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GUEST OBSERVER
If Australia has an Achille’s heal it’s the high and still rising level of household debt that has gone hand in hand with the surge in house prices relative to incomes.
Whereas several comparable countries have seen their household debt to income ratios pull back a bit since the Global Financial Crisis (GFC), this has not been the case in Australia.
Some worry Australians are unsustainably stretched, and it is only a matter of time before it blows up, bringing the economy down at the same time. Particularly now that global interest rates are starting to rise. This note looks at the main issues. 
Australia - from the bottom to the top in debt stakes 
The chart below shows the level of household debt (mortgage, credit card and personal debt) relative to annual household disposable income for major countries. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%201.jpg" alt="">
While rising household debt has been a global phenomenon, debt levels in Australia have gone from the bottom of the pack to near the top.
In 1990, there was on average $70 of household debt for every $100 of average household income after tax. Today, it is nearly $200 of debt (not allowing for offset accounts) for every $100 of after tax income. 
Why has debt gone up so much in Australia? 
The increase in debt reflects both economic and attitudinal changes. Memories of wars and economic depression have faded and with the last recession ending nearly 27 years ago, debt seems less risky. Furthermore, modern society encourages instant gratification as opposed to saving for what you want.
Lower interest rates have made debt seem more affordable and increased competition amongst financial providers has made it more available. So, each successive generation since the Baby Boomers through to Millennials have been progressively more relaxed about taking on debt than earlier generations. 
It’s not quite as bad as it looks 
There are several reasons why the rise in household debt may not be quite as bad as it looks: 
<ul>
<li>Firstly, higher debt partly reflects a rational adjustment to lower rates and greater credit availability via competition. </li>
<li>Secondly, household debt has been rising since credit was first invented. It is unclear what a “safe” level is. This is complicated because income is a flow and debt is a stock which is arguably best measured against the stock of assets or wealth. </li>
<li>The rise in the stock of debt levels has been matched by a rise in total household wealth in Australia. Thanks to a surge in the value of houses and a rise in financial wealth, we are far richer. Wealth rose 9.5% last year to a new record. The value of average household wealth has gone from five times average annual after tax household income in 1990 to 9.5 times today. <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%202.jpg" alt="" style="font-size: 12.16px;">
</li>
</ul>
So, while the average level of household debt for each man, woman and child in Australia has increased from $11,837 in 1990 to $93,943 now, this has been swamped by an increase in average wealth per person from $86,376 to $475,569. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%203.jpg" alt="">
As a result, Australians’ household balance sheets, as measured by net wealth (assets less debt), are healthy.
Despite a fall in net wealth relative to income through and after the GFC as shares and home prices fell, net wealth has increased substantially over the last 30 years and is in the middle of the pack relative to comparable countries.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%204.jpg" alt=""> 
<ul>
<li>Fourthly, Australians are not having major problems servicing their loans. According to the Reserve Bankís Financial Stability Review non-performing loans are low and Census and Household Expenditure Survey data shows that mortgage stress has been falling. Of course, this may reflect low mortgage rates with interest costs as a share of income running a third below its 2008 high. </li>
</ul>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%205.jpg" alt="">
<ul>
<li>Fifthly, debt is concentrated in higher income households who have a higher capacity to service it. This is particularly the case for investment property loans.</li>
<li>Sixthly, a disproportionate share of the rise in housing debt over the last 20 years owes to investment property loans. As servicing investment loans is helped by tax breaks the debt burden is not even as onerous.</li>
<li>Finally, lending standards have not deteriorated to the same degree in Australia as they did in the US prior to the GFC where loans were given to NINJAs borrowers with no income, no job and no assets. </li>
</ul>
What are the risks? 
None of this is to say the rise in household debt is without risk. Not only has household debt relative to income in Australia risen to the top end of comparable countries but so too has the level gearing (ie the ratio of debt to wealth or assets). 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/HOUSEHOLD%206.jpg" alt="">
It certainly increases households’ vulnerability to changing economic conditions. There are several threats:
<ol>
<li>Higher interest rates – the rise in debt means moves in interest rates are three times as potent compared to say 25 years ago. Just a 2% rise in interest rates will take interest payments as a share of household income back to where they were just prior to the GFC (and which led to a fall in consumer spending). However, the RBA is well aware of the rise in sensitivities flowing from higher debt and so knows that when the time comes to eventually start raising rates (maybe later this year) it simply won’t have to raise rates anywhere near as much as in the past to have a given impact in say controlling spending and inflation. And so, it’s likely to be very cautious in raising rates (and is very unlikely to need to raise rates by anything like 2%). 
</li>
<li>Rising unemployment – high debt levels add to the risk that if the economy falls into recession, rising unemployment will create debt-servicing problems. However, it is hard to see unemployment rising sharply anytime soon.  
</li>
<li>Deflation – high debt levels could become a problem if the global and local economies slip into deflation. Falling prices increase the real value of debt, which could cause debtors to cut back spending and sell assets, risking a vicious spiral. However, the risk of deflation has been receding.  
</li>
<li>A sharp collapse in home prices – by undermining the collateral for much household debt – could cause severe damage. Fortunately, it is hard to see the trigger for a major collapse in house prices, ie, much higher interest rates or unemployment. And full recourse loans provide a disincentive to just walk away from the home and mortgage unlike in parts of the US during the GFC.  
</li>
<li>A change in attitudes against debt – households could take fright at their high debt levels (maybe after a bout of weakness in home prices or when rates start to rise) and seek to cut them by cutting their spending. Of course, if lots of people do this at same time it will just result in slower economic growth. At present the risk is low but its worth keeping an eye on with Sydney and Melbourne property prices now falling. But high household debt levels are likely to be a constraint on consumer spending. </li>
</ol>
Conclusion 
While the surge in household debt has left Australian households vulnerable to anything which threatens their ability to service their debts or significantly undermines the value of houses, the trigger for major problems remains hard to see. However, household discomfort at their high debt levels poses a degree of uncertainty over the outlook for consumer spending should households decide to reduce their debt levels. 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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j.ballantyne1990-6AQqhLzZaK

Australian's love affair with household debt - how big is the risk? Shane Oliver

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GUEST OBSERVER
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 2.3% to 102.7 in February from 105.1 in January.
The survey was conducted over the week of February 5 – February 11. That week was marked by a wave of volatility in global share markets.
The Australian market, which was more stable than most, still experienced some significant swings, being down a net 4.6% for the week while the US market (S&amp;P 500) was down by a net 7.2%.
Extensive media coverage of these developments would have unnerved respondents on two fronts – the impact on their own financial position and concerns for general global stability.
These concerns appear to have been acutely felt by retirees whose confidence fell by 13.5%.
In those circumstances the 2.3% fall in the Index is a decent result and is now registering a fourth consecutive month where optimists outnumber pessimists. Recall that this sequence follows 12 consecutive months where pessimists were in the ascendency for all but one month.
Having said that the level of the Index is still well below levels typically associated with a robust consumer.
Every six months we gauge respondents’ outlook for interest rates. In August last year 61% of respondents expected interest rates to rise over the next year. That was an uplift from 54% in February 2017. The proportion has fallen back to 58%, partly explaining the boost to confidence since the middle of last year.
Developments in the components of the Index are consistent with the likely impact from last week’s market volatility. In particular respondents’ assessments of their own finances suffered, the ‘finances vs a year ago’ sub-index fell by 4.5%; and the ‘finances, next 12 months’ sub-index fell by 3.1%. We assume that these components have suffered temporary set- backs associated with market volatility. On face value the ‘year ago’ component is sending a very weak signal about likely spending prospects.
Not surprisingly the ‘economic conditions, next 12 months’ component fell sharply by 4.7% while the ‘economic conditions, next 5 years’ component was stable.
The ‘time to buy a major Item’ sub-index increased by a modest 0.9%. Despite the overall Index still being 3.1% higher than a year ago this component is only up by 0.6% over the year – signalling ongoing reluctance from households to commit to large purchases”.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/consumer.jpg" alt="">
Consumers continue to become more comfortable about the outlook for jobs. The Westpac Melbourne Institute Unemployment Expectations Index declined 1.8% to 120.6 in February to a new cycle low (recall that lower reads mean more consumers expect unemployment to fall in the year ahead).
The Index, which can be viewed as a measure of consumers’ sense of job security, is down 15.2% on this time last year and well below its long run average of 130. The state detail shows the improvement has become more broadly based as well with all state indexes now comfortably below their long run averages.
Consumer views around housing showed mixed moves with buyer sentiment softening but price expectations improving.
The ‘time to buy a dwelling’ index declined 2.7% to 103.8 in February but was coming off an 18 month high in January. The index is still showing a clear improvement on last year’s very weak reads (an average of 95.7 for 2017) but is well below the positive long run average of 120.
The state detail shows a significant pull-back in Victoria (down 12.7% to 93). In contrast, there was a notable lift in NSW buyer sentiment (up 7% to 96) having been at much weaker levels through 2017 (an average of 82).
The Westpac Melbourne Institute Index of House Price Expectations rose 4.8% to 135.3, reversing all of last month’s decline to be back comfortably above its long run average. The biggest gain in February was in NSW although price expectations in the state are coming from a weaker starting point and still show the biggest pull back on this time last year.
The Reserve Bank Board next meets on March 6. In a speech on February 8 the Governor concluded, “the Reserve Bank Board does not see a strong case for a near-term adjustment in monetary policy”.
Clearly there will be no policy change at the March meeting.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/consumer%202.jpg" alt="">
Through 2017 Westpac has argued for rates to remain steady in 2017–2019. The Bank expects to make some progress in reducing unemployment and having inflation return to the midpoint of the target range. However, based on its recent forecasts that were released on February 9 that progress is expected to be painfully slow. Underlying inflation is expected to reach only 2%, the bottom of target range, through 2019 and the unemployment rate is expected to fall from 5.5% to 5.25% (compared to an estimated full employment rate of 5.0%) by end 2019.
While we are less optimistic about the unemployment rate and the growth outlook the Bank’s forecasts are not entirely out of line with our own view and, arguably, consistent with steady rates over the next few years.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Consumer sentiment falls in response to stock market turmoil: Westpac's Bill Evans

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Agent Kirsten Mueller has joined The Agency, the latest in the line of defectors from McGrath.
“Kirsten Mueller is one of the most focussed and professional agents I have met,” Matt Lahood, The Agency’s CEO says.
Mueller aims to build a powerful team on Sydney’s Upper North Shore.
“I am so excited to work for a brand and around people where I don’t feel like my wings are clipped anymore. Around people that support you and push you to succeed and believe in you. It is now my time to soar like an eagle and I couldn’t be more excited,” Mueller says.
"I believe that is what Matt Lahood has created with The Agency. His model is ingenious.”
Just two years into real estate she was presenting at one of the industry’s leading conferences AREC and has held the number one position in Normanhurst since 2013 at McGrath.
"I know change to most people isn’t a big deal but for anyone who has served in the military it is a big deal.
"It is drilled into us… never abandon ship… but I had tried absolutely everything where I was,” Mueller says.
“I called Matt and he was amazing.
"He really understood why I had to do this and supported me. I will forever be thankful to Matt for that. He is a great leader.”
Real estate mentor Tom Panos once credited the former truck driver in Australian Army, as proving it was "possible transform yourself into a 7-figure agent in a short space of time".
The Doain website suggests Mueller sold 16 properties via Domain in the last 12 months , with an average sale price of $1.4 million, and these properties were on the market for an average of 28 days.
Kirsten's highest recorded sale price was $2 million for 61 Hinemoa Avenue, Normanhurst NSW 2076, a 5-bedroom house which sold at May auction.
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Kirsten Mueller jumps ship from McGrath to The Agency

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Crown Group has revealed the plans for Reflect, a new illuminated public art piece at Arc, its 22-storey residential tower being built at 161-165 Clarence Street in Sydney’s CBD.
Reflect will be created by Ramus Illumination, a collaborative design studio based in Melbourne.
Reflect will be an illuminated sculpture that is suspended across a new laneway connecting Kent and Clarence streets.
The sculpture stretches 12 metres across the atrium from the third to the eighth levels, with a shifting shape inspired by the murmuration of birds and the daily patterns of people as they journey to and from the city.
The artwork is comprised of a steel frame, stainless wires and thousands of LED lights. The form itself is reflective of a path of flight through the air, and the subtly shifting palette of colour and movement in the lights brings an ever-changing energy and life to the atrium sky space.
“Reflect challenges convention and will be an exciting addition to Sydney’s public art collection, one that would reflect the modern city of Sydney,” Iwan Sunito, chairman of Crown Group said. 
“Arc by Crown Group reflects the past and the future of Sydney in its heritage-inspired brick podium and contemporary glass tower above,” says Koichi Takada, architects and designer of Arc by Crown Group.
When completed in mid-2018, Arc by Crown Group will offer 220 studio, one, two and three-bedroom apartments.
This week Crown Group introduced Arc by Crown Group’s Signature Collection, a limited selection of previously unreleased luxury apartments. It features a selection of 12 one-bedroom-plus- study apartments and a ‘Super Penthouse’.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/crown%202.jpg" alt="">
The Signature Collection at Arc by Crown Group will see prices for one-bedroom apartments range from $1,075,000 - $1,555,000. 
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Crown Group reveals Arc public art on Clarence Street

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One-third of Australian residential development site in 2017 were purchased by Chinese investors and developers, equating to AUD$2.02 billion of site sales, according to Knight Frank.
Their report, Chinese Developers in Australia – Market Insight 2018 found Chinese developers continued to dominate foreign investment in residential development sites across Australia.
"Many are now well-established in the local market," Knight Frank’s head of residential research, Australia Michelle Ciesielski said.
The share of sales to Chinese buyers has tripled since 2013, but decreased from the 38 per cent recorded in 2016.” (See Figure 1)
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/FIGURE1.jpg" alt="">
“Sustained developer interest in the Australian market has come in spite of government efforts in both Australia and China to tighten credit conditions as they relate to residential investment and development.
“In Australia, the Australian Prudential Regulatory Authority (APRA) has encouraged local financial institutions to impose stricter controls, while in China the government has attempted to moderate capital outflow with China’s Central Bank imposing new rules for companies which make yuan-denominated loans to overseas entities.
“However, in mid-2017, this was relaxed somewhat – resulting in a boost to market confidence.” said Ms Ciesielski. 
According to the report Victoria recorded the sale of 38.7 per cent of residential sites to Chinese buyers – the highest share of all states. 
Ms Ciesielski said many developers consider that Melbourne offers better relative value when compared to Sydney. New South Wales and Queensland followed, with Chinese buyers comprising 35.6% and 7.4% of their state’s total volumes, respectively.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/14/FIGURE3.jpg" alt="">
Knight Frank’s Head of Asian Markets, Australia Dominic Ong said as Chinese developers gain experience in higher-density projects across the major cities, there has been diversification in many of their portfolios to include medium and lower-density sites.
“These lower-density projects have also become more popular with local developers – especially in NSW with the draft Medium Density Design Guide being released, identifying the ‘missing middle’ to encourage more low-rise, medium-density housing to be built.
“This type of project also tends to have less hurdles with the imposed tighter lending restrictions, and overall, lowers the delivery risk to the developer,” said Mr Ong.
The report found that residential development sites purchased by Chinese developers and investors in 2017 had an average site area of 21,785 square metres.
Of all Australian development sites purchased by Chinese developers and investors, 29 per cent were suited to low density (single dwellings or landed properties) – up from two per cent in 2013.
 
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One-third of Australian development site sales in 2017 to Chinese

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A suitable construction funding model is the critical missing ingredient needed to deliver more affordable housing in Australia. Aside from short-lived programs under the Rudd government, we have seen decades of inconsistent and fragmented policies loosely directed at increasing affordable housing. These have failed to generate anything like enough new supply to meet <a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/241" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">outstanding needs</a>.
<a href="https://www.propertyobserver.com.au/http://www.ahuri.edu.au/research/final-reports/293" target="_blank">Our latest research</a> looked at recently built, larger-scale affordable housing projects in contrasting markets across Australia. We examined each scheme’s cost, funding sources and outcomes. We then developed a housing needs-driven model for understanding the financial and funding requirements to develop affordable housing in the diverse local conditions across the country.
Up to now, the key stumbling block has been the “funding gap” between revenue from rents paid by low-income tenants and the cost of developing and maintaining good-quality housing. The <a href="https://static.treasury.gov.au/uploads/sites/1/2017/06/C2016-050_Final_report.pdf" target="_blank">Commonwealth Treasury</a> acknowledged this problem last year. And the problem is greatest in the urban areas where affordable housing is most needed.
<h2>What does the new model tell us?</h2>
The Affordable Housing Assessment Tool (AHAT) enables the user to calculate cost-effective ways to fund affordable housing to meet specified needs in different markets. It’s a flexible interactive spreadsheet model with an innovative feature: it enables users to embed housing needs as the driver of project and policy, rather than project financial feasibility driving who can be housed.
Affordable housing developments have recently been relatively sparse. However, our research highlighted the varied and bespoke funding arrangements being used.
Despite this variety, too often project outcomes are driven purely by funding opportunities and constraints, rather than by defined housing needs. One notable constraint is the fragmented nature of affordable housing subsidy frameworks both within and across jurisdictions.
Our case study projects generated a diversity of housing outcomes. This can be seen as an unintended positive of the bespoke nature of affordable housing provision as a result of the need to “stitch together” gap funding from multiple sources on a project-by-project basis.
Equally though, the lack of policy coherence and fit-for-purpose funding added cost and complexity to the development process. By implication, this leads to a less-than-optimal outcome for public investment. Despite providers’ best efforts, current approaches are not the most efficient way to deliver much-needed affordable housing.
What are the lessons from this research?
We applied the model to typical housing development scenarios in inner and outer metropolitan areas and regions. By doing so, we identified six key lessons for funding and financing affordable housing delivery.
1) Government help with access to land is central to affordable housing development and enhances long-term project viability.
Especially in high-pressure urban markets, not-for-profit housing developers cannot compete with the private sector for development sites. High land costs, particularly in inner cities where affordable housing demand is most extreme, can render financial viability near impossible. Having access to sites and lower-cost land were two of the most important components of feasible projects.
2) Government equity investment offers considerable potential for delivering feasible projects and net benefit to government.
How governments treat the valuation of public land with potential for affordable housing development must be reviewed. Conventionally, even where affordable housing is the intended use, governments typically insist on a land sale price based on “highest and best use”.
It would be preferable in such cases to treat the below-market value assigned to public land as a transparent subsidy input. This would mean the sale price reflects the housing needs that the development seeks to meet. That is, the land value should be priced as an affordable housing development for a specific needs cohort.
By retaining an equity stake, government could account for its input as an investment that will increase in value over time as land values appreciate.
3) Reducing up-front debt load and lowering finance costs are critical to long-term project viability.
Debt funding imposes a large cost burden over a project’s lifetime. This is ultimately paid down through tenant rents. Reducing both the cost and scale of private financing can have a significant impact on project viability.
The analysis reinforces the rationale for the Australian government’s “<a href="http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/HA_18.htm" target="_blank">bond aggregator</a>” facility for reducing financing costs for affordable housing projects. But this must come in tandem with other measures to reduce up-front debt.
4) Delivery across the range of housing needs helps to meet overall social and tenure mix objectives. This also can help improve project viability through cross-subsidy.
Mixing tenure and tenant profiles can enable affordable housing providers to produce more diverse housing that meets the full range of needs.
Cross-subsidy opportunities arising from mixed-tenure and mixed-use developments can also enhance project feasibility. By improving a provider’s financial position, this helps advance their long-term goal of adding to the stock of affordable housing. And, by providing welcome flexibility, this enables organisations to better manage development risk across different markets and cycles.
5) The financial benefit of planning bonuses is limited
Inclusionary zoning mechanisms impose affordable housing obligations on developers through the planning system. This approach potentially offers a means of securing affordable housing development sites in larger urban renewal or master-planned areas.
However, our research demonstrated that planning bonuses allowing increased dwelling numbers in return for more affordable housing have little beneficial impact on project viability. This is because the additional dwellings allowed generate additional land and/or construction costs but no matching capacity to service a larger debt.
However, planning bonuses can be useful as part of a cross-subsidy approach. In this case, they may support project viability, without necessarily resulting in any additional affordable dwellings.
6) Increasing the scale of not-for-profit provision offers financial benefits that help ensure the long-term delivery of affordable housing.
Our analysis supports the case for targeting public subsidy to not-for-profit developers (government or non-government) to maximise long-term social benefit. Investing in permanently affordable housing ensures the social dividend of affordable housing can be continued into the future.
Comparable subsidies are not preserved when allocated to private owners. They will seek to trade out at some stage, capitalising the subsidy into privatised gain.
The results of our case study analyses and modelling highlight the need to develop comprehensive funding and subsidy arrangements that account for different costs in different locations. These arrangements also must be integrated nationally to support affordable housing delivery at scale.
<img src="https://counter.theconversation.com/content/91072/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">This study reiterates the common finding of research over the last decade: both Commonwealth and state/territory governments need to develop a coherent and long-term policy framework to provide housing across the full spectrum of need.
<a href="https://theconversation.com/profiles/laurence-troy-2403" target="_blank">Laurence Troy</a>, Research Fellow, City Futures Research Centre, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>; <a href="https://theconversation.com/profiles/bill-randolph-147968" target="_blank">Bill Randolph</a>, Director, City Futures - Faculty Leadership, City Futures Research Centre, Urban Analytics and City Data, Infrastructure in the Built Environment, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>; <a href="https://theconversation.com/profiles/ryan-van-den-nouwelant-199969" target="_blank">Ryan van den Nouwelant</a>, Senior Research Officer - City Futures Research Centre, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>, and <a href="https://theconversation.com/profiles/vivienne-milligan-147970" target="_blank">Vivienne Milligan</a>, Visiting Senior Fellow - City Futures Research Centre, Housing Policy and Practice, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/six-lessons-on-how-to-make-affordable-housing-funding-work-across-australia-91072" target="_blank">original article</a>.
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How to make affordable housing funding work across Australia

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Sydney’s fast-paced property market is pricing the city’s key workers out of metropolitan areas, threatening the viability of the key services they provide to our city.
This was the finding of a wide-ranging study, Key Worker Housing Affordability in Sydney, commissioned by member-owned Teachers Mutual Bank, Firefighters Mutual Bank and Police Bank, and undertaken by the University of Sydney’s Urban Housing Lab led by Professor Nicole Gurran and Professor Peter Phibbs.  
The report detailed declining levels of housing affordability across greater and metropolitan Sydney for key workers - including teachers, firefighters, nurses, police, ambulance drivers and paramedics.
The report identifies five key priorities for policy makers and private sector stakeholders to consider, which include:  
<ul>
<li>Reducing the deposit gap: Proposes a shared equity model allowing key workers to buy up to 75 percent of the property’s value, reducing deposit requirements to between five and 10 percent. </li>
<li>Securing alternative development and financing models: Proposes ‘deliberative development’ models, an alternative to conventional multi-unit development models which could achieve prices which are 10-12 percent lower than the current market.</li>
<li>Establishing alternative tenure arrangements (Community Land Trust or ‘CLT’ model): Proposes that homes are purchased with a conventional mortgage and/or the land component is rented at a marginal rate e.g. two percent of ‘unimproved’ capital value. A CLT model in NSW could reduce purchase costs by 25 percent.</li>
<li>Reducing development and or construction costs and passing savings on to eligible purchasers: Smarter designs, construction material and processes could reduce costs by 25-35 percent, equating to savings of $75,000 to $100,000 for 2-3-bedroom units or townhouses.</li>
<li>Reducing land costs (inclusionary planning): Mandating that 20 percent of dwellings in all major new housing developments are affordable to moderate income earners, including key workers, could deliver 6,000 to 7,000 affordable ‘start-up’ homes per year in Sydney. </li>
</ul>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/12/TMBANK%201.jpg" alt="">
The report found that in the 10 years leading up to 2016, key areas in Sydney lost up to 20 percent of teachers, nurses, policy and emergency service workers to outer and regional areas.
Sydney’s Inner South West (-14.6%), Inner West (-11.3%), Eastern suburbs (-15.2%), Ryde (-14.2%) and Parramatta (-21.4%) all experienced a net loss of key workers, while areas including the Illawarra (+10.5%), Southern Highlands (+17%) and Hunter Valley (+13.6%) all had net gains.
The nature of this group’s shift work combined with living a distance away in areas with unsuitable public transport meant 77.4 percent of key workers drove their private motor vehicle to work in 2016, compared with just over 43 percent for the general population. 
Only five percent of key workers used public transport to get to work, compared with 12.7 percent for the general population. 
Despite reports of Sydney’s housing market cooling, Teachers Mutual Bank CEO Steve James said key workers’ hip pockets are still under serious pressure.
“Any so-called cooling of the housing market has not trickled down to prices in the range that key workers such as teachers, ambulance drivers, firefighters, paramedics and police officers can afford. It would have to be the Ice Age for any such cooling to fit their salary and household budget,” he said.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/12/TMBANK%202.jpg" alt="">
“For teachers who are earning under six figure incomes, a 10 percent deposit on a $1.5 million house is not feasible. While a slight drop in prices in some areas can be factored in, it’s a drop in the ocean for the key workers who protect and support our city. They still can’t afford to live within 100km of where they work.”
 Mr James added that the pressure this situation puts on people already working in high pressure jobs is unfair, whether they’re looking to rent or buy.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/12/TMBANK%203.jpg" alt="">
“Longer commute times, especially in private vehicles, lead to significantly higher financial costs and serious social consequences for key workers and their families, disrupting work life balance and impacting their lifestyle,” he said.
The report also looks at urgent solutions that can be implemented to help key workers buy their own homes both close to their place of work and their established support networks including family, friends, and the wider community including local groups, clubs, and schools. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/12/tmbank%204.jpg" alt="">
The report reveals that between 2003 and 2016, the median price of established homes in Sydney more than doubled from $400,000 to around $900,000 beyond the reach of many key workers, especially those who are single. Soaring rents have heightened the crisis, making a 20 percent home loan deposit out of reach for many key workers.
For instance, a single key worker eyeing a property in Sydney’s inner ring at the 2016 median price of just over $1 million would need 13 years to save for a deposit. This is a sharp increase from the 8.4 years needed to save a 20 percent deposit in 2006. 
“For a key worker, finding somewhere affordable to live in reasonable proximity to their work is becoming impossible for those not already in the property market.
“The report has found that the closest local government area with an affordable median rental price for an entry level enrolled nurse is Cessnock in the Hunter Valley. That’s about 150km from any hospital in Sydney city, making it a 300km round trip per day. 
“Without urgent and genuine intervention on the part of policy makers and other institutions, a growing number of key workers in NSW and Sydney may never be able to afford to own their own home within reasonable distance of Sydney,” said Mr James.
Police Bank CEO Tony Taylor said that the five key measures identified in the report to improve housing affordability for key workers were worth serious consideration.
“We could see more key workers pushed further out of the Sydney metropolitan area, the effects of  which will be felt by each and every one of us."
“Addressing these key barriers to housing affordability could deliver residential housing products in metropolitan Sydney as much as 20 percent cheaper than today’s prices, and with vastly more manageable deposits for key workers looking to buy a home,” he said.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/12/tmbank%205.jpg" alt="">
 
 
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So-called market cooling not trickled down to housing affordability for emergency and essential services

<html><body>
Zetland - part of the Green Square precinct in Sydney's inner-ring - has been labelled as the riskiest off-the-plan suburb in 2018 in an analysis conducted by RiskWise Property Review.
RiskWise analysed more than 3000 suburbs in an attempt to identify the Top 100 Oversupply Danger Zones across the country.
It says more than 315,000 units have been approved for construction across Australia over the next two years.
Zetland tops the list, which is dominated by suburbs in Sydney and Brisbane.
There are currently nearly 600 apartments for sale in <a href="https://www.realestate.com.au/buy/property-unit+apartment-in-zetland%2c+nsw+2017/list-1?activeSort=list-date&amp;source=location-search" target="_blank">Zetland, and surrounding suburbs, on realestate.com.au</a>.
"Taking out number one spot is Zetland, a former industrial zone 4km south of Sydney’s CBD," Doron Peleg said.
"Now in an advanced stage of gentrification as part of an urban renewal project, the residential development of choice has been high-density units and apartments, with more than 5000 new units in the pipeline across Zetland and neighbouring Waterloo since 2016," the Riskwise report advised.
The Green Square urban renewal area – encompassing Waterloo, Zetland, and parts of Alexandria and Rosebery – is forecast to record a near tripling of its population from 21,000 people to more than 61,000 within 12 years.
Some, like Symphony built by Meriton, are ready to occupy.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/13/green%20square.jpg" alt=""> 
Off-the-plan projects include Waterfall by Crown Group in Waterloo, four towers ranging from seven to 20 storeys. 
Natural features are centred on a tranquil internal lagoon, lush rooftop escape, tropical bamboo walk, and a 22m high cascading waterfall.
Mirvac's multi-million dollar Ebsworth building has been described as the crown jewel in the City of Sydney's Green Square development. All 174 apartments offered in Ebsworth were sold off the plan in 2015, and completed last year.
Mirvac also secured a near sell-out of Ovo, Green Square with a reported 221 of the 224 apartment Ovo apartments sold in 2015, with an expected completion by early 2018.
Ovo comprised six open plan one bedroom apartments, 46 one bedroom apartments, 152 two bedroom apartments, and 20 three bedroom apartments located at the northern end of Green Square Town Centre.
First home buyers paid $700,000 plus for one-bedroom apartments without parking in what will be the tallest Green Square Town Centre tower.
<table style="height: 278px; width: 725px;" border="0"><tbody>
<tr>
<td>State</td>
<td>Post code</td>
<td>Suburb</td>
<td>New units in next 24 months</td>
<td>New units next 24 months as % of units</td>
</tr>
<tr>
<td>NSW</td>
<td>2017</td>
<td>ZETLAND</td>
<td>2332</td>
<td>39.8%</td>
</tr>
<tr>
<td>NSW</td>
<td>2121</td>
<td>EPPING</td>
<td>2460</td>
<td>42%</td>
</tr>
<tr>
<td>NSW</td>
<td>2142</td>
<td>HOLROYD</td>
<td>3184</td>
<td>853.6%</td>
</tr>
<tr>
<td>NSW</td>
<td>2762</td>
<td>SCHOFIELDS</td>
<td>1389</td>
<td>754.9%</td>
</tr>
<tr>
<td>QLD</td>
<td>4000</td>
<td>BRISBANE CITY</td>
<td>3201</td>
<td>38.5%</td>
</tr>
<tr>
<td>QLD</td>
<td>4006</td>
<td>FORTITUDE VALLEY</td>
<td>1040</td>
<td>23.6%</td>
</tr>
<tr>
<td>QLD</td>
<td>4101</td>
<td>SOUTH BRISBANE</td>
<td>2145</td>
<td>49.7%</td>
</tr>
<tr>
<td>SA</td>
<td>5000</td>
<td>ADELAIDE</td>
<td>1720</td>
<td>20.1%</td>
</tr>
<tr>
<td>VIC</td>
<td>3006</td>
<td>SOUTHBANK</td>
<td>2212</td>
<td>12.5%</td>
</tr>
<tr>
<td>WA</td>
<td>6000</td>
<td>PERTH</td>
<td>1151</td>
<td>13.7%</td>
</tr>
</tbody></table>
There are three suburbs from Queensland that make the top 10.
Adelaide, Melbourne's Southbank and Perth have also been pinpointed as the highest risk across the rest of the country.
Brisbane was always likely to be a contender as one of the high risk, particularly with the likes of the RBA and BOQ highlight their concerns for the amount of apartments.
Riskwise suggest :inner-ring demand doesn’t extend to units" with CBD units delivering poorer capital growth than units in the middle ring. 
It cites prime examples of poor growth as Melbourne’s Southbank, and Fortitude Valley in Brisbane, with negative growths of 1% and 4.8%, respectively.
"In 2017, more than 5300 units were completed in Brisbane, with another 11,000 in construction. 
"What we’re currently seeing on the market is a lot of incentivised advertising, from offers of full furnishings included to a free car on settlement," Riskwise advised.
"A significant number of new developments have led to very high supply of units in NSW, VIC, QLD and WA.
"In many areas inside these states, there has been major oversupply, inflicting significant losses on investors.
"High supply in our major cities, particularly in the CBDs, has often impacted capital growth and rental returns, leading to the instatement of lending restrictions.
"The strength of the units market must be assess on the suburb by suburb basis.
"This slowdown is likely remain at least in the medium term."
</body></html>

Zetland the riskiest off-the-plan suburb in 2018

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Mirvac Group has secured three new tenants at its A-grade office building at 90 Collins Street, Melbourne.
They take the building to 100 per cent leased. 
Click Energy has leased over 1,300 square metres for a five-year term.
An eight-year term has been secured with Merricks Capital for approximately 500 square metres.
A five-year term has been secured with McDonald Murholme for over 900 square metres. 
Mirvac’s Paul Bezzina said the building offers 21,000 square metres workspace over 21 levels along with luxury brand retailers on the ground floor and basement parking for 111 cars.
</body></html>

Mirvac's 90 Collins Street, Melbourne fully leased

<html><body>
iProsperity (iPG) has listed its Park Regis Hotel asset in Sydney with offers due March 13.
The 122-room hotel stratum comprises 10 levels of the 45-level mixed-use tower.
Located at the corner of Park and Castlereagh streets, the hotel comes with an outdoor rooftop pool along with 39 car spaces. 
iPG Group CEO, Michael Gu said Sydney’s hotel market remains "the red-hot stand-out performer in the Asia Pacific region".
iPG purchased it in 2016.
The hotel is being offered with a management agreement with Staywell Holdings, a subsidiary of the Japan-based Prince Seibu group, which provides an annual underwrite of the trading performance until the end of 2021.
</body></html>

Park Regis Hotel placed on the market by iPG

Buyers considering a residence at boutique Gordon townhouse development <a href="https://www.apartments.com.au/new-townhouses/lume-gordon-43-47-dumaresq-street-gordon-nsw-2072">Lume</a>&nbsp;now have another reason to bring forward their decision.

For a limited time, purchasers of a residence at Lume will receive a BMW iX3 50 electric SUV, valued at more than $120,000, as part of their purchase. The offer is designed to add value for buyers while complementing the lifestyle envisioned for the architecturally designed Upper North Shore development.

Scott Timmins, Development Manager at <a href="https://www.apartments.com.au/developers/winim">WINIM</a>, said the partnership was created to provide buyers with a compelling reason to act.

"In today's market, buyers need a compelling reason to act now, and the BMW partnership was designed to create that catalyst. We wanted to add genuine value for our future purchasers. Choosing the all-electric BMW iX3 50 also reflects the values behind LUME, forward-thinking design, innovation and a more sustainable way of living. It's a premium incentive that complements the lifestyle our buyers aspire to and rewards those who commit early."

[smartcode_project:default project_id=7354 project_image_fid=374893]

Delivered by WINIM in partnership with Burtonwood Investment Partners, Lume comprises 14 architecturally designed two, three and four-bedroom townhomes created for families seeking the space of a freestanding house with the ease of modern, low-maintenance living.

The three-storey residences, designed by award-winning architecture practice <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, have been tailored for families and multi-generational living, featuring private internal lifts, flexible lower-level spaces, generous open-plan living and entertaining areas, media rooms, and landscaped outdoor spaces with custom outdoor kitchens.&nbsp;

Inside, engineered oak flooring, bespoke dining joinery with integrated wine fridges and backlit bars, sculptural porcelain bathrooms, Parisi freestanding baths and Astra Walker tapware create interiors that balance functionality with refined finishes.

Each townhome has been designed to combine generous internal spaces with sustainability initiatives such as EV charging infrastructure, while <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>'s landscaped communal areas, centred around a restored creek line and native planting, encourage residents to connect with nature and spend more time outdoors.

[smartcode_project:default project_id=7354 project_image_fid=269527]

Rothelowman's Gary Tsui said the architecture was conceived to respond carefully to its Upper North Shore setting.

"Our vision was to create elegant, uplifting homes that draw on and positively contribute to the local character through meticulously considered design and an interaction with the surroundings."

The communal landscape has been designed as more than an open space between homes. Arcadia's Ben Newell and Kate Phillips said the adjoining reserve provided an opportunity to create a distinctive natural retreat for residents.

"Just as waterways carve their way through Ku-ring-gai's landscape, a raised boardwalk weaves through the reserve, connecting the homes to this tranquil oasis."

[smartcode_project:default project_id=7354 project_image_fid=374892]

Located just 300 metres from <a href="https://www.apartments.com.au/developments/gordon-nsw-2072">Gordon</a> Village and Gordon railway station, Lume offers convenient access to Sydney's CBD while placing residents close to some of the North Shore's leading schools, including Ravenswood, Pymble Ladies' College and Knox Grammar. Lane Cove National Park, Gordon Golf Club and a range of cafés and restaurants further reinforce the family-focused lifestyle on offer, with the BMW iX3 50 complementing everything from local trips around Gordon to weekend drives and city commutes.

Construction is underway with completion expected in mid-2027.

[smartcode_project_cta:default project_id=7354]

Joel Robinson

Boutique Gordon townhomes now come with a BMW iX3 50

Two apartments have sold for more than $10 million at EADE Byron Bay, setting some of the highest apartment prices ever achieved in the coastal town and underlining the growing appetite for luxury beachfront apartments in Australia's most popular coastal locations.

The $210 million project by Vitale Property Group has now secured more than $70 million in sales, led by residences that changed hands for $12.75 million and $11.75 million.

The record-breaking transactions reinforce the shift occurring in Byron Bay's premium property market, where affluent downsizers and lifestyle buyers are increasingly opting for high-end apartments over large beachfront homes.

<a href="https://www.apartments.com.au/new-apartments/eade-byron-bay-29-shirley-street-byron-bay-nsw-2481">EADE Byron Bay</a> occupies a rare 6,000 sqm absolute beachfront site on the corner of Shirley and Milton Streets overlooking Main Beach and The Wreck surf break, just 350 metres from Byron Bay's town centre.

The 25-residence development is the first beachfront apartment project approved in Byron Bay in more than a decade and is currently under construction, with completion expected in May 2027.

[smartcode_project:default project_id=145590 project_image_fid=359521]

The project has attracted a mix of local Byron Shire residents downsizing from larger homes, alongside interstate buyers from Sydney, Melbourne and Brisbane seeking a permanent coastal lifestyle without compromising on space.

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a> and with interiors by <a href="https://www.apartments.com.au/interior-designers/alexander-co">Alexander &amp; Co</a>, EADE comprises&nbsp;10 garden apartments ranging from 284 sqm to 622 sqm, nine with private pools, five full-floor apartments and 10 rooftop residences with private plunge pools, expansive outdoor entertaining areas and uninterrupted ocean views.

[smartcode_project:default project_id=145590 project_image_fid=359527]

<a href="https://www.apartments.com.au/developers/vitale-property-group">Vitale Property Group</a> Managing Partner Chris Vitale said the project's combination of scale, location and limited future supply was driving buyer demand.

"There isn't another beachfront holding in Byron Bay of this size and position that could be developed again," Vitale said.

"Buyers are responding to the scarcity and the irreplaceability of a site of this calibre and to floorplans they can't find elsewhere in the market.

"We are seeing buyers place significant value on quality, space, design, resort-style amenities and the rarity of the location. The sales achieved to date demonstrate that discerning purchasers recognise the long-term significance of what is being created at EADE Byron Bay.

"Many are coming from larger homes in the Byron region, or from Sydney, Melbourne and Brisbane, and are after the space, security and convenience, without the upkeep of a house."

&nbsp;

[smartcode_project:default project_id=145590 project_image_fid=359523]

The Byron Bay project follows Vitale Property Group's delivery of the Mondrian Hotel and Private Residences at Burleigh Heads, with EADE continuing the developer's focus on luxury coastal developments.

Residents will have access to a resort-style swimming pool, gymnasium, sauna, cold plunge pool, concierge services and dedicated workspaces, while the project is targeting an 8-Star Green Star rating.

EADE Byron Bay is being exclusively marketed by Projx Australia in conjunction with WHITEFOX Projects.

WHITEFOX National Projects Director Phillip Rand said demand had been driven predominantly by owner-occupiers.

"We are seeing buyers at EADE place significant value on quality, space, design, resort-style amenities and the rarity of this location," Rand says.

"The sales achieved to date demonstrate that purchasers at this level recognise the long-term significance of what is being created at EADE Byron Bay."

Residences at EADE Byron Bay are currently priced between $4.75 million and $15.95 million.

&nbsp;

&nbsp;

&nbsp;

&nbsp;

&nbsp;

[smartcode_project_cta:default project_id=145590]

Vitale breaks Byron Bay records with EADE sales flurry 

When buying an apartment, most people compare the big-ticket items first. Floorplans. Kitchens. Balcony size. Natural light. The view.

But there's one everyday consideration that often doesn't come up until after moving in: how parcels are delivered.

As online shopping has become part of everyday life, parcel deliveries have shifted from an occasional event to a regular occurrence. Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally.

For apartment residents, that can present a challenge.

If nobody is home to accept a delivery, parcels may be redirected to a nearby Post Office, left in a building lobby or common area, or require building management to step in. In higher-density buildings, where dozens or even hundreds of residents may receive deliveries each day, parcel management has become an increasingly important part of everyday living.

That can create a range of frustrations. A missed delivery often means making time to collect a parcel elsewhere, while packages left unattended in foyers or mail areas can create clutter and increase the risk of theft. What seems like a minor inconvenience can quickly become a recurring issue for residents who shop online regularly.

It's one of those details that rarely features in a display suite but can have a noticeable impact once residents move in.

As a result, buyers are beginning to look beyond traditional apartment features and consider how a building supports day-to-day convenience, including whether there are secure options for receiving deliveries.

Australia Post's Parcel Lockers provide one solution.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/CkF2oKmlACg?si=C50sDaoUUn2nuLmq" title="YouTube video player" width="560"></iframe>

Rather than having a parcel delivered directly to an apartment, eligible deliveries can be sent to a nominated Parcel Locker. Once the parcel arrives, residents receive a notification through the AusPost app or SMS and can collect it using a QR code or one-time PIN at a time that suits them.

The Parcel Locker network now includes more than 1,500 locations nationwide, with installations at Post Offices, shopping centres, transport hubs and an increasing number of residential developments. By providing a secure collection point, Parcel Lockers help reduce missed deliveries and avoid parcels being left unattended in common areas.

For developers, parcel infrastructure is becoming another way to improve the resident experience. Rather than relying on concierge staff or leaving parcels in communal spaces, secure collection points help streamline deliveries while preserving the presentation and functionality of shared areas.

For buyers, it's a reminder that the best apartment features aren't always the most obvious.

A generous floorplan or quality finishes might help narrow the shortlist, but the conveniences that simplify everyday life, whether that's EV charging, secure bike storage or reliable parcel delivery, often become the features residents appreciate most once they're living there.

The apartment feature many buyers don't think about, until their first missed delivery

<a href="https://www.apartments.com.au/developers/hg-developments">HG Developments</a> is doubling down on Maud Street in Newstead, filing plans for a new apartment tower just a few doors down from its under-construction Aire Newstead development.

Recently submitted to Brisbane City Council, the proposal is for an 18-storey building designed by bureau^proberts, which has drawn heavily on Brisbane's subtropical design principles while referencing the suburb's industrial heritage.

A total of 64 apartments are planned for the amalgamated 1,518 sqm site at <a href="https://www.apartments.com.au/new-apartments/17-21-maud-street-newstead-qld-4006">17–21 Maud Street</a>, a short walk from the Brisbane River and Newstead Riverwalk.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="a400c7fd-bd15-48f8-a63b-10ede92efe00" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20bldg.png?VersionId=.0vPmjpbC7CNP7kqGWa6L7rGIwsNExaw" />

"The building is defined by a series of vaulted motifs that reinterpret the arches, colonnades and layered facades evident throughout Newstead's historic built fabric," the Urban Design Report states.

"Combined with recessed glazing and generous balconies, these elements create a layered building envelope that provides shade, weather protection and opportunities for natural ventilation whilst establishing a distinctive architectural identity."

The proposal comprises 64 two, three and four-bedroom apartments across 18 residential levels, positioning it alongside a growing number of taller residential projects transforming Newstead's northern precinct. The tower incorporates extensive subtropical landscaping, with cascading planter boxes, deep planting at street level and a landscaped rooftop recreation area.

<img alt="First look: HG Developments plans 18-storey subtropical apartment tower for Newstead" data-entity-type="file" data-entity-uuid="1d8140f4-8b98-45cd-b1b8-1efe8c8e266b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Maud%20st%20podium.png?VersionId=VAZtbCoD44YCJ57N99fQCAKeSJx7ldZs" />

Bureau Proberts has prioritised passive environmental design throughout the project, with generous balconies, recessed glazing and operable façades helping reduce solar heat gain while maximising natural ventilation. River views become available from the upper levels, while the building has been orientated to capture prevailing breezes from both the Brisbane River and the west.

The architects say landscape is intended to be integral to the building rather than an applied element.

"Vertical greenery, cascading planter boxes and elevated gardens are woven throughout the architecture, softening the built form and strengthening the connection between residents and the subtropical environment."

"Through the integration of landscape, high-quality materials and passive design principles, the development delivers a refined residential address that celebrates Newstead's heritage character while contributing positively to Brisbane's evolving subtropical identity."

Newstead has remained one of Brisbane's most active apartment markets in recent years, with a number of developers continuing to back the inner-city suburb.

HG Developments is currently delivering the 40-apartment Aire Newstead at 25 Maud Street. Fortis recently launched the 65-apartment <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> on Kyabra Street, while builder-developer BPG and Don O'Rorke's Consolidated Properties are both expected to launch their respective Newstead projects before the end of the year.

HG Developments doubles down in Newstead with second Maud Street apartment development

Walk past a new apartment development promoting its sustainability credentials and it's easy to picture rooftop gardens, mature trees, landscaped courtyards and residents surrounded by nature.

But in many cases, that's not actually what those sustainability ratings guarantee.

Australia's leading environmental rating tools have played a significant role in improving the energy efficiency and environmental performance of buildings. Yet despite their focus on reducing emissions, many don't require developers to include trees, biodiversity or meaningful green space.

In other words, a building can achieve one of the country's highest sustainability ratings while containing little more than concrete, glass and hard landscaping.

That disconnect has led to the emergence of a new movement across Australia's property industry: nature-based cities.

The concept goes beyond designing buildings that consume less energy. Instead, it encourages developers to treat nature as essential infrastructure, integrating biodiversity, tree canopy, living landscapes and green spaces into projects from the earliest stages of planning.

Research has consistently linked access to nature with better physical and mental health, cooler neighbourhoods, improved biodiversity, stronger climate resilience and more connected communities. As Australia's cities continue to become denser, advocates say those outcomes should be considered just as important as energy efficiency.

Nature Based Cities (NBC) was established in 2022 to help accelerate that shift.

Founded by Hamton Executive Chairman Paul Hameister OAM, the not-for-profit was created after research highlighted a significant gap in Australia's sustainability framework. While existing environmental rating tools rewarded energy performance and emissions reductions, they placed little emphasis on the inclusion of living landscapes.

"We've always wanted to do more, and we know other developers who want to do more, but the ESD rating tools just aren't there," Hameister says.

"In Australia, you can have a five-green-star rated building that's concrete and glass with not a blade of grass.

"The focus is on reducing emissions, which is laudable, but there hasn't been enough attention paid to protecting and re-establishing nature. We need both for the health of the environment and for communities."

Since its launch, NBC has developed independent design guidelines and accreditation frameworks that encourage developers to prioritise ecology, biodiversity, tree canopy, walkability and living landscapes alongside traditional sustainability measures. The organisation first focused on medium and high-density residential developments before recently expanding into precinct-scale communities and masterplanned neighbourhoods.

Jan Talacko, founder of sustainability consultancy Ark Resources and a member of the Nature Based Cities Advisory Council, says the initiative addresses an area that has largely been overlooked by the property industry.

"Throughout my 25 years of working collaboratively with all stakeholders in the property sector, I've always favoured a pragmatic approach to sustainable design which encourages initiatives that not only meet environmental expectations but also improve amenity," Talacko says.

"Whilst we are making steady progress in relation to energy and carbon emissions from buildings, there has been much less emphasis on encouraging biodiversity and tackling the urban heat island effect.

"The Nature Based Cities initiative responds to a gap in the suite of tools currently used by the property development sector, which don't provide sufficient incentive, or recognition, for the integration of landscaping and greenery."

For apartment buyers, the shift is also changing the questions worth asking.

Rather than assuming a sustainable building will naturally include abundant green space, buyers are increasingly being encouraged to look beyond environmental ratings and ask what nature is actually being delivered. How much tree canopy will the development create? Has biodiversity been considered? Are landscaped spaces designed for people as well as appearance?

As Australia's cities continue to grow upwards and outwards, the next generation of sustainability may not simply be measured by lower emissions, but by how successfully developments bring nature back into everyday urban life.

Staff reporter

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