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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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We would all know of Albert Einstein, the German-born physicist who developed the general theory of relativity and is best known for his formula E = mc2. A smaller percentage will know of Ernest Rutherford, the New Zealand-born British chemist who is widely credited with first "splitting the atom" in 1917.
Even fewer people will know the formula of “the long-run average ratio of house prices to disposable income and to rents equals (property) fair value”. And, that by adopting this formula, the Australian property market is 36% above fair value. This is what The Economist is claiming in its August 2012 update of 21 residential-property markets around the world. I must have been truant the day that they taught this theory at property school.
Here’s another formula that those who know me personally will relate best to: “full-time property market student plus outlandish claim from so-called expert equals outburst.” That’s the response which those in earshot of me hear each time some suit in an ivory tower tries to make a name for himself with an attention-seeking headline.
I always find it amusing when people talk about “the Australian property market”, as if every one of the 8.4 million residential properties spread across 15,000 suburbs in this country all move in the same direction.
It is similarly amusing when an economist looks at what occurred to property values in one country, then plays around with a few ratios in a spread sheet, and concludes that she’s unlocked the formula that is going to split the property atom in another country. Economists would have us all think that their reading of the stars in the sky says that the Southern Cross is about to fall apart.
I am sure that fellow property market analysts such as Terry Ryder and Michael Matusik will concur with me that forecasting from one Australian city to the next is a very involved science that even we, as full-time property students, find difficult to keep up with. Add to this the many political, economic, legal and cultural variables across different countries and you have an impossible task.
Australia is nothing like America or Europe. Credit policies adopted by Australia’s (very strong) banks are completely different to the policies during which American banks handed out interest-free loans and a set of keys to unemployed people with no deposit. Australia’s economy (current and forecast) is vastly different to those in the Western world. And, unlike practically every other part of the world, Australians have a deep-seated cultural attachment to bricks and mortar – that Anzac spirit in our DNA means most Aussies, when faced with adversity, will fight hard to retain our family homes.
Economists love two things: data and formulae. The problem is, data is a record of the past, not the future. And, not everything in life can be calculated using some magic formulae. I like data too, however in order to draw any conclusions from data one needs to understand the things that influence it. You can’t just extract some data from a spreadsheet, multiple it by three, divide by the power of five, and end up with the square root of nine. One needs to understand the human behaviours that influence both the supply and demand of that essential commodity called “accommodation”. Most economists are flat-out predicting interest rate fluctuations, let alone reading the dozens of property markets across the country.
In some ways the science of evaluating share markets has similarities to property markets. In other ways, they are completely different. Ratios, for example, are referred to a lot by stock brokers as they dissect company balance sheets. Economists who persist with referring to ratios between median property values and median wages as a formula for our property being overvalued are delusional.
In a former life as bank manager during the 1990s my then employer had a policy that clients couldn’t afford a home loan if their total annual financial commitments were more than 30% of their gross annual income. This formula implied that 70% of a given client’s gross income was needed for taxes and living expenses. This formula was scrapped several years ago after even the conservative credit-Nazis who write polices acknowledged that it was inappropriate to generalise that a household earning (say) $300,000 lived a proportionately more extravagant lifestyle than the household earning $30,000.
“Median value : median wage” in the affordability debate is inappropriate. How do you compare the $250,000 salary of the boiler-maker who just purchased a $900,000 shack in the iron ore belt at Port Hedland to the retail assistant earning $60,000 and living in a nicer home in Port Adelaide?
For the economists out there trying to split the property atom I’ll spare everyone the excruciating pain that you will cause and share the formula with you: Property knowledge equals industry-specific education, plus real life experiences, divide by accountability, to the power of common sense.
Simon Pressley is a buyers' agent for <a href="https://www.propertyology.com.au">Propertyology</a>.
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spressley-sBoeMhannA

There is no magic formula to understand Australia's property markets

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Returns fell across all types of shopping centres from 2011 to 2012, according to IPD.
Total returns dropped from 10.6% to 9.1% across all types of shopping centres.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/08/ipdaug151.gif"><img src="/images/stories/2012/08/ipdaug151thumb.gif"></a>
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cknowlton-QnEa6ntUYP

Shopping centres recorded lower returns in 2012 than 2011: IPD

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With so much negativity in the broader Australian property investment industry recently, there has been a lot of backlash against the “value” of property investment and the potential for success within it. Today I want to share some perspectives on this subject and discuss how some of the negatives should really be considered ‘positives’.
I want to begin by sharing an article by <a href="https://www.propertyobserver.com.au/residential/refurbishment-renovations-or-redevelopment-is-the-way-the-rich-make-their-money/2012082356217" target="_blank">Michael Yardney about how the rich make their money.</a>
He effectively states that you’ll “never get rich by working for ‘the man’”. I believe this to be true also. I think true financial freedom comes from stepping out independently and making your fortune. Doing it “your way” allows you to take control of which partners you choose and how much you are willing to pay others to help you get closer to achieving your financial dreams. He cites capital growth as being the main way to get ahead, make money, and get closer to becoming rich.
But with capital gains hurt recently in the Australian property market, it becomes hard to really look at property (and to some extent the share market) as an asset class objectively, when other investment classes such as gold and resources are offering more incentivised capital growth prospects.
So why invest in property in a climate like this? With plenty of negative sentiment about, some states and regions actually going backwards in growth numbers, and the immediate future looking to show no immediate dramatic improvement, property as an investment type must seem pretty unappealing right now – to the uninitiated, at least. Well, I am not going to argue with this. Sure, things right now are not as great as we’ve seen in the last 10 years, so why invest?
There is no easy answer to write in one sentence. But if I were to try to, I’d simply say this: everybody has to live somewhere. Think about that for a moment and let it sink in. A roof over our heads is a pretty basic human need. And people need to work to live. Basic logic says that people thus need a place to live that is also within easy access to their place of work, so they can, well, make a living.
“Need” translates to supply and demand. If there are way too many properties in a market, demand will be low because everyone is already housed. This is where Australia offers such great opportunity. Because we are a young country, still growing and most places do not have enough property available to meet the demand of their markets, demand for property will remain very strong in places for years. Regardless of the volume of construction projects that get approved, Australia will always be “chasing its tail: to make sure there are enough properties available for people – where we need them, that is. This is a very important state of play for Australia and sets us apart from highly oversupplied markets such as the US, Dubai (and all of the United Arab Emirates, for that matter) and even Japan, which is beginning to shift more towards oversupply.
What I am getting at with all of this is: although values may fluctuate, this is all part of the process. This market correction we are going through is nothing new; it happens every 10 years, really, and is a normal part to any property market cycle (peaks, troughs, and everything in between). If your strategy is a long-term “buy and hold” approach, you have nothing to worry about on the capital growth front. The truth is, if prices were dipping so badly, this would not (and does not) change the dynamics of supply and demand.
Yes, the same number of people will front up to a Saturday inspection of a tiny one-bedroom apartment in Bondi, hoping to get that lease, regardless of whether the place is worth $250,000 or $500,000. What this means for investors is that in times of slow capital growth, if you buy property that provides good rental return, you won’t feel this so much. That one-bedroom in Bondi will still continue to rent for $500 per week, regardless.
 
<hr class="system-pagebreak">
 
This is where demographics come in. The great thing about living in a very large country, but one with a low population, is the concentration of employment centres to just a handful of major cities, along with regional centres that are one-stop economies. In this way, Australia and Canada are quite similar.
Let’s be honest, if you live in either country, and you want a decent professional/office/services job, you are really restricted to a few major cities ( Sydney, Melbourne, Brisbane, Perth, Adelaide in Australia, and Vancouver, Toronto, Montreal, Ottawa, Edmonton in Canada). If you want a regional resources “one-stop” job, you are also restricted to key areas (in Australia, mining towns like Kalgoorlie, Mt Isa, Bowen Basin, Coober Pedy, and in Canada, oil/gas/mining towns like Estevan, Wood Buffalo, and St Albert). What this means for both countries is that demand for residential property is driven mostly by a small volume of towns/cities. There is simply not the variety of job options in many cities that there are in other countries such as the US.
All of this translates to ever-increasing rents in areas of high demand. This then translates to increased rental return (aka monthly income) from your rents. This is good news when coupled with some of the very cheap interest rates being offered by lenders currently and moving in to 2013. Higher rental return and lower interest rates can literally add hundreds of dollars per month to your bottom line when holding a residential rental property. And we have not even begun to take capital growth in to effect.
Buying in a depressed market, providing you buy the “right” property (if I haven’t made it obvious enough already in this article – location, location, location – it is all about buying property in close proximity to employment centres), offers additional benefits. You can negotiate great discounting on areas (such as I have done twice in the last 12 months), as well as get a feel for the true value of property in your target postcodes. As you enter into the “due diligence” phase, you’ll learn about where values have diminished some and settled back to reflect the true value of that area.
We always knew that the property boom of 2003-07 would not be a long-term thing. Yes, values are reduced right now, but an opportunist such as me sees this only as a positive thing. I say this because you get double benefits: you buy at the cheapest rates possible, with great rental return and holding costs kicking in for the next few years, then within the next five or so years start to see values creep back up.
So why choose property investment in this climate? Well, choose it for the same reasons that you’d choose it in a more “prosperous” climate – as long as your foundations and due diligence check out from the beginning, that is all that matters.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
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cmcevoy-Go82SmsJA9

Why property investment is still a way to get rich in the current climate

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I am risk adverse and I believe in minimising risk where possible, so I always have a back-up plan for making money and for getting out quickly if I have to.
The Trident Strategy is my way of reducing risk to the absolute minimum.
<img src="/images/stories/2012/08/janess1.jpg">
It’s a simple strategy. There are three prongs on the fork. If one of the prongs breaks, there are two other prongs to back you up.
Essentially there are three ways of making money through property investing: make money when you buy; make money in the medium term by renovating; and make money over the long term through capital growth. Hence, if one of my “prongs” is wobbly — for example, I overcapitalise on the renovation, or I pay too much or the area does not grow as expected, I still have two strong prongs that enable me to make money. The skill is in having all three working for you.
In addition to this strategy there are ways you can further reduce your risk, for example:
<ul>
<li>Renovate to a point just above the median so you can rent and sell faster.</li>
<li>Understand what the median property is and who the average tenant is so you know that the property you buy will be in demand, thus minimising vacancies and enabling you to sell quickly if you need to.</li>
</ul>
What are the risks?
There are many risks associated with a property purchase. Consider the following, which generally apply to any property investment.
Personal risk
This is essentially the risks associated with you: not being able to afford the property, losing your job, and so on. The factors to consider are:
<ul>
<li>What is the risk of losing your job?</li>
<li>What is the risk of the property being vacant for long periods of time?</li>
<li>How will you cover emergencies? Do you have cash reserves you can access quickly?</li>
</ul>
Economic risk
This is largely out of your control. It is how the Australian economy is performing, how the world economy is doing and the availability of funds or buyers — and any special one-offs such as the effect of a natural disaster.
Let’s face it, even economists can’t agree on whether interest rates will go up or down, this is hard to predict and control. You need to be aware and consider the risks. With this in mind you might want to start reading reports and listening to the market commentary to become aware of risks.
These risks include tightening of banks’ lending criteria (making it harder for you to get funds), high interest rates, high unemployment and higher costs of living — much of which is discussed in newspapers, on websites and by other media.
Asset risk
Essentially, lenders look at any property investment — be it a home, an investment property or a commercial property — through risk filters. They ask the hard questions that you should be asking; for example, “If this person defaults on the loan, how hard will it be to sell this property?”. Each type of property or security (as lenders consider it) has different types of risks. We can learn from lenders and how they consider risk so that we can apply their methods to our own investment plans.
If your mortgage broker tells you that your lender requires a higher deposit for a particular property it means the lender sees it as a risky purchase and wants you to have more skin in the game — and that should give you a heads up to reassess how risky the purchase is for you as well.
Consider the following scenarios:
<ul>
<li>a three-bedroom house within 10 kilometres of the CBD of a capital city</li>
<li>a one-bedroom, 40-square-metre unit within 10 kilometres of the CBD of a capital city</li>
<li>a three-bedroom house within two kilometres of the CBD of a small regional town with only one industry (an abattoir that is closing down).</li>
</ul>
Which is the riskiest? You would have to say the third scenario, followed by the second one and then the first. Why? Because if the lender — or you for that matter — needs to sell your property quickly (for example, if you have defaulted on repayments), the likelihood of being able to do this is much higher under the first scenario than the third one.
 
<hr class="system-pagebreak">
 
Rental risk
What happens if no one wants to live in the property you own? What if they won’t rent it at the price you want? First you need to know what makes a rental property attractive in the area where you want to buy. So, for every 10 properties you inspect in a suburb or town, I encourage you to also inspect at least one rental property in the equivalent price range. This is so you can gauge what the market wants and what the competition looks like, and so you can hear comments from people looking at the rental properties to ascertain what the potential tenants’ or buyers’ needs may be. (Then you’ll have to do the research to confirm this.)
The beauty of the Trident Strategy is that it enables you to optimise capital growth and rental yield.
Not only does renovation as a strategy improve your cashflow, it also reduces your risk by making your property more attractive to tenants and — should the unthinkable happen and you have to sell — more attractive to buyers.
There are further ways to reduce your risk, as we will discuss next. For now, however, you should be not thinking that property investing is a gamble, or that you have to be lucky to make it work. It is about looking at options and taking a low-risk approach to achieving your goals.
Minimising your risk
It’s one thing to know your strategy and another to understand how to assess the risk associated with it. By now you may have a strategy in mind, but know that with every investment comes risk.
There is risk associated with you and risk associated with what you are buying, and in fact your property investing strategy also carries risk. For now, rather than consider how others (that is, the banks) will assess your risk, start thinking about how much risk you are prepared to accept for yourself and your family.
Fundamentally, risk is about the likelihood of something happening and then the consequences of it happening. So if something is highly likely to occur but the result is not so bad, it could be acceptable risk. Conversely, if it is unlikely but the consequence is a disaster, that might be unacceptable risk. You have to understand risk.
Once you have assessed your risk, it’s time to brainstorm the actions, strategies and steps for reducing the risk, and then assess the risk again. You need to ask yourself whether the risk has been reduced. Does the cost of putting the risk minimisation strategies in place outweigh the gain of the investment? For example, if the risk was that the ocean view of the unit you are considering purchasing could be blocked by a new property being developed on the vacant lot in front of it and the only way to keep the view is to buy the block in front, then in most cases the cost of this action would make the purchase not viable — even prohibitive.
As an explosives engineer I used to think about risk in this way for everything I did, so it was not such a stretch to apply the method to my property investing. However, most people will have to condition themselves to think about the likelihood of something going wrong. Ask  yourself: what is the  consequence and can I live with it? If not, is there something I can do to reduce the risk, or is this a walk-away situation?
This can be anything from big-picture buying (for example, finding the location that fits with your criteria) in a one-industry town to not buying a one-bedroom unit in an area where most people want a two-bedroom unit.
The most important step is understanding how to deal with the high risks and minimising your exposure to such risks.
Devising an emergency exit plan
Before each property purchase — be it your home or an investment property — you need to have a definitive exit strategy. This is one form of risk minimisation. This does seem a little like overkill, but it’s one way that you can greatly reduce your risk and improve your comfort level. For instance, if your strategy is to renovate, you might consider renovating to a standard just above the median value for the area so that you are able to rent the property quickly. This also gives you an emergency exit strategy.
Here’s how.
Consider that something bad (or good) happens and you need cash fast and have to sell the property. If your property is better than others in the market then in theory you should be able to sell it quickly, especially if you are prepared to accept the median price for the property. In other words, you should have a plan B for every decision you make in property investing. This will give you a low-risk property investing strategy.
 
<hr class="system-pagebreak">
 
Location, location, location
There is something you need to consider in order to minimise risk before you buy a property and that’s to buy where people need to live. Essentially, this means buying where there’s going to be long-term population growth, predominantly in capital cities or in growing multi-industry regional towns.
I must stress the ‘”multi-industry” part of this risk-reduction plan. If you buy in a one-industry town and that industry closes down due to economic conditions, natural disasters or the like, you’ll have an asset that no one wants to buy or rent. This is particularly important in relation to mining towns as well as farming centres and even tourist centres. Remember: it is all about plan B and risk reduction.
Say you bought a property in 1980 in Sydney for $80,000 because you got completely emotional and went over the top at the auction and spent almost 10% more than it was worth. After the purchase you may have been worried. But look at the figures 10 years later. Or 20 years later. The secret to the Trident Strategy for low-risk property investing is that the safety net is capital growth. If you do get the renovation from hell and blow the budget, or you overpay, time will help heal all wounds if you buy in the right place.
<img src="/images/stories/2012/08/jss2.jpg">
You will find that, on the whole, when holding property for the long term in capital cities and large regional towns with multi-industries — and not trying to pick the market, the hotspots or doing anything fancy such as buying and selling quickly — prices do increase.
 
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Using rent to mitigate risk 
Your property investing strategy is designed to build wealth and to provide an income for you later in life. Sometimes when property values lie stagnant for a number of years, we start to focus on rental yield. After all, it is total return that counts, but during periods where prices are relatively flat, you may look to improving yield returns to give you yield protection.
There are people who argue growth over rental yield. I believe you can have both and you should not have to compromise. The simple fact is you need a healthy rental yield to be able to afford to keep your property portfolio and you need capital growth to grow your portfolio and eventually sell up so that you have money to live off.
Initially, though, many properties will cost you money. Your job when finding a property and property investing strategy is to minimise this cost so you can get to a position where your properties are making you money quickly. You need to know how to calculate rental yield so you can make these assessments.
Rental yield is calculated as follows:
Rent per week: $250
Rent per annum = $250 × 52 = $13 000
Property value: $250 000
Rental yield = rent per annum ÷ property value
= $13 000 ÷ $250 000 × 100 = 5.2%
Visit &lt;<a href="https://www.yourpropertysuccessnow.com.au/ypsbookbonus">www.yourpropertysuccessnow.com.au/ypsbookbonus</a>&gt; to see a list of handy calculations and definitions you will need.
Put simply, a combination of good growth and yield is ideal. In other words, your property goes up in value so that when you sell it as part of your exit strategy it is worth more than you bought it for, even after allowing for inflation ($1 now is worth more than $1 in the future). The higher the rental yield, the less you need to contribute week to week to pay for your property.
For example, if interest rates are 7% per annum and your rental yield is 5.2% per annum, you are paying the difference of 1.8 percentage points out of your own pocket (plus all the other holding costs such as rates and insurance).
It is, simply, good money management to have sufficient funds tucked away to cover the difference — plus any extra costs — of your property investment strategy for a few months. You also have to cover the day-to-day costs of your property — these are often called on-costs. Personally, I allow an extra 25 to 30% to cover landlord’s insurance, strata fees, property management fees, council rates, land tax and maintenance. So if the rent per annum is $13,000 and I allow an extra 30%, I would contribute an additional $3,900 per annum ($13,000 × 0.3 = $3,900). This is ultra-conservative, but planning for the worst-case scenario is what a low-risk property investing strategy is about.
Understanding how this works is important. If you can minimise any extra costs you have to pay, and you have a property in a high capital growth area going up by more than 7% per annum, then you have an advantage.
So how do you improve yield? Maybe you can negotiate to buy the property at a cheaper price. For example, if you bought a $250,000 property for $225,000, the rental yield would be 5.8%.
Another way to improve yield is to renovate. This will add value to the property — but you must ensure that the value added is greater than what you spent on renovations — and hence improve the property value so you can ask for a higher rental amount. So, if you buy a property for $250,000 and you spend $15,000 on a cosmetic renovation such as painting, re-carpeting, redoing the kitchen and cleaning up the bathroom, then arguably the value of the property should be at least the initial value of $250,000 plus the value of the renovation, that is, $265,000.
However, let’s assume that you derived extra value and the property is now worth $280,000. This would mean that for the $15,000 you spent you have created an extra $15,000 in value through your clever and strategic renovation decisions and execution. This could also affect your cashflow, as the renovation would be funded by a higher mortgage and you may have slightly higher repayments, but remember that you will have a great boost in rent.
The secret is that people with a renovation strategy try to do both: buy a property at below its true value and create equity by way of a renovation. Then throw in the fact that they have bought in an area with great capital growth and they have won the trifecta: a property going up in value, bought below the true value, with value added to it through renovation. Yes: this is the Trident Strategy at work.
Understanding rental yield enables you to work out what your portfolio needs to be achieving to minimise your out-of-pocket expenses. I rarely get into the argument about positive cash flow versus high growth and negative gearing investing strategies because I support both. My aim is to have my property going up in value and for the difference between my income and expenses to be minimal.
Borrowing with a buffer
For certain investing strategies, borrowing with a buffer may be the only risk-minimisation action you can put in place. Essentially, this means that if all goes wrong, make sure you have either equity or savings that you can use to cover the additional costs so you don’t have to sell the property at a “fire sale” price that’s unacceptable to you.
If you’re using equity from your home to buy an investment property and you need $100 000 to cover your contribution on a $400,000 property (that is, $80,000 deposit plus stamp duty and legal costs of $20,000), you may consider tapping into the equity with a buffer. So, instead of borrowing $100 000, you would borrow $120,000, giving you a $20,000 buffer, in case you lose your job, you can’t rent the property, the development goes over time or budget or the renovation is delayed.
Peace of mind is nice to have in a situation made stressful enough by other circumstances. There are many ways to reduce your risk. Perhaps we have covered a few that you may not have thought of. Importantly, you just have to start considering every decision from the point of view of risk and minimising risk.
Anything can become safe if you know how to control the risks, as I learned from explosives.
Jane Slack-Smith is director of <a href="https://www.investorschoice.com.au/" target="_blank">Investors Choice Mortgages</a> and founder of <a href="https://www.yourpropertysuccessnow.com.au/" target="_blank">Your Property Success</a> online education teaching investors to find the right property at the right price. Winner of the Your Investment Property 2009 Mortgage Broker of the Year. Jane is a regular property commentator, author and experienced investor. This is an extract from her new book <a href="https://yourpropertysuccess.com.au/" target="_blank">Your Property Success with Renovation</a>, published by John Wiley &amp; Sons.
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How to minimise your risk when investing in property

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Woolworths has confirmed that it plans to sell close to $1 billion worth of shopping centres held in its property portfolio.
Woolworths finance director Tom Pockett told investors today that “probably somewhere between $800 million or $900 million plus” worth of property was available for sale, with the total value depending on whether centres were completed or under development.
The supermarket group owns a portfolio of neighbourhood and sub-regional shopping centres.
As part of its annual results presentation last week, Woolworths told shareholders it had “passed the peak in its property development pipeline” as the supermarket reported a 14.5% drop in net profit after tax to $1.8 billion.
Sale of the stores was mooted by the Australian Financial Review earlier this year, which said Woolworths was looking to return to its core retailing activities.
In September last year Woolworths took the unusual step of buying the Centro Lismore, NSW, shopping centre, where it is the anchor tenant on a short-term lease.
But corporate affairs spokesman Simon Berger told Property Observer at the time that the main focus for Woolworths remained being a retailer and “looking for opportunities to serve our customers”.
“We will develop or acquire where it suits our interests and customers, but we also lease in plenty of places,” he said.
In July last year, Woolworths completed the sale of eight neighbourhood and sub-regional retail shopping centres to a 50/50 joint venture entity owned by Charter Hall Retail REIT and Telstra Super for $266 million at an initial yield of 7.94%.
Pockett told investors Woolworth was always offering properties to investors but this is the first time the supermarket has confirmed plans for a large-scale divestment.
Pockett highlighted that sales activity would be driven by buyer interest in the group’s centres and Woolworths would not be giving its centres away.
He described current investor appetite as “a bit lower than last year” amid a “tough” investor environment.
Woolworths is targeting yields of 6% to 7%, a range it has struggled to achieve, reported RBS analysts Daniel Broeren and Alexander Beer.
Commonwealth Bank analysts estimate that Woolworths actually holds closer to $2 billion worth of property assets that could be sold.
It estimates that at the current rate of new development, Woolworths’ property portfolio could accumulate to a value of around $8.5 billion by 2017.
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Woolworths confirms plans to sell up to $1 billion worth of shopping centres

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Founder, Rockpool Group
Born in: Sydney
Friends: <a href="https://www.propertyobserver.com.au/https://www.thepowerindex.com.au/business-bosses/alan-joyce/201206201425">Alan Joyce</a> | <a href="https://www.propertyobserver.com.au/https://www.thepowerindex.com.au/business-bosses/james-packer/201206111420">James Packer</a> | Heston Blumenthal | Thomas Keller | <a href="https://www.thepowerindex.com.au/food/kylie-kwong">Kylie Kwong</a>
Home town: Sydney
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You can't escape Neil Perry – even if you want to.
His Rockpool Group runs eight venues across three states, which have garnered 11 Good Food Guide hats between them. For nearly a decade he's been popping up on our TV screens and in our magazines. Even in the air you're eating Perry's tucker, thanks to his 16-year relationship with Qantas. Add in his connections with James Packer’s Crown, and you'd be hard pressed to find an industry Perry hasn't dipped his finger into for a taste.
But it's his famous ponytail that most Australians remember him for.
"I'm getting to the stage where I’m thinking, 'Should I be cutting it off?" but I just can't think of any other look,” the ex-hairdressing apprentice says, laughing down the phone line . “Single-minded, you see. It's been part of a brand for me. I didn't think of it that way, but I've become synonymous with it in the industry."
With over 30 years working in hospitality, the Rockpool founder has become synonymous with a lot of things: Modern Australian and Asian cooking. Steaks. Relationships with the big end of town. A love for quality Australian produce. And a one-eyed obsession about everything he does.
Food industry insiders say Perry exists in his own world: “Planet Perry”. “We're very single minded about what we do and I think you've got to be to be successful,” admits Perry. “Sometimes people say I'm arrogant or whatever. That generally comes across [because of] just not having enough time to do the things I'd like to do.”
What he does like to do is open successful restaurants -- although he’s had his fair share of unsuccessful ones over the years. His Rockpool Group runs three restaurants in Sydney (Rockpool on George, Rockpool Bar &amp; Grill and Spice Temple), four in Melbourne (Rockpool Bar &amp; Grill, Spice Temple, The Waiting Room and Rosetta, which opens September 14) and one in Perth (Rockpool Bar &amp; Grill). The company is budgeting to spend $26 million on staff wages in 2013.
The location of Rockpool’s venues also hints at Perry’s powerful connections. As one food reviewer puts it: “Half of their restaurants are in a hideous, disgusting casino.” All of Perry’s Melbourne restaurants are located in the Crown Casino complex. His Perth restaurant sits in the Burswood Entertainment Complex, a casino and entertainment complex owned by Crown Limited.
Plus, flagstaff restaurant Rockpool on George is widely assumed to be a loss leader, helpful for gaining foodie cred, but useless at making money. Instead it's the highly profitable relationship with Crown – which gives support in the form of cheap rent, fit-out and marketing support – that helps make his restaurants so successful.
Not that he hides his gambling connections. Perry names James Packer as one of his business mentors: “James is just fantastic and has been very generous with his time and advice.”
There's a strong relationship between the two businesses. “I sort of think that Rockpool Bar &amp; Grill brand and Spice Temple co-exist with the Crown brand," says Perry. That's particularly interesting since Crown just announced a Crown Towers hotel in Perth and a new entertainment precinct in Sydney's Banagaroo.
Since 1996 Perry and his Rockpool Consulting team have determined what travellers dig in to while onboard a Qantas flight. Six full time staff work on the project all year long, examining the strengths and weaknesses of catering centres around the airports of the world. Former Qantas CEO Geoff Dixon and current CEO Alan Joyce are the other two names that come up when Perry talks about his mentors.
But Perry is also known for his own mentoring role. His passion for Aussie produce has meant he’s pushed the careers of several now well-known farmers, seafood producers and growers. “The amount of Australian food producers that he has supported along the way is a reflection of his influence and power,” declares chef Kylie Kwong.
As a former apprentice of Perry’s, Kwong is just one of many of Perry’s “young disciples” -- as she calls them -- to have gone on to run their own restaurants. Others include Ross Lusted from The Bridge Room and Mike McEnearney from Kitchen by Mike. Perry is known for paying staff well and many are deeply loyal to him.
His personal endorsements and media appearances have also helped make him a wealthy man. Perry's six cookbooks are beloved by foodies and home cooks alike and he pens a weekly column for Fairfax’s Good Weekend magazine.
Although Perry’s longevity is impressive, Rockpool’s restaurants no long appear in the San Pellegrino Top 50 lists. Perry was credited as one of the pioneers of the Modern Australian food movement, but several restaurant reviewers and food writers tell The Power Index that younger chefs and other restaurants push the boundaries more than Perry and his venues these days.
Not that the 55-year-old is complaining. Ultimately he sees himself more as a restaurateur than a chef, and he’s planning to open five more venues in the next five years.
Rockpool can live on without its founder, claims Perry. “I try and build restaurants in their own right to stand for an experience and stand for quality and value, and that's why I don’t have a restaurant called Neil Perry or plates with my name on it, which I think is a bit of a doomsday situation.
His 18-year-old daughter already works at Rockpool and his other children express interest in continuing the family business, although Perry quips that he'd prefer them to be doctors. No word on who'll carry on the ponytail tradition.
This article originally appeared on <a target="_blank" href="https://www.thepowerindex.com.au/">The Power Index.</a>
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Neil Perry planning to open five more restaurants in next five years

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New home sales got off to a bad start in the new financial year, with July sales down 5.6% following three consecutive months of modest but rising sales, according to the latest HIA New Home Sales report.
The HIA recorded just over 4,000 new home sales over the month, compared with more than 5,500 in June, based on its monthly survey of Australia's largest volume builders.
Three years ago monthly new home sales were close to 8,000, peaking at around 8,600 in August 2009 helped by the federal government-funded first-home buyer boost, which ran from October 2008 to December 2009, providing a bonus $7,000 for those first-home buyers who bought a new home, on top of the $7,000 for all first-home buyers.
Over July the HIA recorded a 5.5% fall in the “persistently weak detached housing segment”, with a 6.4% drop in the more volatile multi-unit market.
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Across the major markets, Queensland was the only state to buck the trend, with a seasonally adjusted rise of 11.1% in detached new home sales in July.
New detached house sales fell by 6% in New South Wales, 4.6% in Victoria, 8.9% in South Australia, and 14.4% in Western Australia.
“New home building is the weakest sector of the Australian economy. Despite interest rate cuts in 2011-12, the two updates for this financial year – new home sales and the Australian Industry Group- HIA Performance of Construction Index – both point to deteriorating conditions in July," says HIA chief economist Dr Harley Dale.
“Now is a good time to build a home. Interest rates are lower, it’s a very competitive market, and there is less pressure on skilled labour availability.
"However, consistently weak consumer (and business) confidence is weighing very heavily on new housing investment, far more so than is the case for retail expenditure," Dale says.
“Combine that low confidence with very tight credit conditions and excessive taxation, and you have the unpalatable recipe for the recessionary conditions facing new housing.
“Leading indicators suggest this situation will persist well into 2012/13," says Dale.
More insights into the state of new home building will be revealed when ABS building approval figures for July are released on Thursday.
In June the ABS recorded a 1.1% seasonally adjusted fall in approvals for private sector houses, but with rises in Queensland (5.3%), Western Australia (4.4%) and South Australia (0.4%).
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Queensland the only bright spot as new home sales fall 5.6% in July: HIA

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Melbourne recorded $629.5 million worth of commercial office CBD investment sales over the first six months of year, trumping Sydney, which managed $478.6 million of sales, according to new research by Colliers International of sales worth $20 million or more.
The biggest whole asset sale in Melbourne over the first six months of the year was 150 Collins Street, which was purchased by GPT Wholesale Office Fund for $181 million on a yield of 6.77%.
Sydney’s most expensive single asset sale was Macquarie Bank’s $131 million vacant possession purchase of 48 Martin Place on yield around 7% and 7.5% (as estimated by Knight Frank).
The only premium-grade asset sale in Sydney during the first half of 2012 was the 25% acquisition of 126 Phillip Street for $176 million by Investa Commercial Fund from Investa on a yield of 6.35%.
Of the two office markets, Sydney has the brighter short-term outlook, with Melbourne's vacancy rate expected to continue to rise.
Colliers says that despite a large number of buyers chasing better-quality assets across Melbourne’s CBD office market, “the short-term outlook for transaction volumes remains subdued”.
“This is a function of the lack of investment-grade stock on the market for sale, as opposed to low levels of demand.
“As a result we expect face rents to remain stable while incentives will experience further increase, as landlords look to offer more to attract and secure tenants. This will in turn lead to further declines in effective rents across all grades over the next 12 months.”
In the case of the Sydney CBD market, Colliers expects leasing and tenant enquiry activity to remain “buoyant from smaller non-CBD based tenants who are looking to take advantage of softer market conditions to evaluate and upgrade their tenancies”.
“Limited supply entering the market and positive absorption over the remainder of 2012 is expected to see vacancy rates decline across the Sydney CBD office market.
“This is expected to result in subdued rental growth and a stabilisation of incentives over the period.”
The most recent Property Council of Australia office report recorded that the Melbourne CBD office vacancy rate increased from 5.2% to 5.6% from January to July, while Sydney recorded a 1.5 percentage point contraction from 9.7% in January to 8.2% in July – the largest decline of all CBD markets over this period.
Colliers International forecasts the Sydney CBD vacancy rate to decline further over 2012 to 7.9% by January 2013, before rising slightly to 8.2% as of July 2013.
In contrast the Melbourne CBD vacancy rate is expected to trend upwards to peak at 7.5% by July 2013 as 234,000 square metres of new supply comes on board over the next two years – before starting to trend downwards again.
Colliers attributes the decline in the Sydney CBD office vacancy rate to a “distinct lack of supply”, with only 13,225 square metres entering the market over the first six months of the year, combined with a positive absorption result of 45,300 square metres during the period.
Renting premium and A-grade office space in Melbourne remains significantly cheaper than in Sydney.
According to Colliers, top-of-town Melbourne premium office rents range from $480 to $665, with A-grade office rents ranging from $392 to $457.
Premium core Sydney CBD office rents start from $800 to $1,295 while core A-grade rents range from $650 to $820.
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Rental returns are quite similar for premium-grade and A-grade assets in both capital cities.
Premium Sydney office yields have remained stable in six months to July 2012, sitting between 6.25% and 6.75%, while A-grade yields also remained stable during this period, recording between 6.75% and 8.15%.
Premium Melbourne yields also remained stable in six months to July 2012, sitting between 6.50% and 7% while A-grade yields also remained stable during this period, falling in a range between 7% and 7.75%.
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John Marasco, Colliers International managing director of investment services, says Sydney prime grade yields have stabilised, while the yield spread between high- and low-quality secondary-grade assets has continued to widen.
“Quality office buildings, particularly premium and A-grade, that offer a weighted average lease expire (WALE) of four years or greater continue to be in high demand from investors.
“A lack of this type of property on the market for sale has seen sales volumes remain low, and this has led to the stabilisation of prime grade yields during the first half of this year,” he says.
“The outlook for the next six months is overwhelmingly positive, as the number of genuine enquires for investment properties in Sydney’s CBD has increased since the end of the 2011-12 financial year,” he says.
“We predict this will translate into a greater number of assets sold in the second half of 2012, with Sydney ending the year on a definite high.”
Nerida Conisbee, Colliers International national director of research, says Melbourne CBD office property remained highly sought after despite a rising vacancy rate and declining rents, with Premium and A-Grade stock experiencing particularly strong demand.
Marasco says good quality Melbourne CBD assets continue to attract “keen interest and this interest is coming from a range of different buyer types.
“A high proportion of demand is coming from offshore, but there should also be no underestimating the level of active domestic capital.”
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Melbourne trumps Sydney on office investment sales activity but not on short-term outlook: Colliers International

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Both local and offshore commercial property investors have continued to pour money into Australian CBD office assets with around $2.4 billion worth of property changing hands so far in the first six months of 2012, according to new Colliers International research.
Year-to-date national office sales are on a par with the same time last year with Canberra notable for having racked up over $500 million in sales –accounting for a fifth of all investment sales, just behind Melbourne and Sydney.
In its latest series of CBD Office Research &amp; Forecast Reports, Colliers International found that while global economic conditions remain delicate and uncertainty surrounds some leasing markets, investment in Australia’s CBDs remains strong.
Colliers International recorded 34 transactions with a combined value of $2.4 billion for the first six months of 2012, compared with 38 transactions Australia-wide with a combined value of $2.4 billion for the first six months of 2011.
Net effective rental growth was positive in all markets over the past 12 months, with the exception of the Melbourne CBD which recorded a decline, despite positive net absorption in this market.
“Across the board, we are seeing soft tenant demand in our CBD office markets, but this is not being reflected in investment demand, which, in general, is very strong,” says John Marasco, Colliers International managing director of investment services.
Simon Hunt, Colliers International managing director of office leasing, says improved levels of tenant demand are being recorded nationally. “In the first half of the year we saw the gap between mining and non-mining driven markets widening, however, based upon an upswing in enquiry during July, we believe the disparity is unlikely to become any more pronounced in the second half of the year,” Hunt says.
“There are still deals happening in well-positioned and well-presented assets, with options that provide quality fit-outs requiring minimal adjustment leasing well, particularly up to 2,000 square metres
“Despite widely publicised cuts in the finance, retail and manufacturing sectors, the Australian unemployment rate fell in July and is currently at 5.2%. This has been reflected in positive net absorption in all CBD office markets.”
The highlight over the first six months of the year has been Canberra, which has recorded “outstanding investment growth”.
Marasco said Canberra CBD had shown exceptional performance over the first half of 2012, with a marked increase in foreign investment propelling total sales volumes to more than twice the amount record over the entire 2011 calendar year.
“This is the highest volume of foreign transactions in Canberra over the past four years,” Marasco says, with investors particularly attracted to ‘green’ buildings –highly sought after by tenants and in plentiful supply in Canberra.
About 82% ($308.89million) of the total sales volumes in Canberra ($504.07million) were to offshore investors, with the remainder bought by the government.
Steady investor interest has meant that yields for A Grade assets in Canberra have remained unchanged over the last two years, while B Grade assets have reached the bottom of the market cycle in over the first half of 2012.
Recent sales of such assets is 50 Marcus Clarke in Canberra, a 6-Star Green Star and 5 Star NABERS building which sold to CIMB Trust Capital, a Malaysian investor for $226 million - the highest Canberra sale in four years.
“Importantly, it had a 15-year lease to a Government tenant which is another key attraction in the Canberra market – secure cash flow is always in demand.”
Average A-grade net face rents in the Canberra CBD range from $375 to $425 per square metre with yields ranging from 7% to 8%.
According to Colliers, over the next six months eight buildings, comprising around 141,000 square metres of space, are expected to be delivered in the Canberra region with the biggest project being the ASIO Headquarters in the suburb of Parkes currently under construction and which will add 40,000 square metres of space to the Canberra market - representing 26% of the overall new supply anticipated to be delivered over the next twelve months.
A new office development at the St. John’s Ambulance site at 18 Canberra Avenue providing nearly 10,000 square metres of office space has been fully leased to the Department of Human Services. It is being developed by the Doma Group and due for completion in the second half of 2012.
For transactions above $20 million Melbourne had the leading tally of $629.5million, compared to $478.6million of sales recorded in the Sydney CBD.
In the Brisbane CBD, various investor types, namely institutions and foreign buyers, made approximately $408.5million worth of major purchases in the first half of 2012.
Investment-led economic activity in Perth persisted, despite a reported slowing of economic growth in China and a trouble-plagued European Union.
There had been four major transactions in the Perth CBD for the year-to-date, with a total value of $276.3million, with <a href="https://www.propertyobserver.com.au/news/st-georges-terrace-perth-paved-with-bronze-as-office-block-sells-but-for-less-than-last-time/2012082756264">another sale</a> yesterday.
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Government leases draw offshore investors to Canberra in strong six months of CBD office investment: Colliers

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On the one hand, increasing the ability of prospective home owners to get a foot hold in the market is admirable. After all, home ownership in Australia is all but considered a right of citizenship. However, to date, the only way governments have done so is to encourage greater debt levels by way of incentives, lower loan-to-value ratios, negative gearing, low interest rates and so forth.
Consequently, even overpriced homes have looked tempting to emotionally led home buyers who’ve heavily invested their future wealth and income into the principal place of residence. They – along with investors – were more than eager to take advantage of the pre-GFC decade-long property boom stimulated principally by debt. According to RateCity, from a random selection of more than 2,000 home loans in mid-2008, more than a quarter had a loan-to-value ratio of 100% – LVR’s now rarely encountered.
However, the above policies that increased funding without adequate investment in infrastructure to ease supply have pushed property ownership (despite the health of the economy) out the reach for an increasing number of would-be home buyers. We’re now facing a situation where the cost of living and subsequent debt levels against housing are an issue of growing concern.
For market watchers, reading the terrain ahead is somewhat clouded by the emotional aspect to property, hence why so many mis-forecast the measure of percentile change in their predictions.  The essential need for shelter, along with our creative capacity to make the home “a castle”, pins a far greater emphasis on consumer sentiment.
Each sale is the result of a carefully negotiated contract between two parties with differing needs and priorities.  In most cases, it’s a long way from being just a simple business arrangement and shouldn’t be classed as such.  Furthermore, because each property marketed has its own intrinsic qualities – which are valued differently from buyer to buyer – trying to lump residential housing alongside stocks and shares, for example, leads to errors when reading and analysing statistics.
The latest data from Residex has indicated that Australia-wide, there’s been a marginal return to growth in the house-and-land market. The news is often jumped upon as a positive sign of recovery.  However, with overall turnover back at levels not seen since the 1990s, how can we herald it as such?
Residex recorded a marginal improvement in transaction figures, however, not significant enough to prove we’ve turned a corner.  Therefore, the figures feeding into the median are representative of a comparatively small composition of properties selling and most likely stimulated by home buyer sentiment.  Broadly speaking, buyers are still taking a back seat, first-time buyers are hamstrung by stricter lending conditions, and increased supply isn’t providing feasible or affordable options to ease the consequential stagnation.
As an outsider – looking at Australia’s current environment of low interest rates, broadly dormant house prices, coupled with the “on paper” health of the economy – you’d be forgiven for wondering why overall transaction figures are so low. As a home buyer however, the increasing cost of living, as well as a general unease about the future of the economy – despite government and RBA insistence of a prospective “lucky country” outlook – is starting to bite.
Consumer sentiment is further hampered when there’s more circulating disagreement regarding the “boom” or “not so boom” cycle in the resource industry than there is surrounding residential property movements.  It’s not helping reassure Australian buyers or sellers of future market stability or job security.
As if we need further evidence of the above fact, the predominant headline from last week – picked up by every major news outlet – was the significant increase of Australian home owners <a href="https://m.smh.com.au/domain/real-estate-news/home-owners-raid-super-to-pay-mortgage-20120818-24fda">seeking access to their super</a> to fund outstanding home loans.  There’s been a 25% rise in claims between 2011-12 totalling $99.38 million. It’s a worrying statistic.
Meanwhile, the ABS has recorded a 0.1% drop in owner-occupier housing finance for the month of June ,and Westpac’s Consumer Sentiment Survey indicates a drop of 2.5% in August.
 
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There’s general disgruntlement with the current government and as far as the property industry is concerned there remains a healthy standoff between vendor expectation and buyers. Consequently, those wanting to upgrade or downsize are finding themselves unable to make a move through lack of buyer activity and as our population increases, this is causing a mismatch of ownership as downsizers hold onto property too big for their needs and families struggle with an inability to find suitable accommodation in which to upgrade.
The recent census proved the continued downward trend of home ownership figures, which – should it continue – could result in 50% of the population renting within a generation. Along with this, the current strain on both available and affordable rental accommodation is locking a significant proportion out of the property market for the foreseeable future, with renters struggling to service increasing yields – up 50% on the last census figures.
Home owners are also under pressure – median mortgage payments as a percentage of median household income are also on the rise.  ABS data indicates a 4.5% increase since 2006, currently above the broadly accepted stress level of 30%. To cut to the chase – residential property is too expensive for a growing majority – with the cost of shelter depicting more of a ball and chain than a “dream”.
Pundits in the financial and property sphere tend to pump the proposal that all we need to spike a return to growth is a lift in consumer sentiment to enable Australia to get back to its pre-GFC trajectory. However, when you consider the data above, there are some worrying rumblings under the surface that are not going to disappear when the clouds clear.
Whether you see the cup as half full or half empty will no doubt depend on personal circumstance.  We’re not currently looking at market collapse of 40% or so, as witnessed the USA or parts of Europe, due to relatively stable employment.  According to Finch Ratings, default rates are still low by world standards despite a marginal increase Queensland – up 18 basis points to 1.6%. However, the low numbers transacting on property are a concern and producing figures not dissimilar to countries in more dire straits – countries that have witnessed a 40% drop in values.
While a loss on the balance sheet of property prices would cause pain to the economy, the catch-22 is that high property prices are equally unfavourable – increasing the cost of living and leaving less in the pocket for wealth-creating projects to stimulate greater economic recovery.
Australia currently has the world’s highest household debt-to-annual disposable income at around 150%, and despite the movers and shakers in government telling us it’s OK based on debatable “responsible” lending practices, you have to wonder: what will happen when Australia can no longer shelter itself behind a mining boom?
The RBA is not ignorant of the risks outlined above, the fact that is has chosen to address the subject in detail in this year’s annual conference  <a href="https://www.rba.gov.au/publications/confs/2012/index">‘Property Markets and Financial Stability’</a> outlines that lessons reaped from booms and bust cycles in other countries are bringing the risks associated with our highly leveraged housing market to the forefront.
One of the areas addressed in detail is the housing shortage.  It was noted that cities producing an adequate supply of affordable accommodation in the USA had experienced lower long-term inflation in house prices.  The example offered in the study was Atlanta – however, you could equally cite Dallas Fort-Worth.
In 1981 both cities were of a similar size and a similar population growth trajectory as Sydney and Melbourne, yet both Dallas and Atlanta provided cheap land on the outskirts of their city boundaries and unlike Australia, developed adequate infrastructure at the same time (train lines, schools, hospitals etc) to entice their growing population.
In Australia, the limited affordable options open to first-time buyers have been by way of poor planning policies coupled with a lack of adequate investment in infrastructure. Often, the only way home buyers and investors can be incited to soak up the oversupply of “Lego” houses or high-rise rabbit hutches is when they’re lured with generous off-the-plan or new home incentives. Incentives that a significant number regret taking advantage of, when a few years later they find themselves stuck in nowhere land with little capital growth and three-hour commutes into their places of work.
The debate is both endless and tiring, and yet we never seem to move past first post. As always the most vulnerable to be hit are would-be buyers and those who reach retirement either renting or still servicing hefty mortgage repayments.  If we continue on our current path we face some undeniable certainties – certainties an adjustment in interest rates, or “talking up” the economy, will not change.
While some may be satisfied with a life living in rental accommodation rather than opting for ownership, Australia doesn’t have any “long-term” rental strategies to provide this security and protect against rising yields.
You can’t solve the dilemma by building new homes first-home buyers can’t afford to purchase or that are located in areas not suitably supplied with enough essential amenities to inspire relative demand. Furthermore, according to the Australian Taxation Office, self-managed super funds are now the “largest and fastest-growing segment of the super industry” and corresponding data proves a large proportion of this wealth is invested in established residential property – totalling over $14 billion.  In light of this, investment policies affecting the housing sector need to come under greater scrutiny, especially as they predominantly encourage activity in the established market rather than promoting regional growth and investment.
Like it or not, a core part of any housing affordability strategy needs to focus on driving down costs in areas prone to inflation due to heated demand via stimulation in the investment or home buyer sector. There’s inevitably going to be a growing need for social housing and therefore this needs to be integrated within the framework as well as tacking inevitable problems of social residualisation.
Australia once had a dream – a dream for the “right of all Australian people to have access to (land) at fair prices”. However, unless we seriously address the issues above and make serious moves to lower the cost of living and price of housing - that once held dream will become an “unobtainable nightmare” – effectively placing a huge burden on government assisted housing and our future ability to prosper and grow.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
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