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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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In an unusual move, Mission Australia and the Business Council of Australia last year <a href="https://www.theage.com.au/comment/are-we-mature-enough-for-a-genuine-tax-debate-20130825-2sjo9">co-authored a piece</a> calling for a mature and open conversation about tax reform. They joined a chorus of voices, from the <a target="_blank" href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCwQFjAA&amp;url=http%3A%2F%2Fgrattan.edu.au%2Fstatic%2Ffiles%2Fassets%2Fff6f7fe2%2F187_budget_pressures_report.pdf&amp;ei=RzMdUrPKCsyfiAfN4oCwDw&amp;usg=AFQjCNHinxucpcUF2nYOLPqyHAyZXTAxMA&amp;sig2=j4rxRSdFQWC6xSixmxPS1A&amp;bvm=bv.51156542,d.aGc">Grattan Institute</a>, to the <a target="_blank" href="https://www.pwc.com.au/media-centre/2013/tax-reform-jul13.htm">CEO of PwC</a>, to <a href="https://www.theage.com.au/comment/full-transcript-saul-eslake-20130812-2rsnr">Saul Eslake</a>, all concerned about structural problems with our taxation system. Government revenues are in trouble, in part, because of the looming end of two great economic booms.
We’re all familiar with the tale of the squandered mining boom but a less familiar narrative is that of the squandered baby boom. Baby boomers are now starting to hit retirement age, striking fear into treasury and health bureaucrats worried about the spiralling costs of health-care and age pensions combined with falling tax receipts.
While increased life expectancy contributes to population ageing, the primary cause in the 20th century was falling fertility rates (number of births per woman). This is important in understanding the boom. An increase in the proportion of the population that is retired (old-age dependents) occurs as a result of a decrease in the proportion of the population that are under working age (child dependents). However, there is a lag between the two which means we have an economic sweet spot that is referred to as the “demographic dividend”, where there are fewer total dependents as a proportion of the population (see the area between the dashed lines in Figure 1).
<a style="font-size: 0.8em;" href="https://c479107.ssl.cf2.rackcdn.com/files/30865/area14mp/ttfgt9bf-1378447095.jpg"><img width="470" src="https://c479107.ssl.cf2.rackcdn.com/files/30865/width668/ttfgt9bf-1378447095.jpg"></a>
<a style="font-size: 0.8em;" href="https://c479107.ssl.cf2.rackcdn.com/files/30865/area14mp/ttfgt9bf-1378447095.jpg"></a>Figure 1: Dependency ratios in Australia 1950-2050. Data points after 2010 are projections based on an intermediate birth rate scenario. Data compiled from https://esa.un.org/wpp/
This is the economic boom provided by the baby boom generation. The historically low total dependency ratio shown in Figure 1 meant that, for a 25 year period, more money was free to be used for discretionary spending and investment. This helped to propel economic growth and drove up incomes – and the effect was even more pronounced because it happened to coincide with major economic reforms. It also helped set high expectations on what the average Australian could afford to buy and the lifestyle they could afford to lead.
Instead of seeing the coincidence of the height of the mining boom and the baby boom as an opportunity to save for the retirement of the baby boomers and to foster industries to shoulder the burden after the inevitable decline of the mining sector, the Howard government put in place permanent income tax cuts. These were extended under the Rudd government. Now that these temporary booms are both coming to an end, those tax cuts are really starting to bite and it is becoming increasingly difficult to adequately fund the services we’ve come to expect from a modern western economy.
We are not yet entering an unprecedented level of dependency. It will take until about 2035 before we return to the dependency levels seen in the 1960s. However, there is clearly a major shift from young dependents to old-age dependents. If the costs were the same and borne by the same people, there would be no problem. But many changes have occurred. The savings from the reduction in family size have been applied to discretionary consumption, including much higher expenditure per child, so the total cost of raising children has actually increased. Little is left for transfer to expenditure on aged dependents.
How will we face this challenge? Will we keep the age pension down near the poverty line and continue to cut other government services in order to pay the rising total pension and healthcare costs as more and more baby boomers retire? Or will we take account of the shift in dependence we see in Figure 1, acknowledge the role that the baby boomers have played in the country’s economic prosperity over the last 50 years and provide them with a retirement income that allows them to live in dignity and with access to a few of the luxuries available to a modern developed country?
Australia is a low tax country by OECD standards. We can well afford to provide the baby boomers with a decent standard of living during their old age. But just how would we find the revenue? The possibility exists to use the end of the mining investment boom to finance the retirement of the baby boomers.
The distinction between mining investment and mining production is important here. It’s not the boom in mining itself which is slowing down; it’s the mining investment boom. Many more people are employed during the establishment of new mines than are employed running the mines once they are in production phase.
With the mining investment boom coming to an end, a mining production boom will follow. Most of the proceeds of the mining production phase will be exported as profits by largely foreign-owned mining companies or pocketed by the likes of Gina Rinehart and Andrew Forrest.
The Australian public owns the resources in the ground that the miners dig up and sell. When we talk about mining income, what we’re mostly referring to is asset sales, not real income. You don’t sell your car and call that money income. The mining companies add value to the resources by digging them up and putting them on a ship in an accessible form but they do not create the value of the resources themselves. Yet it is primarily the mining companies that benefit from high resource prices, rather than those who own the resources (Australian citizens). This is the very definition of economic rent; it is profit that the companies do nothing to earn which is in excess of industry expectations.
Australian citizens deserve a reasonable return for selling their assets to the mining companies and a well-designed resource rent tax would deliver that return. This revenue could be placed in a sovereign wealth fund, <a target="_blank" href="https://www.abc.net.au/lateline/content/2013/s3736272.htm">similar to Norway’s</a>, the proceeds of which could assist with paying pensions or be used to maintain and improve public services such as education and health. The one-off sale of assets should be invested in the future in some way, rather than just be used to plug holes in the budget of the present day.
Of course, resource taxation is just one of the many possibilities for increasing tax revenue. The <a target="_blank" href="https://taxreview.treasury.gov.au/Content/Content.aspx?doc=html/home.htm">Henry Tax Review</a>, completed in 2009, is full of very sound recommendations, 95% of which have been completely ignored by both Labor and the Coalition. <a target="_blank" href="https://theconversation.com/bca-wants-your-home-taxed-and-its-actually-a-good-idea-16630">Land taxes</a> are another good option, as is a <a target="_blank" href="https://ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/">financial transaction tax</a>. Even increasing the GST is a viable option assuming adequate compensation for low income earners is included as part of the package.
Tax reform is difficult. It takes leadership because there are always losers and losers shout louder than winners – who tend to slink away with their proceeds and quietly hope nobody notices. Is there a major party political leader on the horizon with the sort of courage, honesty and charisma necessary to convince us of the need for tax increases and to resist the inevitable, well-funded backlash? Not that I’ve seen. But for the sake of those baby boomers facing decades of retirement spent in poverty, I hope that one emerges soon.
Warwick Smith is a postdoctoral research fellow in environmental economics at the University of Melbourne.
This article was originally published at <a target="_blank" href="https://theconversation.com">The Conversation</a>.
 
<img src="https://counter.theconversation.edu.au/content/17953/count.gif" alt="The Conversation" height="1" width="1">
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wsmith-vzpEZDKJvA

Ageing population and mining: A tale of two booms

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Investors are being offered a rare opportunity to acquire a 50% share in the new Queensland headquarters for GE Australia in Springfield Central.
The soon to be completed GE Queensland headquarters, located in the central business district of Australia’s largest master planned city, Greater Springfield in the heart of South East Queensland, is being offered for sale with three adjoining future development sites.
The 31 Barry Alexander Drive site - known as Parkside - has a total land parcel of 16,880 square metres.
Knight Frank’s Grant Whittaker and Ed Sutton, in conjunction with Savills Peter Chapple and Anthony Ott, <a target="_blank" href="https://www.spacehero.com.au/listing/Brisbane-Cbd-6322">are marketing the GE building and development projects</a> on behalf of master developer, Springfield Land Corporation.
“Comprising 12,500 square metres of A-grade office accommodation over five levels, the Parkside project will be a landmark asset designed by leading architects Conrad Gargett Riddel and anchored by one of the world’s largest corporations,” said Mr Sutton.
On completion, Parkside will comprise an ultra-modern office tower with ground floor retail and secure basement parking for 229 vehicles. The building is targeting a 4.5 star NABERS rating.

Mr Sutton said the residual land contained in the project’s commercial precinct provided an opportunity to partner with the master developer, Springfield Land Corporation, to undertake a joint venture for the development and delivery of the three separate but adjoining lots. The lots are known as Parkside Two, comprising 1,790 square metres, Parkside Three 4,745 square metres and Parkside Four 5,345 square metres for uses including commercial, hotel and retail, he said.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a> 
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kjiminez-eaYKfU7qd2

Investors offered chance to purchase 50% stake in new Queensland headquarters for GE Australia

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Serviced office provider Servcorp said it was on track to deliver continued earnings growth in the 2014 financial year after handing down a 20% lift in interim net profit.  
Net profit after tax came in at $11.12 million for the six months to 31 December, on revenue growth of 15%.  
Like for like occupancy across the group was steady at 78%.
Excluding North Asia and the ANZ/SEA region - which comprises of Perth, Singapore, Kuala Lumpur and Wellington - the remaining international locations achieved their occupancy target of between 82-85%. 
Growth in the virtual office business continued in line with management's expectations, delivering growth of 9% to about 37,000 packages.
The company's operating cash flow was strong - up 63% to $18.13 million. 
On the outlook, management said that "initial indications are that business conditions are starting to recover around the world".
"Over the last four years we have substantially enhanced our footprint and as the global economy improves we are very well positioned to take advantage of the recovery in global business sentiment.”  
Its current vacancy levels, added management, gave the company “significant opportunity to improve our margins and operating results". 
It is aiming to grow its footprint in strategic locations and to add 10% to office capacity in FY14.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
  
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Servcorp hands down 20% lift in interim net profit over first half of financial year

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Improved trading conditions in Melbourne, Sydney and a recovery in Cairns helped boost average hotel room rates across the country by more than 3% in the 12 months to December 2013.

The figures were revealed in the latest Savills Insight Australian Hotels report, which painted an upbeat picture for hotel industry in the year ahead. 
"As the correction of the Australian dollar continues, domestic travel is likely to increase and Australia will become more affordable for international tourists", the report said. That combination of factors, it believes will lead to increased demand and higher rates in Australian hotels.
Average revenue per available room (RevPAR) growth rose by 3.2% to $132.36 in 2013. RevPAR is a key industry performance measure based on multiplying the occupancy rate by average daily room rate.
RevPAR growth was the strongest in Melbourne, which recorded a 7.2 per lift, followed by Sydney at 6.4% and Cairns at 3.3%. That was offset by falls in Perth, which was affected by the mining industry scale back, Brisbane and Canberra.  
Savills is tipping a better year ahead for the Brisbane market, with expectations of a "spike in trading" during the G20 summit in November.  
During the 12 months to December, Savills recorded 69 sales of hotel assets over $5 million throughout Australia, representing a total value of $2 billion. More than half of that total value was attributed to the sale of the Four Seasons Hotel Sydney and the TAHL portfolio. 
With demand continuing to outstrip supply, the report said: "current owners are looking to capitalise on rising values and view the next 12 to 18 months as a good time to exit the market."
Savills also highlighted that development of new hotels was picking up and as a result "we could see offshore investors acquire hotels on forward commitments as a way to secure assets in a tightly held market."
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
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Average national hotel room rate lifts by over 3% in 2013: Savills

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Investor demand continued to grow in the latter stages of 2013 with the value of loans for investors jumping by 8.2% in October. That equates to $10.3 billion, the highest level on record. This increase is resulting in strength in the property market and will entice more investors back to the market. Investors traditionally want to ensure they get the timing right and do not want to be left behind. This means most investors will make their move once they are sure other investors are active.  
As investors continue their comeback to the market in 2014, it is important not to get too carried away and enter with a level head. Whether you’re a first-timer or seasoned campaigner, successful property investment is based on certain timeless principles.  
Here are six of the best:  
<ol start="1">
<li>
Horses for courses. Despite much of what you read and hear, no two properties work the same way. Commercial property is primarily income-producing, whilst residential property primarily generates capital growth. Some properties need substantial renovation to improve their resale value, whilst others have inherently high land values that do the job for you. Some properties (like B&amp;Bs) demand a lot of time and hands-on involvement, whilst others can be managed by a third party, enabling you to ‘set and forget’.
All these differences mean that the property which is right for you may not be the property which is right for someone else. Before you enter the market, it’s essential to consider your personal and financial circumstances and goals, your stage of life and the level of involvement you’re prepared to have.
</li>
</ol>
<ol start="2">
<li>
Strategise first, buy later. Decide what type of property is appropriate for your situation. Do you have a large enough working income to support the costs of owning an investment property? If so, a residential property that can provide capital growth may be the best bet. Do you need income to replace your wage or salary? In this case, a commercial property or commercial property trust may be more suitable.
Next, determine which entity is going to own it. There are several forms of ownership: individual, partnership, company, trust or self-managed superannuation fund. The tax office treats each form of ownership differently, so seek advice from your solicitor or accountant before you buy. If you have to change the form of ownership down the track, you could be up for thousands in additional stamp duty and/or capital gains tax.
</li>
</ol>
 
<ol start="3">
<li>
Get your finances in order. No matter which type of property you buy, the substantial entry and exit costs mean you must consider it a long-term proposition. It’s not just a case of having the funds to buy the property, but being able to fund the holding costs for at least seven to 10 years. Think ahead to possible changes in your circumstances (such as starting a family, becoming self-employed or retiring) that could affect you ability to hold the asset for the long term.
If you’re buying a new or near-new property and relying on claiming depreciation benefits to maximise your cashflow, remember that most depreciation occurs in the first five years. Once you’ve used up your depreciation allowance, you could be out of pocket unless you can find another source of income to fund the holding costs.
</li>
</ol>
<ol start="4">
<li>
BYO research. When you’re researching the local market, be wary of free advice. If someone is purporting to ‘advise’ you but being paid by the vendor, they’ll be accountable to the vendor, not to you.
Instead, do your own research by looking at reputable statistics from objective agencies, attending auctions in person and tracking auction results. If you need back-up, seek advice from professionals who don’t have a vested financial interest in steering you towards a certain course of action.
</li>
</ol>
<ol start="5">
<li>
Know your limit. You’re buying an investment property, not a home to live in. You don’t have to love it – or even like it. Leave your emotions at the front gate, set a limit based on your research and stick to it. If the bidding goes over your limit, drop out of the race. It’s one thing to buy well, but buying at all costs simply isn’t smart investing.
</li>
</ol>
<ol start="6">
<li>
Regular reviews. Cast a critical eye over your financing arrangements and property portfolio once a year to decide whether they’re still doing the required job. The finance market changes constantly, so you may be able to get a better deal with a different product, package or lender. Are your properties generating rental income and/or capital growth higher than the wider market? If they’re lagging behind Melbourne-wide or local median rental and property values, it may be time to consider selling.
</li>
</ol>
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

Six things you need to know about investing in property

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There was once a time when the start of a house-hunt was signalled by the quiet chime of the bell over a real estate agent’s door. Things have changed.
Searches that once took weeks can now be done on the train to work. Processes that didn’t seem possible are now every day events.
Progress marches on and almost every aspect of the property market now has an online presence. There is now a website, app or tool for every imaginable facet of real estate.
These make dealing with property easier, faster, more efficient and can help save money. There is so much more to working online than posting ads on big property portals.
There are a multitude of websites, apps and tools to help people buy, sell, market, discover and manage properties – so many that it’s easy to get overwhelmed by the deluge.
The vast legion of online tools available allow one to snoop on property prices, go on holiday, make money, spend money, get price estimates, make plans, break plans, play, hunt and stay up to date.
So many aspects of property have been covered online that Property Observer made this A-Z of online property sites and apps. Here is part one of Property Observer’s favourite online websites and apps, to help you with all aspects of property.
Alerts 
There’s no excuse for missing that perfect property now. Websites will alert you every time a property that fits your criteria pops up. With alerts, you can be the first to know about a new listing before it gets snatched up. The various real estate portals all offer their different flavours of alerts.
<a href="https://domain.com.au" target="_blank">Domain.com.au</a> allows some very specific alerts to be sent. If you have a problem with cemeteries, you can specify homes at least 5km away from them, but within 1km of a park. You can choose to be close to the train station, but away from gaols and power stations. You can search for a home within those constraints, but also make sure you’re only sent three-bedroom properties that have a balcony and a shed within the inner city region. A daily or weekly alert with all these properties is easily set up through their search function. 
<a href="https://realestate.com.au" target="_blank">Realestate.com.au</a> has a similar offering, but it’s not quite as powerful. While Realestate.com.au does have more properties listed, we found the filters on Domain to be more refined. We welcome the environmentally friendly search options such as solar panel and energy efficiency filters, but these are not enough to set it apart from Domain. The email alerts are quite useful however, and you can set up multiple searches to the same address.
<a href="https://www.propertyobserver.com.au/Realestateview.com.au" target="_blank">Realestateview.com.au</a> can also send property alerts. The search feature can’t discriminate properties quite as well as Domain or RealEstate.com.au but the filters are tolerable. However, to save a search listing you must create an account or sign in with Facebook.
Alongside these portal websites, most individual real estate agency websites have the ability to send alerts on specific searches. If there are just two or three agencies active in your area it might be better to subscribe to their individual alerts.
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Augmented Reality
It can often be quite hard to visualise the vast reams of data available online. You can easily access 20 pages of hard data on a suburb and come away without a clear idea of what things are worth in an area. This is where augmented reality comes into play.
Augmented reality is a relatively recent development where real world information is overlayed over a camera’s output. It pulls information from the web based on your location and superimposes it over whatever you point the camera at.
<a href="https://itunes.apple.com/au/app/commbank-property-guide/id375054462?mt=8" target="_blank">CommBank Property Guide</a> uses this free technology to overlay past sales history, current property listings and recent sales over a real world view through the iPhone’s camera. They say it works on more than 95 per cent of residential properties in Australia but Property Observer has found some of their data lacking. It takes its information from RP Data and realestate.com.au.
If you don’t have any luck with Commbank’s app try the free <a href="https://itunes.apple.com/au/app/anz-property-tracker/id393053333?mt=8" target="_blank">ANZ Property Tracker</a>. It has a similar feature-set but pulls its data from Fairfax’s domain.com.au and Australian Property Monitors. Again, it’s a great idea, but we found it to be a little less than perfect.
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Banks
If you’re buying property, you’re going to have to deal with a bank at some point. It’s just how these things work. The banks all have their various online offerings and some have some quite nifty apps.
<a href="https://www.anz.com" target="_blank">ANZ</a> have been lauded for their latest mobile banking effort. The ANZ goMoney app is a simple to use but quite powerful app. It has a great new development where you can pay someone just with their phone number, which ANZ markets as an easy way to split bills. If you’re torn between ANZ and another offering, this app might be a deciding factor. Their website isn’t quite as slick but it’s a solid offering.
The <a href="https://commbank.com.au/" target="_blank">Commonwealth Bank</a> website has all the usual features, with quite an intuitive front page. Their website has the usual features. The page isn’t too cluttered but still has quick access to quite a few useful tools.
They’ve just launched a new mobile banking app that’s got a few people excited. Its claim to fame? It makes paying people incredibly easy. The app even lets you pay for drinks at a bar simply by waving your phone over a Mastercard PayPass terminal, which are gradually being rolled out across Australian businesses. Take note, this option does require buying an iCarte iPhone case. This latest app is a huge improvement over their earlier efforts.
<a href="https://www.stgeorge.com.au/" target="_blank">St Georges Bank</a>’s mobile banking app has a good reputation. It was frequently regarded as the best mobile banking offering until ANZ released goMoney and Commonwealth released their new app. The website is strictly utilitarian and doesn’t have too many flashy banners to divert your attention.
<a href="https://www.westpac.com.au/" target="_blank">Westpac</a>’s website does have quite a lot of information online. If you feel like a bit of light reading, they do regularly release economic updates, including information on the property market. Their mobile banking app is a well made piece of software and is regularly updated.
<a href="https://www.nab.com.au/" target="_blank">NAB</a>'s website has quite easily accessible information on their home loan offerings. In fact most of their website is quite intuitive. Their app is a standard issue banking app that does that job reasonably well.
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Calculators
Real estate is all about money, and money needs maths – sometimes, quite complicated maths. Thankfully, there are some kind souls out there that make these things easier, with a range of intuitive calculators for smart phones.
<a href="https://itunes.apple.com/au/app/tapmortgage-australia-mortgage/id402187202?mt=8" target="_blank">tapMortgage</a> is an Australian made app to calculate stamp duty, transfer fees, first home concessions and more. It hasn’t been updated since August 2011, but it's a great tool to calculate mortgage costs.
<a href="https://itunes.apple.com/au/app/real-estate-master-iiix/id398247923?mt=8" target="_blank">Real Estate Master IIIx</a> is a calculator for estate agents. It allows you to calculate mortgage insurance, amortization, FHA, ARMs, rent/buy comparisons and more. It can do just about any calculation a real estate agent might need to do. There are videos on Youtube to help with the more complicated sums one can do with the app.
<a href="https://itunes.apple.com/us/app/property-evaluator-real-estate/id335518202?mt=8" target="_blank">Property Evaluator</a> is an iPad app that gives comprehensive estimates on property costs and returns for investors. It allows you to input every imaginable piece of financial data about a property and then crunch the numbers to give estimated returns over the next 30 years. It’s a useful tool and might be instrumental in demonstrating the real value of a property.  This comprehensive app allows you to graph and table all the generated information and email this on. It’s not designed purely for the Australian audience so there may be a couple of hiccups along the way, but for basic projections the app works well.
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Depreciation
Depreciation is an easy way to claim some money come tax time but it’s often regarded as a bit of a mystery area with property – but no longer.
<a href="https://itunes.apple.com/au/app/wb-dep-calc/id448589647?mt=8" target="_blank">Washington Brown Tax Depreciation Calculator</a> calculates the tax depreciation of a property. Under Australian tax rules, investors can claim the depreciation of their investment properties against their taxable income. If it’s something you find yourself doing quite often, this app might come in handy.
<a href="https://www.aiqs.com.au" target="_blank">The Australian Institute of Quantity Surveyors</a> is the national professional standards organisation for quantity surveyors. It’s a good resource for finding a local professional to help you with all your quantity surveying needs including depreciation.
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Environmental Concerns
Houses are designed to take the occupiers out of the elements and put them into a safe place, but you can’t just ignore the environment. Real estate affects the environment, and conversely, the environment affects real estate. There are tools out there to help make homes more sustainable and liveable. A big part of living in Australia, especially in rural areas, is the threat of natural disasters. So we’ve included a series of tools that inform users about risks associated with the Australian environment.
<a href="https://www.ecoeasy.com/index" target="_blank">Eco Easy Home </a>is a new Australian app that grades the environmental credentials of a property. It allows users to rate their home on a number of factors through its clean interface. The app allows users to work out the orientation of a home and the future sun paths around a property. The app is full of drawings, diagrams and helpful information to assess a home. The rating system is based on a system used by architect Gareth Cole and NSW councils. The app is useful for vendors hoping to spruik the environmental credentials of a home and buyers looking to discriminate between various choices. Overall, its a very comprehensive app aimed at Australian usage. There is an iPad edition coming somewhere down the line.
<a href="https://www.liveability.com.au/" target="_blank">Liveability.com.au</a> is an online resource for owners, renters and landlords on living sustainably. The site publishes advice on how to make property more environmentally friendly.
Our country is prone to disasters. Sometimes nature decides to shake things up a bit. When investing in a new area, especially in more remote or rural areas, it’s important to know what to expect.
<a href="https://itunes.apple.com/au/app/disasterwatch/id484402725?mt=8" target="_blank">Disasterwatch</a> is the ultimate app for the perpetually nervous. Created by the Australian Emergency Management Institute, this app gives real time updates and warnings on all possible disasters in Australia. You can check fire safety warnings before deciding on buying that nice house in the bush.
<a href="https://home.iprimus.com.au/foo7/menu" target="_blank">Romsey Australia</a> is well worth a read. It catalogues the history, threats and nature of areas all around Australia. It’s the work of an independent organisation who disseminate freely available information in an easily digestible form. It’s not the most beautiful site but it’s a favourite of ours.
Queensland really copped a beating in 2011. People died and many homes suffered severe flood damage especially around Brisbane. It was a tragic time but what happens now? How do you know if a home for sale suffered flood damage. It might look fine but there could be rot lurking beneath. Or if it was rebuilt, how can do you know if it’s in a flood prone area. These tools will help.
<a href="https://flood.brisbane.qld.gov.au/floodwise_property_report/" target="_blank">FloodWise Property Report</a>: If you’re buying in Brisbane this government run website has flood history of all Brisbane areas. Sometimes agents don’t volunteer flood information so it’s best to check this website first. Given the recent floods this really is a sensible idea when buying in Brisbane.
<a href="https://pdonline.goldcoast.qld.gov.au/masterview/modules/propertymaster/default.aspx?page=home" target="_blank">Planning and Development Online</a>: This is a similar tool for the Cold Coast. You can search by property address and check for flood reports. Without this tool it might not be immediately apparent that a property is prone to flooding.
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Floor Plans
We have no time for people who post online real estate listings without floor-plans. Impress people and make friends by producing your own floor plans with one of these great tools. Your clients will love you.
<a href="https://itunes.apple.com/au/app/magicplan/id427424432?mt=8" target="_blank">MagicPlan</a> allows you to automatically create a floor plan of a house within minutes just by taking photos. Walk around a property with your phone and take photos of every corner in the house and it will automatically create a floor plan. One of the few genuinely ground-breaking apps, and free, this is great news for agents or buyers when there are no floor plans available.
<a href="https://floorplanner.com/" target="_blank">FloorPlanner</a> is a powerful online tool for creating easy floor plans and furniture placement. You can add floorplans from possible purchases and see how your furniture fits in. Brilliant. As of May 7, they have added an iPad app.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
 
 
 
 
 
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The A to Z of property apps: Part one

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<img src="/images/stories/2013/10/29/KF_STACKED_RGB.jpg" width="200" height="75" alt="KF_STACKED_RGB" style="max-width: 480px; display: block; margin-left: auto; margin-right: auto;">
Name: Ashley Moffat<img style="float: right;" alt="ashley_moffat_feb_17" height="125" width="100" src="/images/stories/2014/02/17/ashley_moffat_feb_17.jpg">

Position: Associate director, retail leasing

Company: Knight Frank

Office Location: Brisbane





How long have you been in the industry?
21 years
What’s happening in the area you specialise in?
Plenty – the sands are shifting constantly in retail leasing and sometimes hard to keep up with the latest trend/fad/concept. At the moment, it’s all about very specific fresh food concepts. Rather than just opening an Italian restaurant, restaurateurs are instead opening up a “Meatball” restaurant which may roll out 10 different varieties of meatballs. It’s all very exciting.
Describe the most interesting property you have sold
I’ve spent most of my career leasing or developing shopping centres. Probably the funniest transaction was when I was in the pub talking to a complete stranger who, after sharing a couple of drinks, asked me whether I was interested in buying a piece of land he had an interest in. 12 months later I completed building a BI-LO Supermarket and specialty shops on it which resulted in a few million dollar profit for the company I was working for at the time. Goes to show, networking does work!
What are the ingredients to being successful in your job?
You have to love it, because it shows if you don’t. There are plenty of people that just go through the motions; they are also the first people to complain they haven’t received a promotion or aren’t making any money.
What aspects of your role do you enjoy the most?
Every day is different, every hour is different – it never gets boring.
Where would you invest a spare $750,000?
I’m a big believer in the Gold Coast at the moment – it’s clawing its way out of the mud and there are just some unbelievable opportunities to pick up. I would choose a two bedroom, two bathroom unit overlooking the ocean, in an older style building, for mid to high $400,000s. Spend $50,000 modernising it and to me, that is a smart investment for the boom that is on the horizon.
Which football team do you support?
Broncos (don’t hit me!), Roar and the Lions. And of course the Reds. Any ueensland team with the exception of the Titans – my brother and sister support the Titans so I automatically hate them just to be annoying! Makes for interesting dinner table conversation when we catch up.
What’s your favourite app or techno gadget?
“Kaching”, which is the Commonwealth Bank app. Obviously only handy if you bank Commonwealth, but I use it all the time, it’s just eliminated so much time wasted getting online or going to the bank.
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How do you use social media?
I admit to being a little “slow” to embrace these mediums. I don’t have Facebook because I like to maintain some form of private life. However, I am starting to embrace <a target="_blank" href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/ashley-moffat/79/971/975">LinkedIn</a>, which I think is a very handy tool for professionals to communicate and share information. But I’m still a little “old school”, and believe nothing beats picking up the phone and talking to somebody, or better still, face to face contact.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
Correction: Ashley Moffat's title has been updated to associate director of retail leasing since initial publication.
         
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In profile: Knight Frank's associate director of retail leasing, Brisbane, Ashley Moffat

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Total industrial vacancy on Australia's eastern seaboard surged to a near three year high in the 12 months to January, as the Melbourne and Brisbane markets were swamped with additional space.
Fresh figures from Knight Frank's Quarterly Eastern Seaboard Industrial Vacancy report showed that the total industrial vacancy on the east coast rose 2% over past quarter and 10% in the past six months to 1.84 million square metres as at January 2014, reflecting a 28% increase over the same time last year.
<img alt="chart_of_the_week_feb_18_one" height="316" width="470" src="/images/stories/2014/02/18/chart_of_the_week_feb_18_one.png">
Source Knight Frank
Inflating that result was a jump in available industrial space in Melbourne, which was up 26% to 626,848 square metres over the past six months - the highest vacancy in more than three years.
The vacancy rate in Brisbane soared 17% to 551,433 square metres - the highest recorded by the survey, which started in early 2007.
Taking a 12 month perspective, the vacancy rate was more pronounce in Melbourne and Brisbane - up 75% and 67%, respectively.
Sydney was the bright spot in the results, with the vacancy rate falling 7% to 662,661 square metres, down 7% over a six month period and 12% over the year.
Prime space across the Australian east coast market remained relatively scarcer than secondary, however the proportion of prime space had increased marginally over the past year, from 34% to 44% of the market, said Knight Frank's head of research and consulting Matt Whitby.
The highest proportion of available prime space is within the Sydney market with 49%, equal to 322,350 square metres of total available stock.
"The proportion of total vacancies made up of prime stock is now at its highest level since the series began although the majority of these options are in the sub 10,000 square metres range," Whitby said.
Better placed was the secondary market, which has fallen 40% since its peak down to 340,300 square metres.
“This is expected to correct sharply over the coming quarter with a strong pipeline of 35,000 square metres of vacant stock in Sydney currently under offer, 20,000 square metres of which is speculative builds,” said Whitby.
"This is another sign that confidence is returning, particularly within the Sydney market, as much of 2013 was dominated by shorter term leases in secondary accommodation as a hold over measure until corporate confidence improved and longer term, higher grade accommodation is sought.”
Commenting on the tenant demand, Knight Frank national industrial director, Greg Russell, said that the take-up across the eastern seaboard had softened for the second quarter in a row, following the July 2013 quarter record result, with 34 buildings over 228,493 square metres absorbed.
“There is some scope for leasing demand to pick up, as enquiry levels suggest a degree of improvement, however there remains a lack of urgency from tenants to finalise premises related decisions,” Russell added.
The Knight Frank research also pointed to the firmer tenant demand for prime grade stock, with 78% of gross absorption in the second half of 2013 dominated by prime accommodation. The take-up of secondary accommodation over the past quarter - some 49,400 square metres - is significantly less than the 273,800 square metres absorbed in the July 2013 quarter.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>  
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East coast industrial vacancy surges to near three year high: Knight Frank

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SCA Property Group (ASX code: SCP) announced on February 14, 2014, its intention to undertake an on-market buy-back of up to 5% of its shares at a price of up to its current net tangible asset value (NTA) which is currently $1.59 per share. The buy-back will be funded from cash and drawing down on debt facilities. The current share price is $1.555 which is up 3.5 cents from the price prior to the announcement.
Companies buy-back issued capital as part of a capital management strategy. This is appealing when the stock is trading at a discount to NTA as it is investing at a discount.
A buy-back of shares can increase earnings per share, NTA per share and return on equity. A buy-back will reduce the equity on issue and increase the gearing level. This can be positive when borrowing costs are low. SCA Property Group’s earnings yield is 7.05% per annum and its borrowing rate is 4.8% thereby creating a positive outcome from gearing for the company.
Table one (below) shows how SCA Property Group’s earnings per share (EPS), NTA per share and return on equity (ROE) following a buy-back of shares. It is assumed that the full 5% of shares are bought back at the close price on 17 February 2014.
Table one – SCA Property Group buy-back
<table style="width: 470px;" border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="bottom" nowrap width="143">
 
</td>
<td valign="bottom" nowrap width="132">
Pre buy-back
</td>
<td valign="bottom" nowrap width="142">
Post buy-back
</td>
</tr>
<tr>
<td width="143">
Share price
</td>
<td valign="bottom" nowrap width="132">
$ 1.520*
</td>
<td valign="bottom" nowrap width="142">
$ 1.555**
</td>
</tr>
<tr>
<td width="143">
Total net assets
</td>
<td valign="bottom" nowrap width="132">
$ 1,031m
</td>
<td valign="bottom" nowrap width="142">
$ 981m
</td>
</tr>
<tr>
<td width="143">
Shares on issue
</td>
<td valign="bottom" nowrap width="132">
648m
</td>
<td valign="bottom" nowrap width="142">
616m
</td>
</tr>
<tr>
<td width="143">
Reported earnings
</td>
<td valign="bottom" nowrap width="132">
$ 43m
</td>
<td valign="bottom" nowrap width="142">
$ 43m
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="143"> </td>
<td valign="bottom" nowrap width="132"> </td>
<td valign="bottom" nowrap width="142"> </td>
</tr>
<tr>
<td valign="bottom" nowrap width="143">
ROE
</td>
<td valign="bottom" nowrap width="132">
4.2%
</td>
<td valign="bottom" nowrap width="142">
4.4%
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="143">
NTA (per share)
</td>
<td valign="bottom" nowrap width="132">
$1.590
</td>
<td valign="bottom" nowrap width="142">
$1.592
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="143">
EPS
</td>
<td valign="bottom" nowrap width="132">
6.7%
</td>
<td valign="bottom" nowrap width="142">
7.1%
</td>
</tr>
</tbody></table>
Source: IRESS, Atchison Consultants
* Close price on February 13, 2014
** Close price on February 17, 2014
As shown in table one the return on equity would increase from 4.2% to 4.4%, NTA per share would increase from $1.59 to $1.592 and earnings per share would increase from 6.7% to 7.1% following the buy-back.
Paul Easton is a senior analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
 
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SCA Property Group buy-back: How will it work out? 

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I appreciate Arek Drozda’s very thoughtful piece in yesterday’s Property Observer (“<a href="https://www.propertyobserver.com.au/trends/revisting-steve-keens-40-property-price-fall-prediction/2014021667812/Page-1" target="_blank">Revisiting Steve Keen’s 40% property price fall prediction</a>”), and this note is intended to clarify some hazy issues.
My 40% claim indeed has become part of the folklore, and as with folklore, the tale is very different to the original event. Arek is quite correct that it was not a prediction, but an analogy to overseas trends, in response to an unscripted question (from memory in a 7.30 Report interview) about what my economic predictions meant for Australian house prices. It was also based on Japan, not the USA, since at the time the USA bubble hadn’t burst. I commented that house prices in Japan had fallen about 40% in the 10-15 years since their bubble economy burst, and I “saw no reason why Australia would avoid the same fate”.
Arek comments that at the time he treated this call “with a fair dose of scepticism since I could not find corroborating evidence for such a substantial fall in prices using indicators from my own analytical toolkit”.
In fact, it appears that I understated Japan’s experience (and by sheer chance picked the level that USA prices would fall by). The <a href="https://www.bis.org" target="_blank">Bank of International Settlements</a> — the only formal body to warn of the crisis before it happened— recently released <a href="https://www.bis.org/statistics/pp.htm" target="_blank">a data series on house prices across the world</a>. Using that data for Japan, Shiller’s data for the USA, and the ABS’s data for Australia gives the picture shown below in Figure 1. Japanese house prices actually fell almost 60% in the 15 years after their peak in 1988, while US prices fell 40% in six years (before the rebound began in 2012).
Figure 1: House prices after financial bubbles burst
 <img src="/images/stories/2014/02/18/keen-feb-18-one.gif" width="470" height="411" alt="keen-feb-18-one">
However at the time of my answer to a “question without notice”, I hadn’t done any serious analysis of house prices; my focus was on the level and rate of growth of private debt and its implications for the macroeconomy—and on that analysis, in contrast to the vast majority of economists, I believed that a serious crisis was imminent (and that would affect asset prices as well as the real economy).
Mainstream economists ignored private debt on the argument that “one person’s debt is another person’s asset” (Paul Krugman 2012, End this Depression NOW!, p. 43), so neither banks nor debt (nor money!) existed in mainstream models. In contrast, private debt played an integral role in <a href="https://www.debtdeflation.com/blogs/wp-content/uploads/papers/Keen1995FinanceEconomicBreakdown_JPKE_OCRed.pdf" target="_blank">my non-orthodox “Minsky model” of the economy</a>. In December 2005, when I saw the trends in private debt in Australia and the USA (see Figure 2 below), I went public with the warning that a serious debt-induced economic crisis was inevitable in the near future:
At some point, the debt to GDP ratio must stabilise–and on past trends, it won’t stop simply at stabilising. When that inevitable reversal of the unsustainable occurs, we will have a recession (see “<a href="https://www.debtdeflation.com/blogs/2007/04/30/debtwatch-may-2005-booming-on-borrowed-money/">Debtwatch May 2007: Booming on Borrowed Money</a>”).
Figure 2: Private debt trends and my warnings of a crisis when they reversed
 <img src="/images/stories/2014/02/18/keen-feb-18-two.gif" width="470" height="402" alt="keen-feb-18-two">
The crisis that I expected duly arrived in 2008, when the rate of growth of private debt began to fall (see Figure 3 below). As Arek points out, my measure of aggregate demand includes the contribution from the change in debt (<a href="https://www.debtdeflation.com/blogs/2014/02/02/modeling-financial-instability/">an argument I’ve since proven here</a>), so my analysis implied that simply a slowdown in the rate of growth of debt can cause a crisis.
Bear in mind that at the same time, mainstream economic advisors like the OECD were telling governments that “<a href="https://www.oecd-ilibrary.org/economics/oecd-economic-outlook-volume-2007-issue-1/achieving-further-rebalancing_eco_outlook-v2007-1-2-en;jsessionid=l84e3jqj65oa.delta" target="_blank">the current economic situation is in many ways better than what we have experienced in years</a>”.
Figure 3: The rate of change of debt and the onset of the crisis
 <img src="/images/stories/2014/02/18/keen-feb-18-three.gif" width="470" height="336" alt="keen-feb-18-three">
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Arek also muses about whether the Credit Accelerator was behind my house price call in 2008. It wasn’t, because I hadn’t developed it then—and I didn’t do so until after Biggs, Mayer and Pick developed what they called the “<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1595980" target="_blank">Credit Impulse</a>”, using related but different logic.
The concept itself was an obvious extrapolation from my thinking on aggregate demand: if aggregate demand included the change in debt, then the change in aggregate demand included the acceleration of debt. I simply didn’t develop the idea, because I doubted that economic data would be reliable enough to reveal it, since it would involve comparing a second differential—the rate of change of the rate of change of debt—to first differentials, like the rate of change of house prices.
It turns out that I was wrong: Biggs et al showed that the effect turned up strongly in economic data. I then turned it to asset price data as well—with the approximation that I compared the rate of change of the rate of change of mortgage debt over a year to price change over the year.
As Arek notes, the correlation of the acceleration of mortgage debt with house price change is quite strong: it’s 0.68 in Figure 4, 0.88 since 2010, and 0.63 since 1993 (there was a break in the RBA data in 1991 that stuffs up calculations prior to then).
Figure 4: Stepping on the pedal--mortgage acceleration drives house price changes
<img src="/images/stories/2014/02/18/keen-feb-18-four.gif" width="470" height="320" alt="keen-feb-18-four">
As you can see, the mortgage accelerator indicator was predicting a turning point in house prices from the beginning of 2012. I didn’t make such a call then, partly because I didn’t completely trust my own indicator—which I had only started to develop one year earlier.
But another substantial reason was, in a word, revulsion. I am first and foremost an economist — and a rebel one at that — and I had hoped the world would learn from this crisis that we can’t base our collective economic welfare on borrowing money to buy second-hand houses from each other. But as Figure 5 and Figure 6 indicate (both below), we’re doing precisely that again: mortgage debt is on the rise once more (and it never fell in Australia, with the First Home Vendors Boost being a major reason that it didn’t do so), and this is driving house prices up again in the USA and Australia.
Figure 5: Mortgage debt on the rise again
<img src="/images/stories/2014/02/18/keen-feb-18-five.gif" width="470" height="335" alt="keen-feb-18-five">
I share <a href="https://www.businessspectator.com.au/article/2014/2/14/european-crisis/hair-dog-risks-bigger-british-hangover" target="_blank">Martin Wolf’s lament</a> about this. One might hope we would learn from our mistakes, but instead we seem to be in a rush to repeat them:
"The credit machine is indeed beginning to work, once again … But we have seen this play before. It ended as a tragedy…  Now, in the UK, people are celebrating the restarting of the very process that ended in this huge disaster."
As for how long the bubble can go on in Australia, we now have two additional factors that are driving prices over and above the impact of accelerating mortgage debt. These are the absence of any controls on non-residential purchases of new properties — as if housing is an export rather than, primarily, a consumption item for Australian residents — and the insane decision in 2007 to let self-managed superannuation funds take levered positions on housing and call it saving for their retirement.
Figure 6: Australian vs US mortgage debt; indebted DownUnder
<img src="/images/stories/2014/02/18/keen-feb-18-six.gif" width="470" height="402" alt="keen-feb-18-six">
The ride to the top may therefore last longer than the Credit Accelerator might imply (though SMSF mortgages should turn up in the data, much of non-resident buying won’t), and property speculators may well enjoy the ride, as Arek observes.
But to my macroeconomist’s eye, it will be a tragedy for the commons if all we will have to show for this decade is deeper mining holes, more expensive houses, a hollowed-out manufacturing sector, and an even more indebted society.
Steve Keen is the author of 'Debunking Economics', the blog <a target="_blank" href="https://www.debtdeflation.com/blogs/">Debtwatch</a> and developer of the <a target="_blank" href="https://www.debtdeflation.com/blogs/minsky/">Minsky software program</a>.
 
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