<a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> has lodged plans for a $750 million, three-tower mixed-use precinct that would complete the long-running redevelopment of Carlton's former Carlton United Breweries site.

The proposal at <a href="https://www.apartments.com.au/new-apartments/185-195-queensberry-street-carlton-vic-3053">46-78 Bouverie Street and 185-195 Queensberry Street</a> spans a 6,468 sqm site, the last remaining undeveloped parcels within the former brewery's 2007 masterplan.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the development will comprise two purpose-built student accommodation towers and a third build-to-sell apartment tower above a shared commercial podium and basement.

Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.

The apartments will sit in the tallest tower, which will rise nearly 200m and 55 storeys. It will become&nbsp;one of the more substantial new build-to-sell apartment projects at the northern edge of Melbourne's CBD.

The apartment mix is weighted toward smaller inner-city product, with 188 studios, 206 one-bedroom apartments, 192 two-bedroom apartments and 20 three-bedroom apartments

<img alt="First look: SP Setia plans three-tower finale for Carlton’s former CUB precinct" data-entity-type="file" data-entity-uuid="8271bc87-1b0a-41b7-ac73-a425ee375261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/3_2.png?VersionId=G4lw23o90B1boX4k4dj7rdz2ZEajS9wy" />

Part of the precinct will be a large-scale&nbsp;3,684 sqm supermarket and a further 2,198 sqm of speciality retail, creating close to 5,900 sqm of new commercial space within the precinct.

But one of the biggest components of the proposal is what sits between the buildings.

Around 4,650 sqm, or roughly 72 per cent of the site, will be publicly accessible open space, incorporating plazas, pedestrian connections, landscaped laneways and retail spill-out areas.

The ground plane is intended to finally complete pedestrian connections envisaged when the CUB masterplan was first approved nearly two decades ago, stitching together Victoria Street, Queensberry Street, Bouverie Street and Swanston Street through the former brewery precinct.

Urbis said the development would "complete the CUB precinct", with the public realm providing important north-south and east-west connections through what is currently the final undeveloped portion of the masterplanned site.

SP Setia is also exploring a new linear park within the Bouverie Street road reserve, with the concept to be developed further with the City of Melbourne through the planning process.

The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.

The planning report acknowledges the proposed heights exceed those contemplated under the original Comprehensive Development Plan and masterplan, but argues the built-form context has changed considerably over the past two decades.

Urbis said the three towers would instead create a stepped transition between Carlton and the Hoddle Grid, rising progressively from the 94.1-metre Tower One along the Queensberry Street edge to the 199.44-metre Tower Three closer to the established CBD-scale buildings to the south.

<img alt="SP Setia" data-entity-type="file" data-entity-uuid="e885a07a-592c-40fc-bf82-e6dbaf32da54" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.52.24%E2%80%AFAM.png?VersionId=7s_ErUkSKAdY1mAWp3GRZgMNCGtwhk5m" />

SP Setia plans to deliver the development across three stages.

Stage One would deliver the basement, podium and retail areas for the entire precinct alongside the first student tower. Tower Two would follow in Stage Two, before the 606-apartment Tower Three is delivered as the final stage.

If approved and delivered, the project would close out a redevelopment process that has been underway since the former brewery masterplan was approved in 2007, adding more than 2,600 student beds and apartments to a precinct already home to Swanston Central, the Barak Building, RMIT Design Hub and several large student accommodation developments.

&nbsp;

&nbsp;

Joel Robinson

SP Setia plans three-tower finale for Carlton’s former CUB precinct

Melbourne developer Lowe Living is seeking to add to its growing bayside apartment pipeline, filing plans for a boutique eight-residence development in tightly held Middle Park.

Lowe Living, which has built much of its development portfolio across Melbourne's affluent bayside and south-east suburbs, is behind the plans for the 730 sqm site at <a href="https://www.apartments.com.au/new-apartments/123-125-erskine-street-middle-park-vic-3206">123-125 Erskine Street</a>, just off Armstrong Street and within the Armstrong Street Neighbourhood Activity Centre.

The developer is seeking approval for a five-storey residential building above two basement levels, with just eight large-format apartments and 18 car spaces.

“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.

"Eight residences is exceptionally boutique, but that's precisely what this site calls for.

“There is a strong community in Middle Park and the surrounding suburbs who have spent decades building a life here. They no longer want the maintenance of a large period home, but they aren't prepared to compromise on space, quality or location. We think there is a real opportunity to capture that hyper local market. A site like this rarely comes to market.”

<img alt="Lowe " data-entity-type="file" data-entity-uuid="875fe572-0f14-4d90-9e11-55b28dd07731" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.42.49%E2%80%AFAM.png?VersionId=GDNQRv9BfpR9r1zkZ5UDyUM4ZvpIksut" />

The low-density proposal has been designed by Cera Stribley and is being progressed through the Victorian Government's Great Design Fast Track pathway, having already secured eligibility from the Minister for Planning.

The Office of the Victorian Government Architect supported its eligibility after finding the proposal demonstrated consistency with the program's seven design principles, while the project's financial feasibility has also been independently confirmed by Invest Victoria.

The project is targeting the downsizer market, with the planning documents describing the homes as larger-format residences and noting the two penthouses could otherwise have been configured as four separate apartments.

<img alt="Lowe 2" data-entity-type="file" data-entity-uuid="60ab0987-2da6-4175-adac-315dcf6053c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.15%E2%80%AFAM.png?VersionId=bOCPH0B2MFwlmaRW.TTCF9TzyifgVoQI" />

The site has dual frontage to Erskine Street and Canterbury Place and currently comprises a collection of commercial buildings used as offices, including a former heritage bakehouse, a former stable, a later gabled addition and a central courtyard.

It sits within the Commercial 1 Zone and the Armstrong Street Commercial Precinct heritage overlay, with the existing property classified as a contributory heritage place.

Heritage has subsequently played a significant role in Cera Stribley's design.

The front section of the former bakehouse facing Erskine Street will be retained, including its return walls, street-facing hipped roof and chimneys, while the Erskine Street façade and part of the western return wall of the former stable will also be incorporated into the new development.

Levels four and five will be set back five metres from the retained stable façade, while bricks removed through demolition are proposed to be salvaged and reused within the new building where possible.

<img alt="Lowe 3" data-entity-type="file" data-entity-uuid="e97927a9-a2de-4a0f-83b6-65451238abfa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.06%E2%80%AFAM.png?VersionId=VR44AChLrX9q1XPB9GvVQV.ALXXbe4gC" />

Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.

A three-storey infill element will sit between the retained bakehouse and stable façades, with the upper levels recessed behind the heritage fabric. Canterbury Place will similarly feature two three-storey podium forms, separated by a central pedestrian accessway, before the upper two levels step back from the street.

A pedestrian through-link will run through the centre of the project between Erskine Street and Canterbury Place, creating entrances from both sides of the site and introducing landscaping and communal areas through the ground plane.

Landscape architect Acre has designed planting across the ground level, private terraces and upper levels, including a feature canopy tree at level three and integrated planting and arbours across the level four terraces. Five existing Erskine Street trees are proposed to be retained.

Sustainability is also a significant component of the Great Design Fast Track application. The apartments are targeting an average eight-star NatHERS rating, with no residence below 6.5 stars, while the project has achieved a 75 per cent BESS score. Seven of the eight apartments are designed for cross-ventilation, with the remaining residence using mechanically assisted natural ventilation.

The plans also incorporate an 8kWp rooftop solar system, a 5,000-litre rainwater tank and infrastructure allowing future electric vehicle charging for every residence.

Lowe has a strong portfolio across Melbourne's blue-chip suburbs. They recently launched <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House by Lowe Living</a> in Camberwell, their first development in the Stonnington LGA.

Lowe Living unveils Middle Park apartment development

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

<a data-end="327" data-is-only-node="" data-start="250" href="https://www.apartments.com.au/developers/norus-projects" rel="noopener" target="_new">Norus Developments</a> has lodged plans for a new apartment development in Clayton that would add further momentum to the suburb's emerging Green Street corridor.

Plans have been lodged for the consolidated site at <a href="https://www.apartments.com.au/new-apartments/1359-1365-centre-road-clayton-vic-3168">1359-1365 Centre Road</a>, where Norus is seeking approval for 218 apartments across a 12-storey apartment building designed by <a href="https://www.apartments.com.au/architects/life-architecture-and-urban-design">Life Architecture</a>.

The proposal sits within the Clayton Major Activity Centre at the threshold of the planned Green Street corridor, a landscaped pedestrian connection intended to improve links through the precinct towards Clayton Railway Station.

The development would replace the site's existing collection of low-scale residential and commercial buildings with a single consolidated building, introducing significantly greater housing density to this part of Centre Road.

A retail tenancy is proposed at ground level to activate the Centre Road frontage, accompanied by transparent street interfaces and landscaping intended to create a more pedestrian-focused edge to the development.

<img alt="First look: Norus Developments plans landscape-led apartment project for Clayton’s emerging Green Street" data-entity-type="file" data-entity-uuid="0a5a763a-d9e9-4253-af2f-88008de27ebf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Clayton%20a.png?VersionId=S2WJJbat1XVkZwB9SnYtygirXgWHiklX" />

The building has been designed with stepped massing and upper-level setbacks to manage its transition towards surrounding residential properties. The planning report describes the approach as one that integrates the building into the landscape rather than treating landscaping as a secondary element.

"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.

"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."

The report adds that these elements are intended to create "a permeable, pedestrian-focused ground plane that enhances walkability, supports urban cooling and reinforces the emerging Green Street character."

Biophilic and passive design principles extend through the residential levels, with planting, daylight, natural ventilation and views towards landscaped areas forming part of the amenity strategy.

Parking would be concentrated away from the public realm, with 145 car spaces proposed from the rear laneway rather than dominating the Centre Road frontage.

The proposal follows an extensive pre-application process with the City of Monash. Three formal meetings were held between the project team and Council from December 2025 to March 2026, with the scheme evolving through several concept iterations before the current design was lodged.

The project arrives as Clayton prepares for substantial change around its established activity centre and the wider Suburban Rail Loop precinct. Its position on Centre Road places the development within an existing concentration of shops, services and public transport, while the Green Street connection is intended to strengthen pedestrian access towards Clayton Railway Station.

First look: Norus plans landscape-led apartment project for Clayton’s emerging Green Street

<a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> has officially commenced construction on Bronze on Chevron, celebrating the sod turning of its first-ever Gold Coast development and marking a significant milestone in the company's continued expansion across South East Queensland.&nbsp;

Following the successful delivery of premium residential developments throughout Brisbane and the Sunshine Coast, <a href="https://www.apartments.com.au/new-apartments/bronze-on-chevron-8-mawarra-street-chevron-island-qld-4217">Bronze on Chevron</a> represents Gardner Vaughan Group's entry into the Gold Coast market. Bronze will deliver 119 one, two, three and four-bedroom apartments above two ground-level retail tenancies.

[smartcode_project:default project_id=107520 project_image_fid=367193]

The recent sod turning ceremony was attended by Deputy Mayor Mark Hammel, President of the Surfers Paradise Surf Life Saving Club, Cassandra Sedgman, project consultants, purchasers, project partners and invited guests to celebrate the commencement of construction.&nbsp;

Gardner Vaughan Group Chief Executive Officer Simon Betteridge said Bronze on Chevron represented an exciting new chapter for the business.&nbsp;

"We've spent almost four decades building homes that respond to the way people want to live, and we're excited to bring that experience to <a href="https://www.apartments.com.au/developments/chevron-island-qld-4217">Chevron Island</a>," Betteridge said.

"Bronze on Chevron is particularly significant because it marks Gardner Vaughan Group's first development on the Gold Coast following many successful projects across Brisbane and the Sunshine Coast."

[smartcode_project:default project_id=107520 project_image_fid=367183]

Betteridge said the ground breaking is a proud moment for the&nbsp;team and their purchasers, who can now see their future homes beginning to take shape.&nbsp;

"As both developer and builder, we're able to oversee every aspect of the project from design through to construction, ensuring the quality and attention to detail Gardner Vaughan Group has become renowned for."&nbsp;

Designed by acclaimed architectural practice <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, Bronze on Chevron has been thoughtfully designed to complement Chevron Island's evolving streetscape while embracing its relaxed coastal lifestyle.

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029.&nbsp;

[smartcode_project_cta:default project_id=107520]

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029

Gardner Vaughan Group breaks ground on first Gold Coast development, Bronze on Chevron

Sydney’s property market is known for high prices, competitive bidding, and mounting pressure on first home buyers. But change is on the horizon.

From late 2025, eligible first home buyers in New South Wales will have access to a new federal government initiative aimed at addressing affordability: the Help to Buy Scheme.&nbsp;

<h2>What is the Help to Buy Scheme?</h2>

The program introduces a shared equity model intended to reduce the upfront cost of entering the property market, particularly in high-demand urban areas such as Sydney.

The scheme operates under a shared ownership structure in which the federal government takes an equity stake of up to 40 per cent for new homes, or 30 per cent for existing dwellings. This arrangement allows eligible buyers to significantly reduce their loan size and avoid the added cost of Lenders Mortgage Insurance (LMI).

Under this model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required. The government’s contribution is not a loan but a co-ownership stake in the property. As such, there is no interest or rent charged on its portion.

Because the government’s equity combined with the buyer’s deposit typically meets or exceeds the 20 per cent threshold, LMI does not apply. The remaining balance, generally between 60 and 70 per cent of the property’s value, is financed through a standard home loan with a participating lender.

The government's equity in the property remains in place until the buyer chooses to repay it voluntarily or until the property is sold. Buyers can buy back the government’s share over time, in increments of at least five per cent, depending on their financial situation.

There is no fixed repayment timeline, but the amount to be repaid will be based on the property's market value at the time of repayment, not the original purchase price.

<h2>How do you qualify for the&nbsp;Help to Buy Scheme?</h2>

To qualify for the Help to Buy Scheme, applicants must meet the following conditions:

<ul>
	<li>Be an Australian citizen at least 18 years of age.</li>
	<li>Be a first-home buyer who does not currently own property.</li>
	<li>Intend to live in the property as their primary residence.</li>
	<li>Earn less than $100,000 per year for individuals, or $160,000 for couples.</li>
	<li>Purchase a property within the regional price caps, currently $950,000 in Sydney, though this is expected to rise to approximately $1.3 million ahead of the program’s launch.</li>
</ul>

While the Help to Buy Scheme does not solve affordability challenges across the board, it does offer a more accessible pathway for a defined segment of the market, particularly younger buyers with moderate incomes who have been priced out of traditional lending routes.

The scheme is expected to commence in NSW in late 2025, as part of a national rollout.

Under the new model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required

Help to Buy Scheme: What first home buyers in NSW need to know

The First Home Owners Grant (FHOG) is a government initiative designed to help eligible first-time home buyers by offering financial assistance towards the purchase or construction of a new home.

While the FHOG is a nationwide program, it is administered separately by each state and territory, meaning the eligibility criteria, grant amounts, and property requirements can vary depending on your location. This means that the amount available and the conditions attached to the grant will differ, so it is important to check the specific guidelines for your state or territory.

It’s important to note that the FHOG is just one of several incentives available to first home buyers. In most states and territories, the grant is not linked to stamp duty exemptions or concessions, with the exception of the Australian Capital Territory (ACT). The FHOG is typically a one-off payment, reducing the overall cost of purchasing or building a new home before any stamp duty concessions are applied.

Below, we provide a breakdown of the First Home Owner Grants available across Australia, outlining the specific details for each state and territory.

<h2>New South Wales First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $600,000. For land purchases and owner-builders, the threshold extends to $750,000.

Stamp Duty Benefits: Provides full stamp duty exemption for homes valued up to $800,000, with concessions available for properties up to $1 million.

<h2>Victoria South Wales First Home Owner Grant</h2>

First Home Owner Grant: Provides a $10,000 grant for first-home buyers purchasing or building new homes valued up to $750,000.

Stamp Duty Benefits: Offers full stamp duty exemption for properties up to $600,000, with concessions available up to $750,000.

<h2>Queensland First Home Owner Grant</h2>

First Home Owner Grant: Offers $30,000 for contracts signed between 20 November 2023 and 30 June 2025. The FHOG applies to new homes valued up to $750,000.

Stamp Duty Concessions: Provides additional concessions for properties valued up to $800,000.

<h2>Western Australia First Home Owner Grant</h2>

&nbsp;

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $750,000 in the southern regions and up to $1 million in the northern regions.

Stamp Duty Concessions: Available for homes valued up to $600,000 for transactions entered into on or after 9 May 2024.

<h2>Australian Capital Territory First Home Owner Grant</h2>

First Home Owner Grant: Replaced by the Home Buyer Concession Scheme, offering full stamp duty concessions for eligible buyers.

<h2>South Australia First Home Owner Grant</h2>

First Home Owner Grant: Provides up to $15,000 for new homes, including houses, apartments, and townhouses. As of 6 June 2024, there is no property value cap for eligibility.

Stamp Duty Relief: Available for new homes and vacant land purchases.

<h2>Tasmania First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes and off the plan purchases.

Stamp Duty Exemption: Between 18 February 2024 and 30 June 2026, first home buyers of established homes valued up to $750,000 receive a full exemption on property transfer duty.

<h2>Northern Territory First Home Owner Grant</h2>

First Home Owner Grant: The Northern Territory provides a $10,000 grant for new homes only. Additional government grants and concessions are available for first home buyers.

Stamp Duty Exemption: The only stamp duty exemption available to property buyers is the House and Land Package Exemption (HLPE).

Eligibility criteria and application processes differ across states. Prospective buyers should refer to their respective state revenue offices for full details on grant availability, conditions, and additional concessions.

Every First Home Owner Grant for new property by state

In the ever-evolving landscape of sustainable architecture and environmentally conscious design, systems and ratings in place can help determine the energy efficiency of residential buildings in Australia.

Australia has multiple building rating systems that evaluate energy efficiency and sustainability in existing and new building designs.

Some systems assess individual building components, while others provide an overall rating for the entire structure.

A rating system ensures that homes are comfortable and energy-efficient, whether you are buying, renovating, or building.

NatHERS (Nationwide House Energy Rating Scheme) is a common way for new homes to meet energy efficiency requirements.

As new developments continue to shape the urban environment, understanding NatHERS ratings becomes essential for developers and homeowners. This article delves into the concept of NatHERS ratings, their significance, and how they contribute to creating energy-efficient homes.

<h2>What is NatHERS?</h2>

NatHERS is a national initiative implemented by the Australian government to promote energy efficiency in residential buildings. The scheme aims to provide a standardised method for assessing the thermal performance of homes, considering factors such as insulation, orientation, ventilation, and building materials.&nbsp;

NatHERS ratings are the most common way new homes meet the National Construction Code's (NCC's) minimum energy efficiency requirements.&nbsp;

NatHERS assessments provide thermal and whole-home ratings for new homes, townhouses, and apartments.

The rating helps evaluate the energy performance of buildings, guides homeowners and developers to make informed decisions about the energy efficiency of their properties, and encourages the construction of more sustainable, comfortable, and cost-effective homes.

<h2>How NatHERS Ratings Work</h2>

NatHERS ratings are determined through four accredited software tools (AccuRate, BERS Pro, FirstRate5, HERO) using a calculation engine CSIRO developed to predict building temperature based on various factors.

The tools can model complex effects of building mass, insulation, window size, and other elements.

The outcome is a star rating that reflects the building's overall thermal efficiency, indicating how well it can maintain a comfortable indoor temperature without excessive reliance on heating or cooling systems.

The star rating scale ranges from 0 to 10, with a 6-star rating being the minimum requirement for compliance with the National Construction Code (NCC).&nbsp;

Achieving a higher star rating demonstrates a commitment to energy efficiency and sustainability, as the building is better equipped to minimise its environmental impact and reduce long-term energy costs.

Anyone can use NatHERS tools, but accredited assessors can provide certified ratings and professional advice.

<h2>Benefits of Higher NatHERS Ratings</h2>

Energy Efficiency: Buildings with higher NatHERS ratings are more energy-efficient, requiring less heating and cooling energy. This reduces the structure's carbon footprint and lowers occupants' energy bills.

Cost Savings: Homes with higher NatHERS ratings are generally more energy-efficient, resulting in reduced energy consumption for heating and cooling. This translates to lower energy bills for homeowners, making sustainable living environmentally friendly and economically viable in the long run.

Environmental Impact: Lower energy consumption directly translates to a reduced environmental impact. Buildings with higher NatHERS ratings contribute to the overall goal of mitigating climate change by lowering greenhouse gas emissions associated with heating and cooling systems.

Improved Comfort: Buildings with high NatHERS ratings offer better thermal comfort to occupants. Proper insulation, well-designed ventilation, and optimal orientation maintain a consistent and comfortable indoor temperature, providing occupants with a more enjoyable and healthier space.

Market Value and Desirability: Higher NatHERS ratings can enhance the market value of a property. As energy efficiency becomes a more significant consideration for homebuyers, a well-rated building may attract a premium price and stand out in the real estate market.

Compliance with Building Codes: NatHERS ratings are a vital component of the National Construction Code (NCC), and compliance with these ratings is often a mandatory requirement for new developments. Local councils and planning authorities may set minimum energy efficiency standards that must be met to obtain development approval.

The Nationwide House Energy Rating Scheme (NatHERS) is a crucial initiative shaping the future of energy-efficient, resilient, and cost-effective homes. With its recent upgrades, NatHERS has evolved into a world-leading tool for the building sector, supporting the global commitment to achieving net-zero emissions by 2050.

Staff Writer

What is a NatHERS rating in new off the plan apartment developments?

Mixed-use developments have gained significant popularity across Australia in recent years due to their unique blend of residential, commercial, and recreational spaces.

Unlike traditional single-purpose developments, mixed-use projects offer a harmonious integration of various functions within a single locale.

Residential units seamlessly coexist with commercial establishments, retail outlets, dining venues, entertainment hubs, and recreational facilities, with the combination not only enhances convenience but also fosters a vibrant lifestyle and a sense of community.

<h3>Convenience and accessibility</h3>

Mixed-use developments are designed with convenience in mind. They often integrate residential units with commercial spaces, retail outlets, restaurants, and recreational facilities, creating a self-contained community.

[smartcode_project:default project_id=114215 project_image_fid=204874]

The proximity allows residents to enjoy the convenience of having essential amenities and services within walking distance. Whether it's grabbing a cup of coffee, going grocery shopping, or accessing healthcare services, everything is conveniently located, saving residents time and effort.

<h3>Vibrant lifestyle and community</h3>

One of the major advantages of mixed-use developments is the vibrant lifestyle they offer. With a diverse range of amenities and communal spaces, residents have ample opportunities to interact, socialise, and build a sense of community.

[smartcode_project:default project_id=107714 project_image_fid=214122]

The presence of parks, community centres, and shared spaces fosters a lively atmosphere, encouraging residents to engage in various activities and events. The vibrant lifestyle within these developments creates a unique sense of belonging and camaraderie among the residents.

<h3>Potential for higher rental yields and property value appreciation</h3>

Mixed-use developments tend to attract a broad range of tenants and buyers due to their versatile nature. This high demand can result in higher rental yields for investors and potentially lead to property value appreciation over time.

[smartcode_project:default project_id=139989 project_image_fid=212887]

The integration of commercial and retail spaces attracts businesses, which can provide a stable rental income stream. Additionally, the popularity of mixed-use developments often drives up property values, making them a potentially lucrative investment in the long term.

<h3>Enhanced security and maintenance</h3>

Mixed-use developments typically have comprehensive security measures in place. With controlled access points, CCTV surveillance, and professional security staff, residents can enjoy enhanced safety and peace of mind.

[smartcode_project:default project_id=108019 project_image_fid=212658]

Additionally, these developments often have dedicated maintenance teams responsible for the upkeep of common areas, landscaping, and infrastructure. This ensures that the overall appearance and functionality of the development are well-maintained, creating a pleasant living environment for residents.

<h3>Live-work-play balance</h3>

One of the key attractions of mixed-use developments is the ability to achieve a desirable live-work-play balance. The integration of residential and commercial spaces allows residents to live closer to their workplaces, reducing commuting time and improving work-life balance.

The proximity to various amenities and recreational facilities encourages an active and healthy lifestyle. Residents can easily access fitness centres, parks, restaurants, and entertainment options, all within the same development, leading to a more fulfilling and convenient way of life.

alisonwarters@gmail.com

The top five reasons to buy in a mixed-use development

When buying a property, everyone needs to be aware of the additional costs that come as part of the buying process.

Often the largest outlay, after the deposit which goes to the bank, is stamp duty.

<h2 style="line-height: 1.38;">What is Stamp Duty?</h2>

Stamp duty is an extra tax to pay the government when you buy land, a property, and other certain assets.

It happens when the legal ownership is transferred. It can also be known as property transfer duty or transfer duty.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="415" src="https://www.youtube.com/embed/C32BWkB5--c" title="YouTube video player" width="660"></iframe>

<h2>Who pays Stamp Duty?</h2>

In some circumstances, you may get an exemption. For some states, you won’t have to pay for stamp duty if you are a first home buyer or a pensioner for houses under a particular price. There are also stamp duty concessions, where you may be entitled to a discount.

<h2>How much does Stamp Duty cost?</h2>

Each state has different rules which affect how much you need to pay. These rules can affect the rate you pay, and the timeframe you will need to pay in. Before you buy land or a property, make sure you check the up-to-date information for your state’s stamp duty.

You can use a free stamp duty calculator online to see approximately how much you’ll need to pay. Find out if you’re eligible for an exemption by enquiring on a project via Urban!

Overall, the stamp duty you need to pay will depend on:

<ul>
	<li aria-level="1">How much your land/property is worth</li>
	<li aria-level="1">Where your land/property is located</li>
	<li aria-level="1">What type of land/property it is</li>
</ul>

Want to find out more? <a href="https://www.youtube.com/@UrbanAustralia?utm_source=YouTube&amp;utm_medium=Video&amp;utm_campaign=Subscribe&amp;utm_id=Subscribe">Subscribe to our YouTube channel</a> for more property videos.

Ellen Walker

Off-the-plan property explained: What is stamp duty?

National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.

NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB changed its call following the August monthly inflation figures that were released at the end of September, showing it had dropped to 2.7 per cent.

"The risk has been skewed to a first cut earlier in 2025, and today’s change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," NAB noted in its latest update.

They added that the cadence of the cuts may be faster than its central profile.

"Domestic inflation pressures are cooling, but only gradually, and we continue to expect the conditions for a cut will not be in place this year.

NAB believes the easing cycle will end at 3.1 per cent by early 2026, which is five cuts from the current 4.35 per cent cash rate.&nbsp;

CBA also thinks 3.1 per cent will mark the end of the cutting cycle, while Westpac is forecasting 3.35 per cent, and ANZ is the most pessimistic at 3.6 per cent, which would be just three interest rate cuts.

<h2>What would a rate cut in February look like for borrowers?</h2>

According to&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2vK2ujS77CHs9VRvSSXzLC" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG" target="_blank">Canstar</a>, if there is a cut in February, a borrower with a $600,000 loan today and 25 years remaining would see their monthly repayments drop by $92.&nbsp;

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			Impact of 0.25% pt cut in February 2025
			</td>
		</tr>
		<tr>
			<td>
			Current loan size
			</td>
			<td>
			Drop in monthly repayment
			</td>
			<td>
			New monthly repayment
			</td>
		</tr>
		<tr>
			<td>
			$600,000
			</td>
			<td>
			-$92
			</td>
			<td>
			$3,907
			</td>
		</tr>
		<tr>
			<td>
			$750,000
			</td>
			<td>
			-$114
			</td>
			<td>
			$4,884
			</td>
		</tr>
		<tr>
			<td>
			$1M
			</td>
			<td>
			-$153
			</td>
			<td>
			$6,512
			</td>
		</tr>
		<tr>
			<td colspan="3">
			Source:&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2qVnp6oqATgqDUi2Frm22q" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL" target="_blank">www.canstar.com.au</a>. Starting rate is the RBA existing average owner-occupier variable rate of 6.36%. Assumes banks pass the cash rate cut on in full the month after the meeting.
			</td>
		</tr>
	</tbody>
</table>

Canstar Data Insights Director, Sally Tindall, says if core inflation continues to track in the right direction, or unemployment starts to accelerate significantly, we could well see a cash rate cut as early as February of next year.

“All four big banks now believe the RBA will be ready to cut the cash rate in just over four months’ time, if not before, in the case of CBA.

“However, the outlook for both inflation and unemployment is still highly uncertain. A couple of wobbly sets of inflation data could see the RBA holding for longer, particularly if unemployment remains relatively steady."

&nbsp;

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB bring forward first RBA cut to February 2025

<html><body>
Thankfully Paul Howes, national secretary of the Australian Workers Union, and Garry Weaven, chair of Industry Funds Management, have zero influence on economic policy. Last week, both made some absurd points and claims regarding monetary policy, the inflation target, the Australian dollar and the operations of the RBA. Both Howes and Weaven revealed the shallowness of their experience by showing little or no understanding of the critical importance of the inflation target. It is imperative that the inflation target remains in place because ongoing low inflation is the best thing policy makers can deliver if there is to be a boost to competitiveness, productivity and with those, employment and real wages. There is also zero chance that the RBA charter is going to change, at least under this government, nor will the inflation target change, nor will there be any material changes to how the RBA works. Howes’ and Weaven’s comments deserve criticism, as do others who say and write misguided, factually flawed or faulty economic analysis. The economy is too important for ill-informed commentary and misguided policy prescriptions. Which brings us to the point made by an ignorant and sometimes politically biased few that the RBA now is somehow being politicised, losing its independence or being lent upon by the government. That clearly is a fantasy. If it were true, the only way it would show up would be in the RBA having inappropriate monetary policy settings and not achieving its inflation target. There is no other way to even vaguely support the claim of political interference or undue influence. Is there any other way any such politicisation of the RBA board would show up? Clearly not, and only poor quality, inexperienced and/or biased commentators trying to get some attention would suggest that the RBA is structurally flawed due to any government decision or appointment. Let’s turn this around and look at some facts to see whether there ever has been any political influence on the RBA. Before starting, let’s agree with the unanimous assessment that a series of monetary policy changes starting today will not have a material impact on inflation for a year or two. There is no debate about the long lags between interest rate changes and the impact on the economy. Consider the only bad miss of the RBA in terms of its 2 to 3% target for inflation. That error of the RBA showed up in the period from the end of 2007 to the end of 2009 when the underlying inflation rate averaged a shocking 4.0% having hit a peak of 5.0% in the September quarter of 2008. That monetary policy error had its seeds sown during 2005 and was really compounded during 2006 and early 2007 when policy was too loose for too long. It must have been – there is no other explanation for such a bad miss on inflation. Recall that in 2005, with mortgage rates some 50 basis points lower than where they are today, the RBA delivered just one, piddling 25 basis point rate hike having left interest rates steady at very accommodative settings right through 2004. In 2006, the year started with monetary policy still accommodative and despite the massive upswing in the terms of trade and sharp falls in unemployment, the RBA dragged the chain with just 3 hikes in the year.  Only at the very end of 2006 did the mortgage rate reach neutral; that is, roughly where it is today. Clearly, the RBA delivered easy monetary policy for a very long three year period. It is unlikely that there was any direct political interference on the RBA over that time, but curiously, it was the Liberal Party appointed board of the RBA, including Governor Ian Macfarlane, that so badly blew the inflation target. Monetary policy was kept too easy in the period from 2005 to 2007, curiously when the Liberal Party was in office and when Prime Minister Howard and Treasurer Costello used monetary policy and interest rates in its campaigning and economic rhetoric in a way the current government is still a million miles from approaching. By the end of 2002, every member of the RBA Board with the exception of Frank Lowy, had been a Liberal Party appointment. Mr Lowy’s term ended in December 2005 meaning that during 2006 and up to the election in 2007, every RBA board member was a Liberal Party appointee. It was only when Glenn Stevens became governor, in September 2006, that monetary policy moved towards an appropriately tight setting. While Glenn Stevens was appointed by the Coalition, there were no other contenders for the role when Ian Macfarlane retired. To appoint anyone else would have been truly shocking.
Stevens quite forcefully delivered 5 interest rates hikes in his first 16 RBA board meetings as governor, including two in early 2008 when the financial crisis was rapidly unfolding. Finally, the RBA was acting to reign in inflation with a hugely hawkish approach. And to the credit of Glenn Stevens and the RBA, that policy approach worked with inflation back on target by the middle of 2010. The underlying inflation rate has been 2.75% or less since the middle of 2010 and it will be probably be close to, or at a 12 year low below 2.5%, when the March quarter CPI is released on April 24.  Unemployment has also recently edged up, fiscal policy has been tight, the world economy weak, yet the 'politicised' RBA has rates at the upper end of neutral and shocked the market in the early months of 2012 by not cutting interest rates. This is despite only 3 of the 6 outside board members being appointed by the Labor Party. And just getting back to the key point in this – if the RBA was being politicised, it would show up in monetary policy being too loose for too long and inflation building to a level above the target. The exact opposite is happening right now. In the last 20 years, there has only been one example where monetary policy has been too easy for too long and that was in the period from 2005 to 2007 when every member of the RBA board has been appointed by the incumbent government. Look at these facts and make up your own mind about the issue of politicising the RBA and monetary policy.
 Stephen Koukoulas is managing director of Market Economics and was former economics advisor to Prime Minister Julia Gillard. 
This article originally appeared on Business Spectator and <a href="https://www.marketeconomics.com.au/" target="_blank">Market Economics</a>.
 
</body></html>

skouk-W92Y2kwjBG

Playing politics with the RBA: Stephen Koukoulas

<html><body>
They are two of Australia’s biggest, yet less understood, companies: the lenders mortgage loss insurers, or “LMIs”: Genworth and QBE LMI. 
Both have estimated market values well in excess of $1 billion. Collectively they insure half a trillion dollars’ worth of Aussie home loans. And the recently deferred IPO of Genworth has suddenly brought the industry into focus. In particular, correspondents overseas have argued that this could be the “canary in the coal mine” for the Aussie housing market. 
But it is an odd time to be getting negative on this admittedly oblique industry. Australian Property Monitors reports today that Australian house prices rose by 0.9% in the first quarter of 2012 following the RBA’s two rate cuts in November and December. Unemployment is sitting at a historically low 5.2% and shows no signs of rising. And with the RBA all but certain to cut its cash rate by 50 basis points, which should deliver a net reduction in borrowing rates of about 75 basis points since November, conditions in the housing and mortgage markets are likely to improve further. Declining interest rates, low unemployment, and steady house prices are surely sanguine conditions for LMIs. 
Genworth Australia’s parent was planning on selling (only) 40% of the local business via an ASX listing in 2012. It was slated to be one of the biggest IPOs of the year. The explanation of the deferral of the IPO was tied to the expectation that there would be a “modest loss” reported by the Australian business in the first quarter of 2012. 
Yet it is not clear whether this decision was motivated by the modest loss, or just as much by the desire of the ailing US parent company to keep repatriating valuable dividends delivered by its Australian jewel. I’d suggest the latter is a very real possibility. 
In 2011 alone, the Australian business paid the parent $166 million in dividends. Since that time, there has been a material increase in premiums earned from the sale of insurance in Australia. 
The Australian business also has enormous excess capital. Standard &amp; Poor’s assesses that Genworth Australia’s total assessed capital before debt funding and reinsurance contracts, which further mitigate risk, is $3.3 billion. This is impressive because APRA’s minimum capital requirement for Genworth Australia is just $1.5 billion. The business’s formal Tier 1 capital is $2.3 billion, or over 1.5 times the minimum APRA wants. As the chart from S&amp;P below shows, Genworth’s capital ratios are substantially better than its main competitor, QBE LMI.
Click to enlarge
<a href="/images/stories/genworth.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/genworththumb.gif"></a>
What is more remarkable is that the Australian business has basically no debt at all. S&amp;P assesses total leverage to equal just 4.1%, with a single Lower Tier 2 loan of $140 million outstanding. 
This contrasts strikingly with the AA- rated major banks, which are heavily leveraged with substantial senior-secured (covered bonds), senior unsecured, subordinated and hybrid debt. The typical leverage ratio for the major banks is 15 to 18 times shareholder equity. Here S&amp;P notes that Genworth’s leverage (or lack thereof) is of “AAA” quality: 
“As of Dec. 31, 2011, GFMI's capitalization metrics continue to be very strong, with an S&amp;P capital model score maintained at 'AA,' and APRA MCR multiple of 1.55x. The company's leverage also remains well within our 'AAA' rating tolerance, with the A$140m 10NC5 subordinated debt issue representing 4.1% of total assessed capital.” 
Following the deferral of the IPO, S&amp;P issued no ratings action. Moody’s, on the other hand, put Genworth Australia’s rating “under review”. 
While S&amp;P assumes when giving the Australian business its “AA-“ rating that (1) the IPO doesn’t occur, (2) any reinsurance provided by the US parent, which is a declining minority of the Australian business’s total reinsurance, has zero value, and (3) that the housing market continues to remain “soft” with, importantly, no further interest rate relief, Moody’s has, relatively speaking, had a more negative view on the major banks, the LMIs, and the Australian housing market more generally. 
Notwithstanding their significance to the national economy, the business models of the two LMIs are not well understood. They are nevertheless quite simple. 
In short, Genworth and QBE LMI insure the risk of default on Aussie home loans. Collectively, they cover about $500 billion. Since there is a total of $1.23 trillion of home loans outstanding, the major banks, in effect, self-insure most of the default risk on the remaining $723 billion. The major banks are, therefore, mortgage loss insurers in addition to being deposit-taking and lending institutions. 
The LMIs do make interesting comparisons to the major banks. Unlike the major banks, they have basically no debt. They face no risk of a run on retail deposits, or the refusal of wholesale funders to refinance their debts. They have no exposures to the riskier corporate, personal, or commercial real estate lending markets (as judged by both default rates and APRA). And they have no non-core businesses that can introduce catastrophic risks (e.g., Asian expansion strategies). 
But what does a worst-case scenario for the LMIs look like? Tapping the parent’s US filings, we can look at Genworth’s total loans insured, the share of “bad” loans, and then compare these to the rest of the Australian home loan market. The next chart summarises the first part of this analysis.
Click to enlarge
<a href="/images/stories/genworth1.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/genworth1thumb.gif"></a>
At the end of December 2011, Genworth’s 90-day delinquency rate across its 1.4 million loans was only 0.55%. This represents a fall from 0.59% in the September quarter and 0.56% in the June quarter. Importantly, this delinquency rate is actually below the industry-wide level assessed by the RBA, which was 0.6% at the end of December. 
Genworth’s low delinquency rate is a little surprising given that LMI is assumed to normally only apply to high loan-to-value ratio (LVR) loans of 80% or more. In fact, Genworth also does a lot of portfolio-wide insurance. 
In December 2011, Genworth reported that the weighted-average LVR across its book of 1.4 million loans was 62%. Its geographic distribution of loans is also what you would expect, and in line with the major banks, as the third chart below shows. Only 22% of its loans were originated in Queensland, which is consistent with the state’s share of the overall mortgage market.
Click to enlarge
<a href="/images/stories/genworth2.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/genworth2thumb.gif"></a>
While Genworth’s Australian business has performed consistently well (e.g., during the GFC) and realised a strong increase in new net premium revenue over 2010 and 2011 (see next chart), its “loss ratio”, which reflects claims and provisions relative to premiums earned, had increased slightly over 2011. This is not a total surprise given the RBA’s decision to hike rates in late 2010, and the flat-lining of employment growth thereafter.
Click to enlarge
<a href="/images/stories/genworth3.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/genworth3thumb.gif"></a>
The explanation for the “modest loss” that is expected to be reported in the March quarter reiterates messages Genworth had communicated months earlier to the rating agencies. For example, S&amp;P commented prior to the deferral of the IPO that: 
“GFMI's operating performance has remained steady and in line with our expectations, with Dec. 31, 2011, results showing good year-on-year gross written premium growth of 8.6%. However, this was offset by a loss ratio of 49.5%, up from 43.3% a year earlier due to continued pressure from southeastern Queensland, and certain lenders accelerating the claims process to address aged arrears.” 
What does a realistic worst-case scenario look like? Despite the strong geographic diversification and relatively low LVRs in its portfolio, you could, in such a scenario, boost its delinquency rate seven times to, say, 3%, which is in line with the peak in the UK during the GFC. 
You could then assume that half these loans go bad, which would be about right. So there are full mortgage loss insurance claims on 1.5% of all loans insured. Today the average claim per loan is about $65,000. Let’s hike this to $100,000 per loan. 
Total claims in this scenario would then sum to about $2.2 billion, which is well below Genworth’s current capital of $3.3 billion. Thus without any new funding at all, it could cover this realistic catastrophe. It would, of course, need to raise about $400 million of new capital to meet its minimum APRA requirements. Yet since these claims would be strung out over a period of two to three years, this seems like a straightforward task. 
The LMIs’ business models have risk — but no more than a major bank.
Dr Elvis Jarnecic is a senior lecturer at the <a href="https://sydney.edu.au/" target="_blank">University of Sydney</a>.
 
 
 
 
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cknowlton-QnEa6ntUYP

Genworth no riskier than major banks despite Queensland exposure

<html><body>
John Symond, the founder and chairman of Aussie Home Loans, believes the Reserve Bank of Australia should cut rates by 0.5 percentage points tomorrow to stimulate growth in the non-mining sector of the economy.
"With the ANZ Bank lifting its mortgage rates recently and other banks seeking to do the same, no change or a drop of 0.25% will not do any good for the vast majority of Australians and businesses doing it tough," he says.
Symond says that weak home finance and retail figures are indicators that the economy is struggling with accelerating job cuts across Australia creating fear among consumers, who had reacted by "pulling in their horns."
"The Reserve Bank needs to provide stimulus for consumers to spend again, build or invest in property and take a holiday at home instead of capitalising on the high Australian dollars and travelling overseas.
"The Reserve Bank admitted last month that there is scope for a rate change in May as economic growth is slowing and concerns about unemployment are on the rise while recognising finally that we currently have a two-speed economy," he says.
Evidence of the lack of confidence among borrowers had been found in the surge of inquiries to Aussie from consumers doing their own financial or mortgage health checks.
But he told the News Ltd papers that it was vital that Australians become more vigilant and start asking questions about their mortgages, especially if the Reserve Bank doesn't act decisively at the May board meeting.
"Our research shows that more than 50% of our customers achieve up to a 0.75% saving by switching home loans," he says.
"Apathy is a killer for consumers getting a better deal and controlling their expenses, which will come under further pressure when the carbon tax kicks in on July 1," he says.
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jchancellor-FAypfDUnLy

 RBA interest rate cut of 0.5% needed: John Symond

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Tomorrow I predict the Reserve Bank of Australia is going to cut official interest rates by either 0.25 percentage points or 0.5 percentage points.
Look at the official figures. The Reserve Bank follows a whole lot of economic data, but the number it focuses on is inflation, taken from the Consumer Price Index.
The March quarter CPI came out last Tuesday, and it printed an inflation number well below what most economists were thinking.
The Reserve Bank is bound to use monetary policy to keep inflation in the target range of 2% to 3%. And the March CPI means core inflation becomes around 2.2%.
When this is the trend, the economy might need a kick-start, by reducing the price of money – the cash rate – and hoping that Australians will spend more.
There are other indicators that the RBA could be looking at. I call these my indicators of the “real economy”.
I talk to business owners and I look at the “for lease” signs, the “closing down sale” signs and the “50% off” specials in shop windows.
I look for empty shops, car yards with no people in them and bank boards on the pavement that spruik their deposit rates, not their variable mortgage rates.
I look at the newspapers: who’s being laid off? Car workers and bank staff.
These indicators tell a story of struggling businesses and cautious consumers. This sort of dynamic can become a nasty spiral if it’s not broken at the right time, because consumers become more cautious with their money and businesses wear the consequences, having to lay off staff, which feeds greater consumer uncertainty and feeds a worse climate for businesses.
With my view of the real economy and the CPI and inflation figures, I think it’s time to break the spiral. When you have large concerns such as Toyota and Harvey Norman talking about a downturn in consumer demand, you have to multiply that stress several times to glimpse what the average small business owner is going through.
It’s a dangerous position, because our 3.5 million business owners are our biggest employers. We can cut the cash rate, making borrowing easier for business owners and easier for householders.
But while you can’t affect what the Reserve Bank does, or what the major banks do, you can use a rate cut to your advantage. If you’re not financially stressed, you can continue to make your normal repayment even after the bank cuts your variable rate.
A 0.25-percentage-point cut on a 30-year $300,000 loan at 7.4% will save you just over $50 a month, worth $18,000 over the life of the loan. A 0.5-percentage-point will save you $101 per month, worth $36,000 over the life of a loan.
You can’t change the RBA or your bank, but you can put the interest rate savings straight back into the mortgage, or put them into a high interest bearing fixed interest account. You can’t change the world but you can make good decisions when the cash rate drops.
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance. He runs a <a href="https://twitter.com/#!/markbouris" target="_blank">Q&amp;A session on Twitter</a> every Monday afternoon at 4pm for small business owners using the hashtag #bizQandA.
 
 
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mbouris-tauSvXGAM2

It is time for an RBA interest rate cut

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With underlying inflation figures coming in considerably lower than expected at 0.35% for the quarter and 2.15% for the year, the lowest in 13 years, the Reserve Bank will have little choice but to cut the cash interest rate at their up-coming May meeting.
I have said it back in February, that a further cut should have taken place, followed by another in March and April.
Bringing the interest rate down would have cemented consumer confidence, increase spending and motivated property market activity, I think the RBA got it wrong.
With the consumer price index moving up by just 0.1% for the first three months of 2012 and 1.6% for the year until March, the lowest since the 2009 GFC, the RBA’s decision should not be whether to reduce the rate, but by how much.
While lifting CPI prices on services such as electricity, childcare and water/sewerage, all over 9% increase, place extra pressure on consumers, a considerable interest rate cut would not only ease the situation, but improve consumer confidence, especially in view of the pending introduction of the carbon tax in July.
Since failing to cut the interest rate at recent RBA meetings, I anticipate cuts of up to 1% over the coming few months, which, if passed on by the banks and lenders, would make a considerable difference to existing borrowers and encourage first home buyers into the market.
If the RBA were to reduce the cash rate to 3.25% and banks did pass this fully onto consumers, on a $300,000 mortgage the reduction in repayments would be $250 per month. Surely, this would enhance construction, retail and property sector activity, providing a much-needed boost to our economy.
Robert Projeski is a leading property finance expert and the founder and managing director of <a href="https://%20www.amo.com.au" target="_blank">Australian Mortgage Options</a>. He has appeared on radio and TV and written extensively on property and finance matters.
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rprojeski-4QFJisNwt8

RBA interest rate cut is now a must

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Before yesterday the last time the RBA reduced interest rates by 50 points or more was in February 2009, when it trimmed the cash rate by 100 basis points t0 3.25%.
The February 2009 rate cut was the fourth in a series of successive big rate cuts following the GFC, during which the central bank cut a cumulative 375 basis points from the cash rate of 7% in August 2008.
An even longer series of big rate cuts occurred in the early 1990s following the 1991 recession.
There have been nine smaller interest rate cuts of 25 basis points over the last 22 years.
Over this time the RBA has cut rates 35 times and raised them 27 times.
Here’s a rundown of when rate cuts of 50 basis points or more have taken place:
100 basis points
February 2009 – cash rate down to 3.25%
100 basis points
December 2008 - cash rate down to 4.25%
75 basis points
November 2008 - cash rate down to 5.25%
100 basis points
October 2008 - cash rate down to 6%
50 basis points
April 2001 - cash rate down to 5%
50 basis points
February 2001 - cash rate down to 5.75%
50 basis points
July 1997 - cash rate down to 5.00%
50 basis points
May 1997 - cash rate down to 5.5%
50 basis points
December 1996 - cash rate down to 6%
50 basis points
November 1996 - cash rate down to 6.5%
50 basis points
July 1996 - cash rate down to 7%
50 basis points
July 1993 - cash rate down to 4.75%
50 basis points
March 1993 - cash rate down to 5.25%
75 basis points
July 1992 - cash rate down to 5.75%
100 basis points
May 1992 - cash rate down to 6.5%
100 basis points
January 1992 - cash rate down to 7.5%
100 basis points
November 1991 - cash rate down to 8.5%
100 basis points
September 1991 - cash rate down to 9.5%
100 basis points
May 1991 - cash rate down to 10.5%
50 basis points
April 1991 - cash rate down to 11.5%
100 basis points
December 1990 - cash rate down to 12%
100 basis points
October 1990 - cash rate down to 13%
100 basis points
August 1990 - cash rate down to 14%
100 - 150 basis points
April 1990 - cash rate down to 15% to % 15.5%
50 basis points
February 1990 - cash rate down to 16.5% to % 17%
50- 100 basis points
Jan 1990 - cash rate down to 17.00% to % 17.5%
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lschlesinger-FZcF9M3vE6

The RBA’s biggest interest rate cuts: a timeline since 1990

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Today I am going to dive into two controversial issues: whether the RBA “should” cut rates by 25 or 50 basis points next week, and what I call the “great RBA counter-factual”. That is, what Australia’s inflation rate would have looked like had the RBA not made its many purported policy “errors”.
Let’s deal with the second issue first. You have to pity our inflation-targeting central bank. You get consistently high underlying inflation, and you get slammed. You do the job you were given, lift interest rates, and allow the currency to appreciate (as you expected), and you get some low inflation. Just what you were shooting for.
And, by the way, “low inflation” is not something Australians are used to seeing. It’s not even really that low – still above the bottom of the RBA’s target 2% to 3% per annum band – and when you strip out “internationally traded” good and services, you find that Australia’s “domestic” inflation looks pretty ugly. But you still get slammed again. According to Alan Kohler today, you will be a “bedraggled, hangdog group of economists who shuffle” into your board meeting next week.
Apparently you made a huge mistake delivering what you were supposed to: much lower tradeables inflation, which is the only reason overall Australian inflation has been wrenched back down towards the bottom of your mandated zone.
Yep, because of the RBA’s decisions, Australia’s economic station looks horrific: we’ve had the first mining boom in recorded history without a major inflation outbreak, 5.2% unemployment, interest rates around their long-term averages, business surveys that suggest growth is near trend (as does the unemployment rate), and underlying consumer inflation of 2.2% per annum, which is still above the targets of most other central banks.
There is an enormous amount of circularity in the current debate about Australian inflation and interest rates. Contrary to popular myth, the latest inflation results are not a disaster. They are the very pleasing and expected result of the RBA’s considered policy actions.
Let me put prove this point graphically. If you compare inflation in "domestic" goods and services (called "non-tradeables"), which also happen to be things that we tend to buy more frequently (and are associated with “cost of living” perceptions) with inflation in so-called "tradeables", which are those goods and services that the ABS defines as having their prices determined in global markets, you will see that almost all the reduction in Australian inflation has been driven by these global consumer prices. And the reason these prices have been falling is because of the appreciation in Australia’s trade-weighted exchange rate, which is one of the RBA’s two key policy tools.
This is illustrated strikingly by the blue line in the chart. Overall inflation is a combination of the blue and red lines. What you can see is that inflation in non-tradeables (i.e., domestic items) remains way above the RBA's target, and is in line with its average 3.7% per annum rate since December 2001.
Click to enlarge
<a href="/images/stories/april261.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/april261thumb.gif"></a>
So this is where the debate about interest rates and inflation becomes circular. Those arguing for much lower interest rates, and a much lower currency, are, by definition, comfortable with higher tradeables inflation. A big decline in the currency would reverse-out a lot of the deflationary benefits yielded by the blue line slumping in the chart above. And without this tradeables deflation we would likely have an overall inflation problem, given domestic consumer prices have been expanding at 3.5% per annum.
One of the reasons "tradeables" inflation has averaged only 1.7% per annum since 2001 is because our main trading partners, such as China, were flooding our markets with cheap imports – that is, exporting deflation. This dynamic has slowed due to rising wage costs and inflation in China and India. As the RBA has observed (and I’ve argued here for years), China is now a source of inflation rather than disinflation. That means that in the future, tradeables inflation will likely be higher than it was during the 2000s.
A related question is whether core inflation of 2.2% per annum, or lower, is such a bad thing. What has happened to core inflation in Australia since the RBA began targeting it in 1993? Is there any evidence we’ve had a structural inflation problem?
And, on a more nuanced level, what does the distribution of inflation outcomes since 1993 look like? That is, does the RBA struggle to keep core inflation around the mid-point of its already high and wide (by international standards) 2% to 3% per annum target band? Do we have a bias in Australia towards high rather than low core inflation outcomes?
To try and answer these questions I have started with a chart that illustrates Australia’s core inflation rate on a three-year and five-year moving average basis since 1993. This suggests that during the 1990s and 2000s there did indeed seem to be an upward drift in underlying Australian inflation. The RBA has acknowledged as much, conceding that it finds it hard to forecast high core inflation events. (The same phenomenon was also found in consumer inflation expectations, which is arguably more worrying.)
Click to enlarge
<img src="/images/stories/april262thumb.gif">
A possibly more interesting analysis is to measure the amount of time Australia’s core inflation rate is above or below the mid-point of the RBA’s target zone. I’ve done this for two periods: since 1993 and since December 2001 (i.e., after the introduction of the GST) in my final charts.
The results are remarkable. Over the last decade plus, core inflation in Australia has been above the mid-point of the RBA’s target 2% to 3% band an extraordinary 92.9% of the time. It has been above 3% per annum an equally amazing 33.3% of the time. It has been below the mid-point only 7.1% of the time. And since 2001 it has never been less than 2% per annum (year-on-year rolling quarterly). That will hopefully change next quarter.
Click to enlarge
<a href="/images/stories/april263.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/april263thumb.gif"></a>
If we examine the RBA’s track record over the full inflation-targeting period of March 1993 to March 2012 we find similar results: core inflation has been less than 2.5% per annum only 35.1% of the time, but above the mid-point 61% of the time (there have been three quarters in which year-on-year inflation was exactly 2.5%).
This strong asymmetry in Australian inflation, whereby it tends to overshoot rather than undershoot the target, is also evident when we look at the top and bottom of the band. Whereas core inflation has been above 3% per annum around 20% of the time over the last 19 years, it has been below 2% per annum only 8% of the time.
Inflation is a tax on your purchasing power and savings. That’s precisely why the central bank’s job is to keep it low and steady. Having a core inflation rate of around 2% per annum when it is being driven almost entirely by tradeables deflation, is a good policy outcome whilst non-tradeables inflation is running at 3.5% per annum.
With that explanation behind us, let’s think about the RBA’s May meeting. The arguments in favour of a 50-basis-point cut are obvious and simple: the RBA’s made a terrible policy error, is now behind the inflation curve, and it needs to slash rates, and pull the currency down, to save trade-affected industries.
Another argument is that the RBA will not want to cut after the budget for fear of being seen to be endorsing the government’s decisions.
The arguments against 50 basis points, and in favour of a one quarter of a percentage point cut, are more nuanced (and accurate). The first is that a 50 basis point move signals the RBA has made a mistake, and undermines its credibility.
A second is that if the RBA wants to genuinely stimulate the economy, it will get more bang for its buck by spreading the cuts out over multiple months and maximising the “jaw-boning” effect.
I’ve talked a lot in the past about the virtual rate hikes we had in 2011 care of the RBA regularly beating the inflation drum, which everyone seemed to accept. The same is true in reverse, but most commentators appear to have forgotten. The media can get the community all excited about interest rate relief in May and June, rather than just in May alone. It’s smart psychology.
A third reason to go 25 rather than 50 is a very poorly understood problem that a big cut creates for the banks. I was speaking to the treasurer of a bank about this issue on Friday. He said to me, “God, I hope the RBA goes 25 and not 50.” I was a little surprised, and asked him why.
He explained that because all the banks have so much retail money tied up in term deposits these days, and because their variable-rate “wholesale funding” prices off the three month bank bill rate, a sudden cut in rates actually damages bank profitability. That’s because the banks cannot immediately reduce all the retail deposit and wholesale funding rates for existing funders.
So, perversely, by cutting 50 you are actually going to encourage the banks to pass on even less to borrowers to save their margins because they cannot immediately reduce their funding costs by the same amount as the RBA’s cash rate change. This bank treasurer argued that all Australian banks will have the same problem.
A final obvious reason to go 25 and not 50 is that you get the benefit of much more information. You get to evaluate the budget, see the next round of unemployment and labour cost data, watch the reaction of the currency, and then re-calibrate your growth and inflation forecasts. And a one month delay is not going to make a material difference to the economy.
Of course, exactly what the RBA does on Tuesday is harder to call. The six business executives on the board will probably opt for the simpler story that says the RBA has to slash rates by 50 to save the economy from low inflation. They would be wrong.
Christopher Joye is a leading financial economist and a director of <a href="https://www.ybr.com.au/savings/index.cfm">Yellow Brick Road Funds Management</a> and Rismark. The above article is not investment advice.
 
 
 
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chrisjoye-JYhJsTrNRC

A 50-basis-point interest rate cut would undermine the RBA’s credibility: Christopher Joye

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The Reserve Bank's economics department had a bad year in 2011, and as a result the board is now high and dry with an official cash rate that is obviously wrong. It needs to come down by 0.5%, to 3.75%. 
In its February 2011 Statement on Monetary Policy, the RBA had a GDP growth forecast for the year ended December 2011 of 4.25% and for June 2012 of 3.75%. CPI inflation for June 2012 was forecast at 2.75%, the same as underlying inflation.
But then in May the bank's economists came over all bullish and upped their GDP forecast for June 2012 to 4.25%, while leaving the December forecast at 4.25%. CPI inflation for June was cut to 2.5%. In August the GDP forecast was up again to 4.5% and while the CPI forecast was left at 2.5%, the underlying inflation forecast was jacked up to 3%.
In November wobbles started to appear and the GDP forecast was cut to 4% and underlying inflation back to 2.5%. In February this year the GDP forecast for June 2012 was back to 3.5% but underlying inflation was actually raised to 2.75%.
So the RBA's economists have made two big mistakes: they got 2011 GDP growth horribly wrong and raised their inflation forecast in February for this financial year even as GDP was falling short.
It's hard to know what came over them on GDP in May last year, but the statement was especially bullish about commodity prices and resource and farm exports. Maybe they were influenced by Treasury, which had a GDP forecast for 2011-12 of 4% in the May budget last year, which has also turned out to be wildly wrong, leading to a bigger than expected deficit (by almost $10 billion).
But why the RBA felt the need to be more bullish about economic growth than Treasury in the middle of last year will probably have to remain a mystery, but that rush of blood to the head in May is still dogging the Reserve bank governor, Glenn Stevens and his board.
With GDP growth of 3.5% and underlying inflation of 2.75% in their February SMP forecasts for 2012, the board could hardly cut rates then, no matter how hard the business people on the board were arguing for it.
The minutes for the April meeting drily say: "Members noted that the national accounts for the December quarter had shown an increase in real GDP of 0.4% in the quarter and 2.3% over the year, which were both lower than expected."
Well, yes, that's an understatement – as recently as November the economists were forecasting 2.75% growth for 2011; just six months earlier they'd been forecasting 4.25%! That's almost twice reality.
One can imagine a fierce debate in the April meeting between the business people and the economists, with the latter clinging to the last shreds of their dignity. In the event they persuaded the board to wait for the March quarter inflation figure before cutting rates and hanging them out to dry.
Kerplunk! March quarter CPI inflation was 1.6%, against last November's forecast for the year to June of 3.25% (there wasn't a forecast for the March quarter). By February that had been slashed to 1.75%, but even that now looks too high.
Next Tuesday it will be, or should be at least, a bedraggled, hangdog group of economists who shuffle into the RBA board meeting for their presentation. And many of the board members may well be checking their emails while it's going on, having already made up their minds to cut rates by 50 basis points.
Which is what they should do.
This article originally appeared on <a href="https://www.businessspectator.com.au/" target="_blank">Business Spectator.</a>
 
 
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akohler-TyLfJGrMb8

The RBA has egg on its face and needs to cut rates by 50 basis points: Alan Kohler

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After last month’s Reserve Bank board meeting governor Glenn Stevens made it fairly clear that if the March quarter inflation numbers were benign the bank would be inclined to cut official interest rates. Well, the numbers are in, inflation is even weaker than was anticipated and the debate has shifted from whether the RBA will cut to how much it will cut. 
With headline inflation of 1.6% and underlying inflation of 2.2% there was nothing in today’s numbers to suggest anything other than that the economy is continuing to weaken. 
Consumer spending is at recessionary levels, the housing market is in a similar state, job losses in the manufacturing sector are mounting, the impact of the continuing (albeit tapering) boom in the resources sector isn’t flowing through to the rest of the economy and Wayne Swan is about to attempt to pull about $40 billion out of the economy, or 2.5% of GDP, if not more. Some of that may be done with "smoke and mirrors" but it isn’t going to be possible to achieve those sorts of numbers without real and very substantial cuts in expenditures and increases in government revenues. In the circumstances, the horror budget that is looming can’t be considered as anything other than a major depressant on an already weakening economy. In that context, a reduction in official interest rates next Tuesday appears inevitable. The larger question, however, is whether that would be sufficient to blunt the negative influences now pervading the economy. It is a question complicated by the RBA’s need to second-guess the responses of the major banks to a rate cut, given that there is a probability that they will retain at least some proportion – perhaps 10 to 15 basis points – of any reduction.  Led by ANZ, the banks have to a degree de-linked their mortgage and deposit rate movements from the RBA’s decisions and they have been making it plain that they are continuing to experience the funding pressures that have caused them to pass through rate cuts lower than the movements in official rates since the onset of the financial crisis. If the RBA cuts the cash rate by 25 basis points next week and the banks pass on only 10 to 15 basis points of it, would the decision have any meaningful impact on the economy and the psychology of consumers and businesses? One doubts it. That’s why there are plenty of people now focusing on the prospect of a 50 basis point reduction in the cash rate, which would allow the banks to retain their 10 or 15 basis points while still enabling a meaningful reduction to flow through to borrowers. No doubt the RBA staff has been in close contact with the major banks to make sure they understand their likely responses to a cut. The RBA has made it clear that it does take the anticipated reaction of the major banks to rate movements into account when deciding whether to move the cash rate and the size of the movements. It is concerned not about the level of the cash rate per se, but the influence it has on the actual rates being charged borrowers. The one issue that might make the RBA cautious about the size of any reduction would be the looming federal budget. It might want to see the nature and quality of Swan’s budget measures – how "real" they are – before moving more than the usual 25 basis points. However, with commodity prices and the terms of trade now off their peak, China slowing, Europe still wobbling, swelling question marks over some of the biggest of the new resource projects in the pipeline, the non-resource economy slowing discernibly from already weak levels, households confronted with rising utility costs and the carbon tax imminent, if the RBA doesn’t lop 50 basis points off the cash rate next week the probability is that there will be a succession of rate cuts between now and the end of the year.
This article originally appeared on <a href="https://www.businessspectator.com.au/" target="_blank">Business Spectator</a>.
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sbartholomesusz-jWVzVSPmF8

Size all that matters now for RBA interest rate cut: Stephen Bartholomeusz

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Many people who have invested in property may have purchased the property in the wrong name, and the cost to correct it creates a stamp duty and capital gains tax liability and thus prohibits the property from being moved. 
Why would people buy properties in their own names? 
The main reason is for tax. 
Generally if the property is negatively geared, then having it in the name of the person paying the highest tax means that he/she gets back the largest tax refund from the ATO. However, if that person’s occupation exposes him/her to litigation, such as a doctor or someone running a business or a director of a company, then holding assets in their his or her own name would be a silly thing to do. 
If someone sued him/her than any assets that are in his/her own name are up for grabs. 
Australia only trails the US for being one of the most litigious countries in the world. Last year a mother of three in the US was sued by a music company for illegally downloading 12 songs from the internet. The judge found in favour of the music company and ordered damages of $100,000 per song. Unable to pay the total damages bill of $1.2 million plus costs she lost her home and any other assets she held in her name. 
Properties that have been bought in one’s name can be protected without needing to move them using several different strategies.
The principle behind this asset protection strategy is to protect the equity in the properties. Litigants are not interested in the property itself, but they are interested in the equity. Thus protecting the equity is more important than protecting the asset itself. 
1. You can strip any equity that is left within the "at risk" property by asking the bank to take 100% of the equity of the "at-risk" properties for their security and leaving properties that are not "at risk". 
2. Properties that are not "at risk" are those that are held in a property investor’s trust (PIT) or those held in a "not at risk" spouse’s name. However, be careful that you have considered the tax benefits that may be lost if the property is negatively geared and your spouse earns and pays less tax than you do. 
3. If you are unable to adopt the above strategy than you can use an "equity bank trust" that will strip the equity from your "at-risk" assets. This is a relatively low-cost solution but a very effective strategy. 
4. Naturally the best solution is to ensure that the properties are purchased in the correct entity to begin with. Having the property in an entity such as the PIT deed that has an ATO approved product ruling (Product Ruling PR2011/15) is better than trying to fix the problem later. The PIT allows you to claim the negative gearing in your own hands (as long as it’s set up correctly) and protects the property from litigation. The PIT does not have a vesting date, so the assets can be passed from generation to generation. 
5. If both husband and wife are in high-risk occupations they should not have their homes in their own names in case they are sued. However, the problem with holding the home in a trust is that one loses one’s principal place of residence tax free status for both land tax and capital gains tax. Depending on where you live (in which state or territory), one can hold the property in a PIT and grant a life interest to the individual to retain his or her land tax-free status  and capital gains tax-free status. However, you must seek advice, because if not set up properly this strategy could potentially backfire. It would also be a good idea to get a private ruling to ensure that this will work in your particular circumstances. 
6. If you have loaned money to your daughter or son to purchase a property with, make sure that you have either registered a second mortgage or a caveat over the property in case his or her marriage and or de facto relationship fails. The second mortgage/caveat ensures that you at least get back the loan or gift you had given your son or daughter.
Ed Chan is a founding partner of <a href="https://www.chan-naylor.com.au/" target="_blank">Chan and Naylor</a> accountants and a leading property tax specialist. He has co-authored three best-selling books as a seasoned property investor who understands the relationship between property investment and tax.
 
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