Apartment buyers in New South Wales are set to gain a decade of insurance-backed protection against major building defects, after the NSW Parliament passed the Fair Trading and Building Legislation Amendment Bill 2026.&nbsp;

The Bill establishes decennial defect insurance, known in the market as Latent Defects Insurance (LDI), as an alternative to the existing two-year strata building bond. It cleared the Legislative Council with amendments on Tuesday evening (August 4, 2026), with the Legislative Assembly agreeing to those amendments shortly after.

Under the reform, eligible developers can satisfy their statutory bond obligation by taking out an approved decennial-style policy that gives owners 10 years of cover for major structural defects from completion, claimable directly, without first having to pursue developers or builders through costly legal action.&nbsp;

The change forms the final tranche of amendments arising from the 2021 statutory review of the Strata Schemes Management Act 2015 and related legislation.

Resilience Insurance, which originated the cover in Australia and has delivered it in NSW since 2022, welcomed the passage and credited the NSW Government for delivering it.

“This is protection apartment buyers have needed for a long time, and the credit for delivering it belongs to the NSW Government,”&nbsp;said Corey Nugent, CEO of Resilience Insurance.

“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into. Reform like this is what good, evidence-based regulation looks like.”

Resilience has delivered LDI in NSW since 2022, protecting thousands of apartments, giving the State, and now the country, real-world evidence of how decade-long, no-fault protection works in practice.

The reform also places NSW within a wider national shift.

NSW is the third jurisdiction to put decennial cover into law. The ACT legislated for it in 2024, with the scheme taking effect in late 2025, and Victoria passed its own framework on 17 June. Between them, the three cover the majority of Australia's apartment market.

The reform commences once the legislation is proclaimed, which is expected in the coming weeks. From that point, developers of Class 2 residential apartment buildings can meet their statutory obligation with an approved decennial policy in place of the bond.

Buyers who purchased into projects that took out the cover early are among the first in the country to take keys to apartments carrying decade-long structural protection.

“With the legislation passed, the focus now turns to making it work for buyers,”&nbsp;Nugent said.

“There are already thousands of apartments in NSW covered by this insurance, bought by developers who moved early. The question every buyer should be asking in a display suite is a simple one: does this building come with 10-year defect cover, and who stands behind it?&nbsp;

“We look forward to working with the Government and the Building Commission in coming weeks as the framework moves to implementation, and to sharing what we have learned over the past four years so the protection reaches owners as smoothly and quickly as possible.”

Other states are working through their own reform programs. Western Australia has indicated that decennial cover is within consideration a later stage of its reform sequence, and Queensland has been examining the settings as it looks at the development pipeline ahead of the 2032 Olympics.

Resilience Insurance acknowledges the NSW Government’s continued focus on strengthening consumer protection while supporting housing delivery across the State.

Fast Facts: What the reform means

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Proven at scale:&nbsp;Decennial cover has operated in NSW since 2022, protecting thousand of apartments.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">10 years of cover:&nbsp;Protection for major structural defects runs for a decade from completion, claimable directly and with no legal action required.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">An alternative to the bond:&nbsp;Eligible developers can meet their statutory obligation with an approved decennial-style policy in place of the 2% strata building bond.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Part of a national shift:&nbsp;The ACT has had decennial provisions in force since 2025 and Victoria passed its framework in June. NSW now joins them.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">No-fault, first resort:&nbsp;Owners corporations claim directly from the insurer without first having to establish who is liable for the defect.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost-competitive:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the 2% bond while offering broader, longer protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market position:&nbsp;Resilience originated LDI in Australia and has delivered it in NSW since 2022.</li>
</ul>

Fast Facts: What is Resilience LDI?

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Resilience Latent Defects Insurance (LDI):&nbsp;Covers major structural defects for 10 years from completion.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Consumer-first:&nbsp;Direct claim access, no need for lengthy legal action.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost advantage:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market leader:&nbsp;&nbsp;Resilience Insurance originated LDI in Australia and is the national market leader.</li>
</ul>

Joel Robinson

NSW parliament passes 10-year defect insurance laws for new apartment buyers

Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

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?

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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Tim Lawless explains that last month we saw dwelling values fall by 1.2% according to the RP Data-Rismark Index, the second consecutive drop in capital city home values, after the index showed a 0.5% fall over April.
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RP Data's Tim Lawless discusses last month's 1.2% drop in dwelling values

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Mark Bouris caused a bit of a ripple this week <a target="_blank" href="https://petewargent.blogspot.com/2013/06/video-bouris-tips-capital-city">by suggesting that</a> the Australian property markets will represent for the next five years "the hottest asset class you can possibly think of".
Of course, just as a hairdresser is probably not the best person to ask if you need a haircut, so it is in this instance, but is Bouris likely to be right?
Some economists, such as David Bassanese of the AFR have made similar suggestions, implying that prices are likely to "pop higher" at this stage in the cycle.
Bouris bases his theory around past experience in Australia. Property downturns, such as the one we experienced through 2011 and the first half of 2012, can be followed by lower interest rates, significantly improved affordability (read: mortgage serviceability) and a surge in real estate prices.
Is this time any different?
Remember the classic old exam question: "does history repeat itself?". The textbook answer is, well, yes to some extent, but the specifics tend to shift. And there is much evidence to suggest that this cycle may be somewhat different from those we have seen in the past.
1 - Deposit growth
Firstly, there is an argument to say that there will be restrictions on credit growth in this cycle, as the prudential regulatory body APRA looks to cap the growth of credit in line with deposit growth.
One complicating factor is that from the middle of 2012, the Australian stock market boomed by around 25% in value increasing Australians' wealth. Of course, articles began to appear of "the best year for superannuation in ages" type, which naturally pre-empted a correction of close to 10%.
Nevertheless, stock valuations are up, can increase cash available for deposits, and superannuation balances are up too. Self-managed super funds can invest in property these days, but lenders to SMSFs tend to insist on substantial deposits, so most of that action will likely be in the lower-median sector of the market, particularly in apartments.
2 - Higher household debt
More significantly, Australia commenced this property cycle with higher household debt levels than it had previously. When interest rates fell around in the early 1990s, credit growth boomed. Consequently, it seems unlikely that another boom of such a magnitude could occur.
<img alt="wargentjune11one" height="328" width="374" src="/images/stories/2013/06/wargentjune11one.gif">
Future growth, therefore, is likely to be far more closely correlated to growth in household incomes.
And in fact, in Sydney, since the last boom period through to early 2004, household income growth has outperformed property prices for close to a decade.
3 - Access to credit
A third limiting factor is that in the period preceding the last surge in dwelling prices, there was a proliferation of 100% LVR loans available, which is not the case today.
Whether or not such a cavalier lending sentiment returns remains as yet unknown, but it seems to me that over the long term it would be better for everyone if an appropriate level of prudence was exercised in this regard.
Multi-speed recovery?
Plenty of commentators have focused on RP Data's Daily Home Value Index and noted that "house prices fell in May" and plenty of scorn has already been heaped on Bouris by bearish commentators in the last few days.
But those figures are retrospective; what for the future?
There may be something to draw from the May figures, but most other indicators such as lending finance figures from <a target="_blank" href="https://petewargent.blogspot.com/2013/06/mortgage-sales-surge-to-unprecedented">AFG</a> (reporting "unprecedented mortgage sales") and from the <a target="_blank" href="https://petewargent.blogspot.com/2013/05/housing-finance-takes-off">ABS</a>, suggest something of an uplift in market sentiment.
Other indicators seem to suggest improving sentiment too, although not across the country.
There is much evidence to suggest that property prices in Perth are considerably higher than they were 12 months ago and the market has not demonstrated many signs of slowing down just yet.
 
<hr class="system-pagebreak">
Meanwhile auction clearance rates in Sydney, and to a lesser extent Melbourne have improved strongly. In Sydney's inner west, clearance rates are consistently clocking at around 85% or above, which is the sign of a hot market. Sydney's North Shore looks strong too.
However, it's not all good news for property owners and investors, for to date the recovery seems to have been largely investor-led. For this reason, I don't expect remote property markets and outer fringe suburbs to have much joy as this cycle progresses.
The RBA's chart packs show that households on average seem quite content to save 10% of  disposable income, which was not the case after interest rates fell from the early 1990s.
<img alt="wargentjune11two" height="353" width="400" src="/images/stories/2013/06/wargentjune11two.gif">
Not buying now?
I've never been a big fan of the "Don't Buy Now" rhetoric, for it implies that homebuyers can easily outsmart the market through using clever timing. It's possible to do, of course, but it's also by no means assured.
Those who took Steve Keen's advice to sell their homes in 2008, for example, must be mortified by the subsequent uplift in capital city prices over the last half decade.
Ideally, homebuyers should be putting their focus on a far longer time horizon than the next few years.
However, as noted by my Pommie pal <a target="_blank" href="https://catherinecashmore.wordpress.com/">Catherine Cashmore</a> of NPB, with people moving house more frequently than previous generations ever did, even homebuyers are now buying homes with an "investor mindset".
They want a  roof over their head and capital growth, and for this reason often look to steer away from the remote or new fringe suburbs where demand is low and new dwellings can show poor or non-existent growth.
As for investors in property, this cycle seems likely to produce lower growth on average that we have seen in times past.
For this reason the old strategy of simply 'buying in your own backyard' because that's what you know best may be a poor strategy.
The hot sectors of the market at this stage look to me to be certain suburbs of Perth and as noted Sydney's Inner West and North Shore, particularly in the sweet spot price range of $500,000 to somewhere just over $1 milllion.
Yield-focussed investors will of course continue to dispute the obvious evidence below that it is investors which are pumping up prices in inner- and middle-ring suburbs, but the RBA's chart pack clearly shows that regional market growth in most areas stalled years ago with few signs of life to date. My own money is on inner- and middle-ring Sydney.
DYOR.
<img alt="wargentjune11three" height="319" width="400" src="/images/stories/2013/06/wargentjune11three.gif">
Pete Wargent holds a range of finance and property qualifications and is the author of <a href="https://petewargent.blogspot.com.au/" target="_blank" rel="nofollow">Get a Financial Grip – a simple plan for financial freedom.</a>
 
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Will real estate be the strongest asset class over the next five years? Pete Wargent

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Looking at the historical growth cycle of capital city rents and value growth, it has been quite a rare occurrence for weekly rents to outpace dwelling values for growth.
In fact, since 1996 there have been only two periods where weekly rents significantly outpaced dwelling values. The first of these occasions was during the GFC when dwelling values fell by close to 5% and rents rose by almost 8%.  The second period was during the recent housing market correction which ran from late 2010 through to mid-2012.
Both cycles gave yields a chance to regain some of the lost ground that was eroded over the previous growth cycles.
The most significant erosion of rental yields took place between 1996 and 2004 when gross rental yields virtually halved. When you consider that dwelling values surged by 142% between the end of 1995 and the beginning of 2004 while rents rose by only 25%, it becomes quite clear what drove the destruction of high average rental yields in Australia.
The average gross yield across the combined capital cities moved from 7.8% in 1996 down to 4.0% by the beginning of 2004.  Gross yields reached a low of 3.6% towards the end of 2007 through to early 2008 as value growth continued to outperform rents.
<img src="/images/stories/2013/06/lawlessjune7onethumb.gif" alt="lawlessjune7onethumb" width="470" height="202">
More recently capital city dwelling values are up 2.9% over the past twelve months compared with a 3.1% rise in dwelling rents. From a longer perspective, over the past five years weekly rents have increased by 27% while dwelling values have increased by a much smaller 10%.
With rents rising at a faster pace than dwelling values the by-product is of course an improvement in rental yields.  Gross rental yields for houses are currently recorded at 4.2% (up from a low of 3.5%) and the average gross yield on a capital city unit is 5.0% (up from a low 4.4%).
Looking across the capital cities, the current yield scenario is quite different from city to city.  Darwin is continuing to record the highest gross yields of any capital city.  The Brisbane housing market has quickly moved through the ranks to record the third highest yield of any capital city for houses and the second highest for units.
<img src="/images/stories/2013/06/lawlessjune7twothumb.gif" alt="lawlessjune7twothumb" width="470" height="296">
At the bottom of the yield pile is Melbourne where houses are returning a gross yield of just 3.7% while units are providing a higher 4.6% gross yield.
As can be seen from the graph below, the gross rental yield was on a consistent downwards trend since the 90s, however Melbourne’s spectacular rate of capital gains during 2007 and 2009/10 together with relatively sedate rental growth has conspired to cause gross yields to move lower than any other capital city.
<img src="/images/stories/2013/06/lawlessjune7threethumb.gif" alt="lawlessjune7threethumb" width="470" height="202">
With vacancy rates remaining around the 2-3% mark across most capital cities, it is reasonable to expect further and potentially greater upwards pressure on weekly rents.  This is likely to be particularly the case in those cities where new dwelling supply has been short such as Brisbane, Perth and Sydney.
While I doubt we will see capital city yields return to the highs last recorded in the 90’s, it is reasonable to presume we will see ongoing improvements in the yield environment across the Australian housing market. This scenario implies a continuation of subdued capital gains with a consistent over performance from rents compared with values; not an unreasonable notion.
Anecdotally a lot more of the investors I have been speaking with are considering tweaking the balance of their investment strategy; looking to maximise their yield while buying in locations where they expect the asset to show potential for long term capital gains.
Previously many investors were buying purely for capital gain prospects without a great deal of focus on the yield potential.  While capital gains are going to be the main strategy for the majority of investors, I wouldn’t be surprised if we see an ongoing focus on the rental side of the equation.
Tim Lawless is national research director of <a href="https://www.myrp.com.au/" target="_blank" rel="nofollow">RP Data.</a><a href="https://www.myrp.com.au/" target="_blank" rel="nofollow" style="font-size: 14px;"> </a>
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The gradual rebound of residential rental yields: Tim Lawless

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I’m often asked about property: when to buy to buy, when to sell, what’s happening to the market, have we reached bottom yet?
The latest RP Data-Rismark Home Value Index reflects a mixed bag, showing capital city house prices fell by 1.2% in May – disappointing given the Reserve Bank’s rate reduction to the historically low 2.75% at the start of May.
Still, while monthly stats are informative, most of us need more perspective.
The May figures must be put beside the year-on-year house price index, which shows house prices rising in capital cities by 2.9% between May 2012 and May 2013.
A city-specific look illustrates this further. While Sydney saw a drop in house prices of 1.0% in May, it also experienced a rise of 3.9% over the previous year. Melbourne recorded a decline of 2.1% in May but saw a rise in house prices of 2.1% over the year.
Close followers of house prices are often investors who look for total return on their properties, which combines rental yield and capital appreciation. This can be a good test of overall property health.
RP Data has Sydney’s ‘total gross return’ on property at a solid 8.5%, and Melbourne at a respectable 6.0%.
These are not as high as most investors want (or as high as Perth 11.3%, Darwin 11.2% and Canberra 7.8%), but they are not low enough to dump property and move into stocks and bonds.
We also have to put house prices alongside the Bureau of Statistics’ housing approval numbers. April housing approvals were very small (0.4% growth) but the year to April saw 6.3% growth.
So, the picture for property – while divided by geography and seeming to be going backwards – is actually showing a slow recovery.
Moreover, I always urge people interested in property to take this market in five- to 10-year windows.
Take a look at RP Data’s longer series: the median dwelling price in the three months to May 2013 was $491,000.
If you compared this to the median price in 2010 - $507,446 – you’d think you’d gone backwards. But compare the current median price to May 2008 when it was $446,488. That’s a rise of $44,512, or just under 10% growth in five years – five years of global turmoil and financial crisis.
Property, in the end, is a medium/long term asset: one step back can be countered by three steps forward. But you have to be patient and strategic: your investment needs time. It can’t reach the peaks if you sell in the troughs.
So I suggest people act upon what’s under their control rather than becoming unnerved by property headlines.
This means looking at what affects you, and acting on what you can act upon. With the lowest interest rates I’ve ever seen, with unemployment low, and property prices recovering, this is a good time for smart buying.
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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When is the best time to buy property? Mark Bouris

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Australia’s construction sector notched up three years - 36 consecutive months - of contracting activity in May, according to the latest Australian Industry Group/HIA Australian Performance of Construction Index (Australian PCI). 
The benchmark index remained broadly unchanged in May at 35.3 - readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline.
The last time the sector expanded was in May 2010.
The weakest sub-sector over the month was detached house building, which weakened for a third consecutive month, with activity recording the sharpest rate of contraction in eight months.  
In contrast, commercial construction activity declined at a slower pace while rates of contraction in apartment building and engineering construction were unchanged on the previous month.
Construction activity by sector
<img src="/images/stories/april23tivoli/construction_index.jpg" width="470" height="363" alt="construction_index">
Source: AIG/HIA Performance of Construction Index.
Despite the sluggish conditions, input prices (73.4) and wages (55.9) continue to lift.
“A sharper decline in the house building sector, together with a flat result for apartments at a very low index reading, unfortunately confirms the on-going sluggish nature of residential construction activity,” commented HIA chief economist, Harley Dale. 
“Some leading indicators point to a very modest uplift in new home building activity, from a recessionary starting point. 
However, he says the latest indexresults highlight what should be a prominent concern for policy makers – "the lack of a large and sustainable recovery in residential construction at a time when the domestic economy sorely needs such an outcome". 
“The balance of risks points to a modest increase in building activity in 2012/13, followed by a subsequent pull-back next year," says Dale. 
“That’s hardly the desirable result for the tens of thousands of businesses and hundreds of thousands of people who rely on new home building for their livelihood, before one considers the flow-on negative impacts to the wider economy of continued under-performance from this key sector,” 
AIG director Peter Burn says the construction industry “continues to languish due mainly to historically low levels of building activity”.
“This is now being compounded by reductions in engineering activity related to mining-related investment which had been driving the industry (and indeed, the economy) until very recently.
“Successive cuts in interest rates by the Reserve Bank have been welcome, but so far they appear only to have steadied the decline in building activity,” he says.
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Detached housing construction sector sinks into steepest decline in eight months: AIG/HIA index

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Hello Margaret   
Long-time fan of yours!  Thank you for your insights.   
I am a single mum who has managed to grow (through some tough personal times), a small portfolio of three properties since 2004 in south-east Melbourne.   
I purchased a small development property during the GFC and have sat on this waiting for the “right time” to develop (it's a two-unit site). 
I am fast approaching retirement age (currently 53) and believe I should be developing now, but my “gut feel” says wait. 
How do I know “when is the right time”?   
I have contacted real estate agents to find out rental / sale values and research seems to show the area is devaluing slightly/stagnating as with a few areas of Melbourne. 
However the agents seem to talk up the amount of rent I could receive, as well as the amount I would get for them should I sell, once built. I don’t know who or what to believe. 
My current PPOR (beachside) also has potential for a 3-4 unit site.
Thanks.
 
The decision to develop any site must come after an extensive analysis of both the area, and the potential costs involved, before proceeding.  
It’s crucial that you first examine your capacity to meet budget blow outs and also the holding costs of waiting until this development is income producing.  Among the costs you will be required to meet will be:  
<ul>
<li>
Costs to obtain the DA, which can run to $40 - $50,000 and includes town planners fees and council contributions and fees
</li>
<li>
Costs to retain architects to draw up plans
</li>
<li>
The interest on progress payments as the build progresses
</li>
<li>
Stamp duties and other statutory charges
</li>
</ul>
Even if you are able to access a loan from a bank for the entire amount, you will need to meet the interest payments as you draw down, and you will not have any rental income to support this.  You must try to establish an overall loan amount, workout the interest payments and establish if this is within your capacity to afford.  Make sure you consider the worst case scenario – I have seen developments take years to complete and you will have holding costs right up until you can rent the properties or sell them.  
You also need to then add these holding costs to the overall project amount so that you can determine whether the final product is worth what you are paying to build it.  You would want to see at least a 20% profit margin to make this worthwhile, as there will be capital gains tax to consider.  In order to reduce that capital gains tax, you will need to ensure that you hold the properties for 12 months past the contract date to get the 50% discount, although if you are building with the intention to sell for profit, the tax office may treat you differently and you may not get the discount.  
There is so much more I could say about this, but I think you get my drift at this stage – developing is quite a risky venture and if you are a single mum who has worked hard to get where you are, you are about to add a level of risk to your investing which has the potential to undo all of your hard work.  
Your other option is to sell this development site to another developer and you might like to put in place the DA approval first, which can often make the property more saleable.  This still has costs attached though, which you will need to meet with no guarantees that you will recoup it via a gain to the value of the property.  
You should speak to a town planner to get a good idea of what you may be up for regarding costs, and then to a qualified valuer to see what potential value you might get out of building.  Then perhaps even talk to a builder about the costs of the build so that you can establish a ballpark project cost before making any decisions.
Margaret Lomas is a best-selling author and writes and hosts the popularProperty Success With Margaret Lomas and heads up the panel on Your Money, Your Call, both on Sky News. She is the founder of <a href="https://destiny.com.au/dotnetnuke/en-au/home.aspx" target="_blank" rel="nofollow">Destiny</a>.
Have a property question? <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
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Ask Margaret: when is the right time to develop my investment properties?

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Steve Keen says he never expected house prices to fall in a huge leap – a point for which he has been figuratively flayed alive by the mainstream media – but does expect house prices to fall like a “slow bleed”.
In 2008, Keen said house prices would fall 40% once the financial crisis had "washed through the system".
In November 2009, he walked up Mount Kosciuszko wearing a T-shirt that said: "I was hopelessly wrong on house prices!" after losing a bet with Macquarie's Rory Robertson.
But he now contends the GFC has never ended and will continue - on and off - over the next two decades.
The volatility in the housing market certainly remains.
Dwelling values fell by a surprising 1.7% in the past two months despite a rate cut in May, according to RP Data-Rismark, while the ABS had capital city house prices up just 0.1% over the March quarter.
Of further concern, the most recent Real Estate Institute of Australia (REIA) Housing Affordability Report has recorded <a href="/news">plummeting mortgage approvals in the key first-home buyer market</a>, particularly in NSW and Queensland.
Keen had anticipated in 2008 when the GFC was in full swing a faster Australian price correction than what has happened in Japan, where house prices in Japan’s six largest cities rose around 175% from 1985 to 1992 and then fell back to their starting point between 1992 and 2000 – but slower than the dramatic GFC plunge in the US.
 <img src="/images/stories/april23tivoli/japanese_and_us_housing_bubbles.jpg" width="470" height="338" alt="japanese_and_us_housing_bubbles">
Source: Seattlebubble.com
Instead Australia underwent a modest house price correction as the latest RBA chart pack show, with five out of the six biggest capital cities now having property markets trending upwards, though at uneven rates of growth - but nothing like the corrections in the US and Japan.
<img src="/images/stories/april23tivoli/house_prices.gif" width="470" height="375" alt="house_prices">
“I got the magnitude wrong. But I?never had this idea of a huge drop?tomorrow,” Keen says in an interview with BRW magazine.
He has called the most recent modest rally in house prices (up 2.9% over the past 12 months according to RP Data) a “suckers rally” with price gains spurred on by government incentives, low interest rates and the resources boom.
Keen does admit that he got other forecasts wrong, including expectations that there would be a massive de-leveraging among households, something which has only occurred on a modest scale.
The most recent RBA chart pack graphs show household debt to income soared from the early 1990s to peak at around 150% to income in the mid-2000s.
<img src="/images/stories/april23tivoli/household_debt.gif" width="470" height="422" alt="household_debt">
It started to dip as the GFC hit around 2007, but government incentives like the doubling and tripling of first-home owner grant (under the boost scheme) encouraged people to borrow again.
Household debt now sits just under 150% - hardly the massive correction Keen anticipated and a mistake he is happy to acknowledge.
Keen says mortgage debt is rising because variable mortgage rates remain the preferred home loan product in Australia while fixed-rates dominate in the America.
This means that borrowers get an instant mortgage repayment benefit when the cash rate is cut.
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House prices will fall in a “slow bleed” fashion: Steve Keen

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One in four wealthy investors have a self-managed super fund though there lingers a strong preference for owning an investment property outside of super, a new survey has revealed.
Around one in two (54%) wealthy investors – those with at least $500,000 to invest – own an investment property, with a quarter (24%) maintaining a self-managed super fund, according to a Hall &amp; Partners Open Mind survey of 202 wealthy investors carried out for The Australian newspaper.
All those surveyed had $500,000 invested in various asset classes (excluding their own home) with almost half (45%) having more than $1 million to invest.
Interestingly, a much higher proportion - a third of the “higher-net-worth” investors (those with $1 million or more to invest) - had an SMSF compared with 18% of those that had only $500,000 to invest.
Two-thirds of these wealthy investors have no plans to set up a SMSF in the future with the difficulty and hassle in setting up a DIY fund and the belief that they could not do a better job managing their super than a professional fund manager the key reasons for this decision.
The other main reasons for not having an SMSF include a lack of interest and not understanding the benefits.
The benefits of having a self-managed super fund include, since 2007, being able to purchase property in super with debt using limited recourse borrowing rules, giving investors the twin benefits of leverage and concessional tax rates.
Another benefit of buying in super, says Ken Raiss, a  certified accountant and director of accounting firm Chan &amp; Naylor,<a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" rel="nofollow" target="_self"></a> is that at age 60 no tax is payable on either rental income or capital gains.
Raiss also highlights that last year the ATO clarified that a self-managed super fund (SMSF) can borrow money to fund a cosmetic renovation, e.g. kitchen, bathroom, flooring etc.
"[However], if the renovation is structural, e.g. if it moves internal walls, then the funds must come from internal SMSF cash, not borrowings," he explains.
Factors that may discourage wealthy investors from setting up an SMSF include the somewhat complex structures that must be in place for borrowing to be considered legal by the ATO.
As Margaret Lomas explains: "It is not a straight loan to the superannuation fund – there must be a trustee who buys the property on behalf of the fund, who becomes the legal owner, while the superannuation fund becomes the beneficial owner that is, the entity which benefits from the asset.
Furthermore, she points out because a loan to a SMSF is a non-recourse loan (meaning the capacity of the lender to recover the outstanding money is limited to what they can recover by selling the property) loan to valuation ratios are usually quite low, around 60%, to allow a suitable margin to pay costs and to account for any falls in the market value.
"This means that the super fund will need to have the remainder of the purchase price, plus costs available," says Lomas.
Benefits of investing through a SMSF, says Lomas, include that as it is a trust structure, assets within this fund can pass more easily to beneficiaries.
Furthermore, if you own your own business you can borrow to buy your business’ real property (but not operating assets) using the super fund.
According to the same Hall &amp; Partners survey, property remains high on wealthy investors’ investment radars.
Asked how they would invest $100 over the next 12 months, wealthy investors said they were prepared to spend $23.49 out of every $100 of investment capital in property – below shares ($33.03) – but higher than their allocation to a high interest earnings savings or fixed deposit account ($19.55),  Asian shares ($5.96) or government bonds ($3.09).
The less wealthy investors in the group also planned to invest more money in both equities and property.
The survey reveals that 70% of wealthy investors have a savings account and 59% hold shares directly (not part of a managed fund or super).
Investment property is third most popular asset (54%) followed closely by a savings account or fixed term deposit account (53%) and superannuation.
While less than a quarter (24%) of wealth investors have an SMSF, it does rank higher than a cash management trust (19%), annuities (8%), hybrids (6%) and corporate, retail and government bonds.
The Australian interpreted the results of the survey as not necessarily a vote against SMSF, but as a reminder that there are many different investment strategies.
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Property very high on the radars of high net worth investors, and increasingly through SMSFs

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When economic news from around the world gets all gloomy, one sector that always seems to get hit is Australia’s tourism industry.
But there are some travel changes in the wind that could be good for some property markets. And they are probably not the specific real estate markets you are thinking of.
What’s gone on over the last few years?  
The fact is since the GFC we have turned from a nation of spenders into a generation of savers.  
Today, Australians tend to be cautious with their disposable income, wondering whether the annual family holiday is such a good idea or whether it’s better to save those extra few pennies.  
Add to this the fact that the strong Aussie dollar has until recently bought us far more bang for bucks overseas, and those of us who had a desire to travel suddenly got itchy feet for the likes of Asia, the US and Europe.  
This meant that locals in our holiday towns have been doing it tough as they face rising unemployment due to a slowdown in the tourism sector.  
And many residents in our holiday locations have been struggling to cope with their mortgage commitment, with these areas recently recording some of the highest rates of repayment delinquencies in the country.  
But now things are changing…  
You’d have to be living under a rock not to have heard that over the last month the Australian dollar has plummeted from its previous highs, now making overseas holiday more expensive for locals and holidays in Australia more economical for foreigners.  
That’s the first bit of good news for our tourism industry, but there’s more.  
We could become the new playground for Asia  
The rapid urbanisation of China and India, two of the world's most populous countries, has created a new population of potential tourists at our doorstep.  
The rapidly expanding numbers of cashed-up Asians are choosing to spend their downtime (and disposable income) right here as China and India’s burgeoning middle class start to embrace holidays Down Under.  
Interestingly, almost as fast as we ship coal and iron ore to China’s steel mills, the number of inbound visitors to our shores from China is soaring.  
A surge in tourism  
In the past decade, the number of Chinese tourists visiting Australia has escalated by 13.4% annually, overtaking Japan and Britain.  
In fact, China is our biggest source of local tourism revenue, with Chinese holidaymakers spending more per person on average than Kiwis or Brits.  
In contrast, the number of inbound tourists from the financially flailing Britain has grown by a dismal 0.2% per annum, while the number of tourists from Japan and the United States has shrunk.  
With many analysts predicting a rapid expansion in China’s middle class, we will no doubt see this trend continue. In fact, some suggest that Chinese visitors will account for a third of the tourism export industry’s growth between now and 2020.  
Where do they want to spend their money?  
The big question then for Australia’s tourism operators is where and how do these new Asian jetsetters want to spend their time and money?  
In the 1980s, the priority was sun, sand and surf as Japanese holidaymakers flocked to the Gold Coast and far north Queensland.  
But the Chinese have different priorities, with a greater emphasis on the attractions offered by urban centres such as Melbourne, Sydney and Brisbane.  
While the traditional holiday hotspots in regional Australian towns struggle, capital city operators are adapting and, in turn, profiting.  
This is because the average Chinese tourist spends more than two-thirds of their entire trip in the nation's three biggest cities, but relatively little time in tropical Queensland.  
So what does this mean for property?  
Well, like anything, where there is economic viability and demand fed by a number of industries (as there is in our capital cities), there is prosperity to be had.  
Regional areas that rely heavily on tourism to sustain their local economies are unlikely to benefit strongly from overseas travellers. However, local tourism should eventually pick up as our cheaper Aussie dollar makes overseas holidays more expensive for locals.  
In the meantime, the economies of our three big capital cities are being strengthened by this new wave of tourism and this can only be good for their property markets.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his <a href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow">Property Update</a> blog.
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New wave of tourism is good news for Australian property markets: Michael Yardney

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No surprises that with the property market on the upturn, the usual parties are back talking up investing in property in remote locations.
Earlier this year the <a href="https://smh.domain.com.au/real-estate-news/cairns-market-awakes-from-coma-20130602-2njjy" target="_blank">SMH reported that</a> Cairns might be about to "awaken from its coma". More than a dozen years ago now some 'positive cash flow commentators' were tipping buying off-the-plan in Cairns as a smart investment, ostensibly for the strong depreciation benefits and high yields (I think they were the only reasons given; I certainly can't think of any others).
<img alt="wargentjune6one" src="/images/stories/2013/06/wargentjune6one.jpg" width="470" height="261">
Source: Realestate.com.au
There may have been marginal capital growth in apartments over the years, but it's not the growth periods in these low-demand or speculative regions that worries me. It's when the downturns hit, and according to SMH dwelling <a href="https://smh.domain.com.au/real-estate-news/cairns-market-awakes-from-coma-20130602-2njjy" target="_blank">prices fell by 30%</a> or more in Cairns through the Global Financial Crisis (GFC), wiping out the previous gains. According to SQM Research <a href="https://www.sqmresearch.com.au/graph_median_weeks.php?postcode=4870&amp;t=1" target="_blank">asking prices</a> have continued to fall over the past four years. Parts of the Gold Coast suffered a similar fate through the GFC.
The opportunity cost of taking heed of this bad advice had you taken it would have been been nothing short of immense. In that time you could simply have invested in a few quality, well-located properties in Melbourne or Perth (or pretty much any capital city) and secured your financial future.
<img alt="wargentjune6two" src="/images/stories/2013/06/wargentjune6two.gif" width="400" height="319">
Undeterred, positive cash-flow investors then went on to promote serviced apartments in hotel complexes for strong rents (each to their own, but I'd file that under 'B' for 'Bad Advice' as well) or investing in all manner of tourism properties (refer GFC above) and other unusual locations (basically "any property" which produced a positive cashflow) located hours away from job centres and where most people prefer to live and to invest.
While many regional properties have been underpeforming investments for years now, today the hot sectors of the property market include certain parts of Perth, Sydney's inner west and Sydney's north shore. As noted, Melbourne has already experienced a phenomenal price boom from 2007. Brisbane has been in the doldrums for some time; but its time will surely come again.
As for Darwin, well prices keep on rocketing, and they may continue to do so. It's a crazy market up here in the Top End, with ultra-high prices these days for such a small city - generally, I don't like crazy markets, but good luck to you if it's your thing. A key factor in determining the return on any investment is the entry price, so in my opinion better value now lies elsewhere.
 
<hr class="system-pagebreak">
Land appreciates
It's often said that land appreciates while buildings depreciate and require maintenance, and this is by and large true, so it is vital to invest where there is a massive and growing demand for a limited supply of land. It's pretty simple really, because every demographic statistic tells us that the capital cities are where these trends are playing out.
<a href="https://petewargent.blogspot.com/search?q=port+augusta" target="_blank">In this recent blog post</a> I noted how in Port Augusta, by way of an example, vacant land prices clocked in at only a few thousand dollars as recently as 2004. To all intents and purposes, from an economic perspective, the land had a value of approximately $nil - there were plenty of lots potentially available for release and there hasn't been much demand from the small population.
So how, then, have median house prices increased all the way up to $175,000? Because it costs more than that to construct and then sell a house for a worthwhile profit these days.
As new houses come on to the market in regional towns, the median price tends to increase. Unfortunately new builds often don't produce great capital growth as the initial buyer tends to suck up much of the developer's costs and profit margins. And this dynamic doesn't do much for the price of existing dwellings either, which become less popular as compared to the shiny new builds.
But hasn't regional property done OK?
Property investment was 'easy' in the 1970s and 1980s for those who were actually born and had access to capital, for inflation was raging and the value of debt was quickly inflated away. Plenty of regional properties did go up in price a fair amount between 1990 and 2007 too, but then, so did nearly all property prices in Australia, because interest rates fell dramatically and we went on an almighty borrowing binge.
However, long-term regional growth rates have still been relatively poor as you can see on the websites of data providers, which is reflected in low median prices today, and regional price growth has stalled for some years now as the first chart above clearly shows.
<img alt="wargentjune6three" src="/images/stories/2013/06/wargentjune6three.jpg" width="470" height="412">
The borrowing boom cannot and almost certainly will not be repeated, and certainly not in remote, owner-occupier regions where few elect to invest. House prices cannot continue to be inflated by ever-greater leverage and household debt. Material price growth in the future must surely only be sourced from real wages growth and investor activity, which largely occurs in some key sectors of our capital cities.
Someone will always be making money from real estate, but if you're an investor you'll have to be smarter than before, and do two things very well if you are to succeed:
(i) invest counter-cyclically; and
(ii) follow demographic trends
The average household persons per dwelling has plummeted over the past century, so medium-density dwellings such as two-bedroom properties may be a good bet, but only in quality locations in cities where the population is booming and where large plots of land cannot be released.
In my opinion, for most regional towns the best case scenario over the next decade is that property prices increase in line with inflation as construction costs increase. However, inflation is likely to remain relatively low so capital returns will also be stunted. The worst case is that prices slide backwards for a decade.
 
<hr class="system-pagebreak">
Construction costs
<img alt="wargentjune6four" src="/images/stories/2013/06/wargentjune6four.gif" width="374" height="362">
The RBA recently released this revealing chart, which shows that even in our major capital cities, in the fringe suburbs where demand is low, land is relatively cheap.
There isn't much demand for these plots from homebuyers or investors so greenfield sites in Brisbane and Perth are cheap. Melbourne's greenfield sites spiked in price during the previous first homebuyers' boost and then receded. Sydney's urban sprawl is constrained by the Pacific Ocean and National Parks on all sides, so greenfield sites as a general rule cost significantly more, especially with the city's notorious NIMBYism.
The chart demonstrates that where demand is low, dwelling price movements are predominantly related to construction costs, government levies, and service and finance. Price growth in low-demand locations consists less of the price of land, which remains a small component. Meanwhile in the prime city suburbs even barely inhabitable hovels can fetch hundreds of thousands and sometimes even millions of dollars due to the great demand for the land in these plots.
While prices could increase steadily in low-demand areas as construction becomes more expensive, I believe this to be a risky approach to investment and one which introduces a significant potential for capital loss.
Example
It's all too easy to generalise, so let's look at an example: the NSW south coast, which has been tipped by the cash-flow investors over the last few years. Unfortunately, no sooner did the region become nominated as a hotspot in 2010 than BlueScope Steel announced a major round of redundancies...with more following later. This is a salient risk of investing in regions dominated by few industries.
In the last decade, whereas a counter-cyclical capital city investor would have been looking to invest in a property which doubled (or more) in value in, say, Melbourne or Perth, prices in the Shoalhaven region appreciated by 12.5%. Even in Sydney which would have been absolutely the last city you'd have picked on a counter-cyclical basis after its preceding boom to Q1, 2004, you might easily have achieved 40% capital growth in a quality inner or middle ring suburb.
As I discussed <a href="https://petewargent.blogspot.com/2013/03/if-something-looks-too-good-to-be" target="_blank">in this post</a>, an investor in Melbourne could comfortably have achieved annual capital growth of a 9-10% compounding annual return since 2000 for well over 150% growth, which blows away equivalent returns from the vast majority of regional property investments.
As ever, don't take my word for this: speak to experienced, independent Buyers Agents (not regional estate agents) about where long-term capital growth has been and will be found, and they will answer this riddle for you. In theory, I suppose you could pick a regional hotspot, but as we've seen above even the positive cashflow commentators do it poorly, so your chances of long-term success in today's highly-leveraged environment are accordingly reduced.
<img alt="wargentjune6five" src="/images/stories/2013/06/wargentjune6five.jpg" width="355" height="288">
REA: Real Estate Reports
Different data providers give slightly different results. Realestate.com.au in their chart below shows median house price growth in regional 'hotspot' Nowra, for example, of 13% since 2004 (and unit price growth of, well...essentially nothing):
<img alt="wargentjune6six" src="/images/stories/2013/06/wargentjune6six.jpg" width="470" height="268">
Source: Realestate.com.au
The broad statistics don't quite tell the full South Coast story, for median prices in the region (sadly, because it's a beautiful part of the world) are being pumped up by extraordinarily ugly new housing estates. You might argue that there are better times ahead for the NSW South Coast. Maybe, but I remain sceptical. There may be a moderately increasing demand, but there has been much land potentially available for release, and worse, it is being released.
Meanwhile, BlueScope have <a href="https://www.smh.com.au/business/bluescope-starts-year-with-job-cuts-20130114-2co7y" target="_blank">announced further redundancies in 2013</a> which will hurt the region's prospects. Existing dwellings will therefore likely show relatively weak long-term growth. While capital cities have been undergoing an investor-led recovery over the past 12 months and recording non-trivial capital growth, median prices in the Shoalhaven region have slipped backwards into a downtrend.
<img alt="wargentjune6seven" src="/images/stories/2013/06/wargentjune6seven.jpg" width="359" height="285">
Source: REA Real Estate Reports
So why do the experts tip regional property. A few reasons:
(i) higher initial rental yields: more than 7% on the South Coast; or
(ii) kickbacks from developers in the regional towns they tip; or
(iii) they own investment property in the regions they recommend.
You might say that I'm also ramping regions where I invest around London and Sydney. Maybe, but the key difference is that the population of London is more than 8 million and that of Sydney is more than 4.6 million, so I don't think my blog will have much impact. This is not necessarily the case in some small regional towns where it's possible to undertake a 'pump and dump'.
Property investment is a long-term game, so keep it simple and invest in suburbs where the demand is continuous and growing. You'll do much better over the long haul.
 
<hr>
Pete Wargent is the co-founder of <a href="https://allenwargent.com/" rel="nofollow" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" rel="nofollow" target="_blank">blogger</a>. 
His new book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" rel="nofollow" target="_blank">Four Green Houses and a Red Hotel</a>' is released on 1 September 2013.
 
 
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