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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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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Astute investors know that all properties have defects which if not identified during due diligence, can be money pits. There is a small window of opportunity during the brief due diligence period to identify these risks prior to purchase.
Identification of risks provides a bargaining opportunity to either negotiate a reduced price or request the risks be removed at the vendors cost. Risk avoidance can be achieved with meticulous due diligence, particularly in investigation of eight potential deal killers listed below.
1. Asbestos contamination risk?
Asbestos materials of various types were commonly used in Australian property construction between 1940 and 1990. Asbestos materials were embedded in wall cladding, roofs, gutters, drain pipes, vinyl flooring, electrical wiring thermal insulation, boilers, exhaust pipes, switchboards, thermal insulation and inside fire doors.
The new National Work Health and Safety Act of 2011 requires owners of buildings constructed before 2003 to conduct an asbestos survey. Where asbestos materials are identified, this triggers the mandatory requirement for an asbestos register and asbestos management plan (AMP). Some property owners appear to be unaware of this new obligation.
An asbestos register is necessary to track of asbestos materials remaining (or removed) in investment properties. Asbestos may also be located in inaccessible areas and unfortunately discovered during re-development with sometimes disastrous and costly results. Asbestos materials if disturbed can cross contaminate internal areas of the buildings, requiring evacuation, loss of rent and potential occupant litigation.
Asbestos removal is a legally notifiable project, which can result in extremely costly asbestos removal projects. Careful investigation during due diligence can forewarn investors, revealing the true cost of asbestos removal. Armed with detailed information and cost options, investors can then more accurately evaluate if they wish to proceed with the purchase or avoid the risk.
2. Electrical switchboard over-loading and fusion risk?
Building electrical cables and switchboards can become over-loaded with tenancy changes and added electrical equipment. The overloading of wiring inside electrical switchboards can remain undetected for many years. Electrical fusion is one of the primary causes of fires within buildings where overheating of electrical switchboards and wiring starts fires.
Further electrical risks can include lack of earth leakage protection (ELP) to reduce the risk of electrocution to occupants. Poor quality electrical installation and modifications over time, can overload electrical switchboards leading to potential fires or equipment failures.
A review of electrical maintenance should be included in due diligence investigations to identify weaknesses and potential costly failures.  Where electrical maintenance is inadequate this may void insurance cover, with owners exposed to remediation costs.
Article continues on next page. Please click below.
 
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3. Fire and life safety non-compliance risk?
Fire and life safety systems for buildings require continuous testing and mandatory certification to confirm the fire detection and protection equipment will function to design when there is a fire.
Where buildings are refurbished this may trigger a mandatory requirement to upgrade the entire fire protection systems to the current Building Code of Australia (BCA) fire standards (This mandatory trigger activates when 50% of the building is refurbished within a three year period).  Upgrading can require new fire sprinklers, fire stair pressurisation, new fire hydrants in fire stairs, smoke hazard management, and in extreme cases additional fire exit stairs.
Upgrading of fire protection systems can incur considerable cost and potential risk and cost of compliance should be calculated before settlement.  Due diligence investigation should include a review of lease expiry dates and tenancy refurbishment timelines, to avoid trigging the 50% over three year rule.
4. Environmental site soil contamination?
Site contamination can occur from past site use, for example, contaminated industries such as petrol stations, industrial storage, chemical processing industries, dry cleaners, processing industries. Underground storage tanks (UST) even if removed, can leave toxic contaminants in sub-soils to contaminate the land and surrounding sub-terrain water courses. This may contaminate neighbouring properties, with the potential for future litigation.
Testing and soil removal can be a considerable expense particularly where the site is close to public waterways and the risk of cross contamination is high. The potential for sub-soil contamination is a risk often overlooked by property investors and an issue that should be investigated during the due diligence phase.
Article continues on next page. Please click below.
 
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5. Structure and façade water proofing risks?
Structural problems can include subsidence of foundations, cracking of walls, concrete cancer, leaking roofs, leaking windows or facades, flooding risk, or low earthquake resistance structures.
Where structural defects are identified, costs for repairs need to be estimated and negotiated with vendors prior to settlement. Unforseen property defects can result in major capital cost to correct structural weakness. Building changes and additions to original structure may overload design foundations with movement and consequential structural cracking. Façade deterioration can result in water entry and major internal damage.
In locations close to flood prone areas, underground basements and car parks may be flooded by back-flow of water through stormwater drains or sewers mains (i.e. Brisbane floods). Property constructed close to rivers beaches and harbours may also be impacted by salt migration and increased risk of rust and concrete cancer of steel reinforcing. Structural issues should form part of the due diligence investigation.
6. Disabled access non-compliance risk?
The 1992 Disability Discrimination Act (Commonwealth) has provided a standard that requires all buildings to provide dignified access with special facilities for people with disabilities (PWD). This has been codified in Australian Standards AS1428.1 as a requirement in new construction under the Building Code of Australia.
Where older buildings are refurbished, a mandatory requirement mat be triggered to upgrade the disabled access features to current Australian Standard AS1428.1. This can result where 50% of the building is refurbished within a three year period. Major capital expenditure could be necessary to provide new entry ramps, wide disabled parking bays, upgrading of lift controls, tactile ground surface indicators (TGSI) and large unisex disabled toilets, on each occupied floor in excess of 500 square metres.
Potential risk and cost to upgrade the investment property to fully comply with disabled access standards AS14281 may be overlooked during property acquisition. The requirement to provide disabled access and facilities can also be triggered with local government building approvals for tenancy fit-out where floors areas exceed 500 square metres.
Article continues on next page. Please click below.
 
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7. Air conditioning life cycle failure risk?
Air conditioning is not a luxury but an essential business component for tenants in modern buildings. Air conditioning systems are not like red wine and improve with vintage, but conversely deteriorate over time. Air conditioning plant and equipment have finite service lives with cooling and heating capacities slowly deteriorating over time. Original design cooling and heating capacities may be under-sized or mismatched to current occupancy loads. Additional air conditioning equipment may be required to meet comfort conditions specified in tenancy leases.
Due diligence should include condition and remaining service life of the air conditioning equipment. Replacement of air conditioning systems can require considerable capital expenditure that should always be estimated during due diligence. Replacement costs for air conditioning over a 10 year investment timeframe can result in large negative cash flow that needs to be included in calculation of internal rate of return (IRR) and return on investment (ROI).
8. Lack of mandatory certification to building codes?
In some cases where mandatory requirements for development approval, building approval or Occupancy Certification are incomplete this can lead to serious future consequences, including potential litigation from statutory bodies, potential restricted use by fire authorities and major difficulty in future when selling the property and non-compliance issues revealed.
Where non-compliance issues are unrevealed at settlement the obligation to remedy these issues becomes the responsibility of the purchaser. Non-compliance can include incomplete development approval conditions, incomplete Building Code of Australia BCA certification, Incomplete Occupancy Certification or lack of Annual Fire Safety Certification.
Where comprehensive technical due diligence is completed, these non-compliance risks can be revealed, and investors have the ability to either avoid the contract, or request a reduction in contract sum to compensate for rectification.
A further option is to request the vendor rectify the non-compliance risk and hold in escrow an agreed sum equivalent to the cost for the purchaser to rectify the risk. Where the vendor is unable to rectify the risk, the sum in escrow is able to be utilised by the investor to remedy the risks.
Comprehensive due diligence allows prospective investors to gather factual information about the condition, remaining service life, statutory non-compliance or other major property risks. The investor can then make a fully informed decision to either accept or avoid a contract on an investment property.
Clive Burrows is the founder of <a target="_blank" href="https://www.risk8.com">Risk Management Group</a>, an Australian due diligence consultancy that has undertaken in excess of 200 due diligence investigations on $11.9 billion of commercial real estate transactions over the past 20 years. 
You can contact Clive via <a target="_blank" href="mailto:Clive@Risk8.Com">email</a>.
 
 
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cburrows-SqzvJJk27D

Eight risks that can turn investment properties into financial nightmares

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The bushfires that travelled through New South Wales’s Blue Mountains in October last year went nowhere near the region’s tourism hubs. Nevertheless, in December the Blue Mountains Economic Enterprise estimated that as a result of the negative media attention around the bushfires, which contributed to a downturn in the region’s tourist visitations, the region’s economy is down by $71 million.
Donald Luscombe, the Blue Mountains Economic Enterprise chairman, said that although none of the region’s attractions were affected, tourists stayed away.
“As a result of lost tourism visitation over the first 42 days after the bushfire emergency, the total impact to economic output (revenue) for the Blue Mountains was $71.3 million,” he said.
“The data indicates a decrease in wages and salaries of up to $17 million over that 42 day period. Obviously, the flow-on impact of that in terms of consumption and expenditure is significant.  The total impact to the economy of the fires is yet to be calculated but as you can see, the impact from the tourism sector alone has had a truly significant effect.”
Tourist properties have also weathered the impact of poor media coverage. <a target="_blank" href="https://www.fntourism.com.au/buy-commercial-real-estate/business-accommodation-tourism-blackheath-nsw-41120130153">Federation Gardens Lodge</a> (pictured below) was prepared to list in October last year through First National Tourism. But according to broker Nick Brook, although the property was unaffected by the bushfires themselves, the vendors and First National Tourism decided to hold off on listing the property.
{yoogallery src=[images/stories/2014/02/11/blue]}
“We did all the preliminary work, including the research, and were ready to put it on the market. But because of the fires, we held off. We’ve only just listed the property this month,” he said.
The Clarendon Guesthouse in Katoomba (pictured below) sold late last year, with market sources suggesting that the hotel went for close to $2 million.
{yoogallery src=[images/stories/2014/02/11/kat]}
The sale was handled by Paul Kapiris and Andrew Jackson of CBRE Hotels. Although he says it is too early to draw conclusions from market values, Kapiris has noticed interest in the area recently, including from foreign investors.
“Interestingly, there’ve been a few sales in the area,” says Kapiris. “Whether it’s reflected in the values is probably unclear. But there has been a little bit of movement, particularly in <a target="_blank" href="/news">Katoomba</a>.”
Kapiris points to foreign investors and tourists as a possible source of revival for the region.
“We’ve seen a mix of local buyers seeking assets and foreign buyers, particularly those that have connections to tourism.
“The Australian dollar should have an impact – a lowering Australian dollar should help regional tourism. But how long that will take would be anyone’s guess.
“And the lowering Australian dollar and the growing Asian middle class are part of the reason that we’ve had such an increase in interest from Asian groups.”
Meanwhile, the Blue Mountains Economic Enterprise has launched a number of initiatives to strengthen the region’s economy, including a “Creative Industries cluster”. With research suggesting that creative industries provide 8% of the region’s available jobs – close to double the state average – the range of events and advocacy initiatives will seek to consolidate the area’s reputation as a creative hub.
While the holidays brought some relief to the Blue Mountains, Luscombe says that sustained interest is what the region needs.
“We saw a lift in visitation over the Christmas period, which is traditionally a peak time but the best way for Australia to assist this region continue its recovery is to visit and savour the cooler weather, glorious local food and world-class tourism attractions,” he said.
“We are absolutely open for business.”
jrichardson@propertyobserver.com.au
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jrichardson-uRX5hFdKfN

After bad bushfire press, the Blue Mountains works to regain its footing

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Toyota has announced it will close its Australian manufacturing division by the end of 2017, signalling the end of car manufacturing in the country.
The move follows similar announcements from GM Holden and Ford last year, with economists now tipping the total job loses to be in the tens of thousands.
Toyota also said it’s considering scaling down its development and technical operations in Australia and around 2,500 jobs will be lost from its Altona plant alone.
The car company’s Australia chief executive, Max Yasuda, said in a statement Toyota had done everything to try and keep its operations in Australia.
“We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia,” he says.
“Although the company has made profits in the past, our manufacturing operations have continued to be loss-making despite our best efforts.”
The move will have a drastic impact on local suppliers, which will be forced to close, start exporting or diversify into other industries.
There has been talk of up to 50,000 jobs being lost and the potential for Victoria to be pushed into a recession, but JP Morgan chief economist Stephen Walters told SmartCompany this is too “alarmist”.
“The closure isn’t for three-and-a-half to four years, so like the other carmakers it’s not immediate, but if you’re not making cars there are direct losses of those jobs. There is a debate going about how many jobs will be lost, I’d say it’s likely to be tens of thousands,” he says.
“With retraining and some assistance, the jobs will end up elsewhere. Component manufacturers are also able to reposition and even export their components, so just because car manufacturing is ending, it doesn’t necessarily mean these smaller companies will shut down.”
A Federal Chamber of Automotive Industries study released in November last year tipped by 2018, if automotive manufacturing ended the <a href="https://www.smartcompany.com.au/finance/cashflow/34848-if-holden-leaves-toyota-follows-the-disastrous-impact-on-small-business" target="_blank">Australian economy would be $7.3 billion smaller</a>.
To what degree the economy is affected will be influenced by what policies are created to support manufacturing in the next three years, Roy Green, the dean of the Business School at the University of Technology, Sydney, told SmartCompany.
“It would be reasonable to say with the combined impact of the three assembly makers exiting the market between 30,000-50,000 people will be affected in the immediate companies, the car component suppliers and related services in engineering and design.
“It’s contingent on what the government does next in terms of policy in respect to manufacturing. It may not be as many jobs if there is a strategy developed around the diversification of the components manufacturing sector to let it participate more in global chains or to diversify into other industries.”
Green says the government needs to provide SMEs in the car components sector with an understanding of their opportunities and with new skills and management expertise to allow them to transition.
“It isn’t a question of throwing money at the remaining SMEs... Some will make it, many will not.”
In an article in <a href="https://www.smh.com.au/federal-politics/political-news/road-to-recession-end-of-car-industry-may-cost-50000-jobs-20140210-32d3g" target="_blank">The Sydney Morning Herald</a>, Adelaide University economics and workplace expert John Spoehr said Victoria and South Australia could be pushed into a recession.
He also speculated the closure of Holden alone could cause 50,000 jobs to go.
Green says a recession is possible, but unlikely.
“Whether it’s a recession or not depends on what else is happening in the economy – whether the component suppliers are transitioning and if other industries absorb the job losses, but if nothing happens and we sleepwalk into the next three years a recession is likely,” he says.
“But it’s hard to imagine policymakers being so short-sighted or businesses not taking advantage of other opportunities.”
Dr Philip Toner from Sydney University’s department of political economy toldSmartCompany research suggests a third of the jobs in the car industry will be lost, with the people either retiring or going on the dole.
“Another third will get jobs with lower wages and conditions in things like hospitality or aged care, and another third will get jobs with equivalent wages and conditions,” he says.
“Ironically, the effect of that is a reduction in Australia’s productivity. A rather startling statistic that emerged from some analysis I did was that something like 90% of jobs created over the past four decades were in industries with below-average productivity and low-wage jobs in things like aged care, retail, cleaning and security services.”
The FCAI study predicted the closure of Holden and Toyota in Australia would see the loss of 33,000 jobs in Melbourne by 2018 and 6000 in Adelaide.
Australian Chamber of Commerce and Industry acting chief economist Burchall Wilson told SmartCompany the alarmist commentary will harm the state economies.
“The job losses will be relatively small compared to the broader labour market and it’s still very unclear the extent to which there will be losses further up the supply chain,” he says.
“There is some quite dangerous and alarmist commentary which will only undermine business confidence in these states. It’s doing the states a disservice.”
Wilson says the closure of the car manufacturers shows the billions of dollars spent on propping up the sector has been “wasted”.
“In terms of support to the industry, it’s been costly to the community. There is no justification for propping up private sector businesses in relation to the automotive industry, as the Productivity Commission told us just two weeks ago,” he says.
“The first solution for any business which is struggling is to do what it can to contain costs and put itself on sustainable footing. It’s not the government’s responsibility.”
AMP chief economist Shane Oliver told SmartCompany the real danger in these situations is overstating the economic impact of an industry’s closure.
“I grew up in Newcastle and saw the closure of the steel industry. I remember going back in the 1990s when it looked fairly dismal. Today, however, the place is buzzing. They moved on. The regions here will also move on,” he says.
“I think there’s a real danger in overstating the economic impact. We’ll get by – there won’t be a recession. The longer-term impact is probably a positive one.
“All the money that taxpayers have been pumping into the car industry will probably come to an end. It can be reallocated to more useful areas, like infrastructure spending.”
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany.</a>
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jake-cSmGT7VXVf

Will Toyota’s move to end car manufacturing by 2017 in Australia cause a recession?

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Recently, we identified <a href="https://www.propertyobserver.com.au/landlords/holiday-and-short-term-rentals-does-your-property-fit-the-bill/2014012867387" target="_blank">new ways to rent out your investment property</a>, via the likes of Airbnb. Though this strategy will not work for every property, there is clearly opportunity to be had in renting your apartment with this approach.
Property Correspondent has since contacted a friend who has shared some top line stats of his experience.
Is it worth it? 
We asked our friend, who owns a modest two bedroom unit in the inner west of Sydney (within 5 kilometre access to the CBD; Balmain area) about his experience with his unit because he’d rented it out in the tradition way for a number of years, before converting it to an Airbnb property recently.
Here’s some rough apples-for-apples comparison numbers for his first year of operation:
Pre-Airbnb:
<ul>
<li>
Rented on a standard lease at $620 per week: $29,760 annually
</li>
<li>
Real estate agents’ management fees of 6% of rental revenue: $1,785.60 annually
</li>
<li>
Maintainance &amp; repairs allowance: $1,500 annually
</li>
<li>
Total actual revenue: $26,384.40
</li>
</ul>
Post-Airbnb:
<ul>
<li>
This example assumes an average of 5 out of 7 nights per week of rental occupancy.
</li>
<li>
There were several initial up front costs:
</li>
<li>
Initial cosmetic ‘light’ renovation (simply paint and new carpets) – $1,400
</li>
<li>
New furniture (master suite, 2nd bedroom suite, washer/dryer combo, ironing equipment, kitchen cookware, utensils, fridge, lounge, coffee and dining tables, side tables, art/decoration, TV/AV/Internet facilities, linen) – $7,600
</li>
<li>
Security key installation – $110
</li>
</ul>
Then there are administrative running costs that needed to paid on a regular basis, so I’ve calculated these as an annual figure:
<ul>
<li>
Airbnb listing costs (nomimal): $100 annually
</li>
<li>
Housekeeper costs: $200 per week, so $10,400 annually
</li>
<li>
Maintainance products (Cleaning products, soaps, shampoos, handwash, toilet paper, kitchen towel, perhaps a welcome gift each time. My friend joined Costco for about $50 and buys all of this in bulk once per quarter): $3,800 annually
</li>
<li>
Property maintainance and repairs (Year #2 onwards only): $2,500 annually
</li>
<li>
Nightly commandable rent rate: $230
</li>
<li>
Total rental revenue ($215 x 260 days): $59,800 annually
</li>
<li>
Total annual expenses (Year #1): $23,410 annually
</li>
<li>
Total net revenue (Year #1): $36,390
</li>
<li>
Total net revenue (Year #2 onwards): $43,000
</li>
</ul>
Of course, both ‘revenue’ figures will then require strata, water, council rate, tax and other additional property operating expenses furhter to those listed above. I asked my friend if there were any horror stories thus far in his experience. His feedback was that problems were minimal, providing that he was always contactable and available, and he screened his tenants carefully.
He did mention a couple of incidents where the tenant had clearly had parties, requiring additional housekeeping costs. Additionally, there were instances where tenants had lost keys. Although the tenants paid the key/lock replacement costs out of their bond; it did cause the property to be out of action for more days than expected, resulting in future-booked tenants having been cancelled. As you could imagine, this did not help his review ratings at the time. These were just a handful of little bumps along the road that he is still discovering.
This case study highlights the profit potential for renting an entire property out. What is missing is the ‘human’ cost – of your time commitment – in running the property for twelve months. There is also the opportunity to live in a two bedroom property yourself, and ‘Airbnb’ the second room out at a reduced nightly rate. However, investors need to be mindful of tax implications in producing rental revenue from their owner-occupied home.
Still, it may well be worth it. If instead of renting your second room for say $250 per week, you could get someone in at least four nights per week, for say $90 per night ($360 per week minimum), you’d be well ahead. An added benefit would also be that you’d only have a flatmate for four to five nights per week.
Australian investors are best served to keep this in mind when considering this approach to renting out their properties.
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://www.propertycorrespondent.com.au/" rel="nofollow" target="_blank">Property Correspondent.</a>
 
 
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cmcevoy-Go82SmsJA9

Holiday and short-term rentals: Do the finances stack up in a real life case study?

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Fears that demand for office space in Australia's capital cities could be crunched by the next generation workplace model - activity based working - are overstated, a new report has found.
Even the Sydney CBD office market, which is tipped to be the most exposed to activity based working (ABW), is showing only a gradual up take of this next generation trend, according to the report from Jones Lang LaSalle and the Property Council of Australia's NSW division.
<img src="/images/stories/2014/02/12/comm_feb_12_one.jpg" width="470" height="541" alt="comm_feb_12_one">
The findings were revealed in their 20 page report - Activity Based Working: Impact on the Sydney CBD Office Market - which looked at the impact of the workplace concept on office markets. Essentially, ABW allows employees to work on projects in a shared environment rather than individual cubicles.
Their analysis found that AWB is gaining momentum with large corporate tenants and some highly compatible industries like finance and insurance.  As such, a market like the Sydney CBD, which has a high concentration of finance and insurance tenants, was likely to be the most exposed market nationally to the trend, it said, while adding that the stock profile was another factor. Nearly 38% of the stock in the Sydney CBD is more than 5,000 square metres.
Significantly, the report also pointed out that the nature of lease expiry and natural tenant growth meant that the impact of ABW on market dynamics were "relatively gradual, even under higher take-up scenarios".
<img src="/images/stories/2014/02/12/comm_feb_12_two.jpg" width="470" height="377" alt="comm_feb_12_two">
JLL director of research and author of the report, Leigh Warner, said ABW was typically taken up only at lease expiry. "Only around 15% of leases expire in any particular year, and the evidence to date suggests that firms have initially been relatively conservative in judging the space that they have taken upon moving to ABW", he said. "This means that the initial impact on market demand is minimal, and it will only be gradual over the term of new leases as firms accommodate natural growth within their fit out – rather than taking new space."
Under a mid-range take-up scenario, said PCA NSW executive director Glenn Byres the "Sydney CBD is estimated to see a reduction in net absorption over the next decade of just over 100,000 square metres, or 16% relative to a base case."
Those numbers, he said, also suggest AWB would have a limited influence on the future growth and supply requirements of Sydney's CBD office market.
"There is no question that ABW is a concept that is here to stay in one form or another, and that it will have an impact on the market," added  Mr Warner. "However, the analysis undertaken clearly shows that impact is far from devastating on the market, even under high take-up assumptions."
The report concluded by saying that ABW was likely to be a trend that "will increasingly have an impact on office markets across Australia over the next decade", even though the portion of tenants that ultimately adopt ABW was still "very ambiguous".
"Regardless of the size of the eventual impact of ABW, the impact will be relatively slow over a period of 10 to 15 years," it said.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
<a href="mailto:news@propertyobserver.com.au" target="_blank"></a> 
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kjiminez-eaYKfU7qd2

Fear of activity based working impact overstated: Jones Lang LaSalle report

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Demand for Australian commercial property, particularly prime assets, is expected to be rampant again this year. Both local institutions and offshore investors have a strong appetite to satisfy, with the only hurdle being a marked shortage of available stock in which to target. This means investors will need to get creative - and they may need to play in a space they’re not traditionally comfortable with.  
Interestingly, the strength of investment demand actually contradicts the current market fundamentals in Australian commercial property, with vacancy rates trending upwards and tenant demand actually weakening, albeit slightly, in recent times.  
Still, those investors and institutions taking a long-term view understand the value of securing prime Australian assets now. The problem is, it’s not as simple as saying “we have $100 million we want to invest”.  
So how do these institutions satisfy their investment appetite for commercial property? How can they secure an interest in prime real estate when existing prime assets are so tightly held and new supply additions are few and far between? How do they recycle their capital?  
It’s going to be tough for institutional investors to get set this year. The need to get creative, to consider new alternatives and to leave their comfort zone is becoming increasingly apparent.  
Last year we saw capital partnering arrangements emerge as a vehicle for investors to satisfy their investment appetites.  
Our research from late last year showed the proportion of capital partnerships to total sales has grown rapidly since the end of the GFC, with 46.4% of transaction volumes recorded in the Australian retail market and the eastern seaboard office markets in 2012 involving a capital partnership.  
When you consider the shortage of available prime stock against the appetite of local institutions and the weight of money aimed at Australian commercial assets from offshore investors, which we quantified as US$16.5 billion as at September 2013, it is clear that offshore investors need to get creative to penetrate the domestic market.  
Hence we expect capital partnership arrangements to become more prevalent in 2014.  
Capital partnerships are one way in which investors may need to compromise their ideal investment scenarios. Another is through investment in REITs as opposed to direct property.  
Owners are awake to the demand for their assets. This means some are in the position to say “if you want to gain access to real estate assets, you need to invest in our funds”. It’s a compromise most investors would prefer not to have to make, but the reality is that it’s one of few avenues available to gain exposure to property.  
Others may even consider diversifying their capabilities to make a foray into development, as a way of creating assets in which they can invest to satisfy their appetite.  
Either way, it’s going to be tough for institutional investors to get set this year. The market can expect a shake up in 2014, and it could well be the major institutions who will be dominating the headlines.
Tony Dixon is director of investment sales for <a target="_blank" href="https://www.cushmanwakefield.com/">Cushman &amp; Wakefield</a>
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tdixon-SLWH4X4fad

Demand for Australian commercial property set to be rampant this year

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Australia could fall behind in the Asian Century if it does not <a href="https://www.smartcompany.com.au/growth/economy/33793-infrastructure-woes-as-sydney-cross-city-tunnel-placed-in-receivership" target="_blank">improve its infrastructure</a>, innovation and creativity, experts have warned.
Ken Henry, a former Treasury secretary and current director of the National Australia Bank and the Australian Securities Exchange told <a href="https://www.theaustralian.com.au/business/economics/former-treasury-secretary-ken-henry-warns-of-infrastructure-shortfall/story-e6frg926-1226821994365#mm-premium">The Australian</a> he thought Australia could be lacking in sufficient port, road and rail links to be an effective exporter during the Asian development boom.
"We do not have the infrastructure requirements for an economy and a society that is well connected with Asia," Henry said.
Henry was at the forefront of the Gillard government’s white paper into the Asian century and said there is “enormous potential” for Australia during Asia’s boom phase.
However he said “we simply don't have the infrastructure assets, the infrastructure services, to ensure that in the commercial space – but also the social space – we make the most of those connections”.
Henry is involved in a green paper by the SMART research group which is calling for “clearer decision-making to inform a national market for Australia’s infrastructure”.
He thinks lots of questions regarding our infrastructure should have been asked 10 or 20 years ago, not now, The Australian reports.
CPA Australian chief executive Alex Malley echoed Henry’s concerns in the accountancy body’s pre-budget submission to the federal government.
“With tentative signs of economic recovery in key global markets and a continued focus on Asia, Australia is uniquely positioned to take advantage of what has now become the Asian Century,” Malley said.
“However, despite our ‘open for business’ mantra, we are not the sole trader in our region. Across Asia, new and existing competitors are increasingly moving into areas Australia once regarded as areas of traditional advantage.
“This is not a time for complacency. It is the time to boldly step up.”
Malley said that as a nation, Australia must now make “brave choices” to secure our success in the Asian century.
“We must make sure that we do everything possible to support Australian businesses to be globally competitive.”
He said Australia is poised to take centre stage on a global level as we host the G20 Summit.
“Just as the strength of our economy made us an international example in weathering the worst excesses of the global financial crisis, this is a time when we should again demonstrate global leadership by making the tough decisions that will strengthen the global competitiveness of Australian business.”
The CPA Australia submission reiterates that Australia’s ability to compete will be “put at risk” unless action is taken to address the infrastructure deficit when it comes to road, rail, air and sea transport.
“Without the ability to safely, efficiently and effectively transport goods, data and people within Australia, our businesses face a significant disadvantage,” it said.
The group said funding of infrastructure should include user-pays principals, along with selling suitable public assets and investing the proceeds into new projects.
“CPA Australia calls on the government to consider providing a 40% or 50% discount on income earned from investment in infrastructure projects to attract more private capital to these major projects which will drive the future of Australian business.”
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany.</a>
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moliver-7qYWqnHmyR

Australia could luck out in Asian Century due to poor infrastructure

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There are so many good agents out there. There are also some bad ones. So, how do you choose the agent that is right for you?
Choosing the right agent is especially important for investors whose real estate portfolios are a major portion of their wealth. You may have held onto an investment property for years, and done everything right in that time. 
Even so, your choice of real estate agent to help you exit the investment could still make a huge difference to your degree of financial success.
Vital for investors
That's a big statement, so let’s look at an example to understand it better. Let’s say you paid $500,000 for a unit in <a href="/news">Artarmon</a>, on Sydney’s north shore, some time ago. Perhaps you reasonably expect to sell it now for about $600,000. 
A good agent might be able to ensure you reach that target price. With a bad one, you might fall short by as much as $25,000. 
Could a bad agent really cut your potential profit by 20%? Of course they could. By failing to develop leads from potential buyers, a bad agent can reduce both the size and the number of offers you receive.
If your property hasn’t gained as much value as the example, the impact of a bad agent could conceivably consume your entire profit. In the worst case, it could put you into the red.
I have always been a big believer in real estate agents, and this calculation just reinforces that belief for me. A good agent can make the world of difference.
That’s why answering the question, “Which agent do I hire?” could be the most important single choice you make in the entire lifetime of your investment property. The only question that is more important is, “Which property do I buy?"
Is the rapping agent right for you?
So which agent do you choose? Maybe you want the hip hop agent, who filmed a rap video in one of his listings. The lyrics include these rhyming lines:
"To be the host with the most you don’t have to be rich,
"Come check my opens and meet with me, b____.”
Or, if rap isn’t your thing, maybe you would prefer an agent who takes excellent property photos.   The blog terriblerealestateagentphotos.com found this listing photo, which it says gives off a "vague sense of animosity". 
Look closely and see if you can guess why. 
<a href="https://24.media.tumblr.com/3c1e5033b3e850ec095302f57a6e677b/tumblr_mvdg8n96HV1rrqskho1_500.jpg"></a>
<img src="/images/stories/2014/02/11/agent_feb_11_one.jpg" width="470" height="352" alt="agent_feb_11_one">Seriously, it is vitally important to hire the right agent for your sale. I have worked with real estate agents professionally for most of my career and, year after year, there’s one piece of advice that I keep coming back to.
It’s simple and not even very clever. It’s certainly not difficult.
None the less, it is perhaps the last bit of advice regarding hiring real estate agents that you’ll ever need.
My advice is this:
Never choose an agent who talks over you. 
In any profession, if your efforts to say something only causes the other person to talk louder or faster, you should have serious concerns. Their behavior shows a lack of respect, sensitivity and professionalism.
When someone talks over you, you can assume one or both the of the following: 
• This person doesn't care what I have to say.
• Or, this person lacks the self-awareness and control to know when to be quiet and listen, and when to speak.
Either way, you don't want an agent like that representing you in a transaction that could mean the loss or gain of tens of thousands of dollars.
Hurting you and themselves
Perhaps you are willing to give talkative agents the benefit of the doubt. After all, you might tell yourself, "They do know more about real estate than I do. Maybe what they have to say about my home is more important than what I intended to say."
Certainly, a good agent will have important things to say. But in listings presentations, the best agents do more listening than talking. It is vitally important to them that they understand their client's state of mind, and that they learn all the important details about the property that only the vendor can know.
In this sense, a real estate agent who refuses to let you speak is doing a disservice not only to you, but also to themselves.
So, whether you prefer a rap artist or a photographic genius as your real estate agent, never choose one who talks over you.
Andrew Taylor is the Queensland-born co-CEO of <a style="font-size: 14px;" rel="nofollow" href="https://juwai.com/">Juwai.com</a>, the number-one Chinese real estate portal for property in Australia and around the world. 
He has almost a decade and a half of experience in Australian and Chinese real estate and managing print, TV, radio and online media. He also has bachelor and graduate degrees in classical music, and plays the diyin gehu (Chinese bass).
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ataylor-LB7AWVFTs9

Choosing the right agent: The one thing they should never, ever do

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Many people express the opinion that residential property is first and foremost a shelter and therefore should only be considered from a social perspective. Many believe that it is a given right of every citizen of this country to have a roof over the head – rather than as a financial asset that can potentially make money for its owners.
Although it seems like a righteous position to hold, it cannot be denied that, in addition to offering a physical protection from the elements, residential property is, and always has been, an attractive investment option.
The old saying “property is the biggest investments one will ever make” has not been coined without reason. Besides, even when people say they are buying a “home and not an investment” they do not necessarily equate this statement with not making any money on their purchase in the future.
It would therefore be more pragmatic to consider residential real estate as “long-term accommodation” rather than just a “shelter”. It is both a  roof over the head, as well as a money making asset.
Property ownership is quite popular in <country-region>Australia</country-region>. According to the Australian Bureau of Statistics, as at August 2011, 67% of all residential dwellings were owner occupied. Although this proportion is slightly down since the previous Census in 2006, it has remained relatively unchanged for the past 50 years.
Those Australians who had a stake in residential property did quite well over the last six decades, as the following chart demonstrates.
 <img alt="seven_decades_of_prices" src="/images/stories/2014/02/10/seven_decades_of_prices.png" height="261" width="470">
Source: Based on ABS data and Stapledon 2007
Returns varied from decade to decade as property prices rose at different paces, but they have always remained positive. So will property owners be seventh time lucky? Chances are they will, given the <a href="https://www.propertyobserver.com.au/residential/australian-property-prices-in-2014-and-beyond-a-peek-into-the-future/2014013167457" target="_blank">past history of property prices in this country</a> .
What the above chart does not show is that property owners also had an opportunity to make substantial savings in the ongoing costs of accommodation (i.e. rent) once they had paid off their initial loan. This increased the actual returns to owners quite substantially.
The following chart compares estimated total returns on residential property from capital appreciation and reinvestment of imputed rents, which is conceptually equivalent to S&amp;P/ASX 200 Accumulation Index.
 <img alt="property_vs_shares" src="/images/stories/2014/02/10/property_vs_shares.png" height="275" width="470">
 
Sources: based on ASX and ABS data
The chart indicates that, over the long run, returns from residential real estate match returns from share market investments. This conclusion is also supported by a study undertaken by Russel Investments and published by the Australian Stock Exchange, the <a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">Long-term Investing Report, July 2013.</a>
It is important to stress that residential property is a long term investment option – it delivers, but requires patience. Consequently, this means it can be outperformed over a short-term by other types of investments.
Take gold for example:
 <img alt="property_prices_vs_gold" src="/images/stories/2014/02/10/property_prices_vs_gold.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Over the long run, residential property outperformed gold. However, over a short-term, those investors who piled into gold in 2005 would have experienced a much greater rate of return than property owners - even after the 2012 and 2013 falls in gold price are factored in.
 <img alt="property_prices_vs_gold_short_term" src="/images/stories/2014/02/10/property_prices_vs_gold_short_term.png" height="299" width="470">
Sources: based on ABS and Perth Mint data
Just a note of caution: Do not take the above comment literaraly – property owners could still come on top, despite the proportionately smaller increases in prices compared to gold because of the leverage that is usually applied when buying a property.
For example, a $100,000 cash investment in gold in 2005 would now be worth $250,000 (i.e. $150,000 increase). That amount invested in the right property worth $400,000 in 2005 (i.e. as 25% deposit) would deliver by now $200,000 extra in owner’s equity.
There is one more reason why property should be treated as an investment. In particular, if you believe in the merits of diversification, individuals should always aim to spread their wealth across a wide range of assets to minimise financial risk.
Residential property is an asset class with proven long-term security, hence should be considered as a part of well diversified financial portfolio.
All working Australians already participate in local and overseas stock markets, various cash instruments and/or commercial property market via the superannuation funds they belong to. However, these funds do not invest in residential property.
Dixon Advisory was the first Australian company to offer individuals the opportunity to invest in residential property in the <country-region>USA</country-region> via its <country-region>US</country-region> Masters Residential Property Fund, but not in Australian property. So, diversification into Australian residential real estate is only possible via direct investment in your own home or in the investment property (as an individual or via self-managed super fund).
All in all, residential property is an investment regardless of whether it can be morally justified, or whether those buying the property do it with full consciousness of this fact or not. It is simply because the returns are too good and too consistent to treat it otherwise.
The social aspect of housing, that is, as an “affordable shelter”, is very important and should be widely debated. However, in my opinion, the issue stands a much better chance of being addressed properly with tailored solutions aimed at assisting specific sections of the community; rather than with Robin Hood like polices advocated by some commentators, that can potentially destroy the investment value of property in Australia.
Residential property constitutes a significant part of the wealth of this nation. There is merit in the aspiration to own a property as a way of building and accumulating wealth, and therefore, there is a good reason to keep the 'Australian dream' alive.
Undermining this aspiration and shaking confidence of Australians in property will not end well – either fif it leads to destruction of national wealth, or for those who are persuaded to opt out of participation if history continues unchanged. 
Arek Drozda is an independent analyst who has worked in the public and private sectors for over 20 years in business development, data analysis and in building geographic information systems.
 
<hr>
 RELATED ARTICLES BY AREK DROZDA:
<a target="_blank" href="/news">Putting property investment losses into perspective</a>
<a target="_blank" href="/news"></a><a target="_blank" href="https://www.propertyobserver.com.au/finance/australian-property-prices-explained-independent-analyst/2014011367181">Australian property prices explained</a>
 
<hr>
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adrozda-Nq9GwoWWBW

An investment or just a roof over your head: How should we treat residential property?

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Some interesting data suggests that low interest rates are working their magic and consumers are enjoying the spoils of low mortgage repayments.
Retail trade punchy
<img alt="Graph: Monthly Turnover, Current Prices, Trend Estimate" src="https://www.abs.gov.au/ausstats/abs@.nsf/a866861f12e106e0ca256a38002791fa/3dda13ecdc094b1cca257734002042f2/Body/0.1928!OpenElement&amp;FieldElemFormat=gif" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: ABS
Very nice results, as trend retail sales rose by 0.6% month on month in December or 0.5% month on month seasonally adjusted.
Reported the ABS: "The seasonally adjusted estimate rose 0.5% in December 2013. This follows a rise of 0.7% in November 2013 and a rise of 0.5% in October 2013."
This is another punchy retail print which suggests that consumers are getting into the swing of things.
As you can see, things were pretty slow in early 2013, but over the past six months retails sales are humming along at an annualised pace of 6.5%, which is a very solid rate of growth.
Note that we have had five straight months of growth at 0.5% or above, which hasn't happened since 2003, when we were in property boom-time.
Michael Pascoe made some <a target="_blank" href="https://www.smh.com.au/business/comment-and-analysis/forget-bananas-were-a-coffee-republic-20140206-3238w">interesting observations</a> over at the Sydney Morning Herald where he advises that rather than listen to the complaints about Aussies 'doing it tough', we should look at the story that the actual numbers are telling:
"Instead of nervously counting our pennies in the face of 'cost of living' headlines, what we’re doing is eating out much more and keeping baristas employed. The star sector within retail continues to be restaurants, cafes and fast food outlets, as the accompanying graph shows.
"On the raw original number, we spent $3,523 million eating out in December, 10% more than in December, 2012. On the trend series, the growth was 8.2 per cent and the seasonally adjusted series scored 8.3 per cent growth."
He's not wrong.
Here is the chart showing the growth in the cafe, restaurant and takeaway food services sector (I like to think that I have contributed here in own my small way!).
<img alt="Cafes, restaurants and takeaway food services sector. Source: ABS" height="188" src="https://images.smh.com.au/2014/02/06/5136373/nar-abs-cafe-300x0.png" width="320" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: ABS
Exports flying
Then came a pleasant surprise with the trade data – a second month of surplus for the Aussie economy.
No prizes for guessing where the surplus was sourced from: a large surge in iron ore exports to China, with export values roaring up to a new record high, both for iron ore and for China exports in aggregate.
Let's hope those commodity prices stay healthy as we continue to move into the production phase of the mining boom and the economy can really start to pick up.
Only a mug tries to pick the GDP result, but throw in a a pick up in housing construction and you might start to be looking at a decent result when Q4 print is released in March.
Markets
And what of the impact on markets?
Well, share markets were cheered at last, the XJO (ASX 200) jumping into the green by more than 1.1% at the time of writing.
Currency markets seem increasingly certain that the economy is picking up, the unemployment rate will start to fall, and that we have seen the last of the interest rate cuts for the cycle.
The Aussie dollar is all the way back up at 89.7 cents.
As for property markets, well, they have not really shown any signs of cooling at all.
In fact, if you drill into the data, you will be able to identify some of the trademark signs of an imbalanced market.
SQM Research's Louis Christopher <a href="https://propertyupdate.com.au/sydney-records-lowest-number-of-listings-since-2008-louis-christopher/" target="_blank">has highlighted</a> how Sydney's stock on market has collapsed by 17% year on year to its lowest level since the stock on market index was created.
Boom-time looks set to continue in the harbour city.
On the flip side, Darwin has 25% more stock on market than a year ago, which is likely to stall the market, says Christopher.
<img alt="sq1" height="125" src="https://dev.propertyupdate.com.au/wp-content/uploads/2014/02/sq1.jpg" width="400" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: SQM
Meanwhile, RP Data's Cameron Kusher updated his time on market index, and found that time on market has fallen to the lowest levels on record.
Dwellings not sold at auction are selling faster than we have seen recorded before (28 days for houses and 35 days for units).
Sydney has led the way in this index in recent history too.
<img alt="TOM" height="145" src="https://ci5.googleusercontent.com/proxy/nw2AS3w5o_Szf920cBksV80z9zx6IICeSnL10WJnbOhojkzR4CaeuXAAwNhtl2Y5JkrlNf6eNT5hK4NpBjAnkYx_mrCYYbK_5nrD7F-l_w=s0-d-e1-ft#https://blog.rpdata.com/wp-content/uploads/2014/02/TOM.jpg" width="400" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;">
Source: RP Data
All in all, the evidence suggests that no more interest rate cuts appear necessary. Now, we just need to employment figures to pick up an the economy could be off and running.
Pete Wargent is the co-founder of <a rel="nofollow" target="_blank" href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a rel="nofollow" target="_blank" href="https://petewargent.blogspot.com/">blogger</a>.
His new book '<a rel="nofollow" target="_blank" href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>' is out now.
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Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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New apartments

New townhouses

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