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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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

<html><body>
Median house values lifted almost 1% over February with Perth and its accompanying WA country market the strongest performers, according to the latest housing data from Residex.
The February figures suggest the housing market is gathering steady momentum with Residex recording a 0.96% gain in February following a 0.61% quarterly gain.
“Things in the financial world and the Australian housing market are looking fine and I am pleased to be delivering a positive newsletter,” writes Residex chief executive John Edwards.
Edwards pointed to the recent gains in the <a target="_blank" href="/companies/westpac">Westpac</a> Melbourne Institute Index in the March reading, following a 7.7% jump in February, the fifth consecutive month that it has registered above 100.
“Much of the population is feeling positive about the current situation.
“The housing market is presenting growth on an Australia-wide basis and the trend is moving in an upward direction,” he says.
Over the past 12 months Perth house values are up 3% to a median of $493,000.
The Perth unit market has been particularly strong, up by 11.3% over the past 12 months to a median value of $425,500.
WA country house values also lifted, up 2.24% over February and 3% over the past year to a median of $344,500.
The Perth housing market also delivered a boost to property investors with an 8% rise in weekly house rents to $470 per week and a 11.4% gain in unit rents to $440 per week.
Rents are rising on the back of declining listings and a very tight vacancy rate.
The Real Estate Institute of Western Australia (REIWA) recorded a Perth metropolitan vacancy rate of 1.9% for the January 2013 quarter with an even tighter 1.3% vacancy rate for the unit market.
The REIWA noted the diminishing level of listings in metropolitan Perth in the wake of strong population growth and improving consumer confidence, which is putting “upward price pressure and increased demand for homes”.
 
<hr class="system-pagebreak">
REIWA president David Airey noted that properties listed for sale slipped to just 8,429 in March, down from 14,092 at the same time last year.
“Agents are reporting an increasing shortage of properties in popular price ranges especially around the median of $500,000," said Airey.
“REIWA data suggests that listing stock is trending downwards on the back of strong sales turnover and these properties are not being replaced with enough new listings to meet demand.
“Now that the market appears to have turned in favour of sellers, many may be holding back with the expectation of a better price in the months ahead. Until more sellers list their properties and until we get more new homes onto the market from builders, then competition from buyers will put pressure on prices,” Airey said.
The Residex figures show that Adelaide was the next strongest capital city performer after Perth in February with a 0.98% gain in its median value of its houses to $392.000.
Sydney recorded a modest 0.66% rise in its median house value to $682,500 with values up 3.88% over the past month
Melbourne recorded a modest 0.28% gain with a median house value of $556,500 with house values almost unchanged on a year ago.
Brisbane house values retreated 1.42% over February to a median of $433,000 but are up 1.41% for the quarter and 2.57% over the past 12 months.
Year-on-year Darwin stands head and shoulders as the top performing market with a 9.43% rise in its median house values to $525,000 – though there was a small 0.84% correction in February.
Darwin house rents are up 11.5% to a median of $580 per week and offers capital city investors the highest rental yield of 5.78%.
Darwin units offer a yield of 6.09% also the highest across capital cities.
Spurred on by the wealth of mining and LNG projects, the wider Northern Territory housing market continues to rise with house values up 7.9% over the past 12 months and a median value of $489,000.
Overall, the unit market tread water over February as it has over the past quarter with unit values up just 1.1% over the past 12 months with a national median unit value of $398,000.
Brisbane, Melbourne and Sydney all recorded small gains in unit prices in February with Perth the standout market over the past 12 months.
Hobart unit price are down nearly 10% over the past 12 months.
<a target="_blank" href="https://blog.residex.com.au/wp-content/uploads/2013/03/Capital-City-Property-Market-Statistics-February-2013.jpg">Click here for the full Residex breakdown for capital city and country markets over February.</a>
Photo courtesy of Flickr.
 
 
</body></html>

lschlesinger-FZcF9M3vE6

Perth leads modest house value gains in February: Residex

<html><body>
Hong Kong-headquartered private equity firm Barings Private Equity Asia is being mooted as a possible bidder for all or part of the Australand business.
The firm has $5 billion under management with offices in Shanghai, Singapore, Beijing and Mumbai and was once part of Dutch banking giant ING.
It is understood to be considering acquiring just the residential business of Australand or putting in a bid for the entire company, including its industrial, retail and office businesses and assets.
Barings Private Equity Asia describes its activities as running “a pan-Asian investment program, specialising in mid-market companies requiring capital for expansion, recapitalisation or acquisitions”.
The firm is said to be more interested in Australand’s residential unit, which could generate returns in excess of 15% with premium Australand commercial and industrial assets expected to generate a smaller return, according to a report in the Australian Financial Review quoting “senior sources”.
Australand’s main shareholder, Singapore-based CapitaLand, which controls 59% of Australand, <a target="_blank" href="https://www.propertyobserver.com.au/news/majority-shareholder-capitaland-to-review-its-investment-in-takeover-target-australand/2013011058723">said in January</a> it was reviewing its investment in the Australian developer as it focuses its efforts on its China and Singapore businesses.
However, it is believed to strongly favour selling the entire business rather than selling it piecemeal.
<a target="_blank" href="https://www.propertyobserver.com.au/industry-news/several-parties-seek-australand-property-group-stake/2013030559720">In March</a> Australand said in an ASX statement that “several parties have expressed an interest in either the whole or parts of the Australand business.”
A $7 billion approach <a target="_blank" href="/news">by Mirvac</a> for Australand’s residential business has also been mooted, but no formal bid has yet been acknowledged by Australand.
A $3 billion bid by the GPT Group for Australand’s commercial and industrial businesses at a $140 million premium to their book value was rejected in December.
If a suitable bidder for Australand cannot be found, CapitaLand may also consider selling its shareholding via a block trade, an off-market trade allowed for share holdings of significant size in specified contracts.
</body></html>

Asian private equity firm emerges as possible Australand buyer: reports

<html><body>
It was the year when online retailing grew up. Though the industry has had the same debate for years, the last year has seen a huge resurgence in the way companies both large and small are dealing with digital.
A decade after shutting down its original digital strategy, David Jones has come back with a vengeance. The retailer, along with department store rival Myer, has spent tens of millions of dollars in buffing up its online presence.
But it isn’t just the department stores getting their digital chops dirty. <a href="companies/woolworths" target="_blank">Woolworths</a> and Wesfarmers have started giving regular updates on online sales in their financial updates. Chains like Speciality Retail and Country Road are reporting sales increases, or actual revenue figures from digital sources.
Even though Gerry Harvey may still decry the use of the internet, <a href="https://www.propertyobserver.com.au/retail/how-gerry-harvey-plans-to-turn-harvey-norman-into-australia-s-biggest-retailer/2013020659202" target="_blank">Harvey Norman</a> is turning over several million dollars.
That’s not forgetting pure play online retailers like Kogan, Shoes of Prey, or Appliances Online. These companies, like StyleTread, are not only making a huge stamp on the retail consumer space, but they’re demonstrating retail is able to attract serious venture capital money.
As Telsyte senior research manager Sam Yip says, it’s been a “very big year of change”.
“There have been players early in the space that have dropped out, and a lot of bricks-and-mortar retailers are doing more.”
“We’re not hearing any more Gerry Harvey stories; everyone acknowledges that this is the channel to be operating in.”
The debate over the GST threshold has largely disappeared, although the industry at large is still hopeful of some government relief. At the very least, most have accepted a 10% change in price isn’t going to help much of anyone. The smarter retailers are simply getting on with the job.
If there’s any evidence the online retail revolution is taking hold, look no further than Australia Post’s reaction. It is investing more money in parcel lockers and out-of-hours delivery services to cater for the huge amount of parcels being delivered.
So much so, the majority of its revenue is now being made from these types of parcel deliveries.
Experts believe online retail in Australia has tipped over the top of the hill, so to speak. The hard work is being done already. Now, Yip argues, the next challenge is to transition that success to platforms like mobile.
“The other big challenge here is around delivery. In the past year we’ve seen horror stories of where logistics have gone wrong, with people getting wrong orders all the time.”
“There’s a need to really refine that back-end logistics functionality.”
As in previous years, we’ve created a list based on a mixture of different metrics, including traffic data from Experian, revenue, and any sort of noteworthy achievement. Local divisions of global companies, such as Apple and Amazon, are excluded, along with auction sites such as eBay and Gumtree.
The list is not presented in any particular order.
The top 20 online retailers of 2013:
<h3>1. Kogan</h3>
If not the most popular, Kogan is one of the best-known homegrown online retailers in Australia. Mostly thanks to founder and CEO Ruslan Kogan’s insistence on putting himself and his business in the news through quirky – and sometimes weird – comments and campaigns. More recently the <a target="_blank" href="https://www.smartcompany.com.au/retail/050178-kogan-slugs-customers-who-use-antiquated-internet-explorer-7-browser-with-a-6-8-tax">Internet Explorer tax</a> got a mention in several international news outlets.
It’s difficult not to be impressed by Kogan’s reach. After shipping a single container of televisions five years ago, Kogan has transformed into a $250 million business with more on the way.
Spars with Gerry Harvey aside, Kogan has maintained a solid footing with Ruslan saying he’s “happy to be everybody’s first choice for a second television”. With a view to growing into a billion-dollar business, and expansion into services like mobile, Kogan will be around for a while yet.
<h3>2. Milan Direct</h3>
The other half of Ruslan Kogan’s online empire, Milan Direct was initially an odd proposition. Selling furniture online back in 2007 wasn’t done very much in Australia, if at all. But Dean Ramler and Kogan have managed to turn the business into a $12 million powerhouse.
The company’s success has spawned some eager competitors. But with growth of 100% last year, and international expansion ahead, Milan Direct  seems set to hold on to its strong market position for a while.
<h3>3. Catch of the Day</h3>
Perhaps the largest online retail success story in Australia, Catch of the Day continues to grow from strength to strength. After starting as an eBay business, Gabby and Hezi Leibovich have managed to transform the company into a $350 million powerhouse, complete with funding from one James Packer.
Part of the success of the Catch Group can be attributed to its savvy expansion plans. Rather than start a business for every category, the team has been able to pick up start-ups and nurture success from there. After expanding into grocery and wine, it seems natural the business could continue to thrive – and all signs are pointing to an eventual float.
<h3>4. Booktopia</h3>
Given books are one of the cheapest things to buy from offshore retailers, it’s surprising any local online store has managed to create a thriving business. But Tony Nash at Booktopia has been able to do just that, on track to turn over $28 million in 2012-13.
There isn’t much complicated strategy here. A focus on clean design, good customer service management and an ever-present need to reduce shipping times has kept Booktopia at the top.
<h3>5. JB Hi-Fi</h3>
One of the larger businesses in Australia to actually understand how online retailing works; JB Hi-Fi is making a good name for itself online. With more than $37 million in digital revenue in the first half of the year alone, at 2% of total sales, the company is proving itself as a good example for dedicated bricks-and-mortar stores heading online.
In fact, JB Hi-Fi perhaps encapsulates what retailers need to be doing online. With the ability to check stock, “click and collect” and some pretty fast customer service, chief executive Terry Smart seems to be doing a good job in transforming the iconic business into a powerhouse online.
 
<hr class="system-pagebreak">
<h3>6. Officeworks</h3>
Office supplies are a boring topic, but Officeworks has at least managed to make the buying process as easy as it can. After all, office supplies are something you should be able to buy online instead of heading to a store.
The company won’t confirm how much revenue the business makes online, although reports indicate it could be anywhere up to $150 million, equivalent to 13-14% of revenue. That’s an astonishing figure for an office supplies store, but it does make sense – the company understands how people shop online.
Just like JB Hi-Fi, Officeworks shows it understands how to not only get people browsing on a site, but makes sure it knows how to capture their money.
<h3>7. Specialty Fashion</h3>
While the retail and fashion industries obviously haven’t been having the best time, Speciality Fashion has been working on its digital presence – and it’s doing very well.
The company, which operates the Millers, Katies and Crossroads brands, recorded $11.3 million in online revenue during the first half of the year, representing 3.6% of total value.
While it isn’t the biggest online retailer around, the fact the company has been so successful with its digital push – and is willing to disclose just how much money it makes online – is a good step in the right direction.
<h3>8. Big W</h3>
While the company doesn’t divulge how much of its revenue is made online, the popularity of Big W’s site indicates it could be making quite a lot of cash. In any case, Woolworths is giving DealsDirect a run for its money with the Big W online store, which doesn’t have many frills but is focused on simplicity of use and cheaper prices.
<h3>9. BrandsExclusive</h3>
BrandsExclusive has been at the forefront of the private shopping club scene in Australia. The business, which has mostly focused on fashion, quickly found a loyal user base and has been growing ever since.
Perhaps the company’s biggest success has been its ability to leverage demand for private shopping networks into cash. Even last year APN News &amp; Media announced a massive $36 million stake.
The business was aiming to turn over $70 million last year.
<h3>10. The Iconic</h3>
Although The Iconic isn’t one of the most established businesses around, and while it certainly isn’t divulging much with regard to revenue, it seems outrageous to leave the company off a list detailing the most important online retailers in Australia.
The business has made a huge splash in Australia with its bright marketing tactics, but it’s also gained a reputation for securing not only one $25 million funding round, but a second earlier this year.
The Iconic certainly has enough money to make a dent on the online retail market. It remains to be seen whether that success will continue.
<h3>11. Shoes of Prey</h3>
The customisable shoe retailer has made quite a name for itself. With plenty of attention from television shows, and some inadvertent celebrity endorsements, Shoes of Prey has ended up as one of the hottest brands in Australian retail.
Some funding hasn’t hurt, either. The company has taken money not only from Atlassian co-founder Mike Cannon-Brookes, but TechCrunch founder Mike Arrington. A partnership with David Jones is sure to increase the company’s reputation among the bricks-and-mortar elite.
Although revenue isn’t the highest in the online space, the company has definitely made an impression. It won’t be going away soon.
<h3>12. DealsDirect</h3>
The largest online department store, DealsDirect started as an eBay business. (Curiously, so did the other major retailer on the list – Catch of the Day).
The business has been expanding in recent years, buying a series of smaller retail-based businesses. Founder Paul Greenberg has a keen eye for businesses, and the people who run them. Although DealsDirect has been a success due its size, he’s been careful not to pack the operation with too much fat.
Greenberg is cagey on revenue, but the business is doing well over $100 million.
<h3>13. Get Wines Direct</h3>
The internet has triggered a boom for liquor sales, with plenty of retailers such as Woolworths, with its Dan Murphy’s brand. Get Wines Direct is topping the competition, making a name for itself as the country’s biggest online wine dealer.
Founder and chief executive Tony Sells has been busily promoting the company lately with partnerships and other deals. And it’s working – the company is turning over more than $50 million.
<h3>14. Groupon</h3>
While the group buying market has certainly fallen from its height, Groupon has kept a stronghold on the local industry. It’s the biggest player, (although Catch of the Day’s Scoopon follows closely behind), and has managed to maintain a foothold in an otherwise tumultuous market.
There’s no denying the pressure facing its parent company, but for now, at least, Groupon has shown group buying is truly well and alive in Australia.
<h3>15. Ozsale</h3>
The other half of Australia’s private shopping scene, Ozsale has been just as successful in establishing a dominant presence in the local retail sector.
Founded by Jamie Jackson, the company has succeeded in building a solid reputation. It’s been a busy year for the company, too, as it snapped up competitor BuyInvite back in June 2012.
The company isn’t slowing down plans, announcing earlier this year it’s gearing up for an IPO.
 
<hr class="system-pagebreak">
<h3>16. StyleTread</h3>
Another online shoe business, StyleTread is all about shipping. When the company first launched, SmartCompany spoke to the founders – who said shipping was their number one priority. The business raised $4 million back in 2011 from Nine Entertainment, and <a target="_blank" href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CDEQFjAA&amp;url=http%3A%2F%2Fwww.smartcompany.com.au%2Fretail%2F048963-online-retailer-styletread-raises-12m-in-funding-round&amp;ei=9-9HUc3uOOSoiAfHjoCIBg&amp;usg=AFQjCNFOjJp47frVXS5A5HDj49Mv4YUoTA&amp;sig2=HZ_rkfrJS391matxRkQ1zw&amp;bvm=bv.43828540,d.dGY" rel="nofollow">then won $12 million</a> from more investors last year.
It’s a good strategy, given how frustrated Australian shoppers have been for some decent delivery times. As a result, StyleTread has continued to grow.
<h3>17. Dick Smith</h3>
Placing Dick Smith on a list of the country’s top retailers may be a controversial move given what’s happened to the company. But despite Dick Smith’s downfall, it still maintains an extremely popular online presence.
Why? Because it has the basics down pat. The ability to reserve products, and check individual stores for stock levels is a must. It’s simply a well-designed website, the importance of which can never be overstated.
<h3>18. Appliances Online</h3>
It was only a few years ago the retail industry felt confident in saying people would never buy large, bulky goods over the internet. The arrogance with which that statement was made has all but washed away, and John Winning’s Appliances Online is enjoying the fallout.
At $20 million a year, Appliances Online is on the smaller side but no less important. The company’s success shows Australians are willing to buy anything over the internet, as long as they’re given enough detail and enough confidence in the seller.
While it might be a while before the practice becomes mainstream, Winning and his Appliances Online team have achieved what many thought would be impossible – and have made money at the same time.
<h3>19. EB Games</h3>
Although plenty of consumers are heading offshore to source cheaper video games, EB Games has managed to maintain a strong foothold in the local sector. A solid website, a savvy social media team, and a thinning market thanks to the collapse of GAME, have all ensured the online division of EB Games is doing just fine.
<h3>20. Westfield</h3>
It’s been a couple of years now since the shopping giant announced it would create its own online hub for shopping digitally. Now, it’s one of the most popular online retail destinations in the country.
It was a smart idea. The site combines deals from various stores located in Westfield shopping centres. A savvy website, along with the ability for free delivery and returns in-store or online, has kept Westfield in a strong position online.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.
 
 
</body></html>

pmcstafford-pr9eMARWoN

Australia's top 20 online retailers for 2013

<html><body>
Private investors were the most active buyers of retail property in 2012, acquiring more than a third (36%) of the $3.7 billion of retail property that changed hands in Australia over the calendar year.
Institutions represented by funds, trusts and syndicates accounted for a combined 32% of purchasing activity while foreign investors were also active acquiring 24% of retail property.
<img alt="chartoftheweekmarch27one" height="838" width="400" src="/images/stories/2013/03/chartoftheweekmarch27one.gif">
“Private investors had been sidelined from purchasing retail property for a number of years due to strong demand from institutional investors. Also of particular note is the emergence of foreign investors purchasing 23% of retail property sold,” says Savills national head of research Tony Crabb.
“Evidently, the global credit crisis created a window of opportunity for private and foreign investors to re-enter the market.
“As conditions for Australian institutions continue to improve, private and foreign investors may well find themselves unable to compete again.
“Purchasers have become more confident the commercial property market has passed the bottom of the cycle,” he says.
Property trusts (26%), syndicates (21%) and private investors (21%) were the biggest sellers of property over 2012 with private trusts and syndicates also active.
Of note, 12% of retail property sales last year were mortgagee in possession sales.
<img alt="chartoftheweekmarch27two" height="816" width="400" src="/images/stories/2013/03/chartoftheweekmarch27two.gif">
</body></html>

Private investors return to retail property market as trusts sell out: Chart of the week

<html><body>
In February, Westfield founders the Lowy family announced the sale of its entire 7.1% stake in the Westfield Retail Trust for $664 million.
The motivation was to diversify its investments internationally. The Lowy family retains its 8% interest in Westfield Retail Trust’s stable mate Westfield Group worth approximately $1.8 billion. 
The action highlights the potential performance differential of passive asset-owning A-REITs compared to those with a higher earnings growth prognosis. 
Westfield Retail Trust is a passive property-owning A-REIT.
Earnings growth is largely generated by rental increases from assets held in the portfolio.
While rent reviews on retail property held in A-REIT portfolios continue to generate rental increases of up to 3%, renewals and new leases have seen rental reductions of up to 7% with some increases in lease incentives acting as a further drag on earnings.
The difference in the change in rental between renewal of existing leases and new leases is the re-leasing spread. Westfield Retail Trust reported the weakest releasing spread in the retail A-REIT sub-sector at -2.6%. 
Westfield Retail Trust’s forecast earnings growth is 3.0% and its estimated dividend yield for the 2013 financial year is 6.3%.
This compares to the forecast earnings growth for Westfield Group at 4.9% with an estimated dividend yield of 4.5%. The yield differential reflects the difference in anticipated earnings growth. 
Westfield Group also owns property. However, its earnings growth is boosted by profit from property development; revenue generated by higher fees from increased funds under management and increased asset management fees.
Westfield Group reported an 18% increase in net profit over the 2012 year driven largely by profit earned from development of its own shopping centres.
Development profit and fee revenue are more volatile than rental income.
</body></html>

markwist-Vaq6S8Xoby

What motivated the Lowys to sell out of the Westfield Retail Trust?

<html><body>
The Australian housing market has entered a period of subdued stability with little prospect of "large price swings" a new report by the Housing Industry Association (HIA) argues.
The HIA bases this assertion on the ratio of mortgage repayments to earnings, which it views as having strong correlations with house price growth.
"The ratio bottomed out during the late 1990s, with brisk growth in house prices following," says the <a target="_blank" href="https://www.propertyobserver.com.au/australian-capital-territory/new-home-sales-on-the-rise-hia/2013013159051">HIA</a> in the report.
Now, it says the ratio is slightly above its long term average.
"This suggests that the relationship between earnings, interest rates and house prices is balanced and consistent with stability in the market. Accordingly, any large price swings are probably unlikely in the near future.
Click to enlarge
<a href="/images/stories/2013/03/hiamarch26one1.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/03/hiamarch26one1thumb.gif"></a>
The HIA says its analysis indicates that the Australian housing market is "relatively weak by historical standards in terms of transaction volumes and anaemic price growth over recent months".
"This state of affairs underlines one of the key features of housing markets generally, whereby low levels of transaction and turnover tend to accompany periods of subdued prices.
"Consequently, the return of sustainable price growth to the market would add welcome fuel to activity in the residential construction sector," it says.
Click to enlarge
<a href="/images/stories/2013/03/hiamarch26two2.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/03/hiamarch26two2thumb.gif"></a>
Click to enlarge
<a href="/images/stories/2013/03/hiamarch26three3.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/03/hiamarch26three3thumb.gif"></a>
</body></html>

Significant house price swings unlikely: HIA

<html><body>
An Asian investor has paid $1.45 million at auction for the premises of a jewellery store on the ground floor of the Fender Katsalidis-designed Hero building on Little Collins Street.
The sale price equated to a yield of 6.2% for the 50-square-metre retail shop at 144 Little Collins Street, leased to Pilkington Jeweller on a monthly lease.
The property was marketed for auction by Josh Rutman, Ed Wright and Mark Wizel of <a href="https://www.propertyobserver.com.au/trends/cbre-embraces-flexible-working-space-in-sydney-office/2013031259832" target="_blank">CBRE</a> City Sales on Friday March 22.
The Hero apartment building is the former 1948-built Russell Street Telephone and Exchange Post Office building, which was transformed into inner-city apartments above retail by Fender Katsalidis with the addition of six floors, added in 2001.
It is considered one of the best examples of the transformation of a former public building into inner-city apartments.
Rutman tells Property Observer the auction drew over 150 spectators, with five genuine bidders pushing the property from an opening bid of $1,000,000 all the way to the final sale price of $1,450,000.
"This reflected a yield of 6.2% and an exceptionally strong rate of $29,000 per square metre over building area, a record for the building," Rutman says.
"This is the second sale of a retail investment property by CBRE City Sales this week and highlights the continued investor demand for well-located ground floor CBD retail properties.
"Despite negative commentary about the state of the retail climate these properties continue to achieve premium prices when marketed strategically by an agent to the marketplace," says Rutman.
CBRE City Sales also sold the 75-square-metre premises of Trend Cafe at 377 King Street for $900,000 at a yield of 6.5%.
"Investor demand for well-located retail continues to remain strong which is being mainly driven by the low interest rate environment and improved sentiment levels due to the improved residential property and share markets," says Rutman.
</body></html>

Asian investor pays $1.45m for retail premises in Fender Katsalidis-designed Hero building on Little Collins Street

<html><body>
Hearty congratulations to Melbourne real estate agency PhilipWebb for deciding to stop advertising client properties in newspapers. The agency has generated publicity for deciding that newspaper print advertising is “Jurassic” in nature and that online promotion is the only way to go. It had abandoned metropolitian dailies, but stuck with regional press ads until recently.
Late is better than never, but what took you so long to have this blinding flash of the bleeding obvious?
Enlightened agencies came to this conclusion a decade ago. Jenman-approved agencies have been finding buyers for homes without newspaper advertising for at least the past 10 years.  
I have published four books on the real estate industry, the first of them in 1998, and they have all warned sellers to avoid agency pressure to spend thousands on unnecessary newspaper advertising.  
Here’s what I wrote in Property Smart in 2002: “One of the unsung scandals of real estate is the many different ways agents abuse their clients’ advertising money … Agents use this money to further their own ends rather than their clients’.  
“Agents use their clients’ marketing budget to promote themselves … Often the largest words in a real estate ad describe the agency name. One way of another the agency’s name will be prominent when in reality there’s no need for it to appear at all.”  
Evidently PhilipWebb agrees. <a target="_blank" href="https://www.propertyobserver.com.au/industry-news/melbourne-estate-agents-philipwebb-ditch-jurassic-newspaper-advertising/2013032059992">It told </a><a target="_blank" href="https://www.propertyobserver.com.au/industry-news/melbourne-estate-agents-philipwebb-ditch-jurassic-newspaper-advertising/2013032059992">Property Observer last week</a> that print advertising was just a way for agents to get their brand noticed – at the expense of their clients.  
Property Smart also described how agencies have earned commissions or rebates from newspapers for directing their clients’ ads to those newspapers. This still happens today and is one of the great outrages in real estate. Why should agencies receive financial rewards for spending their clients’ money? If anyone should receive a reward, it should be the home seller who pays for the advertisements.  
Currently there is a court case in Victoria over an agent allegedly receiving secret commissions from a newspaper for directing vendor-paid advertising their way. The case is ongoing.
What is surprising is that there are not more such cases. Newspaper kickbacks to agencies for vendor-paid advertising have been standard in real estate for decades.
What is even more surprising is that Saturday’s newspapers are still crammed with real estate ads. This is worse than “Jurassic” – it’s a terrible waste of money by the home sellers.
Home sellers appoint real estate agents to sell their properties and pay them with a handsome commission if they’re successful. It’s scandalous for agents to ask their clients to also spend thousands on advertising. 
As consumer advocate Neil Jenman says: if the ads sell the property, why do you need an agent? Just place the ads yourself and save yourself the agents’ selling commission.
The bottom line is that no advertising should be necessary at all. Agencies are supposed to have buyers available.  
But if sellers feel that advertising is necessary to assist the sales process, the last place they should put it is in a newspaper.  
Online marketing is far more effective and less costly. It’s so much more-user friendly than the great mass of newspaper advertisements, grouped under agency banners and designed primarily to promote the agency – at their clients’ expense.
How does a Melbourne buyer interested in a four-bedroom house in, say, <a href="/news">Brighton</a>, find such properties amid the great jumbled mass of property ads in a newspaper? It's nigh on impossible.  
Compare the ease with which you can isolate properties that meet your location, type and price criteria in an online service.  
If you’re selling your home and your agent tells you that you need to budget thousands for newspaper advertising, you have appointed the wrong agent. Sack them and find an alternative that has buyers looking for property in your area and therefore doesn’t need to waste your money on advertising.  
Why blow a big chunk of your capital gain on a wasteful agent?
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>
</body></html>

terryryder-YECXbqmri2

It's ancient for agents to ask vendors to spend thousands on print advertising: Terry Ryder

<html><body>
Westfield  Group  has sold half of its interest in six Westfield regional malls in Florida to O’Connor Capital  Partners for US$1.283  billion. 
O’Connor’s investment will represent a 49.9% interest in this portfolio, which has a gross value of US$1.283  billion.  
Westfield will remain as property, leasing and development manager on terms consistent with the Group’s other joint ventures. 
“This agreement carries on the Group’s strategy of introducing joint venture partners into our assets globally as well as disposing of non-core assets,” says Westfield Group co- chief executive officer Peter Lowy. 
Westfield will realize approximately US$700 million in net proceeds from the transactions. 
The transactions are subject to financing and other customary closing conditions and are expected to close in the second quarter 2013. 
Founded in 1983, O’Connor Capital Partners is a privately held, independent manager, owner, operator and developer of real estate.
</body></html>

Westfield sells half interest in six Florida malls for US$1.28 billion

<html><body>
There seems to be a perceptible sigh of relief across Australia now that spending has started once again. As RBA deputy governor Philip Lowe pointed out in a speech last week:
“Nationwide measures of house prices have increased by around 4% since mid last year, after having declined for around 18 months. Home lending approvals and auction clearance rates have both risen. Equity prices are up over 20% since the middle of last year. And the level of consumer confidence is now well above its long-run average level. Despite what one often hears, households do appear to be feeling better about both their finances as well as Australia’s medium-term prospects.”
Mr Lowe is correct in his assessment of the housing market: conditions have improved and people are once again out and about leveraging against existing assets, and pooling their savings into bricks and mortar.
In Melbourne, according to the REIV, the overall value of residential sales at auction has increased substantially compared to this time last year. Transactions sold at auction over the first few months of 2013 currently total $1.8 billion, compared to $1.5 billion in March 2012 - and the value of private sales has also risen from $3.9 billion to $4.5 billion. It’s a remarkable improvement considering overall turnover last year was back at levels not seen since 1996 as we limped through 12 months of no perceptible growth, aside from a slight ‘uplift’ in the numbers attending both auctions and ‘open for inspections’ in December.
So is it back to business as usual? Well, for the time being maybe – except of course for first home buyers who are struggling to join the party in any significant proportion – a segment that seems to be discounted amongst those calling ‘recovery.’  Albeit, it’s clear from the Governors speech that the post GFC period, during which we’ve been encouraged to save and pay down debt, is drawing nigh.
I suspect, outside of the daily grind most endure to keep their mortgage repayments under control whilst squirreling away funds for retirement, scant thought is given to the broad concept of ‘money’ – or indeed where money essentially comes from.
Whenever we hear a speech on the housing market from the RBA, it’s accompanied by a short history lesson on the major influences that have lead to our fortuitous years of ‘boom’ appreciation, during which we’ve seen median house prices balloon some 200% – outpacing both wage growth and inflation over the same period.
For example, in one of their most recent publications cautioning on a lower growth atmosphere, we were educated thus:
“Over the past 20 years or so, upturns in the housing market have been accompanied by an increase in the growth rate of credit. But those years were also a period of structural change as the economy moved to a higher level of household indebtedness. Generations of households yet to buy their first home, or still wanting to trade up, were taking advantage of easier access to credit, which among other things had been facilitated by the shift to lower inflation and lower interest rates in the early 1990s.”
It’s a seemingly fitting non-emotional explanation to explain away the dramatic increase in prices – albeit it doesn’t quite paint the full picture of where this supply of money actually originated from.
The economist JK Galbraith coined what is perhaps the best explanation of our monetary system when he said "the process by which banks create money is so simple that the mind is repelled. When something so important is involved, a deeper mystery seems only decent."
I’m sure some reading this that will be well educated in the dynamics of debt creation – it’s no hidden secret, just rarely discussed.
However, there will be a good proportion who have yet to be initiated into the remarkable system of monetary supply that has allowed the majority of our currency – some 95% of it – to be created out of thin air through the process of bank lending.
In fact the story behind this great supply of money would make a fitting accompaniment to the unfolding plot in the film Oz The Great and Powerful. As long as we ‘believe’ it doesn’t really matter what’s occurring behind the scenes – processes which in arguably ‘less responsible’ hands ultimately lead the world to the brink of economic collapse.
And as countries around us wake up to the devastating repercussions of what can happen when ‘things go awry’ – <a href="https://www.positivemoney.org/" target="_blank">organisations</a> campaigning for a better way are slowly gaining traction.
If you have an innocent understanding of economics, you may still be under the illusion that banks make their profits by leveraging against depositors funds and thus, charging interest on the loans they advance through a process called ‘reserve ratio’ or ‘the money multiplier’ – keeping a proportion of the balance safely aside whilst extending the rest to a borrower as credit.
However, whilst no one would disagree that economics is a complex subject in its own right – this myth was debunked a long time ago – although perhaps more publicly so since the on-set of the GFC.
Importantly, the central bank doesn’t control the amount of money circulation – commercial banks do – based on their own models of risk assessment, which are arguably developed and manipulated behind closed doors.
You see, when a bank extends a loan, the figures typed into your loan account are just that – simply numbers put there on the premise that the bank has assessed you a credit-worthy individual who will honour the terms of their contract.
In the simplest sense, this loan (the figures typed into your bank account created from ‘nothing’) are counted as a ‘deposit’ – money you owe to the bank, and therefore instant ‘wealth’ upon which the bank can extend further credit into the economy.
Banks don’t have to limit themselves to lending out this somewhat fictional money based on any ratio set by the RBA – or the funds they receive from depositors. In other words, it’s commercial banks that control the level of ‘money’ (debt) which circulates in the system.
Consequently, almost all the currency out there is money which has been created and expanded through an increasing variety of financial models. Money ‘loaned’ into existence with interest attached – for which additional funds are required to service the extra repayments. As the money supply increases, so does inflation, but principally on the goods that it ‘funds’: real estate.
 
<hr class="system-pagebreak">
Let me briefly recap. In almost all modern countries operating under the same system, only 3-5% of ‘real’ money originates from the government-owned mints, the rest is conjured up with the words ‘I believe’ when a bank makes a loan.
As Adair Turner, Chairman of the FSA, eloquently put it in a speech ‘Credit Creation and Social Optimality’ following the GFC in Sept 2011:
“The banking system can thus create credit and create spending power – a reality not well captured by many apparently common sense descriptions of the functions which banks perform.  Banks it is often said take deposits from savers (for instance households) and lend it to borrowers (for instance businesses) with the quality of this credit allocation process a key driver of allocative efficiency within the economy.  But in fact they don’t just allocate pre-existing savings, collectively they create both credit and the deposit money which appears to finance that credit.”
Considering banks favour lending against existing collateral over and above the support of say small business and enterprise, it should come as no surprise that the vast majority of bank lending has been towards the purchase of ‘bricks and mortar’ – and whilst the only constraint on the amount of money ‘created’ is people’s ability to service the debt – we should not be under any illusion that the RBA wouldn’t welcome a return to ‘business as usual’ in our revolving system of finance.
According to RP Data, Australia’s property market is worth an estimated $4.86 trillion, which is three-and-a-half times the value of Australia’s stock market and combined superannuation funds. Therefore, it’s no surprise that the health of our property market dominates the conversations of both those in and out of the real estate industry – an asset class towards which banks are highly exposed.
Without going into further detail, the one problem with our economic model is the requirement for boundless growth – more debt requiring more activity just to maintain the amount of money we have in circulation. Without it, we lose our jobs and our ability to service this growing supply of credit.
Collectively, we’re all in debt – and for those who aren’t, the remainder pick up the slack.  And although its broadly recognised that the initial boom in borrowing which occurred in the decades leading up to the GFC is unlikely to continue at such a rapid pace, you would be foolish not to recognise the risks associated with an economy which has its foundations pinned on a future which has to forever ‘be bigger’ in order to stay afloat.
I came across a cartoon the other day with the wording:
“Oh, The World is $40 Trillion in Debt?”
“Please, tell me who the world is in debt to?”
The answer of course, is the banks. Albeit, whilst we’re rocking along under the protection of the mother of all mining booms, underpinned with increasing demand from China, and in the throes of relatively rapid population growth, the party can seemingly continue ad infinitum.
Albeit, make no mistake - the rocky foundations are there - a younger generation slowly ‘priced out’ – for which the government can only assist through the extension of a further allowance of ‘cheap’ credit, which thus far has not produced any lasting effect.
Not to mention an ageing population who will eventually outnumber the workers, leading the ‘big Australia’ advocates yelling ‘populate or perish!’
The game of checkmate won’t change until the system changes, and the system won’t change until its hand is forced.
With these thoughts in mind, perhaps it’s time to remind ourselves what Citi's Global Head of Credit Strategy, <a target="_blank" href="https://www.businessinsider.com/matt-kings-most-depressing-slide-ever-2012-12">Matt King</a>, cited late last year as “'The Most Depressing slide” he had ever created.
“In almost every country you look at, the peak in real estate prices has coincided – give or take literally a couple of years – with the peak in the inverse dependency ratio (the proportion of population of working age relative to old and young).
In the past, we all levered up, bought a big house, enjoyed capital gains tax-free, lived in the thing, and then, when the kids grew up and left home, we sold it to someone in our children's generation. Unfortunately, that doesn't work so well when there start to be more pensioners than workers.”
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2013/03/cashmoremarch25.gif"><img src="/images/stories/2013/03/cashmoremarch25thumb.gif"></a>
Food for thought is it not?
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
</body></html>

Latest Investing Insights

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

Editor's Picks

Developments

New apartments

New townhouses

News

Latest Investing Insights

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

Editor's Picks

Receive the latest news stories to your inbox

Developments

New apartments

New townhouses

News