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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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

Joel Robinson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Every First Home Owner Grant for new property by state

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

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

Staff Writer

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

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

alisonwarters@gmail.com

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

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

Ellen Walker

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

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

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

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NSW and Perth offer the best prospects in what remains a soft residential market, says Lend Lease CEO and managing director Steve McCann. 
Speaking as Lend Lease’s interim results briefing today, McCann said there was an expectation of increase residential activity in 2013, but it would be “some time” until there was a recovery in the sector. 
“The residential market remains soft,” said McCann. 
McCann said NSW and the Perth market are the strongest residential markets with Queensland also showing “small signs” of recovery at particular price points. 
But he said other markets remain soft.
McCann added that the Australian economy was still strong “on a relative basis”. 
Lend Lease has a backlog of 57,585 zoned residential land lots and just under 12,000 apartments – of which 11,510 are zoned. 
The number of Lend Lease residential projects decreased from 39 to 37 over the six month period following the sale of the remaining units at Jackson’s Landing on Sydney Harbour, Forde in the ACT and Caroline Springs in Melbourne, but with the addition of the Coolbellup residential community in Perth.
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lschlesinger-FZcF9M3vE6

Residential market remains soft but strength in NSW and Perth: Lend Lease CEO Steve McCann

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The property market has started 2013 <a target="_blank" href="https://www.smartcompany.com.au/property/053104-residential-land-market-to-pick-up-in-2013-as-property-recovers-bis-shrapnel-report-predicts">on a good note</a>, with experts saying strong clearance rates are a good sign the market is beginning to respond to last year's series of interest rate cuts.
Strengthened property sales also serves as another reason to believe the Australian economy is improving, with economists also pointing to strong corporate retail results, steady employment, rising consumer sentiment and the highest sharemarket results in years.
"I think we're all a little seduced into expecting an instant reaction from the market from interest rate falls," says Australian Property Monitors chief economist Andrew Wilson.
"But what we're seeing right now is perhaps the real impact of those historically low interest rates."
"Jet-fuelled low interest rates kicking in?" <a target="_blank" href="https://twitter.com/DocAndrewWilson">Dr Wilson tweeted on the weekend</a>.
Last weekend was the second reporting weekend for the property year so far, and it's already shaping up to be a strong one.
According to the Real Estate Institute of Victoria, Melbourne – the city where most auctions are held – recorded a 70% clearance rate compared to 67% last weekend, and 64% during this same weekend in 2012.
"The reported lift in consumer confidence last week will be a positive influence on the residential market over the remainder of summer and autumn," chief executive Enzo Raimondo said in a statement.
"The improved confidence is also evident in this weekend's results, which are an improvement on last year's trend."
The city recorded 437 auctions, with 306 sold. Next week is where the selling really begins, however, with the city expecting a massive 950 auctions to go ahead.
Results were similarly positive in Sydney, with the city recording a clearance rate of 71% from 204 reported auctions, compared to last year's result of just 54.5%
Property analysts have been waiting to see whether lower interest rates would actually flow through to the residential property market, as the spring selling season in 2012 finished with a huge boost to sales.
But now, Wilson says, the number of auction sales is actually quite surprising.
"Sales are tracking ahead of the same time last year in Sydney and Melbourne, and listings numbers are quite sharply increasing over the next few weeks."
"That's a sign things are becoming much more confident in the market – one of the things that characterised the market last year was that the number of listings was low."
Wilson says the rising listings figure is a good sign sellers are becoming more confident, which should give the market a good boost before the colder weather sets in during May and June.
"It's still early in the season and we'll need higher numbers to fully get the picture, but based on the evidence so far the market looks like it's lifted off fairly early."
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.
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pmcstafford-pr9eMARWoN

Jet-fuelled low interest rates seemingly kicking in: APM's Dr Andrew Wilson on strong auction clearances

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The former owner of ABC Learning Centres, Eddy Groves, is homeless, bankrupt and reportedly owes creditors more than $31 million.
The remarkable decline of Groves has been well publicised, but the full extent of his situation is only just coming to light.
He was declared bankrupt on January 29 this year in the Adelaide Federal Magistrate's Court, but ABC Learning Centres were <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">placed in receivership</a> in November 2008, effectively sealing the fate of the once BRW Rich List regular.
The Australian reported today Groves has <a target="_blank" rel="nofollow" href="https://www.theaustralian.com.au/news/former-childcare-mogul-eddie-groves-claims-to-have-3879-in-the-bank-after-being-bankrupted/story-e6frg6n6-1226578261275">debts of $31 million</a> and has only $38.79 to his name, as indicated by a statement of his financial affairs provided to Insolvency Trustee Services Australia.
The once high-flying executive used to be known for driving Ferraris, and owning multimillion dollar properties on the Gold Coast and basketball team the Brisbane Bullets.
Today, Groves is reported to be in a backpackers' hotel, but he's optimistic he'll be out of there in the next two weeks.
"Still to find a permanent address but expect to in the next two weeks," Groves said in the statement.
The bankruptcy proceedings were launched by the Commonwealth Bank, which had pursued Groves over a private debt of $5 million on a loan he took out to purchase the Adelaide Dome basketball stadium.
Following the bankruptcy, PPB Advisory partner Mark Robinson said in a statement issued on January 29 it would be conducting "urgent inquiries" into Groves' financial position.
"PPB Advisory will be making urgent inquiries with Mr Groves and other persons of interest to determine possible assets which may be available to pay unsecured creditors.
"Another key focus of the trustee will be to examine related party transactions which may have taken place prior to our appointment," Robinson said.
Fairfax reported today Groves <a target="_blank" rel="nofollow" href="https://www.theage.com.au/business/homeless-groves-lists-debts-of-216m-20130214-2efx7#ixzz2KvLrCFJX">owes the Westpac bank $209,000</a> on four credit cards and owes his family and friends, including his wife Viryan Collins Rubie, more than $1.5 million. He also says he owes company Iconic Properties, of which he was a director until late 2009, $8.7 million.
Among his few assets which still remain is $10,000 worth of sporting memorabilia, currently in the possession of his ex-wife Le Neve, along with life insurance and trauma policies worth $18 million issued by ANZ subsidiary OnePath.
His self-managed Butterfly superannuation fund also holds $213,916.
Gone alongside his multimillion dollar properties are his four Harley Davidsons and a Honda CRV.
ABC Learning Centres was first listed in March 2001 and by mid-December 2006 the company was valued at $3.4 million after its share price hit its peak of $8.62, putting his personal fortune at around $300 million.
Groves was quoted as saying in 2008 the pressure for a company to grow was immense.
"There is an enormous amount of pressure that the public market can put on a company to continue to grow.
"Even though you tell yourself not to fall into that trap, it's very difficult not to, because the share price continues to grow, the returns were continuing to grow, and people want you to maintain that pace," he said.
The reasons for the company's downfall were numerous, including aggressive expansion, poor financial account management and a lack of thorough management.
Take a look back at <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">what small businesses can learn</a> from Groves.
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.</body></html>

yredrup-o4Anfe78KF

Eddy Groves left homeless, bankrupt and owing millions

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Lend Lease has reported a steep drop in demand for apartments in its Victoria Harbour precinct in Melbourne’s <a target="_blank" href="/news">Docklands</a>, with interim results boosted by its largest project, the $6 billion Barangaroo South project.
The property developer and infrastructure developer announced interim after tax profits up 38.3% to $302.3 million to December 31.
Lend Lease explained that the increase in profit was “largely due to the recognition of the profit on the first two commercial towers at its major project, Barangaroo South in Sydney".
However, it noted that its development business had been partially offset by “reduced residential activity in the period”.
The outlook for its residential business is mixed, with Lend Lease noting that consumer sentiment towards the housing market "improved slightly in the period, with mortgage affordability increasing due to lower interest rates, steadier house prices and rising income" but at the same time "low consumer confidence and uncertainty in the labour market has lessened the impact on sales".
Off-the-plan apartments sales fell 29% from 710 sales in the December 2011 half year to 502 for the six months to December 2012.
Lend Lease recorded 10 apartment settlements totalling $10.4 million over the six-month period – representing an average price of $1.04 million, compared with 17 sales totalling $33 million (average price of $1.94 million)  in the previous corresponding period.
Lend Lease says the fall of 47% "reflect[s] the change in the product mix from premium apartments to smaller, more affordable apartments in response to changes in market demand".
The previous period included settlement of a higher number of high value apartments.
Residential lot sales fell 10% from 1,625 to 1,460, with the average price per residential lot decreasing by 17% from $243,850 to $201,500, "reflecting a change in the product mix".
Lend Lease has 37 residential projects at various stages of development with a pipeline of 69,000 units.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2013/02/lendleasefeb18.gif"><img src="/images/stories/2013/02/lendleasefeb18thumb.gif"></a>
Lend Lease also reported off-the-plan sales of 121 out of 203 apartments released in its Studio Nine development in Richmond (pictured below), which will feature 505 apartments and townhouses when completed on the heritage site that was once the Heinz canning factory, and then a broadcast studio.
<img src="/images/stories/2013/02/studio91.jpg" width="470" height="358" alt="studio91">
Lend Lease had offered very high <a href="https://www.propertyobserver.com.au/developments/studio-9-richmond-offering-buyers-a-10-annual-return-on-deposits-while-awaiting-construction/2012080955948" target="_parent">10% interest rate on deposits paid for apartments in Studio Nine</a>, with apartments priced from  about $455,000 to $1.85 million
Construction commenced on Wertheim Square apartments in Stage 1 of Studio Nine in November.
 
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Victoria Harbour is Lend Lease’s second biggest project by value, with an end value of $4.5 billion.
Victoria Harbour is a 30-hectare precinct connected to the CBD via Collins Street and is primarily a commercial precinct with office buildings completed for ANZ, NAB, Ericsson and Myer.
Completed residential projects in Victoria Harbour include Convesso, the first part of the twin project Convesso Concavo and Serrata, a joint-venture project with Japanese developer Sekisui House.
Construction of Concavo is due to start this year, with a sky bridge connecting it with Convesso at level seven.
In its full year results last year, Lend Lease reported that 15 units remained available for purchase in Convesso, which features 220 one-, two- and three-bedroom units.
Other major Lend Lease projects that feature residential include the $1 billion Waterbank urban regeneration project in Perth and the $2.5 billion RNA Showgrounds project in Brisbane, where off the plan marketing has begun for its first residential apartment development, The Green.
Across all its businesses, revenue rose 8% to $6.25 billion with two the majority of this attributed to its Australian business, where revenue rose 5.2% from $3.8 billion to $4 billion.
Over the six-month period to December Lend Lease launched Lend Lease International Towers Sydney Trust with funding for the first two commercial towers, as well reached agreement with James Packer’s Crown Limited group to build an international hotel and casino on the site.
Lend Lease also secured pre-commitments from Westpac and KPMG to take up 71% of the commercial floor space for the first two towers.
The value of Lend Lease’s investment property portfolio have increased by $219.2 million to $3.63 billion primarily due to the acquisition of two retirement villages, Little Bay, in Sydney’s eastern suburbs and Martha’s Point on the Mornington Peninsula and capital expenditure and revaluations on senior living and other development properties. These increases were offset by the sale of the Glen Woodley retirement village in Adelaide.
In December Lend Lease was selected as preferred bidder by the NSW Government to deliver the $1 billion Sydney International Convention, Exhibition and Entertainment Precinct project, as part of the Destination Sydney consortium consisting of Lend Lease, HOSTPLUS, Capella Capital, AEG Ogden and Spotless.
Lend Lease will pay investors an unfranked dividend of 22 ¢ per share on March 27.
 
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Lend Lease profits up 38% but steep drop in Docklands apartment sales 

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For those interested in the Australian residential property market, below are a collection of figures illustrating long-term trends. Housing prices and land values are compared to a basket of fundamental metrics. Australians are fortunate because much data on real estate and financial markets are publicly available, going into depth not seen in other countries.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb151.gif" alt="soosfeb151">
Comparing housing prices to inflation is one of the more common indicators in property market analysis. If the trend is fairly even over time, then there is no indication that people are favouring housing relative to other goods and services. On the other hand, if there is a wide divergence between housing prices and inflation, this tells us that people are considering housing to be relatively more important. Interestingly, every rise in real prices has led to a downturn, with the one exception of 1961-1964. <img height="252" width="470" src="/images/stories/2013/02/soosfeb152.gif" alt="soosfeb152">
Another popular method of determining property valuation is comparing housing prices to rents. In a fairly efficient market, the costs of buying and renting should closely match each other, though due to factors such as taxes, risks, and interest rates, it is unlikely that costs will equal. Since the post-World War II boom, the ratio has unevenly decreased. Upswings in the ratio suggest the presence of a bubble: the mid-70s, early 80s, late 80s, and today.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb153.gif" alt="soosfeb153">
As with inflation and rents, housing prices have also outstripped incomes as well. Unfortunately, the ABS does not provide a long-term median household disposable income (HDI) series, so the denominator is derived by dividing aggregate real gross household income by the number of occupied households on an annual basis. This results in an unusually high HDI as averages are typically greater than medians, and is further amplified as the HDI is stacked with artefacts like superannuation which cannot be drawn upon to finance debt repayments. While the outcome is a rather low ratio, it keeps in line with that developed in Stapledon’s 2012 housing paper and shows a substantial increase from 1996 onwards. A more realistic median measure would result in a higher ratio, and the latest Demographia report shows it to be so.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb154.gif" alt="soosfeb154">
It is easy to see the major cause of the Great Depression: a deflating land bubble, centred in the commercial property market. Every major rise in the ratio has resulted in a downturn, correlating with, and arguably, causing the economic recessions of the mid-70s, early 80s, and early 90s. The ratio has doubled from the trough in 1996 through to the peak in 2010. The substantial rise in the ratio during the late 1970s was likely due to an anomaly in splicing multiple land value series together, though part of the rise is justifiable because of a residential bubble. <img height="252" width="470" src="/images/stories/2013/02/soosfeb155.gif" alt="soosfeb155">
The same story emerges when land values are compared with GDP per capita, which is arguably a better fundamental metric than GDP itself. As with the previous figure, the ratio has doubled during the same time period.
 
<hr class="system-pagebreak">
 
<img height="252" width="470" src="/images/stories/2013/02/soosfeb156.gif" alt="soosfeb156">
The Kavanagh-Putland Index measures the ratio of property sales to GDP. This metric is considered useful because in times of speculative fervour, investors flip properties to one another, increasing the total value of sales on an annual basis. When real estate markets tank, sales inevitably fall as potential buyers stand by the wayside waiting for further price falls. The ratio peaked in 2004 after housing prices jumped in the years previous.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb157.gif" alt="soosfeb157">
The value of housing stock to GDP has likewise moved in the same direction as house prices to inflation and land values to GDP. It is the land component rather than the dwellings that has increased in value over GDP.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb158.gif" alt="soosfeb158">
The primary determinant of the boom bust cycle in the land market is availability of credit/debt used to speculate on rising capital values of real estate. While data on private debt goes back to 1861, aggregate land values only begin in 1910. Debt peaked in 1893, driving a colossal commercial land bubble that burst, causing the worst depression in Australia’s recorded history. Again the same occurred during the 1920s, with the same result. It took until the 1970s for the debt cycle to assert itself once again, with one boom and bust after another. Debt reached the highest peak on record in 2008, driving the largest land boom on record. <img height="253" width="470" src="/images/stories/2013/02/soosfeb159.gif" alt="soosfeb159">
Unsurprisingly, the cause for the massive rise in housing prices and land values, along with net rental income losses, is the colossal increase in household debt, primarily composed of mortgage debt. It has more than quadrupled since 1988, rapidly accelerating during the 90s and 2000s. The ratio peaked in 2010 as did housing prices, which is clearly no coincidence. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1510.gif" alt="soosfeb1510">
As household debt has climbed, so too has debt as a percentage of household assets. The ratio will rise as housing prices continue to soften. It has tripled from 1990 through to 2008 before the GFC, falling and then resuming its upward climb. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1511.gif" alt="soosfeb1511">
The same has occurred with housing debt to disposable income, tripling over the same time period.
 
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<img height="253" width="470" src="/images/stories/2013/02/soosfeb1512.gif" alt="soosfeb1512">
Despite very high interest rates during the early 1990s, the ratio peaked in 2008 due to the staggering debt load of households, even at lower interest rates. It is no surprise that this ratio closely matches the net income losses experienced by property investors as shown in the next figure. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1513.gif" alt="soosfeb1513">
Perhaps the most telling of all data are investors’ ability to finance the debt and routine expenses on their residential properties. In the midst of the late 1980s commercial land bubble, an element of residential speculation caused real housing prices to increase, most notably in Sydney and Perth. Speculators suffered income losses from 1988-89 to 1991-92 while seeking capital gains. The market later stabilised before making the largest net income losses from 2000 onwards, signifying a zero net yield and massive residential bubble.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1514.gif" alt="soosfeb1514">
The obvious cause of these losses is due to the rise in interest repayments rather than running expenses, which have remained stable at around 50% of gross rental income. Interest repayments peaked in 2008, driven by higher interest rates before the GFC hit.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb1515.gif" alt="soosfeb1515">
Not only is investment properties overvalued, the entire residential stock is. The vast majority of properties are owner-occupied, at almost 70%. Since 2004, all owners on aggregate have been running net income losses, which do not bode well for them once capital values stop increasing. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1516.gif" alt="soosfeb1516">
Once again, it is interest repayments that are the cause of the income losses. A slight uptick in expenses during the 2000s surely didn’t help, but has since then fallen back to its long-run average.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1517.gif" alt="soosfeb1517">
Despite the best efforts of the National Housing Supply Council (NHSC) and the FIRE sector to spruik a housing shortage, the long-term trends show dwelling growth has consistently outpaced population growth since WW2. From 2008 to 2009, the trend reversed temporarily. <img height="251" width="470" src="/images/stories/2013/02/soosfeb1518.gif" alt="soosfeb1518">
Perhaps the only positive factor is the government’s relatively low position of gross debt to GDP. The fashionable idea often repeated these days is that rising public debt poses a risk to the economy has little substance in reality. Compared to the pre-WW2 era, the governments of today are a picture of fiscal responsibility and prudence, with the rise in taxation revenue helping to offset the need for using debt. In the event of a substantial and prolonged downturn in the economy, the federal and state governments are well-placed to debt-spend.
<img height="251" width="470" src="/images/stories/2013/02/soosfeb1519.gif" alt="soosfeb1519">
A better measure of government debt is net rather than gross debt, and even better is the net rather than gross interest repayment burden, expressed as a percentage of GDP. What matters for countries that have high levels of government debt is how great the net interest repayment burden is. This is what separates the US and Japan – countries with a relatively high level of government debt – with the basket-case PIIGS nations (Portugal, Italy, Ireland, Greece and Spain). Australia is currently situated in an excellent position, and even if the government debt to GDP ratio were to rise, this does not necessarily translate into higher net interest repayments if the RBA further cut interest rates from already historical lows and purchases government bonds. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1520.gif" alt="soosfeb1520">
Increases in the government debt to GDP ratio are typically due to two occurrences: World Wars (1914 – 1918 and 1939 – 1945) and responses to economic downturns caused by private debt-financed speculation: the 1890s, 1930s, mid-1970s, early 1980s, early 1990s and the GFC in 2008. The rise in the ratio before the 1890s was due to colonial government mass construction of public infrastructure. It is obvious to see which type of debt today presents an overwhelming macro risk to the economy. Government debt will inevitably rise to counter private debt-deleveraging but it is very unlikely that political parties will engage in the necessary and timely expansion needed to ward off the adverse effects of debt-deflation.
<img height="195" width="470" src="/images/stories/2013/02/soosfeb1521.gif" alt="soosfeb1521">
In conclusion, the data presented should provide more than enough evidence to suggest that Australia’s residential property market (specifically land market) is vastly overvalued, driven by debt-financed speculation and the relative non-taxation of land rent. While land bubbles have been a continual feature of the Australian economy, what separates this cycle is the relative enormity of the boom in both land values and private debt. A smaller private debt to GDP ratio during the 1880s and 1920s was enough to produce two devastating depressions, including a number of recessions during the mid-1970s, early 1980s and early 1990s.
The question is often asked why housing prices are so high. Instead, the real question is to ask why prices are so low. The banking and financial system is ready to lend absurd amounts of debt to the willing army of “greater fools,” and has constructed an elaborate chain from mortgage brokers’ offices through to the business development managers (BDMs) at the banks in order to commit extensive fraud by manipulating loan application forms. This is the “six degrees of separation” Denise Brailey has uncovered. Consequently, the only determinant that prevents the banks from lending more credit is debtors’ ability to finance repayments out of current income. Only when it becomes difficult to finance repayments will the housing and land markets finally capitulate.
It is often claimed “this time is different”. It certainly is, but not for the reasons usually given: Australia has not experienced a land bubble of this magnitude in its history. 70% of adults own property, solvency of the FIRE sector is dependent upon ever-increasing capital values and the governments’ addiction to housing-related tax revenue and votes, it is none too surprising bubble deniers have been out in full force, asserting housing prices are based upon fundamental valuations. Also unsurprising is that all bubble deniers have conflicts of interest, and in an age of the secular equivalent of religious fanaticism and greed, facts and history are conveniently dispensed down the memory hole.
The only option left to policymakers is to continually kick the can down the road, hoping the bust does not occur on their watch. The result, as seen with the Rudd government’s additional first-home owner’s boost, was precisely that. This intervention restarted the debt machine, re-inflating housing and land prices to a new, higher peak in 2010. The overarching private debt bubble, which began in 1964, will likely come to an end once and for all when the government runs out of fuel to throw on the fire.
Philip Soos is a researcher at the School of International and Political Studies at <a target="_blank" rel="nofollow" href="https://www.deakin.edu.au/">Deakin University.</a>
This article originally appeared on <a target="_blank" href="https://www.macrobusiness.com.au/">Macrobusiness</a>.
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How 150 years of Australian housing prices shows that the bubble will likely come to an end: Philip Soos

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One of the remarkable developments over the past year is that investors and analysts can now track home prices on a daily basis just like the sharemarket, interest rates, currencies or commodities. And just like the other markets, prices can rally a long way in a short space of time.
But that generally means that a period of correction or consolidation has to follow.
As we discuss in the last paragraph on page two, the sharemarket has jumped out of the blocks in 2013. But it started 2012 in a similarly positive fashion, only to face periods of correction over the year.
Certainly, Australian home prices also started 2013 positively. In fact, Sydney home prices lifted 2% in the first 28 days, putting the market on track for gains of around 26% over the year. But prices have indeed consolidated through to mid-February.
Currently Sydney home prices have lifted 1.9% over 2013, outpacing a 1.2% lift in Perth home prices, 0.7% rise in Brisbane-Gold Coast and a 0.4% increase in Adelaide.
Melbourne prices have eased 0.2% this year, dragging the five-city index down to a 0.9% gain.
If home prices grow at the same rate over the year, home prices would lift around 16% in Sydney and 10% in Adelaide with the five-city index up 7.5%.
But the current annual growth rates are probably more instructive, showing gains of around 0-3% over the year.
Indeed, we think it is reasonable for home buyers and investors to price in gains of around 2-3%, still way short of the long-term average growth rate of around 7-8%.
The week ahead
On the domestic front, the main interest is the semi-annual testimony from the Reserve Bank governor on Friday. And in terms of economic data, figures on wages dominate, together with a spattering of other indicators such as car sales and imports.
In the US, housing and inflation data will be the highlight. And in a raft of countries including the US and Europe, "flash" readings on manufacturing conditions are issued.
In Australia, the week kicks off with data today on new vehicle sales. Industry data has already been issued by Australian Federal Chamber of Automotive Industries via its VFACTS report. And on Monday the Bureau of Statistics (ABS) will recast the data in seasonally adjusted and trend terms. In original terms sales totalled 85,430 vehicles in January, up 11.3% on a year ago showing that the new car market is exceedingly healthy.
On Tuesday the Reserve Bank releases the minutes from the February board meeting, while the ABS issues January data on merchandise imports (in other words, imports of goods). Apart from car sales, there are few indications of sales or production activity in January so far, so the import data should prove instructive.
On Wednesday the ABS releases the wage price index, the main gauge of wage pressures in the economy. We are tipping growth in wages of 1% in the December quarter and 3.7% for the year. But the risk is that our forecasts prove to be a touch too high.
The Reserve Bank noted in its quarterly statement:
"Business surveys suggest that wage pressures eased further in the December quarter. Liaison with firms also indicates that there has been a pick-up in the share of firms expecting no growth in average wages over the year ahead, and that skills shortages and wage pressures in the resources sector have eased."
On Thursday there is another ABS publication on wages, but the main use of the "Average Weekly Earnings" publication is to provide dollar estimates on wages rather than to gauge wage pressures in the economy.
And on Friday the Reserve Bank governor delivers his semi-annual testimony to the House of Representatives Economics Committee. With any luck the focus will be on economics rather than activities at the note printing subsidiary. Getting some sense on what cash rate could be considered "normal" would be helpful.
In the US, the week begins with the Presidents' Day holiday on Monday with financial markets and government offices closed. And on Tuesday the National Association of Home Builders will issue the activity index for February.
On Wednesday the usual weekly data on mortgage activity and chain store sales is issued alongside figures on housing starts and producer prices. Housing starts soared by 12.1% in December so economists understandably expect some retracement, with the median decline tipped being around 3%. There will be less interest in producer prices (business inflation) with inflationary pressures benign at present.
On Thursday the regular US weekly data on new claims for unemployment insurance (jobless claims) is issued alongside data on consumer prices, existing home sales, the leading index and Philadelphia Federal Reserve index. The main highlight is home sales with a modest 0.2% increase expected in January after the 1% decline in December.
Also on Thursday, survey group Markit will issue "flash" manufacturing readings for the US and a number of European nations. While it is possibly overdoing it to have two readings on manufacturing each month, financial markets are still showing interest in the data.
Sharemarket, interest rates, currencies and commodities
In the coming week the Australian profit-reporting (earnings season) gets into full swing. On Monday amongst the companies that are expected to report are Amcor, Bendigo Bank, BlueScope Steel, Lend Lease and Pacific Brands.
On Tuesday, results include those from Asciano, Coca Cola Amatil, Fantastic, Sonic Healthcare, Mt Gibson Iron and Commonwealth Office Property Fund.
On Wednesday earnings results are expected from BHP Billiton, Fortescue, GWA Group, Ramsay HealthCare, SEEK Limited, Super Retail Group, Suncorp, Tassal, The Reject Shop and Woodside Petroleum.
On Thursday, AMP, APN News &amp; Media, ASX Limited, Brambles, Centro Retail, Fairfax Media, IAG, Origin Energy, Qantas and Toll Holdings are included in a packed schedule of earnings results. And on Friday, Billabong, Crown, Investra, Santos, Telecom NZ, and Transpacific Industries are listed to report earnings.
In the first 30 days of 2013 the Australian sharemarket has lifted almost 7% with the All Ordinaries up 6.9% and the ASX 200 up 6.8%. If the gains were to be replicated over the entire year the indices would post gains of around 60%.
However, it is instructive to turn back the clock 12 months. In the first 30 days of 2012 the key Australian share gauges were up around 5% – not as good as 2013 but still on track to gains of 44%. In the end, the All Ords rose by 13.5% over 2012 with the ASX 200 up 14.6%.
In short, we shouldn't get too carried away. A period of consolidation will inevitably arrive.
Craig James is chief economist at CommSec.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.</body></html>

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Residential growth still short of long-term trend: CommSec

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Investor activity has dominated the Australian property market over the last 12 months, which is no surprise; banks are “bidding” for buyers in a highly competitive market, reducing interest rates principally on fixed-term loans outside of the RBA’s cash rate cycle, and if the right property is sourced, current rental yields are also offering attractive returns.
However, first-home buyers have seen their savings eroded, and as the latest ABS finance data outlines, intermittent first-home buyer “cash injections” or the oft-quoted myth that rising yields are pushing greater numbers into the market are having scant effect. Saving a deposit and sourcing a suitably affordable property is no easy task.
It’s not being sensationalist to emphasise that despite all our statements regarding improved housing ‘affordability,’ and half-hearted attempts from both state and federal governments to inflate the market with incentives that fail to offer long-term solutions, the results for initial buyers are overwhelmingly clear and will consequently bear an effect on the future of both our real estate market and economy as a whole.
The latest figures from the ABS show the number of first-home buyer loans in December 2012 fell to 14.9%. It’s the fourth consecutive month that this segment of the market has been in decline.  Further information from RP Data’s latest media release indicates housing finance activity by first time buyers is 17% below the average figures recorded over the previous 11 years leading to 2012.
A further drop in variable rates currently being offered by a proportion of lenders may inspire a bit of latent activity – however they are all short-term fixes, and you have to wonder what effect will result when rates eventually rise – especially if wage growth doesn’t match pace.
According the RP Data’s calculation of annual price changes (which is based on six months of statistics) – house prices are already rising “faster than wages and disposable household income growth”. Any help first-home buyers get on the borrowing side they’ll inevitably lose on the other.
We’re losing a valuable demographic of property buyer, which will have a flow-on effect across the property chain as a whole. As the changes push through the generation gap, increasing numbers will retire while still factoring as short-term renters.
In lieu of first-home buyer participation, the predominant activity in the inner-city affordable sector of the apartment market is being fed by investors.
Certainly most off-the-plan and new unit developments are sidelined for this demographic (usually via offshore funding); however, investors also dominate the established apartment market, which would otherwise be favoured by first-home.
The percentage of investor-owned apartments in both Darwin and Brisbane falls close to 70% – and in the other capitals, it comes in between 60 and 70%.
As we’re all aware, property to some extent connects together like a flowchart. Supply is fed in from the bottom to allow those upgrading (and then downsizing) a ready market to sell into in order to make the move.
However, when investors predominantly negatively gear into the asset class most favoured by first-home buyers – which results in inflated property values – and the state government fails to come to the party with feasible affordable alternatives, our property wheel of upgrading and downsizing becomes somewhat stagnated.
Investors tend to hold property for extended periods of time in order to build equity – many choose to invest as part of their self-managed super funds and subsequently do not sell until retirement. Therefore the ready supply which would usually come from initial home buyers selling and upgrading inevitably starts to slow.
It’s clear from the 2011 census data that greater numbers of first-home buyers are being forced onto the rental ladder and subsequently getting stuck in the yoyo of rising yields and a lack of affordable inner-city options until they either meet someone with whom to combine wages or gain access to the “mum and dad” equity pot.
Proportionally we’re growing older as a nation – census data tells us the number of 20- to 44-year-olds has expanded on average by 4.6% per year in the five-year period leading up to the last census – however by 2020 it’s expected to slow to 1.2% per annum (a trend clearly demonstrated by the United Nations World Population pyramid, which extrapolates the data out to 2050).
<img src="/images/stories/2013/02/cashmorefeb15.jpg" width="438" height="448" alt="cashmorefeb15">
<img src="/images/stories/2013/02/cashmorefeb151.jpg" width="437" height="448" alt="cashmorefeb151">
 
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Considering the predominant home buying activity takes place within the ages of 22-44, it seems reasonable to assume that there’ll eventually be proportionally greater demand from those downsizing as we progress through these buyer type changes.
However, if the flow-on home buyer effect doesn’t follow through, the mismatch of household size comparable to property type will continue to stagnate our property buying and selling terrain and further tie down supply in the areas most want and need to reside – areas within easy commutable distance to city suburbs, jobs and essential amenities (schools, hospitals, doctors, public transport systems and so forth).
Our census data already demonstrates that most lone person households are tottering around in accommodation that’s far too big for their requirements. Building an abundance of one bedroom apartments won’t suffice – only 14% of the total single person households (of all ages) opt for one-bedroom units. We therefore need a wider diversity of options (something I’ll expand upon in another column).
If we were building homes that were viable for first home buyers to gain a foothold that would not only maintain consistent market demand in order to build equity for those wanting to upgrade after seven or so years, but also provide feasible accommodation for this demographic to settle for an adequate period of time – then having an investor-dominated inner-city terrain could perhaps be balanced somewhat so as not to affect the flow of our home buyer property chain.
However, as we all know, the new home options are either limited to outer-suburban estates lacking in infrastructure, which every Joe on the street recognises is an essential component needed at the start of each project if we’re to lure home buyers outwards, or alternatively, <a target="_blank" href="https://www.propertyobserver.com.au/residential/why-high-rise-accommodation-will-not-solve-our-housing-shortage-catherine-cashmore/2013021059249?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=observers">inner-city high-rise ‘rabbit hutches</a>.
The lack of feasible and affordable new alternatives and the consequential property stagnation is all producing a ripple effect of unfortunate consequences.
The financial burden of fostering a rental nation in terms of tightening vacancy rates and competitive rising yields is obviously unwise in terms of our national wellbeing; however, there is no one golden answer to solving the home buyer property crisis.
A number options should be considered – including reserving a proportion of high-quality new inner-city accommodation for our home buyer demographic alone, reducing the heat in the investment sector by way of tightening negative gearing incentives on multiple purchases, and considering changes to stamp duty as outlined in the Henry Review.
One thing we should not do is ignore the problem, or try and solve it by way of easy inflationary credit.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
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Why investor activity is causing our property markets to stagnate

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With demand for office space in the Melbourne CBD set to plateau over the next two years according to consultants Charter Keck Cramer and vacancy rates rising in other capital cities, office landlords will need to be increasingly creative to secure tenants.
One possibility is to consider turning unused office space into a co-working community space, as pioneered by the HUB Melbourne project at the bottom of Bourke Street in the Melbourne CBD.
Co-working communities are an open-plan office spaces which offer membership to mainly entrepreneurs and small businesses and provide not just the necessary business technology, but also a shared community to exchange ideas and innovations and work together where appropriate and mutually beneficial.
The community aspect is the principle difference between a co-working community space and renting a serviced office.
HUB Melbourne has the second highest membership in the world of any co-working community after San Francisco with a second HUB building under development on William Street on the Sydney CBD fringe and set to open in May.
HUB Melbourne was developed in 2011 and opened with 120 members. It now has over 700 members, all of whom are connected to a global community of 5,000 co-working HUB members on six continents.
It can be found on the top floor of Donkey Wheel House at 673 Bourke Street, a striking heritage-listed building dating from 1890.
<img alt="HubMelbourne_DiannaSnape_03" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_03.jpg" width="460" height="307">
The building was once the headquarters for the Melbourne Tramway and Omnibus Company with HUB Melbourne occupying the third-floor space, once a ballroom.
This includes the developing of tables, chairs and partitions placed on wheels to allow flexible configurations of space, lights constructed from recycled bicycle spokes wrapped in cardboard and extension cords bound in crochet. The space also incorporates velvet theatre curtains to section off work zones and absorb sound.
On any given day up to 60 people work at hub, some sitting at desks, others on couches and some in deck chairs as if they were at the beach.
There are no leases, no rental contracts and membership includes super-fast Wi-Fi, printing, tea and coffee, meeting rooms and a mailing address.
Individual monthly membership fees range from $200 per week for one day a week use to $600 for unlimited use.  One day casual passes can be purchases for $50.
Team of up to five can buy memberships ranging from $300 for one day a week membership to $2,000 for unlimited use.
Users of the space include fashion designers, architects and consultants.
<img alt="HubMelbourne_DiannaSnape_01" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_01.jpg" width="460" height="307">
The space was a designed by architects HASSELL in collaboration with HUB founder and CEO Brad Krauskopf.
HUB will also collaborate with Hassell on the fit out of the 500 square metre Sydney co-working space.
According to Steve Coster, principal at architects HASSELL who lead the team that designed the HUB Melbourne space, the concept of a workplace shared by a community of independent users or organisations that leverage social capital to create innovation and business opportunities.
“More than just a shared space or serviced office, co-working communities are focused on creating a network of mutually supportive relationships, connections and entrepreneurial opportunities among members,” he says.
He tells Property Observer, the growth of HUB Melbourne has been spurred on by an increasing prevalence of independent workers following the large-scale redundancies following the GFC.
As a result, there are many contractors or entrepreneurs, whose only other option is to work from home.
“Working at the HUB creates opportunities for referrals and collaboration with others,” he says.
In addition, he says the big corporates are also keen on the concept as a way for smart, innovative people to work in a space which promotes fringe ideas and allows the setting up of start-ups, and growing these businesses.
“For freelancer workers and small start-up organisations, co-working communities provide a community of like-minded individuals and relief from isolation. For large organisations, they provide an opportunity to access more dynamic, short-term, project based skills and capabilities,” says Coster.
According to Coster, the success of the community at HUB Melbourne is achieved through a range of mechanisms.
“Spaces must be authentic, welcoming, comfortable and meaningful for their members because they can only exist if people choose to pay to use them. With remote work on the steady increase, the value of desirable, meaningful places will only become more critical.
“The space has been designed to ensure a deep and genuine sense of ownership by users. It has also been designed to be easily reconfigured, as fast as the speed of business. Technological support is also crucial, provided through a ‘bring-your-own-device’ model, where network access and high-cost elements form a basic framework for rapidly changing technology platforms provided by the users themselves,” he adds.
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Co-working office spaces food for thought for investors as vacancies rise

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There were 1,076 sales in Perth this week, up 64% from 656 the same week last year, according to the Real Estate Institute of Western Australia. 
The most actively traded suburb was Perth CBD, with 26 sales.
<img height="531" width="290" src="/images/stories/2013/02/reiwafeb15.gif" alt="reiwafeb15">
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Perth sales up 64% on same week last year: REIWA

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As mainstream opinion would have it, Australia’s housing prices are solidly based upon fundamental valuations or intrinsic value. This position was repeated yet again by Terry Ryder, in an <a href="https://www.propertyobserver.com.au/residential/glenn-stevens-is-right-%E2%80%93-there-will-not-be-an-australian-property-crash-as-there-is-no-bubble-terry-ryder/2013011458757?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=residential" target="_blank">article</a> on Property Observer, claiming “current prices are at sensible levels”. This view is the stance of the Australian government, central bank, Treasury, the FIRE (finance, insurance and real estate) sector, much of academia, and a legion of commentators, economists and analysts.
Ryder cites RBA governor Glenn Stevens, who is on the record saying the residential property market is not experiencing a bubble. For anyone who has followed the global property market over recent years, it is difficult not to notice that central bankers are possibly the least reliable and most incompetent of all economists when it comes to identifying asset bubbles. Their record is truly terrible, for not only completely missing trillion-dollar bubbles that formed in their own backyard but they have continually put effort into denying these bubbles exist.
Although Ryder believes Australia is different from the US in regards to the relative economic conditions and property markets (more on this below), in one aspect Australia is similar: central bankers at the RBA and Federal Reserve have gone on the record to deny that a housing bubble exists in their countries. In the US, concerns were continually raised before 2006 about the risk of a property bubble. Unfortunately, such concerns were dismissed as nonsense, with these dismissals emanating from all quarters.
This reached truly ludicrous proportions in the US with its two leading economists and central bankers, Ben Bernanke and Alan Greenspan. In October 2005, Bernanke, then chairman of the President’s Council of Economic Advisers, <a href="https://georgewbush-whitehouse.archives.gov/cea/econ-outlook20051020" target="_blank">testified before</a> the Congressional Joint Economic Committee, claiming “price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.”
A few months before Bernanke’s testimony, Alan Greenspan, the then chairman of the Fed, testified before the same Congressional committee, <a href="https://www.federalreserve.gov/boarddocs/testimony/2005/200506092/default.htm" target="_blank">detailing a similar analysis</a> to Bernanke. In his testimony, Greenspan noted “Although a ‘bubble’ in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels. … Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications.”
As with the dot-com bubble, the vast majority of economists missed and/or denied the existence of a bubble on the stock market, and did it again with the housing bubble. Just <a href="https://www.nytimes.com/2008/11/02/magazine/02wwln-Q4-t?_r=0" target="_blank">12 out of 15,000 professional economists</a> in the US publicly warned of this $8 trillion-dollar Ponzi scheme. This was noted by Dirk Bezemer, a Dutch economist at the University of Groningen, identifing twelve economists who picked both the collapse of the housing bubble and GFC, in a <a href="https://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf" target="_blank">study</a> that is well worth reading (disappointingly, economist John Talbott who wrote two books in 2003 and 2006 predicting the eminent collapse of the bubble was explicitly not included).
Central bankers cannot identify these epic asset bubbles for two primary reasons: lousy economic theory and an unwillingness to take responsibility. The former revolves around a non-empirical form of economics that is taught in universities and practiced in government and industry. This is called “equilibrium economics” and is associated with the neoclassical school of economic thought. It teaches, using many unrealistic assumptions, that markets operate in equilibrium – a state in which economic resources are put to their most efficient use.
Many of these assumptions are patently absurd: all firms are the size of lemonade stands, people can see into the infinite future, know all information about all markets, firms borrow at the same rate of interest, that money, credit and debt does not exist, and so on. It is similar to an astronomer who constructs a model of the solar system without a sun, moons and gravity. If NASA were to attempt another moon landing using such a deficient model, the space shuttle would never leave the planet.
This worldview assumes, because markets operate efficiently, assets are almost always priced correctly – so bubbles cannot occur. Neoclassical theories of equilibrium price statics, rational expectations, efficient markets hypothesis, capital assets pricing model, utility, and so on are doctrines with slim to non-existent empirical backing.
This economic theory does not reflect reality, as has been accurately detailed by economist Steve Keen’s book Debunking Economics and numerous other sources. If it did, why are so many countries generating the largest asset bubbles in their respective histories after undergoing reforms of privatisation and deregulation?
The latter reason is simple: if a central bank warned about a housing bubble as it was forming, the market would react by changing its attitude from greed to panic, typical of the pathology of boom bust mania. Economists in the central bank are considered the foremost authority on the economy, so when they speak, everyone listens. This institution’s most powerful influence upon the economy is not the ability to print money or adjust the interest rate, but its loudspeaker.
For instance, if the Fed had warned about a bubble forming in the housing market in 2002, and put time and effort into ensuring that everyone heard the message, the market would have collapsed then as property investors would act to protect themselves by selling assets (ensuring a collapse in capital values) and refusing to take up more debt (thus hurting bank profitability). This would have plunged the economy into a recession, though not of the severity the US is currently experiencing after letting the bubble run the course through to its peak in 2006.
Central bankers would have copped the blame for the financial and economic fallout, which would not endear them to political and economic elites, or the general population. Economists in the central bank are not going to put their substantial six-figure salaries and secure job placements on the line, including being subject to an immense amount of flak from the FIRE sector, for correctly stating the perfectly obvious that anyone with a modicum of knowledge of the financial and real estate markets would realise.
The majority of economists, especially those prominently placed in institutions like the RBA, Treasury, universities, the banking, financial and real estate industries, reject the notion that a bubble exists in the residential property market. This is unsurprising, given the poor track record of establishment economists in identifying asset bubbles and crises.
The Dot-Com bubble that formed in the stock market during the late 1990s and the GFC of 2008 are but two examples where the vast majority of economists missed the obvious, even though some did accurately predict these events and attempted to warn the public of impending danger. Thus, the analysis and commentary of mainstream economists, especially those within leading policy-making positions, tell us little about the future of the housing market and general economy, and their unwavering optimism should be greeted with a great deal of scepticism.
Ryder goes on to claim the US housing market was sunk by “a recessed economy, high unemployment, a major oversupply of dwellings and an unregulated lending sector (pretty much the opposite of Australia on every count).” The first two reasons are back to front. The bursting of the $8 trillion-dollar bubble caused the ‘Great Recession’ and subsequent high unemployment.
A collapse in demand from a formally strong private sector (including an external account deficit) and combined with the US government’s attempted austerity, pushed the US economy into recession. It is the bursting of asset bubbles that cause recessions and high rates of unemployment, not the other way round.
That the US had a major oversupply of dwellings was obvious to the mainstream only after the bubble had burst. Meanwhile vested interests constantly claimed there was a considerable shortage of dwellings. The shortage argument, however, is not new. Every country that has suffered through a housing boom and crash in recent years had so-called ‘experts’ claiming prices were based upon fundamental valuations due to dwelling shortages.
Take the US as a case study. Leading institutions such as the Federal Reserve, National Association of Realtors, California Building Industry Association and Harvard University’s Joint Center for Housing Studies produced sophisticated studies to show that the housing boom was caused, in part, by dwelling shortages. These studies were authored by professors, PhDs, and businesspeople, all with extensive knowledge and experience but with conflicts of interest that could fill a small book.
Their expertise was as illusory as the shortage when the housing market crashed. In this way, Australia is not different because there is <a href="https://theconversation.edu.au/beware-the-rent-seeking-organisation-dont-be-dudded-by-housing-data-8112" target="_blank">no housing shortage</a> here. High housing prices are not set by the forces of supply and demand but by banks’ willingness to lend, which leads to the next issue.
 
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The leading cause of the US housing bubble was a privatised and deregulated financial system lending absurd amounts of credit to every Tom, Dick and Harry that would take it, regardless of their financial standing. This gave rise to the term ‘ninja’ loan, borrowers with no income, no job and no assets.
Loose credit was used to speculate on the property market, generating easy profits until the bubble peaked and then collapsed the financial sector in 2008. As early as 2004, the FBI testified before Congress that there was a significant amount of fraud taking place around the banks’ lending to borrowers. These concerns were dismissed by the Bush administration.
Similar to the US, Australia has a deregulated and liberalised financial sector, having undergone numerous reforms during the 1980s and 1990s, ending the government’s heavy involvement in ownership and management during the social democratic period of the 1950s to 1970s. Unsurprisingly, the amount of credit the banking sector extended to all parts of the private sector has increased dramatically. Mortgage debt has more than quadrupled from 19% of GDP in 1990 to 84% in 2012 to a <a href="https://www.businessspectator.com.au/bs.nsf/Article/Australian-property-2013-house-prices-mortgage-deb-pd20121217-32QMN?opendocument&amp;src=rss" target="_blank">higher level</a> that of the US at its peak.
According to Denise Brailey, the president of the Banking &amp; Finance Consumers Support Association, an organisation dedicated to protecting the public against predatory financiers, there is some evidence to suggest <a href="https://theconversation.edu.au/there-are-predators-in-our-own-backyard-but-where-are-our-financial-watchdogs-8871" target="_blank">mortgage fraud</a> is far more widespread than previously thought. Having worked in this field for the last 20 years, criminologist Brailey has seen first-hand the financial and social wreckage wrought by a multitude of scams and predatory lending.
Brailey provided testimony before the Senate Economics References Committee alleging wide-scale fraud from banks to brokers. While her testimony, which covers the period of 2008 to the present, was largely about low- and no-doc loans, her claims extend into the mainstream of full-doc mortgages.
Certainly, the public would know more if the ATO, ASIC and APRA bothered to look into these cases of fraud, but just like the US, regulators have been captured by the finance industry, unwilling to upset bankers and their allies in political office. Only time will reveal the extent of fraud that has taken place.
Ryder quotes Stevens about the apparent stability of the house price to income ratio for around a decade. I personally took an interest in the statistics used to construct this ratio, but my data request was refused by the RBA on the grounds of commercial confidentiality. Eventually, I managed to extract the household income part of the equation (denominator) through a Freedom of Information Act, as this had been constructed using ABS data (the numerator was constructed using data from APM).
It was easy to see why Stevens believed the ratio had not changed for 10 years: the RBA measure of household income was severely inflated, to the point that the median household was ‘earning’ $97,000 in early 2010 (the last year that data was provided). This unrealistically high level of household income deflated the ratio.
ABS survey data <a href="https://www.macrobusiness.com.au/2011/08/how-the-rba-undervalued-housing/" target="_blank">estimates</a> household income to be no higher than $74,000, a significant difference. Economists Leith van Onselen and Cameron Murray carefully backtracked through the National Accounts data to reveal the extra artifacts that the RBA had inserted into the household income figure to inflate it.
In summary, Australia does share some uncanny similarities with the US in the period before its housing market collapsed. Central bankers denied there was a bubble, the economy was apparently strong, there were never-ending reports of a dwelling shortage, bank lending is at historical levels, housing prices were also historically high, regulators were asleep at the wheel and reports of lending fraud surfaced. A weak economy and high unemployment only occurs after the housing market sinks.
Probably the only aspect of Ryder’s article that is accurate is when the question is asked of why a comparison between Australia is the US is considered legitimate. Ultimately, the most accurate assessment is based upon Australia’s current internal economic conditions. The second-best comparison is between Australia’s current and historical trends. Comparisons with other countries comprise an interesting academic exercise that can tell a useful story, but this is not needed to assess the health of Australia’s property markets.
Philip Soos is a researcher at the School of International and Political Studies at <a href="https://www.deakin.edu.au/" target="_blank">Deakin University.</a>
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