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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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A sharp fall in house prices remains a "remote" possibility, says Business Spectator economist Stephen Koukoulas.
He says weakness in new housing construction,  strong population growth and the ability for the RBA  to cut the cash rate even further will guard against this happening.
However, ‘The Kouk’ has expressed surprise at the recent dip in house values with <a target="_blank" href="https://www.propertyobserver.com.au/residential/autumn-blues-as-dwelling-values-dip-again-in-may-rpdata-timlawless/2013052661671">RP Data’s daily index pointing to a 1.5% decline</a> over the past two months, leaving house values up just 1.2% in net terms since the start of 2013. <a href="https://www.propertyobserver.com.au/residential/house-prices-to-rise-10-this-year-as-part-of-upward-trend-koukoulas/2013020159098" target="_blank">In February</a>, he tipped house prices to rise 10%  over 2013 as part of an "upward trend" after dwelling values rose 1.2% in January according to RP Data-Rismark.
He says he is sticking with this forecast "more or less".
The latest dip means house prices are still 5% off their peak from two years ago.
Koukoulas said if the price decline gathered momentum, the cash rate could fall to around 2% or even 1% in a “worse case scenario”.
Koukoulas says while it’s not clear what is behind the recent house price dip, he points to the recent fall in consumer sentiment and an “updrift” in the unemployment rate as to possible factors.
However, he draws a clear distinction with the house price collapses in the US, the UK, Ireland, Spain and says the Australian housing market is “fundamentally different” because these countries’ house price bubbles were accompanied by a housing construction boom.
“If anything, housing construction in Australia is in the doldrums, with new construction bouncing along at very low levels.
“Perversely, perhaps, this weakness in new housing construction is good news for now as it means there is little risk of a glut of property coming on to the market should there be a more worrying house price fall in the months ahead,” he adds.
Other factors preventing a sharp fall in house prices, he says are the recent decisions by the RBA to cut interest rates and “extremely favourable demographics” such as “especially strong population growth”.
He says the RBA can do a lot more on interest rates and is why it has maintained an easing bias.
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Chance of a sharp fall in house prices “remote” Stephen Koukoulas

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Autumn has brought with it a cold wind blowing through the property market.
With just a few days to go until the end of the month, the RP Data daily index suggests house values will decline by about 1% in May following a <a target="_blank" href="/news">0.5% drop in April.</a>
“RP Data's capital city dwelling index looking soft for May, likely to be down nearly 1% for month (-0.9% past 28 days),” tweeted RP Data national research director Tim Lawless today.
This follows dwelling values posted a solid 2.8% gain over the first three months of 2013.
The graph below, posted by Lawless, shows the modest and bumpy recovery beginning in about November last year and the recent dip.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2013/05/rpdatadwellingsmay27one.jpg" title="Click to enlarge"><img src="/images/stories/2013/05/rpdatadwellingsmay27onethumb.jpg"></a>
The latest property market decline was noted by economist Stephen Koukoulas from consultancy Market Economics.
"House prices are falling again. If these falls are the start of a new trend lower rather than just a bit of a blip could be a very unpleasant signal that will require a policy reaction from the Reserve Bank," he <a target="_blank" href="https://www.propertyobserver.com.au/residential/autumn-blues-as-dwelling-values-dip-again-in-may-rpdata-timlawless/2013052661671">wrote on Business Spectator today</a>. 
RP Data senior research analyst Cameron Kusher noted in April<a target="_blank" href="https://www.propertyobserver.com.au/residential/first-quarter-usually-has-the-year-s-strongest-residential-property-market-cameron-kusher/2013041760473"> that dwelling values are “typically the strongest for growth” in the first quarter of the year</a>.
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Autumn blues as capital city dwelling values dip again in May: RP Data

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It would be pretty clear to most economic observers that the Australian economy faces massive challenges in the years ahead. Australia’s structural budget balance is not in a good place.
Following an unprecedented economic growth during the Howard years which brought about budget surpluses the Global Financial Crisis (with the benefit of hindsight) saw the Labor government embark on a massive spending spree (mostly unfunded) which today has the federal government living well beyond its means.
Last week we observed <a title="contractor collateral in mining’s stark retreat " href="https://www.businessspectator.com.au/article/2013/5/21/construction-and-engineering/contractor-collateral-minings-stark-retreat" target="_blank">contractor collateral in mining’s stark retreat </a>where a number of mining related businesses significantly scaled down their profit earnings. These announcements signified that the boom times in the mining industry are now a thing of the past where Australia will continue to see an ongoing scaling down of revenues and expansion.
<a title="Weak tax take threatens services: Treasury" href="https://www.smh.com.au/business/weak-tax-take-threatens-services-treasury-20130521-2jz0t" target="_blank">Weak tax take threatens services: Treasury</a> where the prognosis is that Australians will either have to pay more tax or expect poorer government services, the federal Treasury's Michael Parkinson warned.
“From its pre-crisis level of 23.7% the tax-to-GDP ratio fell to 20.1% in 2010-11.”
Finally, we are seeing Treasury acknowledging a much weaker tax take whilst the current settings for Treasury’s structural budget balance are yet to acknowledge this reality.
The dilemma the next federal government faces is finding new savings or new sources of revenue which has led to some suggesting a GST hike – which is an absolute joke!
Given that when the GST was introduced in 2000 it was agreed that the states would abolish taxes in compensation – which never happened.
<a title="Gillard rules out GST increase" href="https://www.businessspectator.com.au/news/2013/5/20/politics/gillard-rules-out-gst-increase" target="_blank">Gillard rules out GST increase</a> which is an expected commentary in an election year especially given at the last election the PM ruled out a Carbon Tax too.
<a title="Greiner says GST freeze juvenile " href="https://www.businessspectator.com.au/news/2013/5/21/national-affairs/greiner-says-gst-freeze-juvenile" target="_blank">Greiner says GST freeze juvenile </a>– “Changing the GST rate of 10 per cent and extending its base was dependent on the agreement of all states and territories, who were the beneficiaries of the tax. But we are in a very, very difficult unprecedented public finance situation in Australia, as is the world.”
Enter Peter Costello, the architect of the GST – <a title="Tax abolition is just comic relief " href="https://www.dailytelegraph.com.au/news/opinion/tax-abolition-is-just-comic-relief/story-e6frezz0-1226631780911" target="_blank">Tax abolition is just comic relief </a>where he referred to NSW as “temporarily deferring” the abolition of some state taxes for 13 years – stamp duty on property transfers was one such tax that technically had been agreed for abolition.
Peter Costello says “at the economic level there is a real leadership role for a premier willing to re-invigorate the productivity agenda, restarting reform in our energy markets and our labour market. What about getting the debate back to how we can take burdens off business rather than add to them? Perhaps we could even 'temporarily defer' the introduction of any new business costs? About 13 years might be an applicable period.”
<img alt="simeonmay27one" height="371" width="470" src="/images/stories/2013/05/simeonmay27one.jpg">
Throw in a falling Australian dollar where the Reserve Bank of Australia (RBA) has no choice but to keep cutting the cash rate or let the dollar keep rising to the detriment of the Australian economy. Australia has no choice but to enter the currency battle given interest rates in Europe and the United States are at close to zero. From what I have read and averaging out the good, bad and ugly, my prediction is that the Australian dollar will sit around 92 cents.
<img alt="simeonmay27two" height="274" width="470" src="/images/stories/2013/05/simeonmay27two.jpg">
Earlier this month Sydney auction clearance rate sat at 78.7%, which was the highest in three years.
This further challenges the RBA given the pressure to cut the cash rate whilst balancing a hotter property market – a booming property market would spell an absolute disaster.
Again interesting to note that the property volumes continue to contract although we are seeing signs that listings will increase significantly after September 14.
This analysis would suggest that selling now may very well achieve a higher sales result given after September 14 we may very well see an over – supply in stock.
The decision last week that Ford Australia would cease operations from 2016 should not come as a great surprise given motor vehicle manufacturing has not been economically viable in Australia for years. Australia simply can’t compete with Europe and Asia on the car manufacturing front so the billions and billions of government subsidies are much better spent elsewhere.
Protecting the Australian motor vehicle industry has only seen imported cars being taxed at higher rates which then make them more expensive to the consumers. Yes, it’s unfortunate for the job losses however the writing has been on the wall for years.
All global economies are re-calibrating. In Australia’s case we urgently need intelligent governments not wasteful ones who have shown little to no business acumen. It is also becoming very clear for Australian manufacturing to be competitive we need less union input into employment contracts. If the Australian unions are so smart I’m sure Ford Australia would be more than happy to sell them their entire business as a going concern.
Robert Simeon is a director of <a title="RWM" href="https://www.rwm.com.au/" target="_blank" rel="nofollow">Richardson  Wrench Mosman and Neutral Bay </a>and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog <a title="Virtual Realty News" href="https://www.rwm.com.au/news/" target="_blank" rel="nofollow">Virtual Realty News</a> since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.
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robertsimeon-hRNTwJyXkQ

Hotter property market poses difficulty for RBA as challenges loom for Australian economy: Robert Simeon

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Like many others, I was somewhat taken aback by the comments put forward by Margaret Lomas last week in relation to negative gearing – significantly, the suggestion that any change from the current status quo would lead to ‘600,000’ homeless individuals and an ‘investor exodus.’
The comment attracted a range of responses - some humourous in particular, Fairfax Media reporter Chris Vedelago who suggested rather accurately on Twitter, that Margaret Lomas had derived her research from the ‘Magic Stat Tree.’
And whilst I agree that a sudden and complete retraction of the policy would be foolish – favouring a slow wind-down whilst other policies are implemented – in particular strategies to aid development and increase supply - the notion that touching the ‘golden egg’ of negatively geared property assets in a way which may dissuade buyers from ‘banking’ on the established market to fund their retirement would be disastrous - seems to be one that’s culturally ingrained in the real estate fraternity.
I won’t go into detail on why I feel the policy of negative gearing needs to be altered; it’s an issue I have detailed in previous columns and therefore feel I’ve made my opinion clear.
However, I do feel it is worth touching upon the obsessive preoccupation with real estate investment in general, which has played a prime role in pushing the price of property to ever escalating levels, resulting in the yearly assessment made by a number of publications – most recently <a href="https://www.propertyobserver.com.au/news/australia-moves-up-to-fourth-most-overvalued-housing-market-but-bubble-risk-subsides-the-economist/2013051761451" target="_blank">The Economist</a> – that Australia’s property market is ‘overvalued’ - with many off shore and local analysts speculating a fall in prices will eventuate in either the near - or distant ‘post mining’ future.
Even the RBA, which recently gave a speech entitled <a href="https://www.rba.gov.au/speeches/2013/sp-so-230413" target="_blank">“Housing and Mortgage Markets: The Long Run, the Short Run and the Uncertainty in Between”</a> have not ruled out a ‘major housing downturn’ at some distant point - stating:
“We certainly can’t rule out the possibility of a major housing downturn in the longer-term future. It is hard to know exactly what the outcome would be because it depends on how we got to that point.”
The paper makes an interesting read, because it highlights just how ‘uncertain’ the RBA are of... well, ...anything much at all:
“We don't have a strong view about whether the ratio of prices to income should be mildly rising, falling or constant from here”... “we think it is very unlikely to return to its 1970s levels, or to rise rapidly once again.”
Leading one to speculate that if the sophisticates at the RBA are so unsure about the longer term future of Australia’s housing market in a lending environment of which they have marginal control – so much less the rest of us.
And it’s easy to look at the sub-prime crisis in the USA – wag a finger – and preach the safety of our arguably ‘regulated’ Aussie banks.  However, whilst the sub-prime crisis played a role in the great American property bubble – it was not the cause.
The rapid escalation in both prices and private debt was born from a culture of expectation that the future would look like the present or as Alan Greenspan, an American economist who served as Chairman of the Federal Reserve from 1987 to 2006, put it in the publication of his 2007 book The Age of Turbulence:
“'Flippers' – speculators in places like Las Vegas and Miami.. would use easy credit to load up on five or six new condos aiming to sell them at a large profit even before the apartments were built.”
Albeit, for readers feeling a little nervous at the above revelations, a few sentences later he provides at least some reassurance:
“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy”.
And as we’ve seen in Australia – irrespective of lending rates which reached close to 9% in the lead up to the onset of the GFC – when such an attitude takes hold, it is remarkably difficult to break or 'deflate'.
For example in China, despite strict measures such as preventing unmarried couples purchasing more than one residence, or requiring higher deposits for second homes coupled with an increase in the capital gains tax when selling, it has done little to suck air out of a country which has few investment options for individuals outside of real estate.
And in Australia – regardless of the recent comparative blip to property prices since the peak of 2010 (when compared to Europe or the USA) – we remain a nation completely obsessed with housing.
You only have to turn on the TV to be bombarded with programs from The Living Room to The Block, which make everyone feel like a rookie renovator able to ‘tap into’ the wealth of their property investments with a quick makeover or fuel the perception that you can pick up a good property ‘below its intrinsic value’ and ‘add value.’
 
<hr class="system-pagebreak">
And yet bubbles when/if identified are undoubtedly unhealthy from the broader perspective of society, leaving a widening gap between owners and renters as speculation pushes prices northwards which, following decades of poor planning for population growth, leave governments firing shots at the market in the form of short term first-home buyer grants as the only ammunition they have to reverse the trend – which of course leads to the intended side effect of pushing the market higher still.
As John Howard declared back in 2007 during prime minister’s question time (and good on him for being honest because without exception, I would think most other politicians from all sides of the table would view a ‘crisis’ in similar terms):
"A true housing crisis in this country is when there is a sustained fall in the value of our homes and in house prices”.
And perhaps it’s worth mentioning that Howard’s response was in reply to a question challenging the plight of first-home buyers from soon to be elected Kevin Rudd – who upon taking office less than 12 months later promptly inflated the market three fold with his first-home buyers ‘boost,’ which had the consequence of leaving many new owners in subsequent negative equity once it was stripped away.
And indeed it is a conundrum.  Considering the levels of private debt – mostly leveraged against housing, and the long term acceleration in the investment sector, which currently makes up around 44% of Australia’s buying market, prices are once again moving northwards as a number of social and economic factors collide.
Increased confidence, availability of cheap credit (such as our current low interest rate environment) and more importantly, the continuation of a cultural illusion that forgoes any financial prudence as investors pull their finances out of savings accounts before it’s purchasing power is diminished completely – in an attempt to beat the well contained genie of inflation and shore up future security in an environment where basic living costs are high and growing.
There are no quick fixes to the housing affordability conundrum. In light of our high private debt ratios it would be extremely damaging to the economy if there were a crash. High levels of debt, when followed by downturn in house prices, generally result in a greater reduction of economic growth and subsequently an increase in unemployment.
And yet, negatively geared investors, mortgage lenders, leveraged home owners, future state and federal budgets are all counting on rising house prices for future spending needs and long term security.
So the question remains, how much higher can prices possibly go at the expense of a new generation of renters (or as they put it in the UK ‘Generation Rent’) who have long given up on the Australian dream?
It can’t be solved with short term thinking, however, neither are we sitting in a revolving chorus of ‘There’s a Hole in my Bucket’ –  our economy is strong and there are plenty of sustainable long term policy decisions that would benefit a structured plan to allow a greater number to take ownership and contain inner city inflation.
The key of course is to slowly unpick the current distortions that tie up the established market such as negative gearing as one example, and first-home buyers grants as a second, whilst at the same time employing policies to increase supply and raise the dollars needed to fund essential infrastructure through (as suggested by economist Leith Van Onselen) bonds, or encouraging large superannuation funds, <a href="https://www.heraldsun.com.au/news/victoria/ted-baillieu-urged-to-use-super-funds-to-deliver-major-transport-projects/story-e6frf7kx-1226553107681" target="_blank">who are clearly open to the idea</a>, to fast track some of our major projects.
What we can’t afford to do is kick the can down the road and continue with the same obsessive lines of limited thinking.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
 
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catherinecashmore-6LXia3pPQj

There are no quick fixes to the housing affordability conundrum: Catherine Cashmore

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With interest rates at 53-year lows, and confidence returning to much of the Australian property market, it seems a smart time for not only new investors to get into the market but for existing investors to add to their portfolios.
Like many other existing investors at the moment – and despite the outcomes and revelations from the federal budget plan for the year ahead recently – I am going through the process of re-financing my portfolio. Existing home owners and investors alike should all be considering refinancing in these times of (very) cheap interest rates on offer.
However, it is important to run the numbers and make sure that you will actually be better off switching to a new lender and/or new mortgage products. If most investors are like me – i.e. working Australians on a sub-six-figure salary who have a medium to long term 'buy and hold' approach to property investing – reducing the amount of interest you pay on your mortgage(s) will be a huge priority. I would argue that the only investor types who do not value the importance of reducing interest repayments on loans would be those who are on much higher incomes ($150k plus), where they may be so negatively geared that it is more beneficial for them, year-to-year, to pay more interest due to the tax benefits for them.
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I digress though. Assuming you are an average property investor and are considering re-financing in these opportunistic times, here is a list of things to think about when refinancing, to not only secure the best possible deal, but to maximise your interest-paying efficiencies throughout the property holding period. 
1) Be conscious of the 'real cost' of attractive ‘honeymoon’ style loan products when switching
Honeymoon loans are products that will offer heavily reduced interest rates for the first year or two, sometimes significantly lower than even the best standard rates in the marketplace at any time, and are very appealing for that reason. But you must investigate what then happens in say year #3 and beyond, when you take up such a product. For instance, what does your rate revert to, at that time? Oftentimes these offers from lenders are to attract new customers in, however the true cost of these products is not nearly as heavily promoted during the marketing campaign. Run the sums and calculate if this is actually a better product over say a 20 year holding period than say the most attractive standard deal on offer from another lender. Most of the time, standard mortgage products fare better in the medium-to-long term. 
 
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2) Lender fees for breaking your existing mortgage (aka ‘break fees’)
Once you’ve found a loan product that you are convinced will save you money on your interest repayments during the short, medium, or long term (or even one that saves money from day #1 onwards), you must consider the additional fees and charges to break your current mortgage. Up until a few years ago this was a nightmare, with some lenders charging their customers exorbitant exit costs should they break a contract. However, there is great news here: in recent years, the federal government has introduced new strict guidelines that all lenders must abide by, to ensure customers can exit mortgage products without paying severe penalties to that lender for doing so.
Whilst the legislation assures much saving, it is still very critical that you check what the exit fees on your current loan(s) actually are, before committing to a new lender's products, as there are loopholes within the legislation that lenders have identified and capitalised fee structures around. For example, one of my mortgage products is less than one year old. Many lenders will have severe fees for those who break their mortgage in say the first twelve months. Fortunately for me, this particular lender only charged $95 to break this mortgage though other lenders can have fees in the thousands of dollars for breaking a contract within the first year. Such fees can make a plan to refinance to save money, redundant in the first place! 
3) Changes to the value of loan credit you are seeking creating additional expenses
When refinancing, the new lender will need to approve you just as your previous lender did. Just because you were approved for lender X, several years ago, does not mean lender Y will not do their homework on you! New lenders will always demand a valuation of the property be conducted, and good lenders worth their salt will have an independent valuer dispatched at your expense – and not just use their own internal valuer and no (aka ‘free to you’) expense. This is a good thing – you should consider the independent valuation and investment and here is why: It is smarter for you to pay a small $100 (or so) valuation fee (tax deductible, mind you) and get a 'true' appraisal of your property value, rather than the new lender using their an internal bank-employed valuer, who will almost always provide a more conservative/lower end value which is worse for you. Variances could be in the tens of thousands of dollars, so if you were looking to refinance to extend your mortgage further, this valuation could make all the difference, so be sure to request from your new lender that an independent valuer be appointed at your cost.
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4) Loan-to-value changes potentially causing Lender’s Mortgage Insurance to be paid
As mentioned above, if you are looking to increase the amount of the mortgage when refinancing, that valuer’s final figure is all the more critical. Why? A favourable valuation even $5K higher than a conservative one could be that 'make or break' difference between paying lenders mortgage insurance (aka LMI, which is arguably my biggest pet hate in all of property investment finance!), or not paying it. As a general rule/recommendation, I would argue that almost any refinancing plan where LMI becomes payable as a result of refinancing, is a bad refinancing plan, and you should be hitting the abort button and staying put in your mortgage product for another year or so.
 
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5) Non-lender based transfer of title fees should be considered
Nominal as they may be, you are best to explore these as they may vary from state to state, as they must be tallied in with everything else when you are forecasting your profitability spread sheet prior to refinancing. If you are refinancing say an entire portfolio of ten properties, you can imagine these nominal costs adding up! Usually the state will charge paperwork (administration/stamping duty) fees for exiting one mortgage and transferring the title to the new lender. The good news is that most of this is a tax deductible expense. Part of the reason I am refinancing now, right near the end of financial year, is to make an early claim for these expenses as quickly as possible, to enable my case flow to increase faster, and get me expanding my portfolio with the next property purchase, quicker too.
6) New lender establishment fees and ongoing charges
Last of all you have the setup/establishment fees for the new lender. These can vary from lender to lender but my recommendation is this, the more established an investor you are, and the more properties you may be transferring to one lender (I.e. bringing more 'new business' to the new lender), the more negotiating power you have up your sleeve to get these initial costs such as application fees, waived or reduced. Maybe you can get some waived? Remember, in life of you don't ask, you don't get, so it never hurts to ask! Also remember that as you grow in your life as a property investor, you’ll eventually become a highly desirable customer to any lender, so use this leverage. Even as a first time investor who is refinancing your first property, do not be afraid to talk yourself up during this process. Mention that you are a professional investor who is looking to ‘grow’ with a strategic lender partner, as you expand your portfolio over the years. This is usually music to a lender rep’s ears, and they will regard you very highly as a result.
And negotiation should not end there. Some lenders may consider you a 'high value customer' if you have loans totalling over a particular dollar value, use this as negotiating power to maximise the rate deal you are offered. Consider both the establishment fees and ongoing fee schedule into your forecasting spread sheet to realise whether it is worth your while to switch lenders or not
Once you have tallied up all the lender and government costs to refinance in your spread sheets, simply run two scenarios:
1) The first one assumes you are switching and you should calculate say the first three years of that mortgage product.
2) The second one assumes you stay in your current mortgage product for the same term (another three years) for example. Though your rate might be higher, you could be better off staying put for three years if this figure overall is lower than the Sanrio #1's figure. Admittedly this scenario forecast is a lot harder to conduct if you are in a variable rate product and are switching to a mostly-fixed product.
Stay tuned for Part #2 where I will mention some refinancing tactics to consider and illustrate these with some examples.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" rel="nofollow" target="_blank">Property Correspondent.</a>  
 
 
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It's a great time to re-finance but consider the true cost of doing so: Cameron McEvoy

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Savvy property investors know how to negotiate a better deal for themselves by applying pressure to three critical negotiating points.  
These pressure points are at work in every negotiation; either you are applying pressure to the other party or they are using them on you. So let’s take a look at them.  
1. Options  
When you’re buying a property it is important to convince the seller that you have more options than they do, because power in negotiation goes to the person with the most options.  
Look at it this way: if a seller has two buyers lined up waiting to offer him $500,000 for his property, then he has options. You probably have little chance of getting him to accept your offer of $480,000.  
However, it’s important to realise that in negotiations you often deal with perception rather than reality.  
Agents will often tell you they have other buyers interested or better offers than yours, but they are simply applying this same pressure tactic on you.  
To gain power in negotiations you must convince the vendor through his agent that you have more options than they do. Currently, this isn’t too difficult because in most markets there’s an abundance of properties for sale.  
Let the agent know that there are also other properties you are interested in. You could say something like: “We like this property but there are two others we have in mind in a better location and at a lower price”.  
Remember: the person with the most options has the upper hand in the negotiation.  
2. Time
 
If a vendor is highly motivated and under time pressure you could find yourself a terrific buy.  
While it may be hard to work out what type of pressure the vendor is under, the selling agent will sometimes tell you that they have already purchased another property and must settle at a particular time.  
Other time-motivated sellers include people going through a divorce or moving interstate.  
To help find out how motivated the vendor is you could ask the selling agent: why is the vendor selling? Where are they moving to? Would they consider a lower offer for a quick settlement?  
Other sensible questions to ask are:
• How long has the property been on sale?
• Have they received any offers on the property?
• How did the vendor come to his selling price?  
I like to use time pressure when making a written offer to purchase. I’ve found it helps if I put a deadline on my offer such as “this offer expires at 6.00 pm on Thursday 23rd May.”  
I always give an explanation to the agent such as: “Well…I’m considering purchasing a particular property that’s going to auction this weekend and if the vendor doesn’t accept my offer by Thursday I’m keen to purchase the other property and can’t have this current offer remaining open when I go to the auction .”  
3. Knowledge
 
In negotiations, the side with the most knowledge will do better.  
If you’ve done the proper research you should know more about the property market in which you are buying than the seller.  
However, apart from researching the local property market, it’s also good to find out what you can about the vendor. The problem is that most of what you know comes from the agent.  
But the reason you should find out as much as you can about the seller and their property is that it will give you a better insight into the real motivation for selling. This could lead to a creative win-win solution that will let you buy the property at below market price.  
In summary:
Remember these three critical negotiating pressure points when negotiating your next property purchase. Make sure you take advantage of them and that the selling agent doesn’t apply them to you.    
Michael Yardney is a director of <a href="https://www.metropole.com.au/">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/">Property Update</a> blog.
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Three pressure points that can swing property purchase negotiations in your favour: Michael Yardney

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The most expensive sale for the week ending May 19 was an original coastal cottage in Bronte, New South Wales, which sold at auction on May 15 for $4.05 million, according to RP Data.
Located on Bronte Road, the property (pictured below) was listed by Jason Black and Brent Foster of <a target="_blank" href="https://www.propertyobserver.com.au/https://www.blacklp.com.au/3373786">Black Lifestyle Property Randwick.</a>
<img height="244" width="470" src="/images/stories/2013/05/brontemay22one.jpg" alt="brontemay22one">
The three-bedroom, one-bathroom house sits on approximately 530 square metres and offers the possibility to be renovated or rebuilt.
The property last sold in April 1990 for $615,000, reflecting an annual compound growth rate of 8.54%.
New South Wales dominated the list, with a total of seven properties securing spots.
The top 10 most expensive sales last week
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/449_bronte_road_bronte_nsw_2024/1609659">449 Bronte Road, Bronte, NSW, 2024</a>, three-bedroom house, sold on May 15 by Black Lifestyle Property Randwick for $4.05 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/1_bridge_street_balmain_nsw_2041/1251783">1 Bridge Street, Balmain, NSW, 2041</a>, four-bedroom house, sold at auction on May 18 by Cobden &amp; Hayson for $2.735 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/3/112_milson_road_cremorne_point_nsw_2090/2004689">3/112 Milson Road, Cremorne Point, NSW, 2090</a>, three-bedroom unit, sold on May 16 by Ray White Lower North Shore for $2.65 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/28_vernon_street_strathfield_nsw_2135/6496416">28 Vernon Street, Strathfield, NSW, 2135</a>, six-bedroom house, sold at auction on May 18 by Richardson &amp; Wrench Strathfield for $2.65 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/3_welwyn_avenue_brighton_east_vic_3187/10041305">3 Welwyn Avenue, Brighton East, VIC, 3187</a>, four-bedroom house, sold at auction on May 18 by Marshall White for $2.575 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/84_birriga_road_bellevue_hill_nsw_2023/1368216">84 Birriga Road, Bellview Hills, NSW, 2023</a>, four-bedroom house, sold at auction on May 18 by Liang + Simmons Double Bay for $2.425 million
<a target="_blank" href="https://www.myrp.com.au/property/277_coopers_shoot_road_coopers_shoot_nsw_2479/1954587/">277 Coopers Shoot Road, Coopers Shoot, NSW, 2479</a>, three-bedroom house, sold at auction on May 18 by McGrath Estate Agents for $2.4 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/37_stanley_street_nedlands_wa_6009/12887777">37 Stanley Street, Nedlands, WA, 6009</a>, five-bedroom house, sold prior to auction on May 18 by Acton Dalkeith for $2.37 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/3_howard_street_strathfield_nsw_2135/6486636">3 Howard Street, Strathfield, NSW, 2135</a>, six-bedroom house, sold at auction on May 18 by Devine Real Estate for $2.335 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property/20_beaver_street_malvern_east_vic_3145/11585506">20 Beaver Street, Malvern East, VIC, 3145</a>, four-bedroom house, sold at auction on May 18 by Hocking Stuart Glen Iris for $2.26 million
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Original coastal home in Bronte records 8.5% annual growth over 23 years: RP Data

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The Domus US Multifamily Real Estate Fund will test Australian investor appetite for American rental property, with plans to join the ASX on June 18, subject to a successful $80 million initial public offering.

The company plans to invest in ‘multifamily’ apartment blocks in Texas and New Mexico with more than 150 apartments spurred on by the improving residential market in these states,  a larger pool of renters following the aftermath of the US housing crisis and more Americans moving to the North West and Mid West.
<img height="328" width="470" src="/images/stories/2013/domus.jpg" alt="domus">
“There is a strong renting culture across the US," says Domus CEO Robert Geringer.
“The housing crisis has changed the perception of the property market from the American dream to the American nightmare. It has created a renter class,” he says.
He says currently renting is just a bit more expensive than owning a home, but as house prices recover and rates rise, owning a home will exceed renting costs.
Geringer says going public in Australia was attractive because of Australian’s love affair with real estate. 
“We looked at listing in New York, but that wouldn’t work. They start at $1 billion and up for REITS,” he tells Property Observer.
Multifamily properties are a foreign concept to most Australian investors, being seperate apartments all on one title - as opposed to a strata model - which Domus says creates "significant management efficiencies".
 
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It will follow the likes of the Dixon Advisor <a target="_blank" href="https://www.propertyobserver.com.au/international/thinking-of-buying-in-harlem-dixon-advisory-provides-australian-investors-with-tourist-style-walking-tour-guide/2013050360970">ASX-listed US Masters Residential Property Fund</a>, which has successfully invested in multi-dwelling residential property in New York and New Jersey and attracted signficant amounts of Australian SMSF investment capital, but not without having to overcome some negative perceptions about the US market.
The Domus fund will use the proceeds of its IPO to purchase (through a US subsidiary) two multifamily projects costing approximately US$60 million on June 6 and to acquire other multifamily assets. 
The two projects are Mission Ranch, a 295 unit garden style luxury apartment complex in Dallas, Texas and Mesa del Oso, a 221 unit condo style, luxury apartment complex in Albuquerque, New Mexico ( a city familiar to any investor who is a fan of hit TV show Breaking Bad). 
These two apartment projects will make up the initial portfolio, with the investments funded via low fixed-rate US government-insured debt with interest rates currently between 2.9% and 3.5% allowing the fund to maintain a leverage ratio of between 60% and 70%. 
Domus has the exclusive first right to negotiate on a further portfolio of over 35 multifamily real estate Assets, consisting of over 6,500 individual apartments with an estimated market value of over US$750 million. 
Such assets, the product disclosure statement says, have 90% average occupancy rates with the US housing crisis leading to a steep decline in the number of owner-occupier assets. 
While the fund will initially invest in the southern and western regions of the US, where typically there are lower unemployment rates than other regions, it will consider expanding into other parts given an “ongoing trend for individuals and business to relocate from the more recessed mid-western and north eastern states to southern and western states.” 
The fund hopes to acquire around $250 million to $320 million of US multifamily assets by March 31 2014 with the initial public offer will close on May 31. 
Domus has lodged a product disclosure statement with the ASIC for an offer to raise up to $100 million, with a minimum subscription amount of $80 million, at a unit price of $1.00. 
Applicants will receive one option for every four units which they are allotted. 
Options will be exercisable at $1.00 at any time during the period from 1 January 2014 to the third anniversary of the date of the listing of Domus on ASX.  Options will not be quoted on ASX.  
Geringer says there has been good response to the offer from investor road shows from institutions, investment funds, REIT and small cap funds.
Geringer met with investors in road shows in early May in Hong Kong and Singapore.
He says the perception of the US housing market is good.
“They want to own a piece of US real estate and to invest in the residential recovery. They don’t have to be on the ground themselves,” he says.
Geringer has 30 years of experience in the US property market as a tax lawyer and real estate professional.
The fund will make quarterly distributions with the first scheduled for October 2013 with forecast distributions of 3.6 per unit for the first two forecast periods, an annualised distribution of 6.2% on the offer price.
 
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US property fund Domus set for ASX listing as it seeks to tap into growing demand for rental property in Texas and New Mexico

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The Australian dollar appears to be less of a factor than some believe in encouraging offshore investors to buy Australia’s commercial property, research by Jones Lang LaSalle suggests.
The graph below shows that funds poured into Australian commercial real estate when the Australian dollar was well above parity against the US dollar in 2012, rather than discourage investors.
It suggest that the opposite could happen if the Australian dollar falls – or perhaps that the Australian currency is less of a factor in commercial real estate as it may be in residential investment.
Click to enlarge
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Source: Jones Lang LaSalle Research
As Australian Financial Review property editor Robert Harley highlights, listed property trusts like the Goodman Group hedge 86% of their offshore income, so changes in the exchange rate have much less of an impact.
Savvy offshore investors would be able to do something similar to counter the exchange rate impact, while also attracted to Australian real estate due to its sound property market fundamentals - transparency, rising capital values, a strong economy and its proximity to Asia.
Certainly Asian investors are showing no signs of slowing down their appetite for Australian commercial property purchases, with a <a target="_blank" href="https://www.propertyobserver.com.au/retail/gpt-confirms-sale-of-half-stake-in-erina-fair-shopping-centre-to-asian-interests-for-%243971-million-thegptgroup-jllnews/2013052061487">South Korean pension fund </a>paying close to $400 million for 50% of the Erina Fair Shopping Centre on the Central Coast this month.
Harley also points out that the lower Australian dollar – which will support industries like manufacturing and tourism – may also flow through to benefit rural property and tourism property.
And a stronger Australian dollar is attractive to company’s like Westfield Group, which has nearly half of its income-earning assets in the US.
The Australian dollar peaked at $1.11 against the greenback in July 2011 and remained mainly above parity until the recent fall in early May sparked by the cash rate falling to a 53-year-low of 2.75%.
In 2007, the rising Australia dollar was also not an impediment to funds flowing into commercial real estate, with investors most likely seeing Australia as a safe investment haven.
In other periods – such as the late 1980s and mid-1990s – a rising dollar was also accompanies by an increase in funds flowing into commercial property.
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Australian dollar less of a factor in commercial property investment: Jones Lang LaSalle chart

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The onset of the GFC saw the highest proportion of Australian landlords claim losses on their property investments.
In the 2008 tax year, around 1.2 million taxpayers said they made a net rent loss on their investment properties compared with around 500,000 who made a net rent profit, ATO figures analysed by MacroBusiness show.
Property investors claimed a record $9.1 billion in aggregate losses in 2008, lower than $7.9 billion in aggregate losses claimed in 2010-2011 when 1,213,597 out of 1,811,174 landlords held negatively geared property investments.
Analysis by MacroBusiness shows that a greater proportion of property investors negatively gearing their investments from 2002 to 2008, coinciding with booming property markets before the GFC brought the party to a halt.
In 2009 and 2010, as the property market underwent a correction and property investors became more cautious, fewer landlords negatively geared their investments.
In 1998-99 – just before the Howard government halved capital gains tax and mortgage lending became more easily available - the number of investors with positively geared investments was roughly equal to those with negatively geared investment.
<img height="286" width="470" src="/images/stories/2013/macrobusiness_chart_2.jpg" alt="macrobusiness_chart_2">
“Up until 2000, property investment was more or less neutral from an income perspective, with aggregate rental receipts covering costs,” says MacroBusiness editor David Llewellyn-Smith.
“Since then, however, the situation has changed markedly, with the latest ATO data showing that there were just over 1.2 million negatively geared property investors in Australia in 2010-11, representing two-thirds of all property investment,” says MacroBusiness's Leith van Onselen.
“From 2000 onwards, however, net rents deteriorated sharply; with aggregate losses totalling $7.9 billion in 2010-11,” he says.
The logical explanation for the decline in net rental returns from 2000 and the surge of negatively geared property investment, says van Onselen was the Australian Government’s decision in 1999 to change the nation’s capital gains tax (CGT) rules by halving the rate of tax payable on capital gains earned on assets held for more than 12 months.
“This change, in combination with the negative gearing provisions allowing investors to offset rental losses against other (labour) income, encouraged investors to speculate on rising housing values in full knowledge that any losses would reduce their overall tax liability, and any capital gains would be taxed at only half the rate of labour income,” says van Onselen.
“The net result of these policies is that Australian investors have increasingly become Ponzi borrowers – Hyman Minsky’s term for borrowers who rely heavily on capital gains to repay debt and interest – in the belief that housing is a sure fire investment,” he says.
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