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Competition in the home and contents insurance market is unlikely to be damaged by IAG’s proposed acquisition of Wesfarmers’ insurance underwriting business, according to the Australian Competition and Consumer Commission.
The ACCC announced last week that it would not to oppose the planned amalgamation of Australia’s fifth and sixth largest insurance underwriters as it did not believe the deal would “substantially lessen competition in any insurance market”.
Wesfarmers underwrites Coles Insurance, which offers home and car insurance to consumers through Coles supermarkets and online. It also underwrites rural and commercial insurance through Wesfarmers Federation Insurance and Lumley.
IAG underwrites policies, including home, contents and other personal insurance, sold through NRMA, SGIO, SGIC, RACV, CGU and Swann. IAG’s Australian operations also distribute commercial and rural insurance products.
Following an acquisition, Coles would continue to offer insurance to consumers underwritten by IAG in accordance with a 10-year distribution agreement.
In making its decision, the ACCC noted that insurance sold through Coles was a “small but growing” market but it was likely that the banks and ‘challenger’ brands such as Woolworths would step into the market to provide strong competition on price so consumers would not be disadvantaged.
The ACCC’s lack of concern over competition in home and contents insurance is supported by the findings of a recent study, the 2013 General Insurance Barometer by JP Morgan and Taylor Fry.
The study, released in February, forecast home and contents insurance premiums would increase by single digits this year, compared to double-digit increases in the past two years partly due to competition within the sector.
The report found that 38% of general insurance underwriters, and 43% of general insurance brokers, were worried that their businesses could be challenged by excessive competition.
The ACCC approval of IAG’s acquisition of Wesfarmers’ insurance brands removes a key hurdle to the deal, although the Australian part of the transaction is still subject to approvals from the Australian Prudential Regulation Authority and the Federal Treasurer. In New Zealand, the deal must be approved by the New Zealand Commerce Commission and The Reserve Bank of New Zealand.
IAG announced in December last year that it had agreed to buy Wesfarmers’ insurance underwriting business for $1.845 billion. The transaction is expected to be completed by June 30 this year.
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IAG's proposed acquisition of Wesfarmers' insurance underwriting poses little risk to market competitiveness: ACCC

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People who commit white collar crime in Australia are getting off lightly compared with those found guilty of similar offenses in other countries, a report has found.
Thousands of Australians have lost millions of dollars or been put at risk by the actions of financial planners and credit brokers who have committed fraud, provided inappropriate advice and operated without an appropriate license.
A report by the Australia Securities and Investments Commission has found the penalties that can be imposed for such offenses in Australia are limited in some cases compared with those available to regulators in other jurisdictions.
For example, people who provide financial services without a license in Australia can only be fined up to $34,000. In contrast, the report found that people guilty of the same offenses in the US face maximum fines of $5.6 million. In the UK, the maximum fine is unlimited.
The maximum civil penalty in Australia for giving inappropriate advice is $200,000, while in the UK the maximum is unlimited, and in Hong Kong it is the greater of $1.4 million or three times the benefit gained by the wrongdoer. 
Individuals who broke corporate rules in the US could be sentenced to prison terms of up to 20 years. In Australia, and most other jurisdictions studied, the maximum prison term was 10 years for criminal penalties such as fraud and insider trading. The maximum prison term for providing financial services without a license in Australia is just two years.
The report compared maximum penalties in Australia to penalties imposed for similar offenses in Hong Kong, the United Kingdom, the United States and Canadian province, Ontario.
It found that regulators elsewhere could, in addition to imposing fines and prison terms, remove financial benefits that wrongdoers had obtained through illegal profits or avoided losses. ASIC does not have that power, although it can ask other agencies to bring an action to confiscate the proceeds of crime.
The relatively low fixed fines that ASIC can impose and the fact that it cannot remove the proceeds of crime itself meant that wrongdoers may still profit from their conduct and not be deterred by the penalties, the report warned.
“The maximum fine that may be imposed may be substantially lower than the financial benefit obtained as a result of the wrongdoing,” it said.
The report also found inconsistencies between penalties that could apply to similar offenses under different pieces of legislation within Australia. For instance, offering a financial service without a license attracted a criminal penalty under the Corporations Act with individuals fined up to $34,000, while someone giving unlicensed credit advice could be subject to the same criminal penalty, or a civil penalty of up to $340,000.
Civil penalties in the Corporations Act have been eroded by inflation as they have not increased since they were set in 1992 for individuals and 2004 for corporations. In 2007, it was suggested that the penalties should be lifted following a Treasury review, although no increases were made.
The report is the first of its kind in over a decade and ASIC has recommended further work be done.
Its findings will be fed into ASIC’s submission to the Financial System Inquiry, which closes for comment on Friday, March 28.
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Australia's white collar crime penalties pale in comparison to other jurisdictions

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The official cash rate set by the Reserve Bank of Australia has been at a historic low of 2.5% since August 2013. In line with that low rate, borrowers are paying less for home mortgages now than they have in over 15 years.
 <img src="/images/2014/03/28/zoe-march-28-one.jpg" alt="" style="line-height: 1.3em;"> 
Source: RBA
Lenders typically cut and lift mortgage interest rates roughly in line with the RBA’s movements, charging a margin over the official cash rates. Since late 2007, the extra amount of interest that consumers pay on a variable rate home loan above the official cash has been increasing.
Finder.com.au money expert Michelle Hutchison says lenders have been moving their rates out of cycle with the RBA and failing to pass on rate cuts in full, so the gap between the official cash rate and home loan rates available to borrowers has widened.
RBA data shows that the difference between the official cash rate and the mortgage managers’ basic variable rate – which approximates the average of interest rate actually available to borrowers – was fairly stable at just below 1 percentage point from September 1998 to September 2007. If that relationship still held true, home mortgages with variable interest rates of 3.5% and lower would be common in the market now.
In fact, RBA data shows that the mortgage managers’ basic variable rate was 5% in February 2014, a full 2.5 percentage points more than the official cash rate. Hutchison says the cheapest basic variable rate loan available is 4.49% for a $150,000 mortgage over 30 years from Loans.com.au.
 <img src="/images/2014/03/28/zoe-march-28-two.jpg" alt="">
Source: Reserve Bank of Australia
So, why aren’t headline lending rates lower?
Hutchison says one reason is that borrowers are letting lenders get away with charging more by not shopping around.
“If borrowers are not taking action and doing something about it by comparing home loans and switching to a better, cheaper deal, [lenders are] not going to do anything about it,” she says.
“There are hundreds of home loans on the market and the range of home loan prices is from 4.49% to over 9%. The best thing people can do is keep track of [interest rates]. Don’t sign up to a home loan and forget about it. Review your financial situation every year or two.” 
UBS interest rate strategist Matthew Johnson says few people pay the headline interest rates advertised by lenders. Advertised rates are higher in relation to the cash rate, but lenders have realised that people feel good about getting a discount. Those who are prepared to negotiate can get lower rates than the advertised rate.
Another key reason for the widening gap between the official cash rate and mortgage rates on offer to consumers is that the cost of funding and running a bank has gone up, Johnson says.
Two main sources of funding are available to lenders: financial markets and domestic deposits.
During the financial crisis, lenders found it very difficult and costly to borrow on financial markets as investors lost their appetite for risk. The banks were instead forced to tap local deposits to fund lending, using elevated interest rates on term deposits to lure consumers to save their cash.
As the chart below shows, the amount lenders had to offer on deposits over the cash rate increased dramatically from around 2007. Term deposit interest rates have fallen since mid-2012, but they are still high by historical comparisons. At-call savings account interest rates have remained above average.
<img src="/images/2014/04/01/zoe-april-1-one.jpg" alt="">
“Banks have shifted their funding base away from financial markets to domestic deposits. Banks have passed on a part of their increased funding costs to borrowers,” Johnson says.
Banks also consider credit risk associated with loans and the liquidity risk of funding long-term assets with short-term liabilities when setting interest rates, according to <a href="https://www.rba.gov.au/publications/bulletin/2014/mar/pdf/bu-0314-8.pdf" target="_blank">a report by the RBA</a>.
“Banks’ growth strategies, competitive pressures and the desire to provide a return to equity holders also affect banks’ lending rates,” the report noted.
“An important element in determining the overall cost of banks’ funding is the level of the cash rate, which acts as an anchor for the broader interest rate structure of the domestic financial system. Nevertheless, changes in the level of compensation demanded by investors to hold bank debt, competitive pressures and non-price factors can exert significant influences on banks’ funding costs.”
Johnson says the trend for lenders to charge a large premium over the cash rate will reverse as financial markets stabilise further and investors in financial instruments regain their appetite for risk.
House prices are rising and banks are well capitalised, easing investor concerns. Fund managers face a shortage of yield-producing assets. Under these conditions, and amid stabilising financial markets, demand will increase for yield-producing assets such as residential mortgage-backed securities (RMBS).
“That will again make securitisation [through RMBS] a viable funding strategy for the mortgage lenders,” Johnson says.
Non-bank lenders that lack the deposit-base of the big banks will be better able to compete as financial market funding costs fall, putting pressure on the banks to reduce their margins over the cash rate. 
But Johnson warns that might not lead to lower interest rates for consumers.
He says the wide margin between the RBA cash rate and mortgage rates is a big part of the story of why official interest rates are as low as they are now. The RBA has been compensating for the lenders’ higher costs, he says.
“If that [gap] goes back to 1%, then the official cash rate could rise,” Johnson says.
The RBA estimates in its report that even though funding costs have reduced over the past year, they are likely to remain close to 130 percentage points higher than they were before the global financial crisis.
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Gap between official cash rate and home loans continuing to widen

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A recently launched investment tool is giving self-managed superannuation fund members access to invest in real property with a lower capital outlay.
The Fractional Property Investment Platform, released by DomaCom in early March, allows investors to buy shares in any property on the market through an Australian Securities and Investments Commission-registered managed investment scheme (MIS).
“We are targeting the SMSF sector because that’s the sector that we know wants to invest,” DomaCom general manager of sales and marketing Warren Gibson said.
The average SMSF balance was just over $1 million at the end of the December 2013, according to Australian Taxation Office data. The median balance for the funds is around half that figure.
Gibson told Property Observer that the high cost to buy real estate meant most SMSFs wishing to invest in the asset class had to borrow to do so or invest through a syndicate or managed fund. Funds that did not wish to borrow risked having an undiversified portfolio.
“Syndicates are costly to set up, once you are in the syndicate you are there for the duration and there’s no liquidity for the structure. What we set about doing was introducing equity market concepts into the product,” Gibson said.
Investors can choose from the 18,320 properties already been listed on the Fractional Property Investment Platform, or request that any other property for sale be included. Around 17,000 of the properties currently listed are residential, 1,000 are commercial and 300 are rural.
The company aims to increase the number of listing to around 100,000 by the end of the year and eventually have all properties for sale listed, Gibson said.
After selecting a property, the investor bids on what proportion they would like to hold and a price range they believe it is worth.
The platform allows them to create a book build to buy the property with other investors who also wish to purchase a stake. When enough investors have joined the book build to account for the expected full value, DomaCom engages a buyers’ agent to acquire the property. Property valuers and conveyancers are also engaged.
After purchase, the property is placed into an MIS with sub-accounts set up for each investor. Rent and property-related costs are allocated to each investor in proportion to their holding.
The minimum amount to open an account is $20,000 but investors can put as little as $2,000 into each property.
Management fees to DomaCom are around 1% a year.
Gibson said the DomaCom platform also offered a secondary market where investors could sell their holdings in the MIS to others.
Investors can only access the structure through financial planners, who must be accredited to advise on the products.
DomaCom is also working on a product that will allow home owners to sell part of the equity in their property to investors. Gibson said the company hoped to release that product in the third quarter of this calendar year. 
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New tool allows SMSFs to buy shares in properties

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The cost burden of property ownership has fallen over the past three years as a series of interest rate cuts lowered the monthly mortgage repayments needed to buy a median-priced property, but the latest HIA-Commonwealth Bank Housing Affordability Index shows the trend is starting to turn.
Housing became progressively more affordable in each quarter from December 2010 to September 2013 amid falling interest rates and moderate house price growth, the HIA-Commonwealth Bank Housing Affordability Index showed.
But the latest reading of the Index found that in the December 2013 quarter affordability dropped for the first time in three years, by 0.4 percentage points.
<img src="/images/2014/03/31/zoe-march-31-one.jpg" alt="">
The Affordability Index fell in Hobart (-9.2%), Sydney (-4.4%), Perth (-2.5%), Brisbane (-1.0%) and the Australian Capital Territory (-1.2%). Meanwhile, affordability in Adelaide and Melbourne rose by 5.5% during the quarter.
The lower affordability measures were due to more rapid house price growth rather than interest rate movements.
Interest rates available from lenders are flat and still coming down in some cases. But in the last three months of 2013, the median property price rose by enough to outweigh the effect of lower borrowing costs.
Reserve Bank of Australia governor Glenn Stevens noted recently that dwelling prices had increased by 10% in the past year and were now about 5% above their previous peak in 2010.
The Affordability Index shows the dollar value of monthly mortgage repayments on a median priced property increased to $2,500 in December 2013 from $2,458 in the previous quarter as the median property price rose by $11,400 to $470,400.
HIA chief economist Harley Dale expects the housing market to continue to run for a while from here on price momentum.
“While the rate of growth will be slower in 2014 than in 2013, I don’t think it will grind to a halt. There will be more gains this year,” he told Property Observer. 
How much further the market could rise would depend on a range of factors such as unemployment and household earnings growth.
“There’s some uncertainty around those key determinants of how people view their housing decisions,” Dale said. “That’s all consistent with the rate of price growth slowing but how long it takes our labour and wage markets to reach the end of their cycle is going to be a big determinant of how soon we reach a peak in house prices this cycle.”
On the other side of the affordability equation, few economists believe interest rates will fall further.  Westpac chief economist Bill Evans, who had previously been predicting two extra rate cuts this year, changed his mind in mid-March saying the next movement would be up, but not until sometime in 2015.
HSBC’s Paul Bloxham is forecasting a rise in rates by the end of this year.
Dale said he also believes interest rates have stopped falling. “But it looks like they’re going to remain low for a period of time. The cost of borrowing will be at or near record lows through the rest of 2014,” he added.
With house prices expected to increase further, household earnings subdued and interest rates on hold or rising, housing is likely to become even less affordable through the year.
Ironically, Dale expects people who are already in the housing market to feel the change the most.
“The strong cyclical improvement to affordability for existing participants in the home ownership market has therefore run its course,” he said.
Home owners and investors who are already in the housing market have been able to take advantage of the much lower cost of borrowing by paying down mortgage debt more quickly than needed and upgrading their homes or investing in additional property.
The <a href="https://www.rba.gov.au/publications/fsr/2014/mar/pdf/household-business-finances.pdf" target="_blank">latest RBA figures</a> showing almost that in aggregate, households held 15% of their outstanding mortgage balances in mortgage offset and redraw facilities. That’s the equivalent of around 24 months of total scheduled repayments at current interest rates.
When interest rates rise, households will have less capacity to keep reducing their debts.
Investors, most of whom already own at least their home, have been the most active players in the property market. Existing owner occupiers have also been upgrading their homes.
But an <a href="https://www.westpac.com.au/docs/pdf/aw/economics-research/er20140312BullHousingFinanceJan.pdf" target="_blank">analysis of mortgage lending by Westpac</a> earlier this month suggests that those markets may be starting to slow. “After a robust 13.7% rise in 2013, owner occupier finance approvals may be starting to 'top out',” Westpac senior economist Matthew Hassan noted. Meanwhile investor finance reduced by 3.3% in January, following 40.4% growth over 2013.
The RBA is still concerned that investors are taking on too much debt and people are assuming prices can only go up.
“We need to be alert to the possibility that the past year of strong rises in dwelling prices leads people to assume that this is the norm,” Stevens said in a recent speech. “Were such an assumption to lead to increasing speculative activity, accompanied by a renewed increase in household leverage with all the associated risks to the housing market and the economy more generally, that would be unwelcome ... We are watching this closely, and we remind people that house prices can go down as well as up.”
Lower affordability will also affect first home buyers, of course, but those people have largely been out of the market anyway. They face bigger problems in getting a toehold in the market, such as raising enough for a deposit.
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Housing becoming progressively more affordable

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An independent review into the Financial Ombudsman Service’s (FOS) operations has recommended the external dispute resolution service should exercise greater discretion when deciding whether to refer claims from property developers to the courts.
The review, conducted by Melbourne-based consultancy Cameronralph Navigator, found the scheme’s scarce resources were being tied up in handling complicated complaints brought by small businesses – often property developers – that would be better handled through the courts.
FOS can only hear claims when the claim amount (not the loan) is for less than $500,000. It must refer claims in excess of that sum to the courts.
The external dispute resolution service can use its discretion to refer claims to the courts when the claim amount is uncertain, however the report found that FOS often did not use that discretion. It found property developers that had borrowed large sums, sometimes in excess of $5 million, were accessing the service.
Submissions to the review argued that commercial property borrowers accessing FOS were legally advised at the start of the loan, often well resourced and “more than capable of defending their position in count”.
The submissions argued that these borrowers were using FOS to delay recovery action and this diverted FOS’s resources from consumer matters.
Similar concerns were raised about farm debt disputes.
The property developer disputes that came before FOS were sometimes complex with a number of parties to the loans. The review reported that the issues could take years to resolve and might involve multiple disputes about maladministration, fees, interest rates, financial difficulty and the realisation of security.
The review recommended FOS should use its discretion more actively to exclude large and complex business credit disputes.
It also recommended FOS provide guidelines about what factors would be taken into account when it exercised discretion. The guidance should include “the number, quantum and complexity of the loans, the number of parties, the complexity of issues involved, whether the parties were legally advised at the time of entering into the loan and whether independently facilitated mediation by a qualified mediator had begun” the review reported.
The review was the first report into the operations and procedures of FOS since the external dispute service was formed out of the merger between five major ombudsman and complaints and dispute resolution schemes in July 2008.
It found that while FOS had met most of its targets, there was widespread frustration about how long it took the service to resolve disputes.
The Australian Securities and Investments Commission said it would work with FOS to implement the review’s recommendations. 
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FOS requires greater discretion towards property developer claims

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Information technology company Applabs Technologies is working on a mobile application that aims to rival established real estate search websites. Applabs Australia director Patrick Glovac talked to Property Observer about the product, called Home Open, and the Australian Securities Exchange-listed company’s plans.
Why are you launching Home Open, and why now?
The internet completely disrupted traditional media such as print. We have seen this in many sectors from real estate, the car industry, the jobs market and even to tourism. Companies such as Realestate.com.au, Carsales, Seek and Expedia now have market capitalisations greater than the traditional print media companies which they took on. For example, REA Group - $6.7 billion, Carsales - $2.8 billion.
These companies took on the traditional media outlets and took their market shares. What this has meant is that those industries are now dominated by one or two companies. In the real estate sector specifically, realestate.com.au own 80% of the market and Domain 18%, leaving only 2% for all the other small players.
What we believe you will see over the coming two to three years is the next wave of technology companies taking on these traditional internet companies. Any market which is a monopoly or duopoly we believe is under threat by the next wave of the technology boom.
Funding for technology companies was non-existent for the past 10 years, however given the likes of Facebook, Twitter and Whatsapp the next big investment push in technology start-ups seems to be on. All these companies have one thing in common, and that is they want to disrupt the market and take on the bigger guys – Home Open is no different.
What gaps do you see in the competitor offerings in the market such as Realestate.com.au and Domain.com.au?
Realestate.com.au was built as a web-based product and has since been adapted into a mobile based application. Home Open is the opposite: we are a mobile-based product, which will be adapted into a web based product - through our domain www.homeopen.com. This has allowed us to build a unique application which was designed from the start as a tool which puts the information directly into the hands of the consumers.
<blockquote>
The feedback we continually receive is that estate agents are held to ransom by the big players.
</blockquote>
The feedback we continually receive is that estate agents are held to ransom by the big players and they would be happy to use an alternative product if it meets their needs, produces results and is priced competitively.
How is the content of Home Open different from the other websites? 
Our main point of difference to our competitors is that we are focused on homes which are open for inspection. Our application will take the hassle and time out of finding and viewing a home to rent or buy.
Our back-end will still provide all the traditional features of a real estate product such the property’s price, photos and details. We will come to market with a product which is easier to use for the consumer but, perhaps even more importantly, it will provide greater benefits for the estate agents. It will put the power of information back into the hands of the listing agents, reduce the cost to list a property and allow for direct interaction between the agent and the consumer.
How does the Home Open revenue model work? 
Our product will be free for estate agents to use the app and advertise all their products. It will also be free for the consumer to use. We want to make sure that we don’t have any barriers to entry to ensure we get mass market appeal. 
The problem this model can cause is that it forces you to cover the product in advertising, which can easily turn the consumer off. Home Open will offer a completely different form of paid advertising which will be incorporated into the application. Currently, no competitor in the real estate sector is using this method, even though it is being used successfully in other industries. 
Our second stream of income will be from in-app purchases which can be made through the application. This will cover information similar to that which is available for purchase through RP Data, however will be available in our application in a much more efficient manner.
Thirdly we will offer individual estate agents, for a set fee, a unique add-on product. This will allow them to capture even more data about the consumer and increase the communication channels currently on offer.
When do you expect the product to launch?
Our anticipated launch will be mid-2014 for Version 1. This will cover the iPhone, Android, iPad and web applications. We will look to provide regular updates to continually roll out new features in the application.
Our timeline is to be at Version 1.6 by the end of 2014. That would see some unique and exciting features incorporated into the application.
Your company recently ran focus groups with real estate agents on the apps’ branding. What are the next steps for development? 
Our iPhone product has been built and approved by Apple. 
As announced to the share market, the team is currently working on the Android and website versions.
As announced to the ASX [on March 10] we have just raised an additional $3.86 million, this will bring our cash balance to around $6.5 million. This means we are well funded to bring Home Open to market.
We had originally forecast in our prospectus to spend around $850,000 over the first 12 months marketing Home Open, however we have significantly increased that after the latest capital raise. We are now forecasting to spend closer to $2.5 million over the coming 12 months. This will include a large nationwide advertising campaign.
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Q&A: Will new site Home Open challenge Domain and REA?

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A recent Administrative Appeals Tribunal decision has reminded rental property owners to be particularly careful with record keeping if they claim to be conducting a business of letting rental properties.
In <a href="https://www.propertyobserver.com.au/https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/AATA/2014/9?stem=0&amp;synonyms=0&amp;query=taxation%20and%20chemist%20and%20property" target="_blank">the AAT case</a>, a taxpayer appealed the Australian Taxation Office’s decision that she was not carrying on a business of letting properties and was not entitled to claim certain tax deductions.
The taxpayer worked full-time as an industrial chemist and owned rental properties with her husband. The couple had been investing in property since the 1990s and owned nine properties in the 2003-2005 income years, to which the dispute related.
The taxpayer declared a net rental loss for those years and argued that she carried on a business of letting rental properties.
The AAT sided with the taxpayer in agreeing that she was carrying on a business in letting properties and allowed claims including part of her telephone, computer and work-related expenses.
It refused several other deductions, including car and travel expenses, repairs and maintenance costs, and the costs of investment seminars, saying that either the link to the taxpayer’s income-producing activities was not strong enough, or that she had “insufficient or unsatisfactory substantiation” of the claims.
HLB Mann Judd tax partner Peter Bembrick said it was rare for someone who had another full time job to claim to be operating a business of letting properties. He said in this case, the number of properties and the fact that the taxpayer had a track record of letting rental properties would have affected the decision that she was carrying on a business.
The taxpayer in this case did not have a business plan, and the rental activities had never returned a profit but the AAT found that that she intended to make a profit by increasing rents and buying more properties.
“The general test of carrying on a business is that it all comes down to: Are you doing it in a business-like manner? The scale is important but exactly how are you going about it?” Bembrick said.
“It would be helpful to have a business plan that can show that you are serious about the enterprise and that you had set out to make money. The ATO often has a problem with loss-making ventures such as primary production and agribusiness operations that make losses year after year and can’t show how they are ever going to make a profit.”
Bembrick says rental properties could be negatively geared and still be part of a business but there would have to be proof that there were prospects of making an income from the operation. “If you’re solely dependent on making a capital gain the ATO might say it’s an investment not a business,” he said.
The main advantage in claiming to be conducting a business rather than holding investment properties is that more deductions are potentially available to people who are running a business.
Bembrick said that for most people who owned one, or a few, properties the deductions available to investors would be adequate.
The ATO may allow investors to claim deductions for home office and transport expenses relating to managing an investment property portfolio.
Both business operators and investors needed to maintain log books, diary notes and evidence of the expenses incurred in managing the properties, Bembrick said. Any training courses would have to have a clear link to the income-producing activities.
“People try to claim all sorts of courses, and maybe draw a long bow between the seminars and making investments. It would come down to the nature of the seminar,” Bembrick said.
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Landlords warned to keep careful records when claiming rental properties as business

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The number of first home buyers in the market is understated by official statistics, according to a panel of mortgage industry representatives.
Mortgage managers from lending institutions and broker networks who participated in the panel for the Deloitte Australian Mortgage Report for 2014 said their own statistics showed that there were more first time buyers in the market than Australian Bureau of Statistics data indicated.
According to ABS figures, first home buyers make up a record-low proportion of all buyers in the market at just over 12%.
However Deloitte banking partner James Hickey, who facilitated the panel discussion for the mortgage report, said panellists argued that while there were fewer first time buyers in the market than usual, some were being omitted from official data as they did not qualify for first home owner incentives.
Those who did not qualify for the grant included first home buyers whose parents were helping with the purchase, foreign buyers who were newly migrating to Australia, and those who were buying properties valued at above the threshold for receiving assistance.
First home owner concessions available now apply only to some newly built properties worth up to $650,000. Under previous schemes, grants were available for first time buyers of new or established dwellings who bought properties worth up to $835,000 between 1 January, 2011 and the end of the scheme in October 2012, or up to $750,000 for properties that settled in 2010.
The Deloitte report found that while there had been lift in total mortgage settlements to $28 billion each month, the highest rate on record, most of the activity was due to existing owner-occupiers upgrading and investors returning to the market, rather than first home buyers entering. 
The report also revealed that more than one quarter of first home buyers were aged over 35 years, with more than 5% aged 45 and over. About half of first home buyers were aged between 25 and 34. 
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True first home buyer numbers are understated: Deloitte

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Live pub theatre the Old Fitzroy Hotel in Sydney’s inner-east is for sale by expressions of interest as the hospitality sector faces consolidation and increased transaction activity.
The iconic pub in Woolloomooloo, about 2 kilometres from Sydney’s CBD, is <a href="/expert-insights/investing/old-fitzroy-hotel-in-woolloomooloo-put-on-sales-block">being sold as a freehold</a> going concern by private owner Garry Pasfield.
Transaction activity for freehold pubs rose in 2013, with the cost of debt low and lenders competing for market share. Experienced hoteliers such as Arthur Laundy and private equity and institutional funds including the John Singleton and Mark Carnegie-led Australian Pub Fund were active buyers.
Other pubs, including <a href="https://www.propertyobserver.com.au/victoria/the-espy-hotel-up-for-sale-four-things-you-didnt-know-about-the-melbourne-landmark/2014022567907" target="_blank">Melbourne live music icon The Esplanade Hotel</a> and <a href="/expert-insights/investing/emeralds-mayfair-ridge-tavern-leasehold-interest-listed-for-sale">Emerald's Mayfair Ridge Tavern</a>, are also on the market.
Specialist accounting firm Ferrier Hodgson, in a report into the hospitality sector released in February, predicted further growth in the volume of freehold transactions in 2014, as confidence returned to the sector and access to well-priced debt and equity finance improved.
The report cautioned that the Sydney market could be subdued in the first half of 2014 as investors waited to assess the effects of strict new lock-out laws, which came into force on February 24 in certain precincts.
Ferrier Hodgson said gaming venues may suffer revenue drops of up to 30% as a result of the new laws, and yields on affected pubs could soften by 0.25 to 1.5%.
“This has the potential to affect the sector as a whole as investor demand increasingly shifts towards assets with truly diverse product offerings, revenue streams and lower operational risk profiles,” the report noted.
The Old Fitzroy falls within the Sydney CBD Entertainment Precinct and has a gaming room with 15 poker machine entitlements, but its business is diversified, being Australia’s only live pub theatre.
Last April, Sydney Independent Theatre Company took up residence at the pub and uses the space six days per week, following the relocation in February 2013 of performance group Tamarama Rock Surfers which had been based at the venue for the previous 16 years.
The pub has been operating on the site since around 1910. It has a public bar, ground floor restaurant, beer garden, function room, commercial kitchen and accommodation rooms and offices on its second floor.
It received TimeOut Sydney’s Best Pub Award in 2012 and Hall of Fame Award in 2011.
CBRE’s Peter Vines and Daniel Dragicevich have been appointed to sell the property.
“We expect this iconic hotel will attract strong interest from a range of potential buyers including experienced operators looking to drive revenue in the already successful ground floor areas and further establish the underutilised first and second floor areas to achieve strong growth in profitability,” Dragicevich said.
The hotel’s public bar features vintage interiors, while the recently refurbished upstairs bar is more modern.
Dragicevich said the hotel held redevelopment potential and would benefit from further refurbishment, “particularly the upstairs bar which is currently underutilised, but would be perfectly suited to a cocktail, whisky or craft beer bar”.
Expressions of interest close March 27. 
</body></html>

Iconic pubs for sale as freehold transaction activity increases

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

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

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

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

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

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

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

Sammut secures approval for debut Brisbane apartment development in Toowong

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

Zoe Fielding

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