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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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?

When buying an apartment, most people compare the big-ticket items first. Floorplans. Kitchens. Balcony size. Natural light. The view.

But there's one everyday consideration that often doesn't come up until after moving in: how parcels are delivered.

As online shopping has become part of everyday life, parcel deliveries have shifted from an occasional event to a regular occurrence. Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally.

For apartment residents, that can present a challenge.

If nobody is home to accept a delivery, parcels may be redirected to a nearby Post Office, left in a building lobby or common area, or require building management to step in. In higher-density buildings, where dozens or even hundreds of residents may receive deliveries each day, parcel management has become an increasingly important part of everyday living.

That can create a range of frustrations. A missed delivery often means making time to collect a parcel elsewhere, while packages left unattended in foyers or mail areas can create clutter and increase the risk of theft. What seems like a minor inconvenience can quickly become a recurring issue for residents who shop online regularly.

It's one of those details that rarely features in a display suite but can have a noticeable impact once residents move in.

As a result, buyers are beginning to look beyond traditional apartment features and consider how a building supports day-to-day convenience, including whether there are secure options for receiving deliveries.

Australia Post's Parcel Lockers provide one solution.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/CkF2oKmlACg?si=C50sDaoUUn2nuLmq" title="YouTube video player" width="560"></iframe>

Rather than having a parcel delivered directly to an apartment, eligible deliveries can be sent to a nominated Parcel Locker. Once the parcel arrives, residents receive a notification through the AusPost app or SMS and can collect it using a QR code or one-time PIN at a time that suits them.

The Parcel Locker network now includes more than 1,500 locations nationwide, with installations at Post Offices, shopping centres, transport hubs and an increasing number of residential developments. By providing a secure collection point, Parcel Lockers help reduce missed deliveries and avoid parcels being left unattended in common areas.

For developers, parcel infrastructure is becoming another way to improve the resident experience. Rather than relying on concierge staff or leaving parcels in communal spaces, secure collection points help streamline deliveries while preserving the presentation and functionality of shared areas.

For buyers, it's a reminder that the best apartment features aren't always the most obvious.

A generous floorplan or quality finishes might help narrow the shortlist, but the conveniences that simplify everyday life, whether that's EV charging, secure bike storage or reliable parcel delivery, often become the features residents appreciate most once they're living there.

The apartment feature many buyers don't think about, until their first missed delivery

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A Potts Point one-bedroom bolt hole fetched $684,000 at weekend auction.
The <a href="https://www.mcgrath.com.au/buy/apartment-potts-point-nsw-2011/232659/?searchID=43770266" target="_blank" style="line-height: 1.3em;">one-bedder in the Gemini building</a> last traded in 2007 at $405,000 when bought by the property developer Peter Gaunt and his partner, vet Dr Kevin Foster.
39/40 Victoria Street sold through McGrath agents Richard Bonouvrie and Laura Bitar who were quoting upwards of $550,000. It is a one bedroom, one bathroom third floor unit without car space.
The price represented $18,000 a square metre for the 38 square metre apartment with city views. It is among the late 1960s modernism style apartment blocks designed by Harry Seidler. The twin seven-storey Gemini apartment complex comes with rooftop pool.
It was up for rent recently with its asking rent falling from $650 a week to $580 a week over the month it was advertised.
Its sale at the last asking rent would reflect 4.4% yield. The building's highest prior sale was $560,000 last November which was put up for rent at $590 a week which eased to $570 a week earlier this year.
<img src="/images/2014/10/24/potts-point-oct-24-floor.jpg" alt="">
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jchancellor-FAypfDUnLy

The 38 square metre Potts Point, Sydney unit that fetched $684,000

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At times it is possible to become so engrossed in analysing weekly data series concerning the Australian economy and housing markets that we neglect to recap on the bigger trends unfolding over the years ahead. Here are four of them...
Trend #1 – Rebalancing: The “Great Rotation” is well underway
The Reserve Bank’s best laid plans to rebalance the Australian economy away from mining construction and towards a residential construction boom have been vigorously denigrated at almost every step along the way.
Variously it has been argued that credit growth was too low, land prices too high and that a sharp property market correction was assured.
And yet while the transition has by no means been perfectly engineered, dwelling prices have recovered fairly robustly in most cities, supply has begun to follow accordingly, and 2015 is shaping up to be a prodigious year for dwelling construction.
Building activity has already scaled levels not seen for two decades, while dwelling approvals are all but brushing around 200,000 on a rolling annual basis, reflecting a substantial volume of supply in the pipeline as the market responds.
<img src="https://4.bp.blogspot.com/-60LCdZCJOcw/VEw-6PyMnkI/AAAAAAAAQsA/02Dl2UDlzm4/s1600/1a%2B-%2BBUILDING%2BAPPROVALS.jpg">
From an economic perspective this is a welcome result, especially since previous research has proven residential construction to unfurl a strong <a href="https://petewargent.blogspot.co.uk/2014/07/construction-multiplier" target="_blank">multiplier</a> effect.
Of course, there are always weak links in the economic data.
Major renovation activity is moribund, which has continued to shave irritating fractions from housing investment’s quarterly contribution to GDP growth.
The dearth of renovation activity is no doubt partly a result of the structural shift towards apartment dwelling, and to some degree it reflects the expensive nature of detached housing stock in the capital cities.
There is also a generational factor at play, with younger family buyers having used first home owner grants to buy new properties or in some cases being priced out of the detached housing sector entirely. In the UK Homebase announced this week that it would close a quarter of its 323 stores as Brits also fall out of love with renovating and DIY.
Paradoxically, while Australian television viewers are bombarded by an artillery of cookery and renovation shows, official ABS data continues to show retail turnover for takeaway and café meals booming to unprecedented levels and renovation activity in most states dying a slow death.
We seem to enjoy watching others rustle up fancy meals and renovating houses; actually doing the stuff ourselves, not so much. If capital growth in earlier property market cycles was once in part illusory, driven by improvements to the existing stock of dwellings, this is not so much the case today.
<img src="https://1.bp.blogspot.com/-XCUvcgKBfwk/VEw_EIF4pAI/AAAAAAAAQsI/E7VHQKpr8_U/s1600/1b%2B-%2BALTS%2BAND%2BADDS.jpg">
Overall, though, the picture is strong for residential construction activity – for units and apartments in particular - and the aggregate new capex volumes in 2015 will not represent anything like the disaster that had been feared as the resources-driven engineering construction boom unwinds.
<img src="https://1.bp.blogspot.com/-1fR66lz8QHs/VE1pu1BbFWI/AAAAAAAAQuw/BqkILtQ3r-0/s1600/1c%2BRESI%2BCONSTRUCTION%2BWORK%2BDONE.jpg">
The above having been said, dwelling investment alone can only bridge so much of the gap.
As has been well documented previously, residential construction activity represents only a relatively small percentage of GDP and itself cannot offset the forthcoming plunge in mining capital investment.
More heavy lifting will be required from other sectors of the economy, and the net result of this is that the official cash rate will be lower for longer, with perhaps up to 18 months or more of uncommonly low interest rates ahead.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Trend #2 – Real rental growth is dead
It is often said that a “quest for yield” is dramatically altering investment decisions, wrenching savers out of cash into the risk asset classes in a search for acceptable returns above the rate of inflation.
While this may be true of the equity markets, net yields in residential property are in fact low and heading lower, and the incentives to invest in residential real estate are largely centred upon expectations of reliable future price growth as an inflation hedge.
One of the most notable trends playing out through this cycle is that levels of investor activity are set to break through unparalleled levels, with the Reserve Bank’s own financial aggregates data showing that the gradient of credit growth relating to investment housing continues to rise more steeply than that associated with owner occupiers. 
The inescapable conclusion of this is that property buyers seeking capital growth must anticipate the locations investor funds will flow to, which research has shown are very heavily concentrated in the inner and middle ring suburbs of the large capital cities.
As each month passes further evidence also gradually comes to light that the official data may be materially understating the role of foreign investment in the capital cities, particularly from Asia, and the real level of investor activity could be significantly higher still if offshore funds were to be captured effectively.
<img src="https://1.bp.blogspot.com/-lQmOezz6SEg/VEw_YFqc4KI/AAAAAAAAQsY/gf1XucXGJq4/s1600/2A%2B-%2BOO%2BVS%2BINVESTORS.jpg">
While these trends are doubtless pushing inner city dwelling prices higher, the corollary is that with greater volumes of supply coming online - a high proportion of which is investor owned – real rental growth is declining.
While the rate of rental inflation has held up reasonably well in supply-constrained Greater Sydney to date, where the population is also booming, the risks for most cities are to the downside (and in some smaller cities such as Canberra, nominal rents have already turned alarmingly negative).
<img src="https://1.bp.blogspot.com/-fqMtUdBim-U/VEw_jz_NXTI/AAAAAAAAQsg/t4AeS0Aw99M/s1600/2b%2BRENTAL%2BGROWTH.jpg">
Article continues on the next page. Please click below.
<div>
<hr class="system-pagebreak">
Trend #3 – At long last…it’s time for Brisbane to shine
</div>
Sydney has become the Antipodean equivalent of London and the residential property market just keeps on keeping on.
An imperiously strong FY14 will be followed by more of the same in FY15, with SQM Research forecasting a further 8 to 12% growth for the harbour city.
The supply versus demand imbalance in Sydney has been well known about by those close to the market for half a decade, and dwelling price growth continues to respond accordingly.
Variously Australian cities face considerable challenges. Adelaide’s labour market and economy are lacklustre, Melbourne has a surfeit of supply and of sellers, while Perth is juggling an awkward transition from mining construction to production in concert with a decline in Australia's terms of trade. Queensland aside, full-time employment in regional Australia has stalled completely and is actually lower now in the major states than it was way back in 2006, <a href="https://petewargent.blogspot.co.uk/2014/10/city-versus-country-widening-jobs-gulf" target="_blank">as I analysed here</a>.
We have taken great care to analyse the Brisbane data for false dawns and have refrained from calling prematurely for a marked uplift in prices, but the data suggests that at long last it is time for the maroon of Queensland to have some time in the sun.
<img src="https://3.bp.blogspot.com/-4G2nnN-OvNI/VEw_uGbTnqI/AAAAAAAAQso/5LGtQAgrOIo/s1600/3A%2BOO%2BBY%2BSTATE.jpg">
The recovery in Brisbane housing finance to date has been studious rather than explosive, but upon closer inspection of the figures we see that while most states have recorded seasonally weak mortgage finance data since June, Queensland is going from strength to strength, with owner occupier commitments increasing by another 15% over the past year.
It has been a significant bounce back for Queensland owner occupier finance activity and dwelling transaction levels since 2011, and more timely data from mortgage aggregators suggests that there has been further strength through to October 2014.
<img src="https://2.bp.blogspot.com/-CJyzCOsCqkk/VEw_2m4cllI/AAAAAAAAQsw/hhuyueuz8dI/s1600/3b%2BQLD%2BOO%2BBY%2BMONTH.jpg">
We called the Sydney property investor boom long ago and took action accordingly - you would have to be living under a rock not have heard about it by now.
However the ABS Lending Finance activity data that investors have not yet fully come to the party in Brisbane - at least, not domestically.
Enquiries and mortgage broker data have indicated that a steady rotation towards Queensland is taking place, with interstate investors enticed by stronger yields and considerably more attractive entry prices.
<img src="https://2.bp.blogspot.com/-te6rwa5azak/VExAAz-J3pI/AAAAAAAAQs4/Bms_8hmDnJA/s1600/3c%2BBRISBANE%2BINVESTORS.jpg">
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Trend #4 – Asset selection will be critical in this cycle
For all the above, buyers in Brisbane need to undertake more educated investment decisions than in cycles past, and asset selection will be critical to a successful outcome.
The coming upturn in Brisbane is not resultant from a chronic undersupply such as was the case in Sydney, with more attached housing stock (units and apartments) approved in Brisbane on a rolling annual basis than we have previously seen.
<img src="https://1.bp.blogspot.com/-wYAUJvwvyUc/VExAJMWDI8I/AAAAAAAAQtA/lvFGjWGjjWo/s1600/4a%2B-%2BCAP%2BCITY%2BUNIT%2BAPPROVALS.jpg">
The clear implication of this is buying generic, off the plan city apartment stock is an almost guaranteed route to a sub-optimal investment outcome, and the return on investment from such a strategy could easily be negative.
Not only do investors need to steer clear of the standout pockets of looming apartment oversupply and elevated vacancy rates, they must look to source stock which will retain a level of scarcity value through the cycle.  For units this can mean boutique blocks, river views or district views which will not be subsequently built out.
The apartment construction boom will be effectively absorbed by population growth in due course and over time, yet Brisbane will not any time soon see a repeat of the dramatic boom in interstate migration which played out in previous cycles.
<img src="https://1.bp.blogspot.com/-a1jq7bbVZ60/VE1qksOPb7I/AAAAAAAAQu4/U_5W0mUT9Do/s1600/4B%2BPOPULATION%2BGROWTH.jpg">
Population growth in Queensland remains very strong, but in common with other mining states, the pace of growth is presently declining.
<img src="https://2.bp.blogspot.com/-AXYPUB5A7pg/VE1quBf3vBI/AAAAAAAAQvA/-Er6P_hW4Ec/s1600/4C%2B-%2BQUEENSLAND%2BPOPULATION%2BGROWTH.jpg"> 
As the mining construction boom begins to unwind net interstate migration to Queensland has slowed, and it will be natural increase combined with net overseas migration which drives Brisbane forward in the immediate future.
Informed investors will take note of the property types favoured by immigrants, leaning towards favoured modern types of investment housing (ideally, as noted, with water or district views which will not be built out).
Headwinds and challenges persist in the local economy in Brisbane, as indeed is the case in most Australian capital cities.
Previously encouraging labour force growth appears to have hit something of a plateau lately, and while strong construction employment is a welcome start, Australia needs to stimulate a broad-based recovery in the services sector and encourage household consumption.
<img src="https://3.bp.blogspot.com/-2XfKBMaPJrE/VExBUEXP0KI/AAAAAAAAQtc/HOwPOqfsEbs/s1600/4D%2BCUM%2BJOBS%2BGROWTH.jpg">
Price growth for Brisbane and Sydney ahead
Dwelling price growth in Brisbane has been weak for more than half a decade with prices having declined from peak to trough by close to a fifth in real terms, which, with interest rates at exceptionally low level might give an indication as to the potential quantum of a successful rebound. After a prolonged hiatus, sentiment has turned a corner and improved prospects lie ahead.
BIS Shrapnel forecasts capital growth in Brisbane of 17% over the next three years, while SQM Research’s forecast of 8 to 12% capital growth in Sydney will continue to attract investors in the harbour city.
Over the longer term Residex forecasts capital growth tracking at 5 to 6% per annum in Sydney and Brisbane.
We will be buying investment outstanding properties for clients in both cities in 2015.
You can visit <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) or Pete's <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blog</a>.
His latest book is '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' .
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pwargent-M4siyDbqQY

Four major housing market trends for this decade

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GUEST OBSERVATION
<ol>
<li>
Save Time and Money Save time for fun stuff and hobbies by not having to do all the work in and around a large house. Start visualising what you can do with all your free time in the future. Free up your lifestyle and travel the world. Enjoy less preparation time when leaving your home. Save money by simply having less space to put furniture, TVs and electronic equipment, appliances or decorative items. Prioritise and only use what is necessary and functional in a smaller space. 
</li>
<li>
Save Energy Reduce your carbon footprint by using less energy for heating and cooling, and reducing your water usage in the kitchen, bathrooms and for your garden. Contact your local energy provider to check out your savings and visit some of the new retirement resorts that meet highest sustainability standards. 
</li>
<li>
Improve Your Wellbeing through De-cluttering De-clutter and simplify your life! Let go things from the past and make space for new and exciting experiences. Become organised and more efficient on a daily basis. Create an inspiring and functional space throughout your home. Creative organisation is the key to making the most out of your smaller space. Enjoy being more efficient in everything you do. Make the most out of your new lifestyle through creativity and focusing on the essentials. 
</li>
<li>
Splurge on Feature Pieces<ins cite="mailto:Helen" datetime="2013-10-20T12:05"> </ins>Get that one designer piece you always wanted and make it a feature in your new home. Work your beloved pieces around it and start mixing and matching to create a personal home. Work out a clever room layout and make the most of a more compact space. 
</li>
<li>
Start a New Chapter of Your Life and Be Happier Be courageous, challenge yourself and embrace the change! Make a decision, and you will instantly feel better. Enjoy your new lifestyle with fewer chores around the house and more time for leisure, spending time with family and friends, and loving your new home. Use a happiness journal to be happier every day, achieve a happy home and eventually refine your apartment lifestyle.</li>
</ol>
Bettina Deda is an interior stylist and author of '<a href="https://www.bdcolourdesign.net.au/downsizewithstyle/home/#2">Downsize With Style</a>'.<a href="https://www.bdcolourdesign.net.au/downsizewithstyle/home/#2"></a>
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BettinaDeda-UST3RDdkuY

Thinking about downsizing? Five reasons to do so sooner rather than later

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GUEST OBSERVATION
I don’t usually get many comments in response to my articles, so it was a real thrill to receive a full length dissection of key points from my latest story titled '<a href="/expert-insights/buying/lies-damned-lies-and-housing-statistics">Lies, damned lies and housing statistics</a>'.
I always welcome constructive criticism since variety of well argued opinions promote better understanding of facts. Ultimately, this is what we are all after – an informed community with well balanced opinions and not prone to fall under the spell of any particular ideology. 
In the interest of promoting that better understanding of property market in Australia, I would like to revisit a few points from <a href="/expert-insights/buying/subjectivity-damned-subjectivity-and-housing-statistics">Joseph's (aka Bullion Barron) commentary</a> to reinforce the original point made in my article – data does not lie, only people interpret it incorrectly or deliberately omit inconvenient truths to advance their own agendas.
My intention is to highlight that if one is prepared to dig deeper, there is much more to official data than often realised and that too narrow an interpretation of facts can lead to completely incorrect conclusions. 
In my previous article I presented a chart showing that, in relative terms, Brisbane, Melbourne and Perth housing prices grew much stronger in the last 28 years than Sydney prices. It concluded that the recent jump in Sydney prices may be just a long overdue catch up – the recent strong growth is nothing out of ordinary.
Further evidence was that Sydney prices grew only a tad over and above the weighted average of eight capital cities and that purchase affordability is still very good, in historical terms.
My objective was to demonstrate that if Sydney property prices were indeed out of control, we would have seen the evidence no matter what statistic was used. This was clearly not the case.
To counter my arguments Joseph (Bullion Barron) referred to information published on the internet by him and other property market commentators. Let’s examine a couple of pieces of information in detail to determine if indeed this information can decisively undermine my earlier conclusion. 
Case One:  Low rental yields as a proof of high level of speculation and overvaluation
The following chart was presented as the evidence (sourced from RESIDEX August 2014 report, indicating median values and rental yields for houses).
<img src="/images/2014/10/27/arek%20oct%2027%20one.jpg" alt="">
Source: RESIDEX
In order to determine if this data really proves speculation and overvaluation we would need to know if Sydney and Melbourne yields are indeed out of ordinary. That is, we would need to find out at least “how low is low” - by comparing current yields to those from the past, as well as to other risk free options. So, let’s put this information into a broader context.
Firstly, as any avid follower of the property market will know:
<ul>
<li>Rental yields are always higher in smaller capital cities and in the country than in larger cities. This pattern is clearly visible in the provided data but we cannot determine whether the gap between Sydney and other cities is reasonable or not;</li>
<li>Yields always fall when prices grow strongly (simply because rental contracts are usually a year in duration; as well, in many states rents cannot be adjusted more than once a year and more than by a certain percentage, so it takes time for rents to adjust to rising prices) – the table does not contain historical information for comparison so we cannot determine whether rental yields were always like this or whether they are declining or rising.</li>
</ul>
Please note, the author omitted yields for apartments which are in mid to high 4% for Sydney and Melbourne and do not show such a dramatic difference in comparison to other states and capital cities.
Examining rental yields from a historical perspective reveals that the current numbers are not the exception. For example, data published by SQM Research indicates that Sydney had similar yields in July 2010 (unfortunately, the data series does not go any further than that and I don’t have access to historical information from RESIDEX).
<img src="/images/2014/10/27/SQM_gross_rental_yield_Sydney.png" alt="">
Yields for apartments are currently at the lowest point since July 2009 but they are still well above 4%.
SQM Research charts for capital cities confirm the pattern that rental yield for houses are generally higher in smaller cities. However, the difference between the cities appears to be smaller than RESIDEX data implies (different methodologies may explain that discrepancy).
An interesting point to note is that Perth used to have yields in the low 3% in 2010, which is much lower than Sydney and Melbourne now. This is another indication that things may not be that extreme as yet.
And comparing alternatives, Sydney and Melbourne rental yields still look pretty reasonable. For example, the Reserve Bank of Australia (RBA) publishes cash deposit rates for financial institutions which in September 2014 were ranging from 1.25% per annum for a one month term deposit to 3.75% per annum for retail deposit and investment rates on savings accounts (for banks' bonus savings accounts with balances of $10,000 plus). So, even Melbourne’s 3.58% yield is not as bad in comparison as it can appear at the first glance.
I know what many are going to say: “But rental yields are gross yields, there are costs that need to be taken out; it makes more sense to keep the money in the bank…”
True, there are costs to be accounted for but commentators tend to forget that in case of property, total return consists of rental income and capital appreciation.
Keeping money in the bank returns only interest income. Property, even if not leveraged, can therefore deliver substantially more than cash in the bank.
That is why investors can accept lower yields, especially in the current low interest rate environment and when the stock market delivers so little in comparison.
Considering Sydney and Melbourne are our largest cities (so rental yields are expected to be lower than for the rest of the country), and that alternative investments appear too risky in comparison (i.e. the share market is not delivering), it would be hard to conclude that current rental yields are the undisputed proof that property market is out of control. Rather, it looks more like just a normal stage of the property cycle where prices jumped ahead and rents have not yet caught up to these higher prices. 
<address>Article continues on the next page. Please click below.</address>
<hr class="system-pagebreak">
Case Two: Value of investor loans for Australian states (12 months rolling basis) as a proof of out of control speculation by investors 
The following chart was presented as the evidence (sourced from Pete Wargent - a regular commentator on Property Observer):
<img src="/images/2014/10/27/arek%20oct%2027%20three.jpg" alt="">
Source: Pete Wargent
This chart is full of interesting twists. There is nothing wrong with charting raw data but special care needs to be taken with interpretation of such charts, and especially with comparisons between presented data series. Otherwise it is easy to draw totally incorrect conclusions. Let’s examine this chart a bit closer.
You will notice that it compares total value (i.e. 12 months running total) of property investment loans for states which have:
<ul>
<li>Widely varying population sizes,</li>
<li>Varying rates of population change, and</li>
<li>
Big differences in property prices. 
</li>
</ul>
Furthermore, the information is represented as nominal values (i.e. is not adjusted for the effect of inflation over time –a billion dollars nowadays is not equal to a billion 30 years ago). Not to mention there were differences in lending rules now and then…
In other words, a lot of the difference between the presented data series and the steepness of the rise in individual lines can be explained by the above listed factors. That is, in order to make a meaningful comparison between states, as well as relative change over time, we would firstly need to adjust the data to eliminate the effect of all these factors on the original data series. 
So, yet again “the proof” ends up raising more questions than providing answers.
I will leave the exercise of recalculating the data for another occasion since this is quite a time consuming task. Then and only then we will be in a position to confirm whether what is happening in Sydney with respect to property investing by individuals is indeed out of ordinary or only proportional to changes in the Australian economy and demographics.
There is one more interesting point to be noted about this chart. That is, it starts with values close to 0. Does it indicate then that in the 1980s there was hardly any investment in residential property by individuals?
Yet, as another set of data from ABS demonstrates, the proportion of rental properties in Australia remains relatively stable over time, ranging between 27-32% for many decades…
You will have to wait until another opportunity for the explanation of this apparent inconsistency. For now, I will just point out that “the rise of individual property investor” phenomenon dramatically exaggerates what is really happening in the rental end of the property market.
I have no doubt that Joseph’s (Bullion Barron) intentions are noble and that he and other commentators proclaiming that Sydney property market is out of control strongly believe this is the reality. However, as you can see, the data does not decisively support such a conclusion.
There are more inconsistencies and erroneous conclusions I could address in Joseph’s article but I think I have already made my point. I sincerely hope that you have enough insight and wisdom now to not accept any claims about the Australian property market without a dose of realism. 
Arek Drozda is an independent property market analyst.
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A dose of reality: Populist opinions v the property stats

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The Sydney home auction market has eased under the weight of over 700 properties going under the hammer this weekend.
There was a preliminary 78.9% weekend clearance rate, according to Australian Property Monitors.
The prior weekend's revised clearance rate dipped to 77%.
The underlying trend has weakened over the past month although remaining strong.
It was definitely still a sellers’ market, according to APM's senior economist Dr Andrew Wilson in the lead up to the super Saturday.
After Saturday's result Dr Wilson the weekend recorded the lowest clearance rate for three months. 
"The 78.9 percent result - although still strong, was nonetheless the second time in three weekends the clearance rate has fallen below the boom-time benchmark of 80 percent. 
"The underlying trend of the past month however continues to weaken with the four-weekend average clearance rate now standing at 80.6 percent compared to 82.9 percent over the previous four-weekend period.
"Record high auction listings may be a factor however in recently falling clearance rates as supply catches up with buyer demand.
"Sellers are clearly energised by high clearance rates, low interest rates, Australia’s best performing local economy and unsurprisingly still strong prices growth," Dr Wilson said.
This weekend the Sydney home auction market had 750 homes scheduled to go under the hammer. About 150 results remain to be tallied.
It was higher than last weekend’s 704 and up on the 691 auctioned over the same weekend last year.
Sales totalling $456 million were secured by agents. Saturday's 750 offerings was the highest total recorded since May and Property Observer gleans October will break the record for auction listings in Sydney for that month following record monthly performances over September and August.
The inner west hosted the most number of auctions this weekend with 134 followed by the city and east with 111.
The most popular suburbs for auctions were Paddington and St Ives on the upper north shore each with 11 auctions listed.
Of the six Paddington results, there were just the three sales.
Four of the six St Ives results were sales. 
Sydney’s inner west regained its usual mantle as the leading region following last weekend’s unusually low result with a strong 85.4% clearance rate – and from the highest volume of activity with 88 sales from 103 reported results. The south followed with 84.5 percent with next the lower north at 81.8 percent, the north west and the northern beaches each with 81.3 percent, the west 77.8 percent and the south west 76.2 percent.
<div>
Despite the APM data and interpretation, RP Data reported a contrasting conclusion. RP Data had the preliminary Sydney clearance rate of 78.1 per cent compared to 72 per cent last week and 79.7 per cent last year. 
</div>
<div> </div>
<div>
"After two lacklustre weeks the Sydney market has returned to trend," Robert Larocca from RP Data suggested.
</div>
<div> </div>
<div>
<div>"This was a strong week for auctions nationally and results suggest that the remaining eight weeks should provide good outcomes for sellers and plenty of choice for buyers," he said.</div>
</div>
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Sydney October auction strength easing says APM, but RP Data proffers otherwise

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Melbourne’s mega Super Saturday passed with a clearance rate of 73%, on the busiest of auction weekends sandwiched between the AFL Grand Final and Derby Day races.
This weekend's success rate compared to 72% last weekend and 73% on the same weekend last year.
There were 1471 auctions reported to the REIV today, with 1075 selling and 396 being passed in, 188 of those on a vendor bid.
The Saturday sales total came in at $933 million. Houses scored better than apartments with 75% to 69%.
The REIV had been expecting about 1,750 auctions across 307 suburbs today and tomorrow, so almost 300 results are yet to be included. There are some 60 auctions scheduled across Victoria on Sunday.
The top auction locations were Richmond (27 auctions), Hawthorn (26 auctions) and Glen Iris (25 auctions).
The REIV reported just the eight Richmond results with five sales topped by a <a href="/expert-insights/buying/melbournes-biggest-ever-weekend-auction-volume-with-an-underbelly-warehouse-thrown-in">$1,477,500 Brighton Street townhouse sale</a>.
The REIV said the last record weekend was 1,517 on the 15 December 2013 weekend.
Some 122 auctions are scheduled next weekend.
After today’s record number of auctions, there have been more than 31,000 Melbourne auctions held so far this year with more than a third of all homes being sold by auction, the REIV chief Enzo Raimondo said.
The suburb with the highest number of auctions so far this year has been Reservoir, with just over 500 auctions held.
The weekend's top sale was when 45 The Strand, Williamstown fetched $3,876,000, according to the REIV, although Property Observer is aware of the $4.45 million sale of 22 Victoria Road, Camberwell where there were three bidders at the Jellis Craig auction. Tavistock, the Henry Kemp-designed 1900 home came on the market at $4 million.
There was also the pre-auction sale of <a href="https://www.realestateview.com.au/Real-Estate/797-orrong-road-toorak/Property-Details-buy-residential-7694388" target="_blank">797 Orrong Road, Toorak</a> which had been listed with $4.5 million plus hopes through Marshall White agents Marcus Chiminello and Nicole French.
But the offering at 22 Walmer Street, Kew was passed in at $5.4 million with no bidders for Selbourne. Ditto 38 Chrystobel Crescent, Hawthorn which James Buyer Advocates reported was passed in at $4.1 with no bidders after two vendor bids.
At Armadale <a href="https://www.realestateview.com.au/Real-Estate/3-myamyn-street-armadale/Property-Details-buy-residential-7694896" target="_blank" style="line-height: 1.3em;">3 Myamyn Street</a> (pictured above) was passed in at a $4.3 million vendor bid, having been listed with reported $4.3 million plus hopes through Marshall White. 
The 1880s trophy home was renovated by architect Nicholas Murray in 2011 utilising its 662 square metre block behind its neo-Gothic facade. There is now $4,975,000 price guidance.
With 1197 results, APM reported a 75.4% Melbourne result which was up on last weekend and last year. 
 
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Steady sales gallop secures 73% success rate on record Melbourne auction weekend: REIV

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Dodgy financial planners will soon be named and shamed on a public register, in a move to make the financial planning industry more transparent and protect businesses and individuals from poor advice.
The register forms part of the federal government’s response to a five-month parliamentary inquiry into the <a href="https://www.smartcompany.com.au/growth/economy/42786-cba-announces-chair-of-financial-planning-review-unemployment-rate-now-at-6-shares-up-on-open-midday-roundup" target="_blank">Commonwealth Bank scandal</a>, according to <a href="https://www.afr.com/p/business/financial_services/public_shaming_for_rogue_planners_QAMKyItad5ZUzx5jefubeJ" target="_blank">The Australian Financial Review</a>. 
It will include advisers’ names, their registration number, qualifications and professional association memberships. Any bans, disqualifications or enforceable undertakings will also be listed.
Finance Minister Mathias Cormann said in a statement the register will be up and running by March 2015, and will be funded by increasing the current ASIC lodgement fee for Australian Financial Services licensees from $5 to $44.
“Our goal remains to ensure that we have a robust but efficient financial services regulatory system, which is competitively neutral so that people saving for their retirement or managing financial risks through life can access high quality advice they can trust and which is also affordable,” he says.
“The government will continue to work with the industry working group and all other interested stakeholders on efficient and effective ways to keep lifting professional, ethical and educational standards across the financial advice industry.”
Mark Rantall, chief executive of the Financial Planning Association of Australia, said he welcomed the announcement.
“This is something we’ve been calling for many years and in fact it’s part of our 10-point plan to raise standards and trust in the financial planning industry,” he says.
“Consumers being able to find who has the highest qualification – and in this case a certified financial planner which is the gold standard, and whether they have had any action against them – is really important for transparency so consumers get advice they can trust.”
Rantall says one of the interesting things to look out for when further details come to light is how the register will define what constitutes a ‘professional association’ as opposed to an ‘industry association’.
“Clearly a professional association has ethics, regulations and enforcement and a commitment to ongoing education,” he says.
“Unless an organisation has that at the most robust level then they’re an industry association, not a professional association.”
Rantall says it is critical for SMEs to access sound financial advice, and the new public register is a step in the right direction.
“Running an SME is probably one of the most rewarding things to do, but also one of the highest risk areas where you’ve got your own capital on the line,” he says.
“You need to be on top of your numbers and getting appropriate advice to ensure your business is not only compliant, but also has a solid plan including cash flow analysis so that you give yourself the best chance of success.”
In May, a Melbourne man who claimed to be a financial planner <a href="https://www.smartcompany.com.au/legal/42175-melbourne-financial-planner-faces-court-over-100-million-fraud-charge" target="_blank">faced the Magistrates’ Court</a> for his 10-year involvement in a fraud scheme said to be worth $100 million.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Public register for dodgy financial planners aims to clean up industry

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First home buyers heading to auction must keep a cool head, particularly on a weekend like the upcoming one in Melbourne. 
Excitement is the air ahead of a record number of scheduled weekend auctions.
There are close to 1,800 auctions lined up for the weekend across Victoria, according to the Real Estate Institute of Victoria (REIV), the most auctions ever held on a single weekend in the state. “I’m tipping this to easily outstretch any of the big auction weekends in the past, including the current record of 1,517 auctions set on December 14 and 15 last year – closely followed by 1,463 auctions on the pre-Cup weekend last year,” said the CEO of the REIV, Enzo Raimondo. "The city's auction market is in excellent form and we believe this record-breaking weekend will see the public turn out in large numbers.”
The top auction suburbs are:
<ul>
<li>RICHMOND </li>
<li> HAWTHORN </li>
<li> GLEN IRIS </li>
<li> PORT MELBOURNE </li>
<li> BRIGHTON </li>
<li> RESERVOIR</li>
</ul>
Source: REIV
With all the attendant excitement, how can you ensure you keep your calm this weekend? Here are our tips.
<ol>
<li>
Head in with your documents pre-prepared By now, you should have looked at your contract of sale, sought out legal advice, obtained a building and pest inspection (and any of your other checks and balances), undertaken any other required due diligence and prepared a cheque or other way to pay your deposit. There’s little time to do this on the day, so having all these things pre-prepared will go a long way to stop the last minute “morning before” rush. 
</li>
<li>
Engage an expert if you need the assistance If you are concerned about bidding, then it may be worth contacting a buyer’s agent to assist you in the bidding process. Alternatively, you may decide that bringing a “devil’s advocate” in the form of a trusted mentor, friend or acquaintance can assist you at auction. If you become more bullish under pressure, this may assist you in maintaining your restraint with bids. 
</li>
<li>
Gauge the crowd ahead of time Head to the auction early and gauge the crowd and the ‘vibe’ ahead of the start. If you’re heading in late you will be unable to weigh up your competition and you may encounter extra stress as a result. This will help you think strategy and determine whether or not you may be contending against another buyer. 
</li>
<li>
Position yourself thoughtfully When at the auction, don’t forget to position yourself carefully in preparation to bid. Property Observer editor at large Jonathan Chancellor <a href="/news/nsw/11-tips-to-avoid-becoming-spring-auction-pushover-buyers">recommends that you never sit in the front row</a>, or with your back to the crowd. “Take a corner position so you can survey all your competition,” Chancellor advises. 
</li>
<li>
Know your highest price and do not waver Before bidding, you should have determined the highest price you’re willing – and can afford – to pay. If you’ve made a thoughtful decision ahead of time, then this should enable you to set your limit on the day. If you do not make a researched judgment on the price then you may face overpaying in the heat of the moment. While it is debatable as to whether you should allow yourself to push a “few thousand” over your set price, it’s advisable that you determine to be comfortable to allow the property to go if it sails past upper limit. 
</li>
<li>
Step back Be confident and polite when bidding, but if you find yourself getting caught up or confused then it’s time to quickly re-assess. Step back, remind yourself of the value of the property and ensure you don’t get swept up in the emotion of the day. Similarly, if you find yourself bidding furiously against another buyer it is worth reminding yourself that you are both causing the other to pay more. Be alert and know when to show restraint.
</li>
</ol>
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jduke-EHk3XBmHkn

Six tips for keeping a cool head at auction

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GUEST OBSERVATION
There has been much talk about the “search for yield” in investment markets. 
Investor interest in decent yield bearing investments has seen the price of such assets rise and their yields (or the cash flow they provide relative to their price) fall. This is clearly evident during the last three years. 
The chart below shows the yield available on various Australian assets today versus what they offered three years ago. All have seen a fall in their yields to varying degrees. 
<img src="/images/2014/10/23/oliver-oct-23-one.png" alt="">
But what's driving this? Is it a bubble? What warning signs should we watch? What does it mean for investors?
Why all the interest in yield? 
The first thing to note is that interest in the yield or cash flow an investment provides is a normal part of investing. But it seems to become a greater focus at various points in time. This is particularly so when interest rates are relatively low and investors are a bit wary about going for growth.
In Japan it’s become the norm as interest rates have stayed at/near zero for 15 years. In the US and Australia, yield focussed investing was in favour in the 1950s when interest rates were low and investors still cautious after the Great Depression and WW2. It became particularly apparent last decade as investors started putting more into yield plays like property, infrastructure and credit as bond yields remained relatively low only to be interrupted by the GFC. It has since returned with a vengeance.
There are three main drivers:
<ol>
<li>Low interest rates have pushed bank deposit rates and bond yields down, all of which is encouraging investors into higher-yielding alternatives. </li>
<li>Reduced fear of economic meltdown has helped investors feel comfortable taking on more risk but with memories of the GFC and its aftermath still fresh, this is only in a cautious fashion. So there is a desire for the comfort provided by investments that get a high proportion of their return from income. </li>
<li>Finally, aging populations are driving a longer term interest in yield. This started last decade as the first baby boomers moved into their pre-retirement phase and is intensifying now as they are starting to retire. This is driving demand for investments paying decent income in the form of dividends, rent, interest payments, etc. That said, trying to get a handle on the precise impact of this is nigh on impossible given increasing retirement ages and longevity driving a need for a decent growth exposure. </li>
</ol>
Is it structural of cyclical? 
The safest option in investment markets is to assume something is cyclical (ie short-term) rather than structural (ie long-term) until proven otherwise. Demographic influences are clearly structural and long-term. However, there is a structural aspect to low interest rates that cannot be ignored. 
First, to state the obvious, interest rates have been trending down with lower peaks and troughs since the 1980s. 
Second, the period of near zero/low global interest rates that has followed the GFC doesn’t look like it is about to end anytime soon. While the low global rates and easy money of the last few years have been constantly met with scepticism and concern about inflation and higher rates around the corner, the reality is that it hasn’t happened.
We are now into the fourth year in a row where the hoped for lift off to above trend global growth has not happened. Global growth remains OK at around 3 to 3.5%, but it’s below trend and uneven with periodic flare ups of concern about recession and deflation as we have seen during the last month or so in relation to Europe.
While it’s dangerous to say “this time it’s different”, quite clearly the world is different to the pre-GFC environment with excess levels of saving, spare capacity and more cautious attitudes to debt resulting in sub-par, uneven growth and low inflation/deflationary risks.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
The impact of low bond yields 
The logic of the chase for yield can be seen in relation to Australian commercial property (ie office, retail and industrial property). The next chart shows average commercial property yields relative to 10-year bond yields. While commercial property yields have fallen over the last 34 years from an average of 8.3% to an average of 6.6%, the yield on bonds has literally collapsed.
While the step down in bond yields was initially treated with scepticism on the grounds that “it’s just a bubble” or “inflation will soon take off forcing yields back up”, the longer it has persisted, thanks to sub-par growth and low inflation, the more investors have come to expect bond yields to stay down. So they increasingly invest in yield bearing alternatives such as property.
<img src="/images/2014/10/23/oliver-oct-23-two.png" alt="">
Faced with the choice of investing in a 10 year government bond yielding 3.2% as they are in Australia now, or allocating to commercial property with a 6.6% average yield and capital growth of, say, 2.5% pa (ie inflation) giving a total return of 9.1%, an investor might well conclude the latter makes more sense. 
In fact, looked at this way the property risk premium – ie the return potential property provides over current bond yields – at about 5.9% is about as high as it ever gets.
<img src="/images/2014/10/23/oliver-oct-23-three.png" alt="">
And of course, the same logic can be applied to investment in assets such as infrastructure, shares and corporate debt.
But is the chase for yield on borrowed time?
Is it wise for investors to behave this way? Probably yes… until it goes too far, bond yields surge or growth disappoints.
Has it gone too far? 
Inevitably the search for yield will be pushed too far as it was last decade. Perhaps the greatest risks are seen to be around corporate debt where the gap between US investment grade and junk bond yields and US government bond yields has fallen to the range that prevailed prior to the GFC.
However, credit spreads remained around these narrow levels for many years in the mid-1990s and mid-2000s before trouble arose. Nor have credit lending standards deteriorated like they did prior to the GFC.
<img src="/images/2014/10/23/oliver-oct-23-four.png" alt="">
In terms of equities, there has certainly been a narrowing in the gap between the forward earnings yield on shares and bond yields. But, as can be seen in the next chart, this gap – or a guide to the risk premium shares offer relative to bonds – still remains relatively wide compared to pre-GFC levels.
<img src="/images/2014/10/23/oliver-oct-23-five.png" alt="">
And finally for real assets (if commercial property is a guide), as indicated earlier, the risk premium offered by commercial property relative to bonds remains about as wide as it’s ever been.
So overall, it’s hard to argue the search for yield has gone too far. That said, corrections like the one we have seen in shares and corporate debt markets during the last month are healthy in ensuring this remains the case.
Article continues on the next page. Please click below. 
<hr class="system-pagebreak">
What about the risk of an upswing in bond yields? 
The events of the last month, with renewed worries global growth and deflation, tell us that the immediate threat from higher interest rates is low. The US is closest to raising rates but global risks and a strong US dollar importing low inflation to the US could see that pushed out to the second half of next year.
Australia is under no pressure to raise rates, with sub-trend growth and low inflation, and probably won’t start raising rates till after the US and for both it will be gradual. Rate hikes aren’t even on the horizon in Europe, Japan and China.
What about the risk of slower growth? 
Slower growth is perhaps a bigger risk globally, with the global economic recovery remaining fragile. In the absence of a major external shock or a major monetary tightening, however, it’s hard to see a sharp slowing in global/Australian growth.
What to watch?
Our basic assessment is that the search for yield hasn’t yet gone too far. Key indicators to watch for signs that it has include the following:
<ul>
<li>Valuation indicators - such as price to earnings multiples and the gap between earnings yields and bond yields for shares, corporate bond yield spreads and the return premium property offers over bonds;</li>
<li>Signs global growth is becoming more synchronised and picking up and that global inflation is rising as a guide to global monetary tightening.</li>
<li>Global business conditions PMIs as a guide to whether growth is slowing again.</li>
</ul>
So far so good, but they are all worth keeping an eye on.
What does it all mean for investors?
While the yields and return potential across most assets has continued to fall, shares, non-residential property and infrastructure continue to offer better prospects than low yielding cash, government bonds and term deposits. Some value has also been returned to corporate debt following the recent back up in corporate bond yields.
Shane Oliver is head of investment strategy and chief economist at <a href="https://www.ampcapital.com.au" target="_blank">AMP Capital</a>.
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soliver-smf6LQXgW9

The chase for yield: What it really means for investors

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South Chinese developer Shunlide Group’s Australian offshoot, Surewin Pty Ltd, are set to build 62 new apartments in Ashfield in the company's first Australian project.
Marketed as <a href="https://www.onevictoriastreet.com.au" target="_blank">One Victoria</a>, the development is located on 2,958 square metre land surplus to the Wests Ashfield Leagues Club at 1 Victoria Street.
General manager of Surewin Australia Edward Cheung said that it took them five years to acquire the site.
“We selected international-class firms to partner with, and we’ve worked closely with the local council to ensure the apartments provide the prime living environment for the suburb yet still maintain realistic prices,” he said.
The six-storey building will see upper level apartments with views to the Sydney CBD to the east and Chatswood to the north.
<img src="/images/2014/10/24/Ashfield%20cutaway.jpg" alt="">
Ray White Erskineville’s Peter Shield expects a high level of demand.
“Ashfield is a naturally beautiful suburb surrounded by parklands and recreational attractions, and very convenient to the Sydney CBD via rail, bus or car,” said Shield.
“Surprisingly though, Ashfield has been largely neglected by quality developers, and apartments here have been primarily built to a price for investors.”
He notes that their research has found subdued median prices in <a href="/news">Ashfield</a> as a result, with the median sitting at $590,000, compared to <a href="/news">Summer Hill</a>’s $650,000, <a href="/news">Croydon</a>’s $667,000 and <a href="/news">Five Dock</a>’s $735,000.
“The apartments are 15% larger than Ashfield’s average, and all have at least one secure car space,” he said.
There are three studios available, at 44 square metres internally plus external space of up to 19 square metres, from $545,000.
<img src="/images/2014/10/24/Ashfield%20interior.jpg" alt="">
A further 14 one bedroom apartments from 52 to 58 square metres internally and external space spanning up to 21 square metres are priced from $595,000 upwards.
Two bedrooms, with the most options at 33 apartments, span from 81 to 95 square metres and the externals range up to 99 square metres. They are priced from $755,000.
Finally, there are 12 three bedroom options that are available from $995,000. They span 115 to 129 square metres with externals up to 96 square metres.
Each apartment comes with a 5.5 metre storage cage in the basement. There are 80 car spaces in the development.
<img src="/images/2014/10/24/Ashfield%20kitchen.jpg" alt="">
One Victoria is being designed by Nettleton Tribe, with a third of the site to be landscaping and communal space, with a central courtyard for residents.
Body corporate levies have been estimated at $600 per quarter for one bedroom apartments, $800 for two bedroom apartments and $1,100 for three bedroom apartments. Strata Choice came up with the estimations.
Deicorp is constructing the development, and work is scheduled for early-2015.
The expected completion date currently sits in mid-2016.
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