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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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

Joel Robinson

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Every First Home Owner Grant for new property by state

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

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

Staff Writer

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

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

alisonwarters@gmail.com

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

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

Ellen Walker

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

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

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

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A combination of rate cuts and an improved economic outlook has resulted in confidence about property prices rising in 2013 lift among property professionals surveyed by ANZ and the Property Council of Australia (PCA).
Optimists now outweigh pessimists by around 10%, according to the March quarter PCA-ANZ property industry confidence index, which considers views on the property market over the next 12 months with 3,000 property professionals surveyed.
This is up from an almost evenly divided outlook in the December quarter survey, but still indicates a good deal of uncertainty about whether house prices will rise or fall in 2013.
Overall confidence about the property market over the next 12 months rebounded in the March quarter following falls in the previous two quarter, rising 5 points to 107, compared with 102 in the December quarter, with stronger expectations for house price growth and positive expectations for property construction.
Click to enlarge
<a href="/images/stories/2013/01/pcajan17.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/01/pcajan17thumb.gif"></a>
“Property industry expectations for house prices in the coming year increased in the March quarter buoyed by increased housing sales and improved affordability,” say ANZ senior property analyst David Cannington, who compiled the report along with ANZ’s head of property research Paul Braddick.
“Looking ahead, the combined impact of tight underlying demand/supply housing market fundamentals, expectations of further rate cuts and a steady medium to long-term domestic economic outlook have improved property industry residential price growth expectations.
“However, despite improved sentiment and affordability, the prevailing sense of caution in the household and financial sectors will limit the ‘normal’ cyclical rebound in house prices,” he says.
Expectations for house price growth and overall property market confidence are strongest in WA and the Northern Territory, due to their exposure to the mining sector, with NSW and Queensland the only other states where optimists outweigh pessimists on house price growth in 2013.
Optimists outweigh pessimists on house price growth expectations by 72% in the Northern Territory, by 55% in WA and by 36% in NSW and by less than 10% in Queensland – all improvements on the previous quarter.
Property professionals are almost divided on Victorian house price growth, with pessimists just shading optimists.
A majority of property professionals tip house prices to fall in South Australia, Tasmania and the ACT.
Confidence is highest in WA and the Northern Territory, the states with strongest expectations for economic growth this year due to their mining sector exposure.
They both recorded higher readings of 131 points in the March quarter, though well down on peak readings achieved in the June quarter of 2012 – an indication of the impact that the mining boom is expected to peak soon has had on the property outlook in these two states.
There was also a rise in property market confidence in NSW (112) and an improvement in Victoria, but it remains below the benchmark 100-point setting with a reading of 99.
Confidence remains weak in Tasmania (83) and the ACT (90) and South Australia (92) – with all three states recording a drop in confidence over the quarter.
WA (131) and the NT (131) - showed the strongest property industry confidence across states and territories, followed by NSW (112). Victoria (99), Tasmania (83) and the ACT (90) were the only states/territories to report ‘negative’ confidence.
“Property industry confidence across states and territories largely reflects differing expectations for state economic growth,” says Cannington.
“The highest proportion of respondents expecting state economic growth to be higher in the coming year were also in the NT (54%) followed by WA (39%).
“In contrast, the net balance of respondents expect state economic growth to be lower in the coming year across all other states and territories, with state economic expectations deteriorating in the March quarter in both Tasmania (68% expect state economic growth in the coming year to be lower in the March quarter survey compared to 60% in the December quarter) and the ACT (53% in the March quarter survey compared to 45% in the December quarter),” he says.
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lschlesinger-FZcF9M3vE6

Industry professionals more optimistic about Australian property market, with outlook strongest in WA, NT and NSW: ANZ/PCA

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Academic Philip Soos has acknowledged that mainstream opinion is opposed to the idea that a housing bubble exists in Australia, as governments, the FIRE sector (finance, insurance and real estate) and many of his colleagues in academia all claim that prices are linked to fundamentals or intrinsic value.
But noting entrenched views exist on both sides, Soos has repeated his strong belief that evidence suggests the residential property market was currently experiencing a bubble, with prices detached from fundamental valuations.
"This appears to be the largest bubble on record, orders of magnitude larger than all preceding bubbles," he says.
"When it does burst, heavily indebted property owners (recent home-buyers, negative gearers) will experience financial trouble, including the economy at large,"<a target="_blank" href="https://www.prosper.org.au/2013/01/16/a-plague-on-aussie-housing/"> the researcher at Deakin University’s School of International and Political Studies noted in an article published on the Prosper website. </a>
His article came with five charts, and the application of his understanding of the Australian scenario with the works of the late US post-Keynesian economist Hyman Minsky.
Soos notes Minsky's contrarian work revolved around how financial markets interacted with asset prices – a theory called the ‘financial instability hypothesis’, arguing that financial markets continually misallocate substantial amounts of credit into asset markets, creating Ponzi (pyramid) schemes.
<img height="248" width="470" src="/images/stories/2013/01/soosjan161.png" alt="soosjan161">
It helps to have a sound fix on what an asset bubble is when exploring this matter, Soos says.
"Otherwise, it becomes like pornography: you can’t define it exactly, but you know it when you see it."
Minsky defined three phases of finance: hedge, speculative and Ponzi. With hedge financing, income flows from an asset are sufficient to pay down both principal and interest on the debt used to finance the asset purchase, and prices are based upon intrinsic value. Speculative financing results in income flows covering only interest repayments, not principal, requiring debt to be continually rolled over. Investors may experience financial stress, but it is not widespread and fundamentals valuations are kept largely in check.
Soos explains the terminal phase occurs with Ponzi finance, as income flows cover neither principal nor interest repayments (including running expenses in the case of rental property). "Investors rely solely on escalating capital values in order to realise substantial capital gains at sale to pay down the cost of debt and balance their income losses. Asset prices are completely delinked from fundamental valuations at this stage. Investors rely upon ‘greater fools’ to maintain positive price momentum, resulting in a bubble. Once there are no more investors willing to take upon staggering amounts of debt to finance asset purchases, prices stagnate then collapse, as the market finally realises that prices are based upon a pyramid scheme, not fundamentals," he says.
"With Minsky’s theory, it is possible to determine whether a housing bubble exists.
"Unfortunately, there is evidence to suggest that Australia’s residential property market is experiencing said bubble.
"Figure 1 (above) shows the long-term trend in housing prices, adjusted for inflation and quality. The 1996-2010 period is the largest single boom on record, rising by approximately 130%.
<img height="251" width="470" src="/images/stories/2013/01/soosjan162.png" alt="soosjan162">


<hr class="system-pagebreak">
"The latest housing boom provides one piece of the puzzle: rising asset prices. The next aspect to consider is whether investors are running current income losses. Figure 2 (above) indicates that this is indeed the case as aggregate net rental returns are negative, with losses escalating from $1 billion in 2000-01 to $5 billion in 2009-10. Losses peaked at $9 billion in 2007-08 when interest rates were relatively high, though rate cuts during and after the GFC relived some of the pressure," Soos writes.
 
<img height="251" width="470" src="/images/stories/2013/01/soosjan163.png" alt="soosjan163">
"There are more than 1.7 million investors with an interest in one or more properties, owning close to two million rental properties. Absolutely and relative to the total housing stock, this is a large sample. If investors are running current income losses of this magnitude, the imputed rents on the stock of owner-occupied housing would bear a similar resemblance, though owner-occupiers treat their properties as security rather than as an investment.
"The reason for the sustained net income losses is the combination of rental costs and interest deductions outweighing gross rental income. The ATO does not provide data on principal repayments as they are not deductible against rental income. Accordingly, the rental losses would be larger if these principal repayments were included as they must be funded out of current income. Figure 3 (above) illustrates the growth of aggregate rental costs and interest deductions as a percentage of gross rental income," writes Soos.
"Another indicator is the rising levels of household debt used to speculate on housing prices. Household debt is overwhelmingly composed of mortgage debt, whereas personal debt is a small fraction. Figure 4 (below) shows the recent and considerable increase in the household debt to GDP ratio, peaking at 97 per cent in 2010 when housing prices did the same. The ratio has fallen slightly to 93 per cent, which may explain the falls in property values over the last two years, including the historically-low growth in housing finance data (Housing finance misses expectations in November, January 14).
"A troubling fact is that almost 60%of investor loans are interest-only (25% for owner-occupier loans), signifying the speculative motive of property owners," Soos writes on the website.
 
<img height="248" width="470" src="/images/stories/2013/01/soosjan164.png" alt="soosjan164">
Lastly Soos notes a classic sign of a bubble as the price to rent ratio.
He says the reason why this metric is often used in housing analysis is because debt speculation effects capital values not rental incomes (the latter is determined by wages and population growth).
"Given that the denominator (rents) tends to remain stable over the long term, it is the numerator (housing prices) that comprises the deciding variable.
"The following figure 5 (below) illustrates the uptick in the ratio commensurate with the boom in housing prices as shown in figure 1.
"From the trough in 1997 through to 2011, this ratio indicates an overvaluation of 44%, similar to the figures that were recently released by The Economist.
"The largest surge occurred post-WW2 when the government released price controls on housing, but took until the 1970s to remove all controls on rents.
<img height="248" width="470" src="/images/stories/2013/01/soosjan165.png" alt="soosjan165">
Soos concludes that Minsky’s financial instability hypothesis can help to integrate the occurrences seen in the data.
"The speculative financing phase likely corresponds to the 1996-2000 period, as housing prices steadily increased but rental income still covered mortgage interest repayments and rental expenses.
"This relationship, however, broke down from 2000 onwards as housing prices rapidly escalated," he says.
"Investors were then dependent upon rising capital values in order to realise a profit at sale and to cover the cost of mortgage debt.
"This resembles the terminal Ponzi phase, where housing prices and the household debt to GDP ratio have boomed while net income losses have escalated.
"Accordingly, by these measures, the evidence suggests that the residential property market is currently experiencing a bubble, with prices detached from fundamental valuations.
"This appears to be the largest bubble on record, orders of magnitude larger than all preceding bubbles."
"When it does burst, heavily indebted property owners (recent home-buyers, negative gearers) will experience financial trouble, including the economy at large," Soos says.
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psoos-uR5EGb6SbQ

Australian housing is in 'largest bubble on record' and will crash: Philip Soos

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Capital city home values have increased at an average annual rate of just 1.9% over the past five years, which is significantly lower than the previous two five-year periods, according to RP Data's Cameron Kusher.
It reflects changing consumer attitudes towards debt following the global financial crisis.
Looking at three five-year periods, the research by the senior research analyst at RP Data indicated the strongest growth period as 1997 to 2002 when the annual growth was 12%.
Kusher argues the rate of capital growth in the Australian housing market has been slowing over some considerable time.
 "The global financial crisis, and the subsequent changes in consumer attitudes that it has led to, has largely impacted the results of the most recent five years.
"However, it remains difficult to argue that value growth would have been as strong over the past five years as the previous five years even without the financial crisis.
"As the cost of buying and selling continues to increase, albeit at a much slower pace, it seems unlikely that capital gains in the housing market will return to those levels enjoyed between 1997 and 2002 and will be more reflective of conditions over the most recent five years," Kusher says.
Darwin triumphed as the city to record the strongest growth in home values over the past five years, increasing at an average annual rate of 4.1%.
But Hobart, Brisbane and Perth each recorded value falls on an annual average basis, at a rate of -1.9%, -0.8% and -0.4% respectively.
From December 2002 to December 2007, the overall performance of the housing market was comparatively stronger, and over the five-year period capital city home values increased at an average annual rate of 8.4%.
It was almost 4.5 times greater than growth throughout the most recent five years.
Excluding Sydney, between 2002 and 2007, every capital city housing market recorded superior levels of average annual value growth compared with the overall performance over the most recent five years.
Kusher notes during this period every city other than Sydney recorded average annual value growth more than 2.5 times greater than the most recent five-year period.
"Sydney’s housing market performance has actually been stronger over the most recent five years than it was between 2002 and 2007," he says.
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2013/01/rpjan161.gif" rel="shadowbox"><img src="/images/stories/2013/01/rpjan161thumb.gif"></a>
<a title="Click to enlarge" href="/images/stories/2013/01/rpjan162.gif" rel="shadowbox"><img src="/images/stories/2013/01/rpjan162thumb.gif"></a>
For the period 2002 to 2007, the standout housing markets were Perth (19.4%pa) and Hobart (17.2%pa), however, the latest data confirms that both of these cities recorded value falls on an average annual basis over the past five years.
"It is worth noting that growth in capital city home values over the five-year period from 1997 to 2002 was greater than for the two following five-year periods; however, this was largely the result of higher levels of value growth over this time in the nation’s two largest markets, Sydney and Melbourne.
"Over this five-year period, capital city home values increased at an average annual rate of 12%," Kusher says.
Overall, each capital city recorded average annual capital growth in excess of 8% per annum over the period 1997 to 2002, highlighting the comparatively stronger market conditions at that time.
Looking more specifically at the average annual growth in values of detached houses as opposed to units, Kusher notes that historically, it is easy to see that houses have experienced stronger value growth than units. Over the 15 years to December 2012, capital city house values have increased at an average annual rate of 7.6%, compared with 6% for units.
And while the unit market underperformed the detached house market over the longer term, unit values appreciated at a faster pace over the past five years.
Kusher says that the recent superior performance is likely due to a range of factors, most notably:
• The relative affordability of units compared to detached houses;
• Changing lifestyle preferences, with owner occupiers more accepting of units, particularly in inner-city areas;
• The fact that units are typically located closer to the city centre and within suburbs that owner occupiers aspire to own houses but can’t realistically afford to do so; and
• The fact that units are typically more attractive to investors than detached houses because they enjoy higher rental yields.
Last week RP Data reported capital city home values fell over consecutive years, down 3.8% in 2011 and 0.4% in 2012.
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jchancellor-FAypfDUnLy

Australian property capital growth slows to 1.9% per year over past five years: Cameron Kusher

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While it’s still early days, the latest housing finance figures published by both the ABS and mortgage broker AFG suggest NSW and Queensland are discouraging many first-home buyers after doubling state handouts last year, but only if they buy or build a new home, while offering nothing for those that buy an existing property.
The most up-to-date mortgage figures are provided by aggregator AFG, which claims to write one in every 10 home loans in Australia through its network of affiliated mortgage brokers.
AFG reports a healthy 15% rise in the volume of mortgages arranged by brokers over 2012 from $28 billion to $32 billion, but says the average long term share of home loans arranged for first-home buyers, usually between 12% and 15%, collapsed to just 4.2% in NSW and 4.5% in Queensland during the last two months of 2012, after the $7,000 first-home buyers grants were withdrawn in both states in favour of the $15,000 boost for new homes only.
In comparison, investors dominated the mortgage market in these two states, comprising 46.3% and 35.9% of all home loans respectively.
Official ABS data is only up until November, so it is difficult to say a trend is emerging, but the figures certainly suggest first-home buyers have not been swayed to consider a new house or apartment over an existing property.
The ABS records that the number of first-home buyer loans arranged in NSW fell from 2,088 in October to 1,383 November, while in Queensland first-home buyer loan numbers fell from 2,116 in October to 1,417 in November - in both states a monthly drop of 33%.
Furthermore, just 793 first-home buyers took advantage of the revised NSW first-home owners' grant in December last year, <a target="_blank" href="https://www.propertyobserver.com.au/news/nsw-first-home-buyer-numbers-fell-to-20-year-lows-in-late-2012/2013011458763?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news">the lowest take-up in 20 years</a> with the NSW state opposition claiming that Barry O'Farrell's decision to dump first-home buyer grants and stamp duty exemptions have been "nothing short of devastating for young people trying to buy their first home".
Indeed, first-home buyer changes are particularly tough on those in NSW that wish to buy an existing property.
Since October 1, the NSW state grant has been lifted from $7,000 to $15,000 for new homes valued up to $650,000, while a maximum stamp duty exemption of $20,240 is also available for new homes worth up to $550,000.<a style="font-size: 0.8em;" href="https://www.propertyobserver.com.au/administrator/index.php?option=com_flexicontent&amp;view=item&amp;cid=58777#">Apply</a>
First-home buyers that purchase an existing home get nothing.
In Queensland, since September 11, a $15,000 first-home owner construction grant (FHOCG) has been available for new property bought or built at a value under $750,000, but all first-home buyers also pay no duty on purchases up to $500,000, with a phasing-out rebate applicable for values up to $600,000.
The doubling of the NSW first-home buyer grant was announced in mid-June, but only came into effect three-and-half months later, with Property Observer reporting on the conundrum it created for both <a href="https://www.propertyobserver.com.au/residential/nsw-budgets-needlessly-complex-artificial-deadlines-have-short-term-and-long-term-consequences-for-residential-property/2012061455119">first-home buyers and investors</a> over this interim period.
Queensland government introduced its construction grant with immediate effect from September 11, but gave first-home buyers up until October 11 to finalise contracts.
Contrast this with Victoria, which still offers a $7,000 first-home buyer loan for both new and existing home purchases (and increased stamp duty concessions from 20% to 30% on January 1) and first-home buyer loan numbers were little changed over the month, falling marginally from 2,545 to 2,407.
Ray White chairman Brian White labelled the new first-home buyer polices as “no longer a first-home buyers but a builders incentive” and a "deceit", saying they distorted the market, but not in a healthy way.
The latest data suggests he could be right.
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First-home buyer policies failing in NSW and Queensland

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Last year brought more economic worries: Renewed fears about Europe; more US “double dip” fears; weaker growth in the emerging world; US drought threatening higher food prices; and ongoing Middle East tensions.
However, despite the wall of worry it turned out to be a good year for investors. Key themes for 2012 were:
<ul>
<li>Soft global growth, but no recession. While global growth softened from 3.8% in 2011 to around 3% and profits were downgraded, both were better than feared a year ago. In other words, the falls in share markets in 2011 anticipated the economic slowdown of 2012.</li>
<li>Easy money. Slowing growth and benign inflation resulted in plenty of monetary easing globally – both rate cuts and quantitative easing. This contrasted to the global monetary tightening that continued into early 2011.</li>
<li>More Europe, not less. The European Central Bank’s bank funding operation and its threat to buy bonds in troubled countries combined with an ongoing theme from European leaders of “more Europe, not less” and more support for Greece reinforcing a determination to defend the euro, all helped head off the threat of a major financial crisis emanating out of Europe.</li>
<li>The US comeback. While US growth has been subdued, the commencement of open-ended quantitative easing by the Fed has kept growth going at the same time that signs of rebuilding gather with a housing recovery, surging oil and gas production, a manufacturing renaissance, and an ongoing tech boom.</li>
<li>Cyclical bottom in the emerging world. Increasing signs that growth in the emerging world has bottomed has also added to global confidence. Chinese growth specifically appears to have bottomed out around 7.5%.</li>
<li>Mining slows while the non-mining sector stays weak. Australia has also had a decent share of worries with a rapid slowing in mining investment at a time when non-mining sector activity remains weak. Growth for 2012 looks like coming in around 3.5% but this masks a slowdown to a 2% to 2.5% annualised pace. Inflation has been benign, despite carbon pricing, allowing the RBA to cut the cash rate back to its GFC low of 3%.</li>
<li>Search for yields amid rate falls. An overwhelming investor theme in 2012 was the chase for yield in the face of zero interest rates in major advanced countries and falling rates elsewhere against a backdrop of investor caution. This benefited high-yield assets. The following table shows returns for major asset classes.</li>
</ul>
<h3>Investment returns for major asset classes:</h3>
<table border="1" cellpadding="0" cellspacing="0"><tbody>
<tr>
<td valign="top">
Total return %, pre fees and tax
</td>
<td valign="top">
2011
actual
</td>
<td valign="top">
2012*
actual
</td>
<td valign="top">
2013
forecast
</td>
</tr>
<tr>
<td valign="top">
Global shares (in Aust dollars)
</td>
<td valign="top">
-5.3
</td>
<td valign="top">
11.5
</td>
<td valign="top">
15.0
</td>
</tr>
<tr>
<td valign="top">
Global shares (in local currency)
</td>
<td valign="top">
-5.3
</td>
<td valign="top">
13.4
</td>
<td valign="top">
11.0
</td>
</tr>
<tr>
<td valign="top">
Asian shares (in local currency)
</td>
<td valign="top">
-13.6
</td>
<td valign="top">
14.7
</td>
<td valign="top">
15.0
</td>
</tr>
<tr>
<td valign="top">
Emerging mkt shares (local currency)
</td>
<td valign="top">
-12.7
</td>
<td valign="top">
12.6
</td>
<td valign="top">
15.0
</td>
</tr>
<tr>
<td valign="top">
Australian shares
</td>
<td valign="top">
-10.5
</td>
<td valign="top">
16.4
</td>
<td valign="top">
12.0
</td>
</tr>
<tr>
<td valign="top">
Global bonds (hedged into $A)
</td>
<td valign="top">
10.5
</td>
<td valign="top">
9.3
</td>
<td valign="top">
2.5
</td>
</tr>
<tr>
<td valign="top">
Australian bonds
</td>
<td valign="top">
11.4
</td>
<td valign="top">
7.5
</td>
<td valign="top">
3.5
</td>
</tr>
<tr>
<td valign="top">
Global listed property securities
</td>
<td valign="top">
1.4
</td>
<td valign="top">
23.0
</td>
<td valign="top">
12.0
</td>
</tr>
<tr>
<td valign="top">
Aust listed property trusts
</td>
<td valign="top">
-1.5
</td>
<td valign="top">
29.3
</td>
<td valign="top">
12.0
</td>
</tr>
<tr>
<td valign="top">
Unlisted non-res property, estimate
</td>
<td valign="top">
9.0
</td>
<td valign="top">
8.0
</td>
<td valign="top">
9.0
</td>
</tr>
<tr>
<td valign="top">
Unlisted infrastructure, indicative
</td>
<td valign="top">
11.0
</td>
<td valign="top">
10.0
</td>
<td valign="top">
10.0
</td>
</tr>
<tr>
<td valign="top">
Aust residential property, estimate
</td>
<td valign="top">
-4.0
</td>
<td valign="top">
2.0
</td>
<td valign="top">
6.0
</td>
</tr>
<tr>
<td valign="top">
Cash
</td>
<td valign="top">
5.0
</td>
<td valign="top">
3.7
</td>
<td valign="top">
2.7
</td>
</tr>
<tr>
<td valign="top">
Avg balanced super fund, ex fees &amp; tax
</td>
<td valign="top">
-2.1
</td>
<td valign="top">
10.6
</td>
<td valign="top">
8.0
</td>
</tr>
</tbody></table>
*Year to date to Nov. Source: Thomson Reuters, Morningstar, REIA, AMP Capital
Shares provided decent gains and setbacks were milder as a lot of the bad news had already been factored in; policy action was decisive and signs of improvement were evident in the US and emerging countries.
By region, European shares outperformed as investors sought their better value after several years of underperformance, followed by US shares – helped by easy monetary conditions – Asian shares, and emerging markets generally, with Japan’s lagging performance not helped by a return to recession.
Australian shares performed well as the rate hikes that caused underperformance since late 2009 were reversed and the Chinese economy stabilised. Healthcare, telco, consumer staple and bank shares outperformed, partly reflecting the defensive and yield bias of investors.
Global and Australian property securities had a very strong year as investors switched into high yield assets. Unlisted commercial property and infrastructure also performed well as investors sought their attractive yields. Bond returns remained solid as interest rates remained low or fell and central banks bought government bonds.
The $A rose slightly on US quantitative easing and central bank and safe haven buying reflecting its safe AAA rating, but has really been range bound for two years.
The strong returns from most assets resulted in solid returns for traditional balanced superannuation funds.
 
<hr>
 
<h3>Outlook for 2013 – tail risks diminishing</h3>
A year ago it seemed everyone was obsessed with Europe. At the time we thought there was a case for a bit of cautious optimism. This turned out OK. While sentiment is now not as bleak, we remain cautiously optimistic for several reasons.
First, the cyclical pattern since the 1970s has been to have major recessions every 8-10 years (mid 1970s, early 1980s, early 1990s, early 2000s, late 2000s) with modest growth slowdowns in between. We still appear to be following this pattern, with the global growth slowdown of 2012 largely anticipated by the 20% top to bottom falls in share markets seen in 2011. If this, albeit imperfect, pattern is correct then the 2012 global growth slowdown has cleared the way for a continuation of the global recovery for the next three years or so which should help underpin growth assets.
Second, the risks around Europe remain high, particularly with the Italian election expected in February and a likelihood that Spain will have to apply for assistance from the bailout fund and the ECB in the next three months. However, the ECB’s funding intervention in banks, its threatened bond-buying program and the euro zone’s ragged but seemingly dogged determination to head towards more Europe, not less, suggests that the risk of a blow-up in Europe will continue to recede. In the meantime, declining inflation and continued recession will see more monetary easing helping clear the way for an exit from recession during the second half.
Third, while the fiscal cliff of budget tightening is a near-term hurdle for the US, there is a 90% probably it will be solved by end of January (as the political consequences for both parties in triggering a recession are just too big). But once the US clears this hurdle it should have a reasonable year in 2013 as the housing recovery adds around 0.75% to growth, shale oil and gas continues to revolutionise the US, capital spending rebounds after uncertainty associated with the fiscal cliff and quantitative easing spurs growth.
Fourth, China looks like it’s on track for growth at around 7.5% at least with the slowdown behind it. Growth in Asia, Brazil and India should also stabilise and begin to improve, following significant monetary easing.
Pulling all this together suggests:
<ul>
<li>global growth somewhere around 3.25% in 2013, ranging from a mild but fading recession in the euro zone, 2.5% growth in the US, 5.5% growth in the emerging world and 7.5% growth in China;</li>
<li>benign inflation in response to 2012’s growth slowdown and spare global capacity;</li>
<li>continued low interest rates and quantitative easing leading to a very easy and growth-supportive monetary environment; and</li>
<li>a stabilising then improving earnings growth reflecting the improving economic backdrop.</li>
</ul>
For Australia, growth is likely to remain subdued initially as mining slows and non-mining is slow to pick up. This is likely to see unemployment rise to around 6%. Against this backdrop the RBA is likely to cut rates further to 2.5% in order to push bank lending rates down closer to past cyclical lows.
However, as the impact of rate cuts starts to feed through with normal lags, growth should start to improve by year end. Overall, we see growth around 2.5%, but this is masking a second half upswing; inflation remaining benign; and the cash rate falling to around 2.5% in the first half.
<h3>So what does this all mean for investors?</h3>
Against a background of a modest pick-up in global growth and gradually receding risks in Europe, growth assets are likely to continue to do well but the returns from bonds are likely to be limited.
Shares are likely to provide another solid year of returns. Shares are very cheap against bonds as bond yields have fallen further and should benefit from ultra-easy monetary conditions globally and the anticipation of stronger profit growth in 2013-14. What’s more, while sentiment towards shares is not as bearish as it was in late 2011, it is still very cautious at a time when share weightings have collapsed. This suggests there is plenty of money to come into shares once confidence starts to pick up. Worries about Italy and Spain could trigger a bout of volatility around February/March, but overall returns are likely to be solid.
While US shares have been a star performer, helped by more aggressive monetary easing, this may be starting to change. Our assessment is that European and Asian shares are likely to be the star performers in the year ahead, reflecting relatively low price-to-forward earnings ratios of around 10 times, compared to around 12 times in the US, the gradual pricing out of disintegration risks in Europe and stronger growth prospects in Asia.
Falling interest rates and improved sentiment towards China are likely to see Australian shares do well, but uncertainties about the growth and profit outlook will act as constraints. We expect the Australian ASX 200 to rise to around 5,000 by end 2013. Bombed out cyclicals such as resources, along with yield plays like telcos, are likely to outperform.
The $A is likely to fall to around parity as the combination of a narrowing interest rate gap, slowing growth, and a widening trade gap offset the impact of more US quantitative easing.
Cash and term deposits are likely to become even less attractive, as cash rates slide to 2.5%, further pulling down term deposit rates well below 4%.
Historically low starting point bond yields suggest low returns from sovereign bonds, unless global growth takes a renewed leg down. Australian bonds are a bit more attractive than global bonds, given higher yields. Corporate debt is a better bet for those after income.
Property securities are likely to continue to benefit from investors seeking yield. However, returns are likely to slow after the 20-30% returns of 2012.
Unlisted commercial property and infrastructure are likely to benefit from relatively attractive returns and strong investor demand, given their relatively attractive yields, e.g. around 7% for commercial property.
Australian house prices are likely to see a modest 4-5% bounce on the back of lower mortgage rates.
<h3>What are the risks?</h3>
The main global risks relate to US budget and debt problems and a relapse in Europe perhaps triggered by renewed worries regarding Italy or Spain. An alternative risk is that growth surprises on the upside, triggering a mass investor switch out of bonds resulting in a sharp back up in bond yields.
In Australia, the main risk is that the non-mining sectors of the economy, e.g. housing, retailing, tourism, etc, take longer than expected to pick up pace leading to a sharper slowdown in growth beyond the 2.5% we are expecting. This could occur, for example, if rising unemployment triggers a desire on the part of households to more rapidly reduce their debt levels. This could see the RBA cut the cash rate to 2% or below.
<h3>Conclusion</h3>
While the year ahead is likely to see occasional bouts of volatility, returns overall are likely to be reasonable, as global growth picks up a bit and monetary conditions remain ultra-easy globally and become increasingly so in Australia.
<h3>Key points:</h3>
<ul>
<li>While 2012 has had its share of worries, it has turned out far better than feared and share markets and growth assets have been able to generate strong returns for investors. This has been helped by investors looking for higher yields in the face of zero or falling cash rates.</li>
<li>The combination of diminishing extreme downside risks globally, a modest pick-up in growth as the year progresses and attractive valuations for most growth assets points to another year of reasonable returns in 2013. Expect interest rates to remain low globally and fall a bit further in Australia.</li>
</ul>
The main risks relate to US budget and debt problems, a relapse in Europe, slow growth in Australia and a sharp back up in bond yields if investors get more confident.
Dr Shane Oliver is the head of investment strategy and chief economist at AMP Capital. Please note that this article is intended as general information and not as investment advice.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/">SmartCompany.</a>
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soliver-smf6LQXgW9

Economic storm clearing in 2013 as greater property investment returns expected: Shane Oliver 

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Incentives! One of the key laws of economics. We act in a certain way because we are incentivised to do so.
Generally people don’t turn up to work purely for the enjoyment of so doing, although they might say that they do. Instead, the primary incentive is usually financial reward. Some older folk elect to keep working beyond the retirement age for the incentive of keeping active or sociable.
Coles and Woolies offer us shopper dockets in order to incentivise us to come back to their store instead of another outlet.
Incentives don’t only apply to financial and economic decisions. In almost every decision humans make we consciously or unconsciously weigh up the incentives of each of our options. This is the origin of the phrase "There's no such thing as a free lunch".
Let’s take the example of… well, why not the example of an actual free lunch?
Let’s say I’m 21 again (sigh) and I wander down to a pub in Sydney tomorrow (sigh!) and meet a beautiful lady whom I find funny and great company. I offer to buy her lunch next weekend. Obviously the lunch would not be free to me. Nope, certainly no free lunch there!
But would it be a free lunch for her? No. Her assumption would be that I would be expecting something in return as an incentive (even if that incentive was simply her time and company) and would intuitively weigh up her own incentives. She’d balance up the mediocre quality of the suggested restaurant, the inane nature of my moribund 21-year-old conversational skills and – the clincher – my woeful need of a haircut, before politely declining.
Whether we think about it or not, we weigh up incentives in this way all the time. Blokes spend more time getting ready to go out on a hot date than they do for a day at the footy due to the incentive of a potential romance.
Even when we are apparently giving something for free such as a charitable donation, we often expect to feel good in return as our incentive. This is why we choose charities that have a meaning to us and is why I donate to cancer charities in in preference to other deserving causes.
Governments use tax cuts and parking or speeding fines to incentivise us to behave in certain ways, and so on, but can we find a free lunch in investing?
Unfortunately, the law of "no free lunches" also applies to property investment.
Investors who gave money to Allen Stanford thought they’d found a free lunch. Consistent, high returns with remarkably little volatility! But they forgot to ask what the cost was. In this instance, sadly, the cost was one of the greatest frauds ever committed, a gigantic Ponzi scheme that ultimately collapsed. No free lunch – and the cost many investors suffered because they did not diversify was immense.
Incentives in property
In<a target="_blank" href="https://propertyupdate.com.au/dont-be-lured-by-property-investment-incentives/"> this recent article, Michael Yardney </a>urges investors to be wary of property investment incentives such as discounts, which can distort the market. Similarly, be wary of rental guarantees. What is the cost of a guarantee? Is it that the developer wants to sell you a property based upon a multiple of the high rent? What happens when the rental guarantee ends?
What if you buy a property via a property investment club? Is the club helping you to buy just to be nice? Perhaps, but you need to fully understand the incentives. It may be 6% of the property purchase price. What of the developer’s incentive in this case? The developer may be selling via a club because it is a simple way to find buyers. At other times, developers may be offloading properties they simply can’t get rid of.
Does that mean that all properties bought via clubs are sub-standard? Of course not, some might be excellent investments. You simply need to understand the incentives and the costs and to always do your own due diligence.
 
<hr class="system-pagebreak">
 The incentive of yield
Property investors today are constantly being lured to invest in regional markets. The incentives are always listed as the same. Higher yield to lower your risk! Higher capital growth! More affordable and “room to grow”!
If anyone had designed a free lunch, this juicy trifecta must be the veritable entrée, main course and dessert. Might you get both positive cashflow and growth? Actually, you well might if you choose your market well.
But always ask, what is the cost? Go back to basics. A yield is high because the market value is low. Prices are usually low because demand is low. A property that is in low demand is a bad investment.
Be especially wary of investing in small cities or towns where there is vast acreage potentially available for new property development – if prices do go up it could become swamped with dwellings and prices may retrace. The best property investments are those you own forever.
Remember that by investing counter-cyclically in cities that are at the nadir of their cycle investors can get some pretty darned good yields anyway.
If you think you can outsmart the market in today’s climes by getting into and out of a mining town with expert timing (materially beating stamp duty, legal fees, sales costs and capital gains taxes) you're probably wrong.
Property cycles
The best benchmark I have for a property market which is at a different stage of the property cycle to that of Australia is the British market.
A great many investors opted to buy properties before 2007 in outer areas and remote markets tempted by yields of 7% or even above. The cost was that when the credit cycle reversed properties in low demand have been absolutely clobbered, in many cases by more than a quarter. And it’s now 2013, with little in the way of a recovery having taken place.
Those who invested in some city markets in the south-east of England, including in and around London, had previously paid a cost of a somewhat lower yield. But today, the incentive they are paid back is that by buying properties in the part of the country with a shortage of property and massive demand, their property portfolios are stronger than ever before.
Property in Australia has delivered outstanding returns over the past decade and a half which incentivises investors into the market.
The future is unknown, of course. Low interest rates in 2013 could well result in some reasonable growth this year. But what is the cost? My fear is that when we reach the end of the interest rate easing cycle and rates move upwards, some markets where property is in low demand will get clobbered.
Remember the law of incentives. There’s no such thing as a free lunch and always ask yourself: “what is the cost?”
<img src="/images/stories/2012/12/wargentbook.jpg" style="margin: 5px; float: left;">
Pete Wargent holds a range of finance and property qualifications and is the author of <a target="_blank" href="https://petewargent.blogspot.com.au/">Get a Financial Grip – a simple plan for financial freedom.</a>
 
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pwargent-M4siyDbqQY

There is no such thing as free lunch, so beware of property investment incentives

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New Stockland boss Mark Steinert received a favourable welcome from the stock market to his first day in the office with its share price rising 5 cents to $3.53 yesterday, in a market that went up 0.2%.
Steinert, <a target="_blank" href="https://www.propertyobserver.com.au/residential/stockland-confirms-ubs-banker-mark-steinert-as-new-managing-director/2012112858171">a former UBS investment banker</a>, replaced long-serving managing director and CEO Matthew Quinn to head up Australia’s largest residential developer.
The stock gain will no doubt please Quinn who walked away with 2.25 million shares worth around $7.8 million at yesterday’s closing price  - and worth little bit more today with the share price up to $3.56 by mid-morning.
When Quinn announced his decision to step down on July 25, the Stockland share price was $3.24. It rose 3 cents to $3.43 when Steinert was appointed on November 29.
Challenges for Steinert will include restoring market confidence in Stockland after it suffered three earnings downgrades last year and trying to turn around its struggling Melbourne residential business – Stockland is heavily exposed in Melbourne with eight residential communities in development on the fringes of Melbourne.
No dramatic changes are expected to be made by Steinert in the first six months of his tenure, but he is expected to re-appraise Quinn’s '3Rs' strategy, with its focus on residential, retail and retirement developments.
Steinert told analysts at a conference call late last year following his appointment, that he intends to undertake “deep analysis” before making any changes to strategy.
According to the Australian Financial Review, another thorn in Stockland’s side is its 15% investment in the struggling FKP Property Group.
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Stockland shares trade up as Mark Steinert completes first day in charge

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South Australia's richest man, Con Makris, has bought the Marina Mirage shopping centre on Queensland's Gold Coast for $52 million.
<img alt="marinacentre1" height="293" width="470" src="/images/stories/2013/01/marinacentre1.jpg">
The shopping centre was placed on the market after private group Fenix were placed into receivership by St George Bank.
The centre was listed in October last year with expectations of up to $60 million.
The 11,800-square-metre centre is split across two levels and comprises 100 shops and 700 parking spaces.
“The Gold Coast has been down for the past four years… but it’s just hit the bottom and is now on the way up,” Makris told The Financial Review.
Makris said that conditions had never been better for buying commercial property as borrowing costs were low and capital growth expected.
“The shopping centre is a destination. It’s where all the top fashion designers are, the best restaurants – it’s a place for the rich and famous to shop and dine,” says Makris.
Christopher Skase built the shopping centre 25 years ago and sold it to MFS Diversified Trust for $28.4 million in 2005.
MFS Group sold the centre in the same year to Fenix Real Estate for $40 million.
Fenix invested about $30 million into the asset but went into receivership.
David Winterbottom and Martin Madden from receivers KordaMentha appointed McVay Real Estate to sell the centre after they secured a $68 million deal with two Chinese groups for the neighbouring Palace Versace.
“It’s in the middle of all the five-star hotels – Palazzo Versace, the Sheraton – and they’re going to build a casino on land next to the shopping centre,” Makris told the Gold Coast Advertiser.
“This is the Miami of Australia,” says Makris.
The centre is opposite the $62 million Sheraton Mirage Resort and includes premium tenants such as Hermes, Tommy Hilfiger and Calvin Klein.
Con Makris founded Makris Group, which acquires shopping centres and today is a $1.5 billion-plus South Australian company.
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ntrotman-Et3xWpamVh

Billionaire Con Makris buys Gold Coast's Marina Mirage shopping centre for $52 million

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Just 793 first-home buyers took advantage of the revised NSW first-home owners' grant in December last year.
There were 4,233 recipients in the prior December.
The numbers were also down in November last year with 1,763 recipients.
There had been a 2,920 monthly average over the past two financial years.
The December figure was the lowest since the <a target="_blank" href="https://www.osr.nsw.gov.au/lib/doc/stats/fhog_apps_received.pdf">first-home buyers' grant was introduced in 2000 </a> as a measure to offset the introduction of the GST.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2013/01/fhbjan15.gif" title="Click to enlarge"><img src="/images/stories/2013/01/fhbjan15thumb.gif"></a>
However the NSW opposition has accused the NSW government of "locking young people out of the housing market after the state recorded the lowest numbers in two decades".
The acting opposition leader Linda Burney blamed the drop on the government's decision to scrap the all encompassing $7,000 first-home owner grant along with stamp duty exemptions worth up to $17,990 for first-home buyers purchasing existing homes.
Only buyers of new apartments and houses now qualify for the grant. The $15,000 first-home owner grant (new homes) started in October last year. The grant will reduce to $10,000 in January 2014.
The data was confirmed by the Australian Bureau of Statistics (ABS) showing only 1,383 loans for first-home buyers were approved in November last year.
This is the lowest ABS figure since February 1992, Burney says.
"These figures show Barry O'Farrell has locked first home buyers out of the property market," she said in a statement on Tuesday.
"The premier's decision to dump first-home buyer grants and stamp duty exemptions has been nothing short of devastating for young people trying to buy their first home."
Burney said first-home buyers buying an existing $500,000 home in November 2012 were forced to pay $24,990 more than they would have a year earlier.
"The O'Farrell government has created the worst environment in 20 years for first home buyers trying to enter the housing market," she said.
Acting Treasurer Greg Pearce told Fairfax Media the fall was due to a period of transition to the new grant. 
"This was a difficult decision. However, we believe this is necessary to make buying a new home or apartment relatively more attractive than buying an existing dwelling."
Murray pointed out that Queensland, which made similar policy changes also taking effect in October, suffered a 33% fall in loans taken out by first-home buyers in November.
"I think it's too early to tell what impact the NSW grant is having," he said. "Clearly, during the periods of transition you get some strange things happening."
The Housing Industry Association economist Geordan Murray also said it was appropriate to wait for a few more months' data before drawing conclusions.
Westmead and Liverpool, with about 550 recipients, were the suburbs with the highest uptake during 2012. 
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NSW first-home buyer numbers fell to 20-year lows in late 2012

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One of many reasons there will be solid price growth in Australian property markets this year is that current prices are at sensible levels. 
Australian house prices make sense in an international context, based on the relationship between household incomes and typical prices. They make even more sense when you factor in culture and tradition, elements economists can’t put into an equation but important nevertheless. 
Reserve Bank Governor Glenn Stevens does not think Australian house prices are unreasonably high and does not believe they will drop. Nor does he agree that we have a price bubble. 
A transcript of a recent interview with the Australian Financial Review shows that AFR editor-in-chief Michael Stutchbury and economics editor Alan Mitchell (why did it take two senior execubots to interview one public servant?) worked pretty hard to get Stevens to agree that Australia was vulnerable to a US-style collapse in property values – but they were unsuccessful. 
I’m always curious as to why doomsayers expect Australia to follow the pattern of the United States, to the exclusion of all other countries. Why would one of the strongest markets on the planet follow the example of the worst? 
The impression created by bad journalism is that most of the nations of the world suffered a US-style collapse in prices, and Australia was one of the few to unreasonably resist the trend. 
In fact, only a handful of countries had property crashes: the United States, Ireland, Spain and, to a lesser extent, the UK. Those declines happened for specific reasons. In the US these included 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 vast majority of nations, even some with weak economies, have escaped decimation of their property values. Many have continued to show growth since the onset of the GFC. Australia is, in fact, reacting in line with most of the world’s nations. 
In his interview with the poorly researched AFR boffins, Stevens repeated his consistent position that Australian house prices are high but relative to other countries they are not overpriced. 
“When you put if fully into international perspective – that is, you don’t just compare us with the US but compare us with a whole range of countries – it’s actually a lot harder to make the case that we’re grossly overpriced and due for a crash,” he said. 
“We’ve been around this level of house prices/incomes for 10 years. It’s taking a long time to burst if it’s a bubble. So, I’m not so much concerned about a crash.” 
However, Stevens said he would be concerned if there was another major rise in prices, such as increase of 10% to 20% seen in some recent years. 
“We have seen some gain in house prices over the past year or so, which is reversing a little bit of an earlier decline. That doesn’t trouble me. I think that’s probably part of the cyclical transmission mechanism working. 
“But it would be, I think, troubling if you saw a return to very strong 10-20% persistent rates of growth of housing prices, especially if that was accompanied by a return of rising leverage. 
“I don’t think that’s going to happen, by the way.” 
Stevens, it seems, shares my view that house prices are at comfortable levels relative to incomes and that we will see solid growth in the near future, without a return to boom levels – with the exception of selected markets with specific dynamics, such as Darwin and Gladstone.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" rel="nofollow" target="_blank">hotspotting.com.au</a> and can be <a href="https://www.twitter.com/hotspotting" rel="nofollow" target="_blank">followed on Twitter</a>.
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