href="https://www.rwm.com.au/files/2014/06/12-06-2014-11-38-49-AM.jpg"><img class="aligncenter size-full wp-image-21002" src="https://www.rwm.com.au/files/2014/06/12-06-2014-11-38-49-AM.jpg" alt="12-06-2014 11-38-49 AM" width="567" height="357"></a>
Yesterday the International Monetary Fund (IMF) announced that Australian house prices are among the top five most expensive in the world. This leads me to another observation.
Following “the recession we had to have” in the early 1990s we saw the emergence of a powerhouse new business model that drove our property markets through to the global financial crisis (GFC) – namely merchant banks.
Over the period of the GFC top-end property values dropped by up to 30% given the bankers were effectively removed from the property markets. In the interim we did see an accelerated entry into the prestige property markets by the mining fraternity albeit quick. The banks have re-calibrated and back into a better space in terms of profitability although there is serious doubt they will again dominate these markets again.
It has become very clear that the emerging new player in our top-end property markets has been the Chinese and up until now we all believed this was through the correct government channels. No doubt the vast majority did follow this process, but following what has been revealed in this inquiry the government now must fully investigate this matter.
I don’t believe the overseas investors are the main reason why we have seen a total collapse of first home buyers in Australia. Whilst they are an obvious contributing factor, we are forgetting that we are seeing unprecedented low interest rates where local and overseas investors have taken full control of this market demographic.
With governments across Australia now focused on building new infrastructure it is imperative that as a result of this inquiry a full investigation is launched immediately, as infrastructure drives property markets.
Last week the Premier Mike Baird announced that next week’s NSW budget will reveal a billion dollar plan to <a href="https://www.dailytelegraph.com.au/newslocal/north-shore/nsw-premier-mike-baird-confirms-a-military-rd-tunnel-is-the-best-solution-to-daily-traffic-woes-for-sydneys-north/story-fngr8h9d-1226950408944" target="_blank">overhaul Spit and Military Roads</a>. Now nothing has happened to these areas since they started construction on the Spit Bridge in 1952. The northern beaches are easily the most under-valued prime real estate in Australia because of this antiquated transport system. A vastly improved transport infrastructure would in all probability see top-end property prices potentially escalate by as much as fifty (50)%.
Based on this announcement this is the next Sydney boom area so it would be nice to see that those investing into these markets are 100% approved by the Australian government.
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Offshore investors buying property without FIRB approval - it's time for a full government investigation

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We all love a hilarious headline and this week we were served up a cracker - “Australian house prices fall 1.9% in May”.
What part of this embarrassing statistic is relevant to real estate? For such data to be extrapolated thousands and thousands of suburbs’ data would need to be fed in, all of which means next to nothing given it significantly fails the relevance test. Households are simply concerned with just the one thing, namely the data pertaining to the suburb in which they own property. For those slightly interested, Sydney posted a 1.1% decline which based on approximately 670 suburbs which would then average out at a 0.00164% decline per suburb.
When it comes to house prices what consistently fails to be mentioned is that the suburbs within that crucial 15 kilometre radius of the CBD continue to outperform simply because they are not cursed by diabolical infrastructure inadequacies. With Australia moving closer and closer to a population of 24 million and a resources industry in significant decline, there will be more pressures placed on the major cities as families relocate to gain employment.
It is anyone’s guess how Sydney (which is facing an 8 million population) and Melbourne (9 million) are simply going to cope given Australia’s current population growth rate is 1.8% and growing. The reality of the argument is that there is simply not enough housing to meet the projected demand nor for that matter even a plan projecting how these major cities will cope. Given it is quite obvious now that the residents of Sydney and Melbourne prefer to live as close to their respective cities, than the onus falls majorly on the governments to develop infrastructure that can meet with this demand which just so happens to be growing at the fastest rate ever recorded before.
To get a better perspective one only has to look at this week’s gross domestic product (GDP) which for the March quarter of 2014 grew 1.1% seasonally adjusted, although it would be fair to say that the June GDP figures won’t be anything to write home about. What the GDP figures did reveal is that it does not look good for Western Australia and Queensland given both are fast-tracked into spiral declines with reduced construction and commodity price declines. Historically, what usually happen next are major unemployment headlines as businesses start scaling down operations.
It should be noted that NSW posted a 9.3% increase in private investment for the quarter together with the best home approval figures in over ten years.
<a href="https://www.rwm.com.au/files/2014/06/2-06-2014-9-56-48-AM.jpg"><img class="aligncenter size-full wp-image-11333" src="https://www.rwm.com.au/files/2014/06/2-06-2014-9-56-48-AM.jpg" alt="2-06-2014 9-56-48 AM" width="429" height="420"></a>
The onus is now definitely on the states and territories to start getting their respective infrastructure spends into overdrive, hence the massive asset sales. The only foreseeable problem with these asset sales is what they do when there is nothing left to sell? It’s no secret that no Australian state or territory is basking in a budget surplus, rather all are in significant deficit or on the borderline.
It should not have come as any great surprise that when the Australian Bureau of Statistics (ABS) released data this week it revealed that 46.4% of state and local government taxation revenue from the 2012/13 financial year came from property related taxes. The total amount collected, a record, came in at $35.931 billion leaving consumers rightly furious that infrastructure and transport have never been worse.
<a href="https://www.rwm.com.au/files/2014/06/2-06-2014-9-59-05-AM.jpg"><img class="aligncenter size-full wp-image-11335" src="https://www.rwm.com.au/files/2014/06/2-06-2014-9-59-05-AM.jpg" alt="2-06-2014 9-59-05 AM" width="633" height="286"></a>
With strong public debate about the GST being raised it should be noted that when the GST was introduced by the Howard government back in July 2000 – this was done so on the basis that the states and territories would reduce/remove these taxes. It should be noted that council rates did not come under the GST removal mandate.
So the question that keeps popping up is once the assets have been sold (and this is fast approaching) then how are the state and territory governments going to survive given all they can tax is properties and businesses (remember pay roll tax was supposed to go also)? You can’t increase the GST only to see these respective governments run amok again as they can no longer balance the books.
Therefore there is a very sound argument to look at a model in Australia where state and territory governments cease to exist and local councils are merged into super councils. It would certainly be good for employment. Work, maintenance and construction would be consistently rolled out across the nation.
Quite simply, it may never come to fruition even though the USA does not have middle-tier government and it works fine there. It would be fascinating to see what this model would look like and how it could possibly work – which should not be that hard. It would certainly remove the politician pension gravy train which is a total waste of tax payer monies. Many would argue successfully that in itself is enough reason to remove this tier of government once and for all.
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Onus on governments to build infrastructure for major cities' projected population explosion

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Paradigm was the buzz word when Australia was handcuffed to a hung parliament, so to be different let’s take a look at Australia’s property paradigm and what we can expect to be reading about the direction Australian property is headed in coming months.
Many vastly differing opinions are front and centre at the moment, for some strange reason commentaries keep reverting back to Australia’s property boom in 2003/04 – which I am struggling to accept.
In 2003/04 Australia was basking in an unprecedented period of economic growth together with a booming resources sector, which for want of a better expression, this may be better described as the old economy given our resources sector is now in decline.
The latest capex figures were released by the Australian Bureau of Statistics (ABS) this week which revealed that total capex fell by 4.2% in the March quarter. Most notable was the mining industry which declined by 8.7% in the March quarter with total new capex now 5% lower than this time last year. As Australia moves from mining to non – mining industries the building sector was suggested as the biggest benefactor from mining and also declined by 7.4% in the March quarter. Capex has now fallen by 8.5% over the last two quarters – which puts the Australian capex on par with the largest six month decline since the recession back in 1993.
There are many questions that today remain unanswered given there is growing opinions that Australia’s long-term planning may need an immediate visit back to the drawing board as these unknown economic irregularities have Australia steering into unknown waters. Certainly the latest capex figures indicate that our productivity is headed completely in the wrong direction.
With interest I have been closely watching the ANZ – Roy Morgan weekly consumer confidence rating which has revealed that confidence is now down 15% since the Abbott government first started spruiking its budget policies. This has brought about a most unusual trifecta given we see confidence, terms of trade and property prices (apparently) in decline. What we are seeing today is a complete opposite to what happened back in 2003/04 although the cash rate back then was approximately double what it is today and from 2003/04 the cash rate steadily increased to 7.25% in 2008 only to be halted by the global financial crisis.
<a href="https://www.rwm.com.au/files/2014/05/27-05-2014-12-25-40-PM.jpg"><img class="aligncenter size-full wp-image-8564" src="https://www.rwm.com.au/files/2014/05/27-05-2014-12-25-40-PM.jpg" alt="27-05-2014 12-25-40 PM" width="595" height="357"></a>
Source: Macro Business
Although what is conflicting is the property dynamic over the same period for residential term loans to households which may very well explain why we are starting to see the early signs of the property markets easing. Although it must be noted that the traditional real estate markets have only recorded modest capital growth when compared to the outer Sydney areas that have posted unprecedented capital growth.
It is anyone’s guess when the RBA will start increasing the cash rate again although most agree that they will remain where they are for some considerable time to come.
<img class="aligncenter size-full wp-image-8565" src="https://www.rwm.com.au/files/2014/05/27-05-2014-1-10-16-PM.jpg" alt="27-05-2014 1-10-16 PM" width="696" height="347">
 
Source: Digital Finance Analytics
With interest this week I read Ian Macfarlane on central bank policies, inflation and China on <a href="https://cuffelinks.com.au/ian-macfarlane-central-bank-policies-inflation-china/" target="_blank" title="Cuffelinks">Cuffelinks</a>. What I find most interesting about China is that aside from them being a number one client for buying our iron ore, which is now in decline, they are fast becoming the number one foreign purchaser of our real estate.
What that in itself may suggest that given their insatiable interest in Australian real estate prices will flat line for some considerable time to come as they are definitely a noteworthy driver of real estate today – this reinforces the mislead perceptions/predictions that real estate values will fall.
The biggest question marks over Australian real estate are quite simple and twofold – what will happen to the markets when the cash rate goes back to some form of normality say at 7.50% which represents a 200% increase? Lastly, they keep mentioning negative gearing and given the Australian government’s debt position there will come a time when this great tax deduction is re-examined.
Although maybe we are looking at the wrong paradigm given nobody can explain why the ASX surged to a six year high this week?
Obviously I must have missed something?
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Australia's contentious property paradigm: What we can expect to hear about in the future

The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

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The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Robert Simeon

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