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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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<img src="/images/2014/04/30/Carpinelli-april-28profile.jpg" alt="" style="float: right;">Name: Rino Carpinelli
Position: Managing director
Company: Savills South Australia
Office location: Adelaide, SA
How long have you been in the industry?
In total approximately 33 years. 24 of those years with Savills, nine years with the Coles Group.
What’s happening in the area you specialise in?
I specialise in the capital transaction area which involves the sale of larger scale CBD office buildings and Shopping Centres. Adelaide is becoming an attractive market to invest in particularly when you consider the yield spread on quality leased investments relative to property sales in other states of Australia. At the moment, we are talking with a number of interested parties looking to invest in South Australia and this should continue as opportunities are becoming scarcer in some of the larger capital cities.
What is the most interesting property you have sold?
The most interesting property I have sold is Adelaide Central Plaza here in Rundle Mall, SA which is home to the David Jones Department Store. At the time it was a real leading edge, high quality retail facility and I am pleased to say that it maintains a fantastic presence in our city today. We ran an international campaign in conjunction with our Sydney office at the time and it showcased the opportunity and Adelaide to many investors.
What are the ingredients to being successful in your job?
I believe there are two ingredients that you need to be successful.  Firstly, you need to understand the market and secondly you need to be an outstanding relationship builder to be very successful.
What aspects of your role do you enjoy the most?
I particularly like the fact that every day is different and also love the interaction that I have with our team and clients.
Where would you invest a spare $750,000?
I would use a spare $750,000 to invest in a well leased retail property that was anchored by a supermarket and a few specialty stores.
Which football team do you support?
Port Power (Port Adelaide)
What’s your favourite app or techno gadget?
Financial Review app.
How do you use social media?
I enjoy <a href="https://au.linkedin.com/pub/rino-carpinelli/2b/76a/89a" target="_blank">LinkedIn</a> which has been great to re-connect with people in the industry.
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kjiminez-eaYKfU7qd2

In profile: Savills South Australia's managing director, Rino Carpinelli

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For all the talk of heat in the market, there are some owners who just can't get their properties to budge.
SQM Research has assembled a list of the most heavily discounted properties on the market. Some have been discounted as much as 38%, while another has been on the market for close to five years.
<ol>
<li>
<a href="https://www.realestate.com.au/property-acreage+semi+rural-tas-campania-111286855" target="_blank">747 White Kangaroo Road, Campania, Tasmania <img src="/images/2014/04/30/white-kangaroo-valley-april-28.jpg" alt=""> </a>This luxury country estate has been largely ignored by buyers since it was put up on the market 753 days ago. Despite willing to negotiate from $1 million (down from $1.6 million), vendors have had no luck. The seven bedroom, four bathroom trophy home is set on 97.91 hectares of land. Days on market: 753 Price reduction: 38% Current asking price: $1,000,000 plus 
</li>
<li>
<a href="https://www.realestate.com.au/property-house-vic-cranbourne-113902211" target="_blank">32 Virginia Court, Cranbourne, Victoria <img src="/images/2014/04/30/cranbourne.jpg"> </a>A three bedroom home in Melbourne’s outer south east has been sitting on the market for more than 10 months. Now seeking offers over $250,000, vendors have been struggling to attract interest in the property. Cranbourne’s median house price for March was $275,000. Days on market: 300 Price reduction: 36% Current asking price: $250,000 
</li>
<li>
<a href="https://www.realestate.com.au/property-acreage+semi+rural-nsw-matcham-113909755" target="_blank">22/138 Coachwood Road, Matcham, New South Wales <img src="/images/2014/04/30/matcham.jpg"> </a>Despite its large size, northerly aspect and valley views, this Matcham house has been unable to attract attention from buyers. The five bedroom house includes ensuites for three bedrooms and two additional bathrooms. There is a large heated pool and spa in addition to the multiple indoor entertaining areas offered. Days on market: 329 Price reduction: 34% Current asking price: $1,150,000 
</li>
<li>
<a href="https://www.homesales.com.au/invest/21-cotton-court/hs536085.aspx" target="_blank">21 Cotton Court, Strathalbyn, South Australia <img src="/images/2014/04/30/strathalbyn.jpg"> </a> After almost three years on the market, this three bedroom offering in the South Australian town of Strathalbyn has been discounted by 32%. The 1900s style house was purchased by the current vendors for $118,000 in 1995. Days on market: 987 Price reduction: 32% Current asking price: $339,000 
</li>
<li>
<a href="https://www.realestateview.com.au/Real-Estate/1-23-albuera-street-battery-point/Property-Details-buy-residential-6948697" target="_blank">1/23 Albuera Street, Battery Point, Tasmania <img src="/images/2014/04/30/1-23-Albuera-Street-Battery-Point-TAS-7004-Real-Estate-photo-8-large-6948697.jpg"> </a>This luxury renovated apartment offering in Hobart is situated in the former Albuera Art School. Vendors are seeking offers over $1.5 million. The property has three double bedrooms, with polished timber floors throughout. After two and a half years on the market, the asking price has been cut significantly from its initial $2.2 million tag. Days on market: 915 Price reduction: 32% Current asking price: $1,500,000 
</li>
<li>
<a href="https://www.realestateview.com.au/Real-Estate/99-green-point-drive-green-point/Property-Details-buy-residential-4723493" target="_blank" style="line-height: 1.3em;">99 Green Point Drive, Green Point, New South Wales <img src="/images/2014/04/30/green%20point%20drive.jpg"> </a>A contemporary home in the New South Wales Central Coast has been discounted by 31% after more than three and a half years on the market. It has four bedrooms, with an en suite with spa attached to the master bedroom. There is also an outdoor covered spa at the back of the property.  Days on market: 1320 Price reduction: 31% Current asking price: $795,000 
</li>
<li>
<a href="https://www.realestate.com.au/property-house-sa-aldinga+beach-108349256" target="_blank">230a Lower Esplanade, Aldinga Beach, South Australia <img src="/images/2014/04/30/image2%202.jpg"> </a>Vendors have been renting out this beachside home for $300 per night during the high season while trying to attract buyers. The three bedroom, two bathroom house, once featured in Australian House and Gardenmagazine, has been on the market for over two years.  Days on market: 845 Price reduction: 30% Current asking price: $970,000 
</li>
<li>
<a href="https://www.realestate.com.au/property-acreage+semi+rural-qld-deception+bay-116642051" target="_blank" style="line-height: 1.3em;">100 Blue Pacific Road, Deception Bay, Queensland <img src="/images/2014/04/30/dcemption%20bay.jpg"> </a>A rural redbrick house north of Brisbane has failed to sell after being discounted from $1 million to $700,000. It’s been on the market for longer than any other home on the list, with vendors trying to sell for almost five years. It was purchased for $500,000 by the current owners in 2005. The four bedroom house is set on 5.2 hectares.  Days on market: 1,797 Price reduction: 30% Current asking price: $700,000 
</li>
<li>
<a href="https://www.propertyobserver.com.au/https://www.mcgrath.com.au/buy/house-pearl-beach-nsw-2256/173442" target="_blank" style="line-height: 1.3em;">4 Coral Crescent, Pearl Beach, New South Wales <img src="/images/2014/04/30/coral%20crescent.jpg"> </a> The owners of this beachfront property are seeking offers over $3 million. The luxury home with four bedrooms and three bathrooms sits on an 816 square metre plot. The house has a wraparound balcony with two outdoor entertaining areas. The premium offering is well above that offered in much of the suburb, with houses in Pearl Beach selling for a median price of $742,000 in March. Days on market: 462 Price reduction: 29% Current asking price: $3,000,000
</li>
<li>
<a href="https://www.realestateview.com.au/Real-Estate/6-127a-hopkins-street-moonah/Property-Details-buy-residential-6567541" target="_blank">6/127a Hopkins Street, Moonah, Tasmania <img src="/images/2014/04/30/6-127A-Hopkins-Street-Moonah-TAS-7009-Real-Estate-photo-1-large-6567541.jpg"> </a>
<a href="https://www.realestateview.com.au/Real-Estate/6-127a-hopkins-street-moonah/Property-Details-buy-residential-6567541" target="_blank"> </a>At the other end of the market, this one bedroom unit in Hobart’s northern suburbs is currently going for $170,000. The unit is being marketed towards first home buyers or investors. After three months on the market, vendors have cut the brick apartment’s price by almost a third. Days on market: 89 Price reduction: 29% Current asking price: $170,000
The top 10 discounted properties list is taken from <a href="https://sqmresearch.com.au/" target="_blank">SQM Research'</a>s latest newsletter.
</li>
</ol>
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jrichardson-uRX5hFdKfN

The top 10 discounted properties on the market

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Confidence in the outlook for the construction industry has hit its highest level since March 2008, although it will take time for improving conditions to translate into new jobs in the sector, a national survey has revealed.
Confidence improved in the March quarter across all measures of business activity and expected profitability, the Master Builders National Survey of Building and Construction, released last week, found.
Builders surveyed reported improvements in sales contracts, display centre enquiries and work on books compared with the previous quarter.
The index for builders’ own business activity rose in March for the third consecutive quarter, reaching 62.8, well above the neutral 50 point mark. This indicated builders expected business activity to pick up over the next six months, Peter Jones Master Builders chief economist said.
“This is particularly reflective of the residential building sector’s response to low [interest] rates and is an encouraging trend,” Jones said.
The Master Builders Association expects improvements in the outlook for work to increase margins and profitability, allowing builders to consider hiring employees and sub-contractors.
However, the index for hiring intentions in the sector rose to only a neutral level of 50.2, indicating most employers surveyed would keep headcounts level in the next six months. Demand for apprentices increased slightly, with 22.2% saying they planned to hire new apprentices.
The survey showed the availability of labour in the sector has increased, with builders having little difficulty in finding staff across all categories of worker. There were particularly high levels of availability of electricians, painters and building consultants.
The Master Builders Association noted that as the business cycle turned and conditions improved, it was likely that builders would once again experience some difficulty in finding certain types of sub-contractors and employees.
A separate study by the Department of Employment, also released last week, showed the number of job advertisements for construction trade workers increased by 2% in March compared with the previous month.
Over the year to March 2014, job ads for construction workers were up by 33.7%, according to the Internet Vacancy Index, which counts online job ads newly lodged on SEEK, MyCareer, CareerOne and Australian JobSearch during the month, although the increase came from a low base.
National availability of labour (index)
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="154">
Role
</td>
<td valign="top" width="154">
Sep-13
</td>
<td valign="top" width="154">
Dec-13
</td>
<td valign="top" width="154">
Mar-14
</td>
</tr>
<tr>
<td valign="top" width="154">
Site Manager
</td>
<td valign="top" width="154">
23.7
</td>
<td valign="top" width="154">
34.8
</td>
<td valign="top" width="154">
29.3
</td>
</tr>
<tr>
<td valign="top" width="154">
Project Manager
</td>
<td valign="top" width="154">
33.7
</td>
<td valign="top" width="154">
33.9
</td>
<td valign="top" width="154">
26.0
</td>
</tr>
<tr>
<td valign="top" width="154">
Foreman/Supervisor
</td>
<td valign="top" width="154">
32.7
</td>
<td valign="top" width="154">
34.1
</td>
<td valign="top" width="154">
23.9
</td>
</tr>
<tr>
<td valign="top" width="154">
Concretors
</td>
<td valign="top" width="154">
16.3
</td>
<td valign="top" width="154">
22.9
</td>
<td valign="top" width="154">
19.0
</td>
</tr>
<tr>
<td valign="top" width="154">
Bricklayers
</td>
<td valign="top" width="154">
18.3
</td>
<td valign="top" width="154">
31.6
</td>
<td valign="top" width="154">
18.5
</td>
</tr>
<tr>
<td valign="top" width="154">
Steel Fixers
</td>
<td valign="top" width="154">
17.4
</td>
<td valign="top" width="154">
26.8
</td>
<td valign="top" width="154">
15.3
</td>
</tr>
<tr>
<td valign="top" width="154">
Office Staff
</td>
<td valign="top" width="154">
16.3
</td>
<td valign="top" width="154">
18.4
</td>
<td valign="top" width="154">
15.3
</td>
</tr>
<tr>
<td valign="top" width="154">
Tilers – Wall and Floor
</td>
<td valign="top" width="154">
15.6
</td>
<td valign="top" width="154">
26.6
</td>
<td valign="top" width="154">
14.7
</td>
</tr>
<tr>
<td valign="top" width="154">
Plaster Fixers
</td>
<td valign="top" width="154">
14.8
</td>
<td valign="top" width="154">
17.1
</td>
<td valign="top" width="154">
13.8
</td>
</tr>
<tr>
<td valign="top" width="154">
Carpenters
</td>
<td valign="top" width="154">
20.3
</td>
<td valign="top" width="154">
22.2
</td>
<td valign="top" width="154">
13.7
</td>
</tr>
<tr>
<td valign="top" width="154">
Scaffolders
</td>
<td valign="top" width="154">
11.1
</td>
<td valign="top" width="154">
15.9
</td>
<td valign="top" width="154">
11.3
</td>
</tr>
<tr>
<td valign="top" width="154">
Labourers
</td>
<td valign="top" width="154">
12.5
</td>
<td valign="top" width="154">
21.0
</td>
<td valign="top" width="154">
10.3
</td>
</tr>
<tr>
<td valign="top" width="154">
Tilers – Roof
</td>
<td valign="top" width="154">
12.3
</td>
<td valign="top" width="154">
14.1
</td>
<td valign="top" width="154">
9.8
</td>
</tr>
<tr>
<td valign="top" width="154">
Building Consultants
</td>
<td valign="top" width="154">
14.3
</td>
<td valign="top" width="154">
16.5
</td>
<td valign="top" width="154">
9.2
</td>
</tr>
<tr>
<td valign="top" width="154">
Painters
</td>
<td valign="top" width="154">
9.6
</td>
<td valign="top" width="154">
17.1
</td>
<td valign="top" width="154">
8.2
</td>
</tr>
<tr>
<td valign="top" width="154">
Electricians
</td>
<td valign="top" width="154">
15.1
</td>
<td valign="top" width="154">
15.3
</td>
<td valign="top" width="154">
7.1
</td>
</tr>
</tbody></table>
Note: Respondents are asked about the degree of difficulty in finding a range of subcontractors/employees. The higher the index, the more builders are experiencing large difficulty in finding employees or sub-contractors. A low index reading indicates slight or no difficulty in finding subcontractors/employees.
Source: Master Builders Association 'National Survey of Building and Construction' (March 2014).
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zfielding-GvX3Uq9KTa

Confidence in construction industry at highest point since GFC

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The RBA recently confirmed a neutral bias, when it announced its latest decision to keep the official interest rate on hold.
Inflation appears to be relatively steady — and still well within the RBA's stated band for comfort.
Furthermore, the feedback from the residential market is that house prices in Sydney and Melbourne now appear to be levelling out.
The RBA was keen to see the residential market slow somewhat. However, if that doesn't remain the case, it may need to look to increase in interest rates.
In any event, the RBA has now signalled the next direction will be upwards from here. And the first sector to be affected will be residential property, as mortgage payments increase.
What does that mean for commercial property? 
As the interest rate rises, consumers now have less to spend. And this quickly impacts upon retail sales — which in turn, can adversely affect the appeal of retail property as an investment.
Generally, this decline in sales tends to occur with a three to six months time-lag, from when interest rates start to rise.  
Right now, retailers are already reeling from poor trading profits— through a combination of the impact of growing online sales, plus the recent influx of competition from some major overseas traders.
Therefore, any increase in interest rates from here will only serve to further affect the profitability of an already struggling retail sector.
<blockquote>
Any increase in interest rates from here will only serve to further affect the profitability of an already struggling retail sector.
</blockquote>
As you will appreciate, the industrial sector is principally logistics and distribution. Therefore, as retail activity slows, you generally see a flow-on effect for industrial storage space. And previously, this has occurred with a further lag of about a six to nine months.
However, with greater diversity of users now seen within the Industrial sector, any impact is likely to be far less severe than before.
How will the office sector be affected?
As interest rates begin to rise, they will have little (if any) effect upon the office markets around Australia.
This was apparently confirmed by an 80-year study conducted by the BIS Shrapnel … which confirmed there was actually no correlation between interest rates and the well-being of the office sector.
Rather, any fluctuations are driven purely through demand and supply of space — which is primarily related to the health (or otherwise) of the Australian economy.
Bottom line: Despite the intrinsic appeal of retail investment property, you need to be mindful of the underlying strength of your tenant (and the lease covenant) going forward.
Industrial property will prove to be a solid investment. However, your real growth will be seen within the office sector — both in the CBD and suburban office markets, which are currently heating up.
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chrislang-EQKojcgJPV

Commercial property and interest rates

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Think about the people you know who have bought investment properties. Chances are that at least one of them claims to have bought their property ‘below market value’.
Strictly speaking, it’s impossible to buy below market value, because a property’s market value is ultimately determined by one thing: the price you pay for it. When someone says they’ve bought below market value, what they really mean is that they purchased the asset for a lower price than other properties in the area, or that they bought it at a lower price than would have been possible six or 12 months previously.
Let’s take the first scenario. If you buy a property for less than others in the area are worth, that doesn’t mean you’ve secured a bargain. It may just mean you’ve bought a second-class asset. For example, if other properties in the area have sold for around $450,000, but you buy one for $400,000, perhaps its value has been compromised by a poor structural condition or noisy main road location.
Under the second scenario, buying a property for less than it would previously have been worth doesn’t necessarily mean that you have bought well. It could simply mean that property values in the area are declining. There are two possible reasons for this. First, there’s less demand than supply. In this situation, vendors are competing strongly for the attention of fewer buyers, so they’re more likely to discount their asking price.
If you buy into a market like this, it’s vital to ask yourself two questions: how much more will prices fall, and how long will it be until the trend reverses? In other words, how much money will you have to lose, and for how long, until your asset starts working for you?
The second possible reason for buying a property for less than its previous market value is that the asset has a low land-to-asset ratio – in other words, the building makes up the bulk of the asset’s value.
Land appreciates (grows) in value, whilst buildings depreciate. If you buy a property for less than its original sale value, chances are that the building’s value is falling faster than the land’s value is growing.
The net result? An asset that will continue to lose value after you’ve purchased it, until all the depreciation has been used up. Meanwhile, you’re paying holding costs like interest, rates and maintenance, on a property that’s delivering nothing in return.
Instead of buying property that is cheap and will remain so because of poor location or high depreciation, focus instead on researching the market to identify properties that represent good investment value.
What does this mean?
First, it refers to the quality of the asset. Properties in established areas with adequate infrastructure like public transport, shopping precincts and leisure facilities tend to have a limited supply of properties in the face of strong demand from investors, home buyers and tenants alike. This supply–demand ratio increases land value and improves capital growth potential.
Second, good investment value means researching the local market to find out the recent sale prices for properties of comparable land size, number of bedrooms and degree of renovation. Once you have determined what you believe is the property’s fair value as an investment asset, stick to that limit and walk away if the bidding or negotiation goes beyond it. Overpaying never represents good investment value, no matter how high the asset’s quality.
It’s true that high quality assets generally cost more than poor ones, so if your research shows that you may be priced out of a certain type of property, it’s better to compromise on the size of the accommodation (e.g. two bedrooms instead of three) rather than the location.
Mark Armstrong is a director of <a href="https://www.ipropertyplan.com.au/">iProperty Plan</a>, which provides independent analysis and tailored advice to investors and home buyers.
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marmstrong-sd3emVLPPb

Buying ‘below market value’: What it really means

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Prime Minister Tony Abbott has ruled out making changes to the eligibility or indexation of the age pension for the next three years.
Responding to <a href="https://www.smartcompany.com.au/legal/politics/41665-hockey-s-budget-roadmap-industry-assistance-age-pension-and-welfare-payments-on-treasurer-s-hit-list" target="_blank">speculation</a> that the government would seek to change pension rules in next month’s budget, Abbott said in a <a href="https://www.pm.gov.au/media/2014-04-29/address-sydney-institute" target="_blank">pre-budget speech at the Sydney Institute</a> yesterday he would keep his 2012 pre-election promise not to change the age pension for now.
“To keep our commitments, there will be no changes to the pension during this term of parliament but there should be changes to indexation arrangements and eligibility thresholds in three years’ time,” said Abbott.
However, the government looks likely to proceed with its <a href="https://www.smartcompany.com.au/legal/politics/41533-are-you-ready-to-work-until-you-re-70-hockey-flags-plans-to-raise-retirement-age" target="_blank">plans to raise the retirement age to 70</a>, as previously flagged by Treasurer Joe Hockey. <a href="https://www.afr.com/p/national/abbott_plan_for_welfare_cuts_to_ZrCS3PW2TTq3asUaOAN1II" target="_blank">Fairfax reports</a> the change will come into effect around 2029.
“I want to assure vulnerable people that the age pension won’t be less tomorrow than it is today and that people turning 65 tomorrow are certainly not going to have to wait five years to retire,” said Abbott.
“Still, with four out of five seniors on the pension, the number of workers per retiree dropping from five to three by 2050, and more than 1,000 people becoming eligible for the age pension every single week, long-term reform is essential and unavoidable,” he said.
Abbott used the occasion to confirm some inclusions in his government’s first budget, including the introduction of co-payments for GP visits and cuts to disability and other welfare payments and family tax benefits.
The Prime Minister did not rule out a temporary increase in personal income tax, the so called ‘debt levy’, which has been <a href="https://www.smartcompany.com.au/legal/politics/41685-debt-levy-on-income-tax-would-hit-small-business-the-hardest" target="_blank">slammed by business groups who have warned that it would hit small businesses the hardest</a>.
However, Abbott said the budget will affect all taxpayers and that if implemented the measures included in the budget will “make personal tax cuts much more likely in four or five years’ time”.
“The budget pain will be temporary but the economic improvement will be permanent,” he said. “I can assure you that everyone will be involved, including high income earners such as members of parliament.”
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
Photo courtesy of Wikipedia/Creative Commons.
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jake-cSmGT7VXVf

Abbott: No changes to age pension for three years

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The Australian Securities and Investments Commission has banned celebrity chef Justin North and his wife Georgina North from managing corporations following their involvement in the failure of three companies.
ASIC announced today the Norths have been banned for two years and 18 months respectively, effective from 4 April, 2014.
The ASIC ban follows the <a href="https://www.smartcompany.com.au/growth/economy/26274-the-heat-is-on-in-the-kitchen---acclaimed-sydney-restaurant-group-with-150-staff-collapses" target="_blank">appointment of liquidators to award-winning Sydney restaurant Becasse</a> in June 2012 and to Etch Restaurant and North Food Catering in July 2012. 
The businesses employed 150 staff at their peak but administrators Jim Sarantinos and John Melluish of Ferrier Hodgson found the Norths’ "rapid growth" led to a "number of underlying business issues".
The regulator found the Norths failed to exercise their powers and discharge their director's duties with the requisite degree of care and diligence.
ASIC found this failure resulted in “large deficiencies” owed to creditors totalling a combined sum of over $7 million for the three companies.
ASIC Commissioner Greg Tanzer said in a statement: “ASIC's power to disqualify directors of failed companies is an important preventative measure used by ASIC to safeguard the public interest.”
North was born in New Zealand and trained in New Zealand, Australia, France and the UK before returning to Australia in 1999.
He worked under chef Liam Tomlin at Sydney's Banc Restaurant and moved through the ranks of the kitchen to the role of head chef before venturing out with his wife, who was the sommelier at Banc, to open Becasse.
North has also released two cookbooks and is well known from his appearances on MasterChef.
<a href="https://www.smartcompany.com.au/growth/economy/26274-the-heat-is-on-in-the-kitchen---acclaimed-sydney-restaurant-group-with-150-staff-collapses" target="_blank">When Becasse initially went into administration</a> North posted on Twitter from his account @JustinBecasse: "Thank you everyone for your support, to confirm Georgia &amp; I have put Becasse Group into voluntary administration with a view to restructure.
"In the meantime it is business as usual. We will post more updates soon.
"The support and messages have been overwhelming, sorry we haven't been able to respond to all, come by and eat with us soon."
The restaurant closed shortly afterwards and North’s Twitter account is no longer active.
Persons banned by ASIC have a right to appeal their banning to the Administrative Appeals Tribunal, and may lodge their appeal within 28 days.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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cwaters-YrtBR88nBe

ASIC bans celebrity chef Justin North after $7 million restaurant collapse

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Before reading this article, it’s crucial that you understand <a href="/expert-insights/your-weekly-how-to-calculating-rental-yield">what your rental yield actually is</a>, and therefore the two dynamics that impact upon it.
These include (for gross rental yield): the price, and the amount of rent coming in, and (for net rental yield) your expenses. It's also worth knowing <a href="/expert-insights/how-to-use-the-rental-yield-statistic">the uses of the rental yield</a>.
Firstly, those in areas where rental demand is heading down will likely want to focus more on <a href="/expert-insights/investing/how-to-keep-good-tenants">tenant retention</a> and keeping a close eye on the market, including the vacancy rate. For those in stable areas who think their properties may be able to perform more strongly, there are certainly opportunities.
GETTING IN FOR A LOWER PRICE
We will touch on this point briefly. Over the years, Property Observer has covered <a href="/expert-insights/buying/the-10-ways-to-negotiate-a-better-deal-in-property-neil-jenman">many articles about negotiating</a> more effectively, <a href="/expert-insights/investing/seven-tips-for-beginning-property-investors">looking for undervalued properties</a> and <a href="/expert-insights/buying/the-dos-and-donts-of-preparing-to-bid-at-an-auction">bidding strategically at auction</a>. If you already own a property, short of selling the investment and absorbing the in/out costs, there’s very little you can do here.
When purchasing an investment property you also want to be aware of the potential up and coming maintenance on the home - this can strongly affect your overall cashflow position as you may end up regularly paying out for repairs and replacements.
If you are, however, looking to buy an investment property, then it’s worth playing with the rental yield equation to note the sizable effect that saving $10,000 on the asking price can have on your overall rental yield, and therefore cash flow situation. Keep this in mind when purchasing.
INCREASING THE RENT
Firstly, to remain competitive, you must not increase the rent beyond what the tenancy market deems acceptable in an area. Your property manager should be able to assist you in keeping your rent at the correct level for the market – and if you are lagging behind, then this is the first area to target to increase the yield.
However, there are reasons why you can increase the rent beyond natural increases in the market. For instance, you could consider one of the following:
<ul>
<li>Improvements A renovation or partial renovation, addition of an air conditioning unit or other outlay can be worthwhile to a tenant. They may be willing to pay more for this change. It’s worth getting your property manager to speak to your tenant, as well as doing a quick search as to the difference between your property and that asking a higher rental price. Are there any areas that you can easily improve? Consider adding bedrooms and bathrooms where possible for a potential uplift in rental return. 
</li>
<li>Adding another dwelling For investors in certain areas, this will be more possible. Those with houses, particularly in outer suburban areas, could consider adding a separate dwelling – such as a granny flat – that can then be rented out separately. Of course, this comes with its own combination of difficulties – such as a reduction of rent on the main house and, potentially, a higher vacancy rate. There can also be a hefty outlay to get a decent build. Here are some <a href="/expert-insights/building/the-four-pros-and-four-cons-of-building-a-granny-flat">pros and cons of this strategy</a>.Some swear by this strategy, while others remain sceptical. 
</li>
<li>Renting the property to multiple tenants Another option is to consider renting the home to a number of properties, perhaps on a room-by-room basis. While this, again, can see higher turnover and higher levels of wear-and-tear, and arguably a lower-quality tenant, you may see it give you the rental yield uplift you desire. 
</li>
<li>Consider turning the property into a holiday rental This is not going to be effective for all property owners, however those with a property in an appropriate holiday area with strong demand may find that the high returns available over the holiday period can push their yield up overall. 
</li>
<li>Furnishing the property This is, again, not a strategy that suits every rental. However, in areas where there is demand for furnished properties, it may suit to deck-out the property yourself. Specific tenants, particularly in shorter-stay locations, are willing to pay a premium for the property to be ready for an immediate move in.</li>
</ul>
Some investors will find that a regular rental income trumps a higher rental yield overall, but a less certain flow of tenants. This is particularly the case if you have <a href="/expert-insights/investing/how-to-keep-good-tenants">good tenants that you want to keep</a>. What have you done to increase the rent, and how effective has this been?
MINIMISING EXPENSES
Lastly, it’s down to minimising expenses. If you do not already know what all the ingoings and outgoings are for each of your investment properties, then you need to do some substantial paperwork to get on track.
Now it’s worth crunching the numbers – are there any areas that you could be saving yourself money with? What is affecting your net rental yield unfavourably? These can be factors that you will not be able to reduce – for instance, property management fees might not be negotiable and you may not want to consider self-managing. However, there are often other costs that you can reduce. For instance, over the past few years of ownership you may have befriended a plumber. Could that plumber offer you a better deal for future repairs? These small changes can help assist with your bottom line.
You might also find that other expenses affecting your rental yield include high interest rates or charges on a loan you haven’t recently assessed. Visit your broker for a loan health check.
YOU MIGHT WANT TO READ
<a href="/expert-insights/investing/the-top-suburbs-for-unit-rental-yield-around-the-country-ultimo-shines">The top suburbs for unit rental yield around the country</a> 
Margaret Lomas' <a href="/expert-insights/investing/how-to-boost-cash-flow-using-your-investment-property">How to boost cash flow using your investment property</a>
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jduke-EHk3XBmHkn

How to boost your rental yield

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In the last 20 years, technology has been a major driver of change in Australia’s real estate industry. But will Google Glass really make a difference to the way we see property?
With Google Glass still months away from an Australian launch, the property industry is already busy predicting how the wearable computer technology will affect the sale and purchase of real estate.
One Biggins &amp; Scott agent in Ballarat who managed to get a hold of the product thanks to an old US postal address told Real Estate Business that he’s used Google Glass to host a virtual tour of a property that was streamed to potential buyers in real time.
Other agents overseas have already begun to market homes using the technology.
{qtube vid:=wHQDcZclcgs}
This recorded tour shows the agent taking a shaky walk through a house. <a href="https://www.telegraph.co.uk/property/propertyvideo/10608043/Google-Glass-will-revolutionise-how-we-buy-houses" target="_blank">Another records agents viewing a property</a> and discussing nearby amenities.
But none of those agents do much more with Google Glass than what is already possible with your standard camera phone. 
Australian real estate agents have been unusually slow to take up video marketing for properties, despite the ease of dissemination on the internet. But according recent sales data from Century 21 Australia, properties the agency promoted with video content sold an average of 27% faster than standard listings.
Century 21 Australia chairman and owner Charles Tarbey said that video listings offer a new method of engagement that was previously only accessible for high end listings.
“Previously, video listings were only a viable marketing option for large, luxury homes but this technology makes video listings accessible for every vendor – whether they are selling or renting a multi-million dollar penthouse, or lifestyle property,” said Tarbey.
“Consumers interact with video listings in a completely different manner to traditional pictorial listings, as they can often be more engaging and are able to be easily shared via social media.”
Century 21 offers video content with a slideshow of listing photos, a voiceover and Century 21 branding, with the listings generally hosted on YouTube, ensuring they are easily shared.
The videos offered by Melbourne real estate agency Marshall White go a step further, featuring filmed video content, as opposed to static images.
Marshall White also offers drone imagery, a new technology allowing buyers to view properties from perspectives that would previously have been inaccessible. Rising drones can capture properties from overhead, while homes that sit on a beach can now be viewed from over the water.
{qtube vid:=CmLisGpZngE}
The premium video offering above is a far cry from the wobbly, relatively low quality footage offered by Google Glass.
Google Glass’s inability to beautify homes means that it’s unlikely to become the primary marketing tool for real estate agents. Filmed footage has been so rarely implemented in Australian real estate for the same reason. For most agents, still photography is still more attractive than the video footage available for the same price.
While some suggest that the Google Glass could be used by agents to quickly look up information to deliver to clients on the spot, this capability already exists on smart phones.
Real estate agents are sales people, who rely on personality and social interaction with the buyer to sell properties. It’s possible that we will one day become acclimated to interacting in-person with Google Glass wearers who shoot off questions to a faraway server while we wait. 
But for many agents, the distraction and the possibility of leaving their buyer cold won’t be worth the trouble. And the “I’ll get back to you” strategy is still a tried and true method to stay in contact with potential buyers.
So while much has been made of Google Glass’s potential as a selling tool, it’s much more likely that the device will come into its own for buyers.
Google Glass will allow offshore or long distance buyers to have a better idea of their potential property than the standard marketing materials or video phone footage. Those engaging a relative or buyer’s agent to inspect properties can ask questions or request a second look at certain features in real time, thanks to Google Hangouts.
The savvy buyers that can attend properties personally will do so. Here, Google Glass will again come in handy. A buyer or buyer’s agent can record their tour of the property and make note of any details to research later – or look them up on the spot. 
A tour of the neighbourhood wearing Google Glass could offer information on local schools, crime demographics, retailers and other properties for the sale in the area, thanks to geo-tagging.
Contracted inspectors could also begin offering Google Glass recorded footage in addition to their written reports for potential buyers. The more comprehensive offering could show the extent of damage for buyers who find it difficult to navigate written reports. 
The benefits of Google Glass will be to buyers, not agents. With rumours that the Google Glass will cost roughly $1,500 in Australia, it’s unlikely that real estate agents will jump on board until prices calm down and the case for Google Glass as an advertising tool strengthens.
But for buyers who have the change to spare, Google Glass could become another valuable way to assess their potential new home.
Photo courtesy of Google.
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Will Google Glass change the face of real estate in Australia?

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GUEST OBSERVATION
Our federal budget is due to be delivered on Tuesday 13 May, 2014 and we are being repeatedly told that there has to be significant cuts to expenditure. Our state budgets will be delivered soon after that date.
In essence it is time for governments to deliver something which is new and helpful to maintain and increase housing stock, but at the same time does not simply drive housing prices higher. This definitely rules out changes to negative gearing as its removal would simply reduce investor activity and available housing stock.
There are two outcomes in our housing markets that are needed:
1. Ensure there is an increase in Australian citizen investment in new housing stock; and
2. Increase the number of first home owners in the market.
The first, in my view, is a state issue
Most of us will have family or friends who have been trying to buy a home and failed because they have been out bid by a cashed-up foreign buyer. One has to ask whether foreign buyers should have equal rights as Australian citizens. I suspect not. That is not to say that foreign buyers are not necessary in our markets, rather they are simply investing in a low risk, very attractive country and for that benefit they should have to pay some type of premium.
Altering our land tax regime would enable us to charge this premium from foreign investors and potentially decrease their activity without necessarily decreasing supply of new stock. This can be done by increasing the land tax payable by non-Australian citizens who own property in our country and at the same time, decrease the rate of land tax charged on property owned by Australian citizens, with all property purchased in the future and currently held, being subjected to these changes. Obviously, the amount of these alterations will need to be modelled and the changes would need to be phased in.
The consequence is clear. Foreign investment activity would be marginally reduced (depending on the altered tax rate applicable to them) and the lower tax rates for Australian citizens should cause increased investment activity by this group. It should also mean that the first home owner may have a better chance of competing when buying.
The second, in my view, is a federal government matter
The first home owner has been forced out of the market simply as a consequence of rising house prices and the consequent level of income needed to support a home loan.
In essence we need to organise things so this group – and everyone buying a property to live in – has adequate cash flow to meet the high home loan repayments. This will particularly be the case when interest rates increase in the medium term.
A relatively simple change to the capital gains tax (CGT) legislation is required.
This change would allow home owners to claim interest deductions on their home loan repayments where they elect to be subject to normal capital gains tax on the profit they make on any future sale of the property. In essence they exchange the right to have their home exempt from capital gains tax in exchange for the right to immediately reduce their taxable income by the interest they are paying on their home loan.
Being brutally honest given the government’s current budget problems they should simply just phase in the removal of the capital gains tax exemption on the family home all together and automatically provide first home owners who buy a new home with the right to claim interest deductions. Politically this might be better for government than altering pension rights and health benefits etc.
Allowing buyers to elect to claim interest as a deduction would mean an improved annual cash flow which will help to make housing more affordable. What is the cash benefit? Well assume someone has a loan of $400,000 and has a tax rate of 22% then the annual benefit at current interest rates would be in the order of $5,000 per annum or roughly about $100 per week.
The impact of this proposal on borrowers as interest rates increase should also not be overlooked. That is, deductibility means that interest rate increases will not have as large a negative impact on our first home owner as they would otherwise. As interest rates increase their deductions increase and their tax liability is reduced. Hence as interest rates rise, defaults on home loans are likely to also be lower.
There needs to be some detailed modelling to work out a progressive phasing in and potentially define a percentage of the interest cost on the home loan that would be allowed to be deductible. Once this is done then a reasonably solid estimate of the cost to the federal budget could be identified.
From any logical perspective, a combination of subjecting all of our owner occupied housing to a form of capital gains tax and allowing our first home owners to access interest tax deductions, does have merit. And provided it is structured in a manner which does not drive housing prices higher, it will also make housing affordable for the next generation.
The negative which could be seen as a benefit by some, is that it would encourage home owners to limit their trading activity in their own home. That is, a home owner would potentially be less inclined to use their home as trading stock and instead use it as a mechanism for wealth generation by buying with the intent of selling following renovation.
In the short-term we are going to be asked to accept some difficult decisions and perhaps the above, implemented carefully by government could potentially soften the perceived blow.
John Edwards is consulting analyst for <a href="https://www.onthehouse.com.au/" target="_blank" rel="nofollow">Onthehouse.com.au</a> and founder of <a href="https://www.residex.com.au/" target="_blank" rel="nofollow">Residex</a>.
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