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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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Most of us have focused on the cash rate cycle in recent times, but there’s another cycle I’m interested in: property.
Australian property prices were inflated leading up to the GFC, and then they started falling. Property prices fell more drastically in some of the major cities than in others. However, investment property was hit hard. Many investment apartments were liquidated, as households switched their outlook from debt to savings.
But it could be time to look again.
There are a few observations behind this: firstly, interest rates are near 50-year lows, so debt is cheap.
Secondly, rental vacancies in capital cities are low, meaning strong demand for rental properties.
Thirdly, although house prices are now moving upwards in some cities, it’s a slow recovery nationally, meaning there is value for smart buyers.
Lastly, employment is still strong in Australia, meaning you can find a lender for an investment property.
Where would you start? Personally, I would rather make a profit on my property and pay the tax than be negatively geared, which entails booking a loss. Going for “yield” means buying well and having good equity in the property, so the costs don’t overcome the revenues.
However, if you want to negatively gear a property you must ensure you have an adviser because the ATO does not accept mistakes in your calculations.
But for the basics of what to look for in an investment property, I really like the check list used by RUN Property:
Location: buy close to shops, train stations and schools; Scarcity: Art Deco and scarce architecture increases demand; Features: properties with views, outdoor living spaces or units with off-street parking; Demand: which can be seen in median valued properties, low rental vacancy rates and infrastructure which can support employment; and don’t forget capital growth and rental yield.
Now what about the ‘where’? Tim Lawless, RP Data national research director, has some great property figures via the RP Data Home Value Index. His research shows that, for the quarter, across the major cities, Darwin is the stand-out for rental yields: Darwin houses yielded (5.9%) and units (6%), while Melbourne houses (3.6%) and units (4.5%) were the worst-performing rental yielders in the eight major cities.
Most investors also look for capital gain in the property, and the RP Data figures are interesting for different reasons. In the year to October, only three cities’ dwellings have risen in value: Darwin (8.6%), Perth (3.5%) and Sydney (0.6%).
It’s worth looking also at supply. In Melbourne the supply question is still sorting itself out with apartments, which in the 12 months to October went backwards by 6%.
Regionally, it’s the mining areas where rental yields are strongest: the Bowen Basin and Port Hedland provide high gross rental yields.
When it comes to owning rental property, always do your homework, talk to experts and be realistic (not greedy).
And good luck.
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
Photograph of Port Hedland by J Thomas McMurray, courtesy of <a href="https://www.flickr.com/" target="_blank">Flickr</a> 
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mbouris-tauSvXGAM2

Do your homework and don't be greedy when investing in property: Mark Bouris

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The Queensland government's well-documented cost-cutting drive has impacted on the performance of the Westlawn Property Trust, an unlisted property fund managed by Clarence Property.
In its latest newsletter to investors, Clarence Property, based in Ballina, writes that the vacancy rate at its 29 level office building at 307 Queen Street in the Brisbane CBD has increased from 4.91% to 19.56% following Queensland government staff cutbacks.
The building, which offers 20,000 square metres of lettable office space, currently has four floors vacant.
This compares to a vacancy rate across the whole portfolio of just 3.89% as of June 2012 an 19.1% improvement on the June 2011 vacancy rate of 4.81%.
“The government cutbacks, combined with a slowing in the mining industry are likely to create difficulty leasing this space in the near-term.
“This vacancy has an obvious detrimental impact on rental income,” says Clarence Property.
The trust paid investors a distribution rate of 4c per unit per annum for the year to June 2012, unchanged from the previous year, after reporting a 7.1% improvement in net operating profit of $5.46 million.
In its newsletter, Clarence Property notes that it has continued to monitor the trust’s cash flow position with a view to being able to increase the distribution rate, but due to the increased vacancy at 307 Queen Street it remains “unable to announce a distribution rate increase”.
A further update will be provided to investors in December.
Clarence Property managing director Peter Fahey described the 2012 financial year performance of the trust as “acceptable” in what transpired to be a “difficult leasing year”.
Looking ahead, Fahey says the trust expects “moderate returns from direct commercial property (office) over the next 12 months".
“Performance will be largely dependent on tenant demand. Vacancy levels in Australian office markets are expected to rise slightly as white collar employment growth continues to be modest at best.
“Vacancy rates in the Brisbane office market, where the trust has its largest exposure, are expected to increase over the next year or so as a result of government staffing cutbacks and a pause in the mining industry," he says.
Fahey says the trust’s primary short-term focus is to fill the vacant space at 307 Queen Street.
Clarence Property paid $76.5 million when it acquired the Queen Street office tower in September 2002.
In currently has a book valuation of $127 million and comprises 46% of the value of all the properties in the trust, which stands at $274 million.
Other properties in the trust include a five-storey office building at 29 Molesworth Street in Lismore leased to the NSW government and Family Law Court of Australia, the Byron West Shopping Fair in Byron Bay, the Easy T Centre in Robina and the Yamba Shopping Fair.
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lschlesinger-FZcF9M3vE6

Queensland government cutbacks hurt Westlawn Property Trust

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The number of residential properties listed for sale in Melbourne fell by 1.4% over the busy month of October, lending some support to what is considered an oversupplied housing market currently favouring buyers.
Melbourne online listings fell from 51,564 to 50,861 from September to October with year-on-year figures now down 0.8%.
This was the steepest monthly fall recorded of all the major capital city markets in contrast with the nation result which was virtually unchanged (up 0.3%) at 374,445 a mere difference of 1,071 listings compared with September.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2012/10/sqmnov2.gif" title="Click to enlarge"><img src="/images/stories/2012/10/sqmnov2thumb.gif"></a>
SQM Research managing director Louis Christopher called the October data a surprise result.
“We were expecting listings to rise in October following the steady result in September and to be fair some capital cities have recorded a rise, but overall it is becoming clear to us that this is an abnormal result for this time of year and suggests to us that stock is being absorbed by buyers and/or vendors have been withdrawing their listings.
“We are starting to believe that it is the former rather than the latter,” he says. Matching strong recent price gains, Darwin registered the strongest decline in residential listings of all capital cities falling 2.7% to just 1,166 properties for sale – down 26.3% year-on-year.
In contrast, Sydney recorded a 4.5% increase in listings over October to 31,773 while Perth gained 1% to 17,689.
This was a reversal of what happened in September, the first month of the spring selling season, when Melbourne recording a 0.7% rise in online residential property listings while both Sydney (-2.9%) and Perth (-3%) both recorded noticeable declines.
However, both Perth and Sydney listings are more than 10% down on a year ago while Brisbane listings are down 5.5% (28,585) on a year ago, following a 0.9% fall over October.
RP Data-Rismark figures show a 0.8% rise in the Melbourne house price to the October quarter to a median of $508,000 while unit prices are down 1.3% to a median of $420,000.
RP Data senior research analyst Cameron Kusher says he expects Melbourne property prices to bounce along near the bottom for the next 12 to 18 months.
In October BIS Shrapnel managing director Robert Mellor predicted an exodus of Melbourne investors with a big rise in new apartments being completed in Melbourne over the next two to three years exacerbating the current oversupply of housing.
According to property market analyst Michael Matusik ,since 2009, Victoria has created 69,000 too many new dwellings, representing “about a two-year oversupply based on the current annual underlying demand for 34,000 new dwellings across the state”.
SQM Research notes that Canberra (6%) and Sydney (4.5%) have experienced the most noteworthy month-on month increases.
“As the spring selling season is well under way, the increases in these capital cities do not come as a surprise; what is surprising however, is that stock levels have not swollen dramatically during spring as is usually seasonally expected,” says the firm.
“This is perhaps a potential indicator that the market has begun to recover – albeit modestly."
 
 
 
 
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Declining October Melbourne residential listings bring some balance to market

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A guitar shop on trendy Dank Street in Waterloo in Sydney’s inner south is being marketed at small investors and those with self-managed super funds offering an attractive gross yield of 8%.
The guitar shop occupies shop 6 at 9-15 Dank Street, a mixed-use building developed and built by family-owned property development and investment company Manicaland five years ago.
The 69-square-metre shop has an asking price of $474,000 plus GST and is currently leased to Playa Playa on a five-year lease, which commenced in August this year with a five-year renewal option.
Playa Playa is paying a starting rent of $38,000 per annum gross plus  GST with annual rent increases of 3%.
The property is being marketed by Anthony Tripodi and Steve Hawksley from City Alliance Property – Waterloo.
Alex Zylberberg from Manicaland tells Property Observer that looking at the profile of buyers of similar properties sold in the same building in the last couple of years suggests it will appeal to “small mum and dad investors who might already have a residential portfolio and are looking to diversify into commercial property”.
He says it would also appeal to small self-managed super funds.
“We are currently working with a couple of enquiries,” says Zylberberg.
Dank Street is the retail heart of urban regeneration in Waterloo, featuring cafes, boutique stores, galleries and studios, and is especially popular on weekends.
Well-known establishments in Dank Street include the Dank Street Bakery and supermarket Fratelli Fresh.
According to census 2011 figures <a href="/news">Waterloo </a>is Australia’s second most upwardly mobile suburb, with weekly household income rising 167% between 2001 and 2011.
Just around the corner from Dank Street, the Amelia Street Café premises measuring 70 square metres are also up for sale with an asking price of $485,000 plus GST.
The property is being sold by Michael Gould of Deans Property Broadway.
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Gross yield of 8% on offer for Dank Street guitar shop in Sydney's Waterloo

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<h2>We are returning to moderate housing price growth, but no bubble: Terry Ryder</h2>
Talk is cheap because supply exceeds demand.
The cheapest talk comes from economists speaking about real estate, because supply (endless) is hugely in excess of demand (zero). There’s also a low price on the articles of most journalists about property because the demand is for a David Jones product but most of the supply is coming from Gone Bonkers.
So, after two years of price decline or stagnation in our major cities, at the first sign of price recovery they’re out there talking up a bubble.
Yes siree, if you crave a bit of media limelight the shortest route is to contact a lazy journalist and give them a sound byte with the word “bubble” in it.
Data from the various research sources indicates we’ve had three or four months in which the average result across the state and territory capital cities has been a rise in median prices.
I’m not sure how reliable the data is, because organisations like RP Data are so desperate to be first with the news that they’ve been calling the monthly price movement on the last day of the month, something that’s difficult to do credibly. Indeed, this week RP Data declared the October price movement 10 days before the end of the month. Is the need for publicity really that desperate?
Nevertheless, the trend evident in the figures from various research sources is one of big-city prices now starting to trend north, slowly.
Further to that, a number of forecasters are predicting rising prices in the near future. BIS Shrapnel is tipping growth in all eight state and territory capitals in the next three years, with the strongest to be in <city>Perth</city>, <city>Brisbane</city>, <city>Sydney</city> and <city>Darwin</city>, where the rises are expected to be solid but not spectacular.
National Australia Bank published its survey of Australian property professionals, most of whom are expecting moderate growth in the next 12 months.
So we appear to have a return to price growth, though small, with the prospect of more moderate rises.
But there’s no middle ground with media. It’s either boom or bust. Now it seems even the smallest rise in house prices instantly has the label “bubble” slapped on it. Alternatively, a cut in interest rates gives rise to fears of a bubble.
David Uren, who writes about economics for The Australian, recently tried to link fears of a house price boom in <country-region>Australia</country-region> into an incoherent rave about inflation and global financial instability. Some fairly innocuous remarks by business leaders have been portrayed by journalists as fears about a bubble, when the people quoted never used that terminology.
Bubble talk has been around for the past five years. It started when a metropolitan newspaper journalist misquoted RBA governor Glenn Stevens and the mistake was repeated as fact by media outlets around the country. Economists and journalists have been promoting bubble talk ever since, although Stevens never said the words reported. It wasn’t merely a beat-up – it was a lie.
I’m still waiting for someone who subscribes to the bubble theory to actually define it. So far, nobody has. The term implies that something has been over-inflated and will burst.
Despite all those dire predictions about a collapse in our home prices since 2007, mostly from publicity-seekers based overseas, the forecast implosion hasn’t happened.
So why are we talking about a bubble now, when capital city prices have barely budged after two years of mediocrity? Because we’re beset with writers and commentators who are shallow, lazy and like the sound of their own voices.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" rel="nofollow" target="_blank">hotspotting.com.au</a> and is a regular Property Observer columnist. He can be <a href="https://www.twitter.com/hotspotting" rel="nofollow" target="_blank">followed on Twitter</a>.
 
<hr class="system-pagebreak">
<h2>Australian residential property market currently experiencing a bubble: Philip Soos</h2>
Recently, Australian property analyst Terry Ryder, in <a href="https://www.propertyobserver.com.au/residential/we-are-returning-to-moderate-housing-price-growth-but-no-bubble-terry-ryder/2012102257367">an article</a> on Property Observer, voiced complaints about housing bubble advocates. His issue is “waiting for someone who subscribes to the bubble theory to actually define it. So far, nobody has. The term implies that something has been over-inflated and will burst.” Of course, Steve Keen has already done so in his voluminous and critical work reaching back for over a decade.

If Ryder has difficulty in finding someone who has constructed an accurate definition of an asset bubble, the work of the late US post-Keynesian economist Hyman Minsky is recommended reading. Minsky developed a theory called the ‘financial instability hypothesis’, theorising that financial markets are not very efficient and continually misallocate substantial amounts of credit into asset markets, creating pyramid schemes or bubbles (Minsky called them Ponzi schemes, named after the fraudster Charles Ponzi).[1]

He defined three types of finance: hedge, speculative and Ponzi. Hedge finance: income flows from an asset are sufficient to pay down both principal and interest on the debt used to finance the asset purchase, and asset prices are based upon fundamental or intrinsic value. Speculative finance: income flows cover only interest repayments, not loan principal, requiring debt to be continually rolled over from the current time period to the next. Businesses or individuals may experience financial stress, but it is not widespread and fundamentals valuations are kept largely in check. Ponzi finance: income flows cover neither principal nor interest repayments. This leaves asset owners completely reliant upon escalating capital values in order to realize substantial capital gains at sale to meet the cost of principal and interest. Prices are completely delinked from fundamental valuations at this stage, resulting in an asset bubble.
Simply put, if gross rental income pays down neither interest nor principal repayments of mortgage debt on aggregate (including other property-related costs) and is sustained over a number of years, a housing bubble exists by this definition. Even better, there is plenty of evidence to show that the residential property market is currently experiencing said bubble. The following figure shows a long-term housing price index for Australia, adjusted for inflation and quality.
Figure 1: Australian Median Capital Cities Housing Price Index 1880-2011, 1880=100[2] Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/soosnov1.gif"><img src="/images/stories/2012/10/soosnov1thumb.gif"></a>
The 1996-2010 period is easily the largest boom on record. This meteoric surge in housing prices, however, is not proof in itself of a bubble; more evidence is needed. Data from the Australian Tax Office shows that, on aggregate, residential property investors have been running substantial net income losses since 2000-01. The same would hold true concerning owner-occupiers and imputed rental incomes.
Figure 2: Residential Property Investor Net Rental Income 1993-94 – 2009-10[3] <a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/soosnov2.gif"><img src="/images/stories/2012/10/soosnov2thumb.gif"></a>
The reason for these sustained net income losses is the combination of general running costs with interest and principal repayments, as shown in the next figure.
Figure 3: Deductions and Repayments as % of Gross Rental Income 1993-94 – 2009-10[4] <a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/soosnov3.gif"><img src="/images/stories/2012/10/soosnov3thumb.gif"></a>
In 2009-10, the negatively geared cohort, who comprise 63% of the residential property investor market, are precariously positioned under a staggering amount of mortgage debt. The following figure shows a breakdown by income tax bracket.
Figure 4: Deductions and Repayments as % of Gross Rental Income 2009-10[5]
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/soosnov4.gif"><img src="/images/stories/2012/10/soosnov4thumb.gif"></a>
The reason why costs outweigh gross income is because Australians have burdened themselves with the largest household debt increase in history to engage in an orgy of residential property speculation.
Figure 5: Household Debt as % of Nominal GDP 1861-2011[6] <a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/soosnov5.gif"><img src="/images/stories/2012/10/soosnov5thumb.gif"></a>
In conclusion, Minsky’s financial instability hypothesis helps to integrate the occurrences of why housing prices and the proportion of household debt to the economy (GDP) have boomed while net income losses are sustained. That Australia’s residential property market has resembled Ponzi finance for the last 10 years is nothing short of astonishing (longer if counting 2010-11 and 2011-12 as there is a substantial lag in making tax data available). The market would have collapsed during the global financial crisis in 2008 were it not for a fresh first-home owner’s boost (FHOB) re-inflating housing prices to a new, higher peak.
Although Ryder claims that bubble advocates are “publicity-seekers” and “shallow, lazy and like the sound of their own voices”, outbursts of ludicrous pettifoggery should not deter the presentation of sound evidence.
References
[1]. Minsky, Hyman P. (1992). “The Financial Instability Hypothesis,” Working Paper No. 74, Levy Economics Institute of Bard College, New York.; Minsky, Hyman P. (2008). Stabilizing An Unstable Economy, 2nd Edition. United States: McGraw-Hill.
[2]. Stapledon, Nigel D. (2007). “Long Term Housing Prices in Australia and Some Economic Perspectives,” PhD Thesis, University of New South Wales.
[3]. ATO Taxation Statistics 2001-02 through to 2009-10.
[4]. ATO Taxation Statistics 2001-02 through to 2009-10.
[5]. ATO (2012; personal communication).
[6]. RBA (2012; personal communication).
Philip Soos is a researcher at the School of International and Political Studies at Deakin University. 
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terryryder-YECXbqmri2

Room for debate: Is there an Australian housing bubble?

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Private investors were the most active purchasers of Brisbane industrial property over the year to September, according to research by Savills.
These investors bought 43% of the $500 million worth of industrial property that was reported as sold in Brisbane over this 12-month period.
The chart also shows that more than a third (36%) of businesses have been snapping up their own warehouse premises rather than rent – not surprising, as industrial land values have fallen 30% since 2007, according to Savills.
 
<img src="/images/stories/2012/11/pie_chart2.gif" width="500" height="326" alt="pie_chart2">
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Savills reports that there is a good level of activity for industrial assets priced between $2 million and $5 million across "all asset types and precincts".
Yields range between 7.75% and 9.75% for industrial property across Brisbane.
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Private investors top buyers of Brisbane warehouses 

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In a shared cab on the way home from my brother-in-law’s birthday party (while dressed as Carmen Miranda) I asked this bloke who was a friend of the birthday boy what he did? By the way, it was a Rio Carnival party; I don’t normally go out with fruit salad on my head!
He said he had an importing business. I have a curious nature at the best of times, but after a few drinks I can be subtle yet blunt with my questioning. It doesn’t seem to offend anyone, and I end up learning about lots of stuff I would never have known about. I am truly interested to hear about other people’s stories.
It wasn’t long before this normal-looking chap told me he had just finishing a million-dollar new home build after knocking down in an area that I knew he would have paid well in excess of a million to buy in in the first place. I thought to myself, “OK, who has a lazy mill to spend on building on essentially a block of land that has cost him that much?”
Next question: “By the way, what do you import?”
Turns out this very clever bloke had a science background and was importing drug-testing products and distributing them to the mines. The mines need to test their employees daily to ensure they are OK to operate all the heavy machinery.
Can you imagine the volume of this market?
After some quick, unofficial research, I’ve found that over 200,000 people work in the mining industry. I’m not sure how many of these will need testing daily, with the salient fact daily. Daily testing is required. So let’s say if only half these people need daily testing, then that means, conservatively over 36 million tests need to be performed a year.
He’d found a great niche and built his business not only on the back of our resource boom, but also the strong Australian dollar, as he was importing from the US. He had low overheads, and his supplier had just bought a fair whack of his company, making him a multi-millionaire.
He was so unassuming yet so entrepreneurial. I said, “You should be on Australian Story or something!” and he said he wasn’t interested, just wanted to “fly under the radar”. He’d taken advantage of economic situations.
Seizing the opportunity is what a successful entrepreneur does.
Here is another example, I have a close girlfriend who has a corporate coaching business and years ago started targeting China. She has done unbelievably well by taking her expertise to China, where they needed to learn about such things as office etiquette, as a small example. Many Chinese were moving to cities from rural areas and they had no corporate experience. My friend taught them how to interact in an office environment, among many other things.
Guess what, she doesn’t even speak their language, but the energy she gave out showed them she was there to make a difference and very soon she’d earned their trust without saying a word (in their language). How cool is that?
How much of the opportunity we grasp really depends on us.
So what are some of your property opportunities right now? Consider this:
<ul>
<li>We have very low interest rates – I hope lower after Melbourne Cup Day!</li>
<li>Great economic indicators, the best in the world, really</li>
<li>High rental returns – in the right locations</li>
<li>Undersupply of new housing - in the right locations</li>
<li>Potential of solid capital growth – in the right locations</li>
</ul>
Big tip: check out the Hunter region of NSW, it’s ticking all these boxes and more if you are looking for a solid investment area.
We’ve been a bit entrepreneurial with our business, too. What we offer is different, essentially it’s a hand of opportunity for those who want to grasp it and for those who are ready to take the next step into property development.
Jo Chivers is director of <a href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
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jochivers-wq5Bp59R5a

Grasp every wealth-creation opportunity, in property and in life

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A four month mini-rally in capital city dwelling values has ended, with RP Data-Rismark recording a 1% fall over the eight capital cities in October to a median national dwelling value of $460,000.
The small fall in October follows dwelling value gains of 1.4% in September, no change in August, a 0.6% rise in July and a 1% gain in June.
A noticeable decline was the 3.2% fall in Melbourne unit values over the month, down 6% year-on-year to a median of $420,000.
“In particular, Melbourne unit values have shown a greater decline in values than any other mainland capital city over the past 12 months,” notes RP Data-Rismark.
Market commentators have warned that the Melbourne apartment market is heading into a situation of oversupply, particularly due to the large number of projects underway in the city and <a target="_blank" href="/news">Docklands</a>.
Click to enlarge <a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/10/rpnov1.gif"><img src="/images/stories/2012/10/rpnov1thumb.gif"></a>
Delivering housing forecasts last month, BIS Shrapnel managing director Robert Mellor said there would a big rise in new apartments being completed in Melbourne over the next two to three years, exacerbating the current oversupply of housing in the city.
RP Data research director Tim Lawless says the weak October result highlights how “delicately balanced the Australian housing market is”.
“Whether the October decline is a blip on the path to a recovering market or a sign of further weakness is yet to be seen.
“Other indicators are suggesting the market has gathered some strength, with auction clearance rates holding firm around the 60% mark across the two major auction markets and owner-occupier housing finance numbers showing steady improvements since February 2012, albeit from a very low base.”
However, he also points out that despite the current cash rate of 3.25% being just 25 basis points higher than the “emergency lows seen in 2009, there has yet to be a real improvement in consumer confidence or housing market transaction volumes”.
“Until we see optimists outnumber pessimists in consumer confidence surveys, a recovery in the housing market is likely to remain precarious,” he says.
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Among the major capital city markets, the greatest decline was recorded in Adelaide where dwelling values declined by 2.4% to a median of $370,000 though they are still up for the quarter (1.3%).
Melbourne dwelling values fell 1.1% to a median of $470,000 to leave its housing market flat (0.4%) over the past three months.
Sydney property values fell by 0.9% to a median of $530,000 to be largely unchanged on a year ago (up 0.6%). It remains the strongest performing mainland capital city market for 2012 up 2.4% since January.
Brisbane also registered a 0.9% decline to a median of $410,000 – down just 0.8% year-on-year.
The stand-out major capital city market remains Perth, which recorded a modest 0.4% gain to $460,000, with property values up 3.5% since October last year.
Among the smaller markets, Darwin continues to surge, with a 4% rise recorded over October to a median of $486,000 and up 8.6% on a year ago.
Hobart (down 4.5% in October, 4.6% year-on-year) and Canberra (down 1.3% in October and 1.6% year-on-year) continue to fall.
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Unit values were slightly more resilient that houses in October, declining 0.6%, compared with the 1% decline for houses.
Rismark International’s CEO, Ben Skilbeck, commented, “We are starting to see a reversal of the relatively poor performance of the top 20% of the market as compared to mid-market segment. Over the last quarter the top 20% of suburbs by price have outperformed both the mid-market and the bottom 20%.”
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'Precarious' housing market recovery halts in October: RP Data-Rismark

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The Housing Industry Association just won’t let up. The voice of negativity in the building industry just keeps pumping out pessimism and then wonders why no one wants to buy new homes.
The latest in the HIA production line of paranoid outbursts proclaims there is “a dire lack of confidence towards housing”. This is nonsense and flies in the face of all the evidence.
Here are the facts about Australian residential property. Loans to owner-occupiers are 6.4% higher than last year. Loans to first-home buyers are up 18.7%. Loans to property investors are up 4.1%, with double-digit rises in Queensland, Western Australia and the Northern Territory. Rents have risen in six of the eight capital cities this year, including big increases in Perth and Darwin. In the September quarter the home value indexes rose in seven of the eight capital cities.
All these figures indicate a rise in confidence towards housing, a sentiment reflected in the latest MFAA House Price Expectations Index, <a target="_blank" href="https://www.propertyobserver.com.au/residential/auction-clearance-rates-largely-irrelevant-but-confidence-perhaps-returning-to-property-market-terry-ryder/2012102957504">which I discussed in my column on Tuesday</a>. The index report discussed rising levels of confidence, with three-quarters of survey respondents expecting prices to remain steady or rise further in the December quarter.
There’s only one indicator that’s currently delivering a negative message. That’s the level of purchases of new dwellings. September recorded the third consecutive fall in new home sales.
But this does not reflect “the persistent lack of confidence towards housing in 2012” claimed by the HIA. People are buying homes in steadily growing numbers; they’re just not buying new ones.
If you’re wondering why that is, here’s an answer in three letters: HIA. It stands for Hopelessly Inferior Attitude.
This organisation could be doing so much to help its members do business. There are so many positives to highlight: a strong economy, low unemployment, rising incomes, low interest rates, solid population growth, recovering property markets, a high level of government assistance for people building new homes.
But rather than encourage people to build, this bleak body of bumbling boffins is giving them reasons not to. There’s a crisis. No one can afford it. The industry is in recession. Everyone’s afraid.
There’s no “dire lack of confidence”. There’s an inability of the housing industry to respond to demographic changes and market needs. There’s also a stubborn refusal to admit that the industry has damaged itself by building too many dwellings in the past.
Most of all, the industry with the Hopelessly Inferior Attitude has failed to take any responsibility for its own situation, preferring to carp on the sidelines with fingers pointed at politicians and councils and financiers and the Reserve Bank. Until it recognizes itself as part of the problem, things won’t get better.
The claim by the man with the most Hopelessly Inferior Attitude, Harley Dale, that “households remain reticent to actually make a decision to buy” contradicts all the available evidence. The truth is people are making buying decisions but they prefer established housing, rather than new dwellings.
Why? Because they’re cheaper and the people selling them are emitting positive messages.
The same rules apply to houses as to anything else available in the market place. People will buy if you provide a product they want at a price they can afford and are encouraged to spend by optimistic marketing.
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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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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Supposed 'dire lack of confidence' in property markets complete nonsense: Terry Ryder

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<h2>Sale prices edge 8.7% above estimates of Melbourne agents underquoting at October auctions</h2>
Alistair Walsh
Melbourne real estate agents continue to underquote properties selling at auction, according to the latest Property Observer survey on the issue.
An analysis of 74 sales catalogued by National Property Buyers over the last four weeks shows 55 of those properties sold for above the price range indicated by the selling agent prior to auction.
That’s just shy of 75% of properties selling for more than the upper bracket of the quoted price range.
On average, those 55 properties sold for 8.7% above the upper bracket of the price range indicated by the agents.
Property Observer’s <a target="_blank" href="https://www.propertyobserver.com.au/news/underquoting-still-rife-in-melbourne/2012100456988">most recent underquoting survey</a> found 75% of September surveyed properties sold for over price indications. Those that sold above went for an average of 6.5% over.
Prior to that, <a target="_blank" href="https://www.propertyobserver.com.au/auctions/melbourne-auction-listings-typically-selling-at-5-above-upper-end-estimate/2012090956435">an analysis of 220 auction results</a> in the months leading up to spring found 77% of properties were selling above price guides. Those that sold above were going for an average of 5% above expectations.
Just one property sold for below the price range indicated by agents prior to auction.
The properties analysed were only those where a price range was given with a lower and upper price indication.
Buyers’ agent Catherine Cashmore, who compiled the raw data for this survey, says buyers can expect to pay more than the price indicated before auction.
“Price quotes are important to attract buyers in the first place – no buyer likes to play guessing games when it comes to putting a price on an advertised listing.  However, as with any auction, the quote has to be at a level to attract as many potential purchasers as possible, whilst at the same time, not being too far from vendor expectation to achieve a sale,” Cashmore says.
“There are still agencies who quote at a level which we know from our own research to be too low to reasonably achieve a sale within the advertised range – we come across them weekly – and it would be fair to suggest buyers can expect to pay above the advertised price quote in most circumstances, especially when there is competition.
“However, bear in mind, every real estate sales agency quotes differently, so it's always important to do the necessary leg work to avoid wasting time and money inspecting a home, which will only ever achieve a sale price in excess of the advertised figure.”
Cashmore says more owner-occupiers in the market can push up auction prices.
“Stock levels have been plentiful this year, however the 'best of the best' has not been in abundance.  Owner-occupiers have dominated the inner-city market (with numbers of investors reduced due to continual poor consumer confidence), and it's well known that owner-occupiers are the demographic willing to pay an extra 5-10% more to secure the home of their dreams.  Hence why owner-occupiers fuel price growth and hence why 'investment grade' homes are chosen to attract this demographic.
The most extreme case of underquoting, or overly enthusiastic bidding, was a two-bedroom <a target="_blank" href="/news">Collingwood</a> house that sold for $662,500, 50% above the pre-auction indicated price range of $400,000 to $440,000.
A four-bedroom <a target="_blank" href="/news">Fitzroy North</a> house sold for $1,845,000, or 29% above the pre-auction indicated price range of $1.3 million to $1.43 million.
And a two-bedroom <a target="_blank" href="/news">Hawthorn </a>apartment sold for $652,000, 25% above the pre-auction indicated price of $470,000 to $520,000.
The $600,000 to $1 million bracket had the most cases of underquoting. Of the 26 sales in that bracket analysed, 23 or 88% sold for above the pre-auction indicated price range.
Of those 23, 17 sold for more than 5% above. Those 11 properties sold for an average of 11% over the pre-auction indicated price range.
For properties selling under $600,000, 64% sold for above expectations for an average of 5.7% over.
For properties selling over $1 million, 70% sold above expectations, an average of 10.2% over.
The property sales analysed come from National Property Buyers weekly survey of the Melbourne market.
The properties recorded those thought to be investment-grade or cream of the crop properties. They are thought to be properties that hold the best potential for long-term capital growth and rental demand.
The price quotes are received as close as possible to the auction date to avoid step quoting practices.
Cashmore says agents who put their price quotes too high risk scaring away potential clients. While Cashmore agrees price quoting can be frustrating for clients they must realise that more legislation won’t stop the practice.
 
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<h2>Melbourne agents not underquoting</h2>
Robert Larocca, REIV policy and public affairs manger 
Homes selling for more than their reserve and quoted price at auction does occur – in fact, it is what most vendors hope for – but it cannot always be described as underquoting.
The legal definition of underquoting is quite different, and those who seek to point out instances of alleged unlawful activity should take the time to understand the law first.
The Australian Consumer Law requires that all business people – including real estate agents – not engage in conduct that misleads or deceives or is likely to do so.
This general statutory obligation is allied to specific requirements imposed on Victorian estate agents by the Estate Agents Act to not over-quote to sellers or under-quote to buyers the estimate selling price of properties they are employed to sell. The act also makes it clear what is meant by the term “estimated selling price”, and this is critical information for all those who comment publicly on this matter.
The estimated selling price is “the amount the agent believes, on the basis of his or her experience, skills and knowledge, that a willing but not anxious buyer would pay” for the property in question. The estimated selling price can be a single figure or a price range.
If a price range is used, the agent must believe the estimated selling price is likely to fall within it. The range cannot be more than 10% of the amount of its lower limit. An estate agent must provide a vendor with the estimated selling price and include it in the sale authority the vendor signs.
The act goes further. It prohibits an estate agent making a statement in marketing material, advertisements, or even when talking to people, in which he or she indicates the selling price is less than the estimated single figure selling price or in the case of a price range, is less than the lower end of the range. For example: if the agent has provided an estimated selling price to the vendor of $500,000 to $550,000 he or she cannot advertise the property using a range of $490,000 to $530,000.
In practical terms, this means an agent can’t use a quoted price that is below what he or she believes (as expressed by the estimated selling price given to the vendor) the home will sell for.
The Australian Consumer Law’s prohibition on misleading and deceptive conduct obliges an estate agent to keep an advertised estimated selling price or price range under review during a sale campaign and to align it with a vendor’s actual selling price requirements, as may be necessary.
If during a campaign an offer or enquiry is received at a price above single figure estimated selling price or above the lower limit or upper limit of a price range an estate agent is advertising, and the vendor indicates he or she want something more, the estimated single figure selling price or price range as advertised must be adjusted in line with the vendor’s current expectations.
For example: if the price range is advertised at $500,000 to $550,000 and an enquiry is received at $510,000 in response to which the vendor indicates he requires an offer of at least $520,000 before he will consider selling, the range will have to be adjusted so the lower limit is advertised as  $520,000, to avoid misleading or deceiving the public about the selling price.
The act also requires that the real estate agent provide proof to the director of Consumer Affairs about how they arrived at the estimated selling price, if the director requests it
In drafting this law, the Victorian Parliament made an effort to be very clear that the estimated selling price and the vendor’s reserve or asking price do not need to be the same – the agent has his or her view about what the home may sell for, and that can be totally different from what the vendor wants. And this, of course, can be totally different to what the market is prepared to pay.
As a result, it is impossible for commentators to conduct or provide “research” about the extent of “underquoting”, because they do not know what estimated selling price the agent has provided to the vendor. As the act explicitly says that ”nothing …. requires the estimated selling price and the seller's reserve price to be the same amount”, commentators also can’t prove underquoting by comparing the sale price with the reserve.
Maybe all that sort of “research” can prove is that the market sets the selling price, not the advertisement.
Finally, it’s worth reminding <a href="https://www.propertyobserver.com.au/residential/sale-prices-edge-87-above-estimates-of-melbourne-agents-underquoting-at-october-auctions/2012102957500">those alleging underquoting</a> that there is one agency that does know what the extent of underquoting actually is: Consumer Affairs Victoria. It was recently reported (AFR 27/10/12) that CAV had received 15 complaints about underquoting in 2011–12. Over the same time there were around 70,000 home sales in Melbourne alone.
A cursory glance at the Consumer Affairs website shows that in the past 12 months there have been no instances of real estate agents being required to sign enforceable undertakings because they underquoted, and only two court actions against agents in which they were found guilty of underquoting.
This shows that while homes may sell for more than quoted or expected, Victorian real estate agents do have an excellent record of compliance with the law against underquoting.
Robert Larocca is policy and public affairs manager at the<a href="https://www.reiv.com.au/" target="_blank" rel="nofollow"> Real Estate Institute of Victoria.</a>
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