High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

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For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

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<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

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The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

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For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

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The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

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Joel Robinson

Buying with confidence: What NSW apartment buyers should check beyond the defect headlines

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

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Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

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The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

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According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

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Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

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Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

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Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

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<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

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A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

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The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

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?

For most Australians, buying an apartment is one of the biggest financial decisions they'll ever make

The location, floorplan and price are often the first considerations, but in recent years another question has become increasingly important: who is actually delivering the project?

A series of high-profile builder collapses, construction delays and defect concerns have fundamentally changed how many Victorians approach buying off the plan. The collapse of Porter Davis in 2023, which reportedly left around 1,700 homes unfinished, became one of the most visible examples of the risks that can emerge when a construction company fails. <a href="https://www.equifax.com.au/sites/default/files/lpassets/pdf/Final-Business-Market-Pulse-June-Sector-Deep-Dive-Report-2.pdf">Similar challenges across the broader construction sector</a> have left buyers asking more questions before signing a contract.

As Victoria continues encouraging higher-density housing to address supply shortages, transparency is becoming just as important as location or price.

One tool increasingly entering the conversation is the <a href="https://icirt.com/">Independent Construction Industry Rating Tool (iCIRT)</a>, an independent assessment framework designed to help buyers better understand the developer or builder behind a project. Originally developed by Equifax in consultation with government and industry as part of NSW's Construct NSW reforms, the system has since expanded nationally.

<h2 data-end="1519" data-section-id="7nmx3" data-start="1492">What is an iCIRT rating?</h2>

Most Australians are familiar with independent ratings in everyday life.

We compare ANCAP safety ratings before buying a car. We look at Health Star Ratings in supermarkets. Banks rely on credit assessments when lending money.

Until recently, however, there has been very little independent information available to help apartment buyers assess the business responsible for delivering a residential project.

That gap is what iCIRT was designed to address.

Builders, developers and other construction professionals with an iCIRT rating have demonstrated high-trust characteristics through an independent, evidence-based assessment across six criteria: Character, Capability, Conduct, Capacity, Capital and Counterparties. This involves a rigorous review of financial health, past project track record, and ethical conduct. Crucially, an iCIRT rating could help provide property buyers with confidence that they are working with a professional who has demonstrated the capability, capacity, and willingness to return and rectify issues.

Importantly, iCIRT is not a recommendation to purchase a particular property, nor is it a traditional credit rating. It is an independent assessment framework designed to provide objective information about a construction business using a <a href="https://icirt.com/sites/default/files/2025-08/iCIRT-Methodology-Issue1-May-2021.pdf">published methodology</a>.

The system has been widely adopted in New South Wales, where more than one-third of medium and large residential builders and developers now hold an iCIRT rating, representing over two-thirds of the state's residential building market by value as of 2025/26.

<h2 data-end="3126" data-section-id="h6ohtj" data-start="3084">Why buyers are doing more due diligence</h2>

For many buyers, particularly those purchasing off the plan, the biggest risk isn't whether they'll like the kitchen finishes.

It's whether the project will be delivered on time, to the expected quality, and by a company capable of completing the development.

<a href="https://icirt.com/sites/default/files/2026-07/iCIRT%202025%20Consumer%20Survey%20Report%20v05.pdf">Consumer research commissioned by iCIRT</a> found more than half of respondents believed current protections do not adequately safeguard buyers from builder insolvencies or defective projects. Other research found 88 per cent of prospective buyers would seek independent ratings or due diligence before purchasing, while 90 per cent said trust in construction professionals is essential.

That doesn't mean buyers should rely on a single rating alone.

Independent legal advice, understanding the contract, and seeking financial advice all remain important parts of the due diligence process.

However, an independent assessment can provide another source of information alongside those traditional checks.

<h2 data-end="4138" data-section-id="pquzxc" data-start="4094">Trust is becoming a competitive advantage</h2>

The conversation isn't only changing for buyers.

Developers are also recognising that trust has become an increasingly important part of the sales process.

Five years ago, purchasers typically asked about floorplans, finishes and settlement dates.

Today, sales teams are increasingly being asked about the developer's experience, financial stability, previous projects and construction partners.

For companies with strong governance and established delivery records, an independent iCIRT rating provides another way to demonstrate those credentials before buyers even visit a display suite.

According to Equifax, the assessment can also help businesses drive sales and <a href="https://icirt.com/resources-for-business/icirt-rating-helps-scion-secure-high-value-projects">secure high-value projects</a>, as well as identify operational improvements and <a href="https://icirt.com/resources-for-business/mirvac-reinforces-brand-trust-and-quality-independent-icirt-rating">attract top talent</a>.

<h2 data-end="4962" data-section-id="1j54ng5" data-start="4912">Beyond buyers: lenders are paying attention too</h2>

The influence of independent construction ratings is also extending beyond consumers.

According to Stamford Capital's Real Estate Debt Capital Markets Survey, an increasing number of lenders now incorporate iCIRT ratings into their due diligence processes when assessing residential development finance applications.

The survey found lender adoption has continued to rise, with many respondents saying independent assessments provide additional insight into governance, counterparties and delivery capability beyond traditional financial analysis. Some lenders also reported declining funding applications where businesses had poor or no ratings.

As construction costs remain elevated and access to development finance becomes more selective, demonstrating credibility is becoming increasingly valuable.

<h2 data-end="5801" data-section-id="1qazuxs" data-start="5772">What it means for Victoria</h2>

Victoria's apartment market is entering a new phase.

The state is seeking to accelerate higher-density housing while simultaneously introducing reforms aimed at improving confidence in residential construction.

For buyers, that means there are more tools available than ever before to research the businesses behind a project.

For developers, it signals that transparency is becoming another point of differentiation in an increasingly competitive market.

Buyers are asking more questions than ever before and increasingly expecting independent information, not just marketing material, before making one of the biggest financial commitments of their lives.

Find out how to get iCIRT rated <a href="https://www.icirt.com/sites/default/files/2025-08/iCIRT-Infographic-Assessment-Process-Final.pdf">here</a>.

<hr data-end="6469" data-start="6466" />
The information contained in this article is general in nature and does not constitute personal, financial, legal or tax advice. It does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it and, where appropriate, seek independent professional advice.

This article contains links to third-party websites. These links are provided for convenience only. Equifax Australia does not control and is not responsible for the content, accuracy or privacy practices of external sites.

Copyright © 2026 Equifax Australia Information Services and Solutions Pty Ltd. All rights reserved.

Buying off-the-plan in Melbourne? How independent iCIRT ratings are set to change Victorian property

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This week, a preliminary auction clearance rate of 72.8% was recorded across 1,494 auction results, with a total of 2,680 auctions held across the capital cities. Both auction clearance rates and auction volumes decreased last week, from 76.2% the previous week across 2,905 capital city auctions.
Currently, auction conditions are a lot stronger than they were at the same time last year. Over the corresponding week last year there were 1,983 properties taken to auction within the capital cities and RP Data recorded a clearance rate of 61.0%. It will be interesting to see if continuing high clearance rates encourage a further increase in the number of capital city properties taken to auction, given that current volumes are already so much higher than at the same time last year.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;" rel="wp-prettyPhoto[g2927]" href="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Capital-city.jpg" target="_blank"><img style="margin: 0px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; height: auto; vertical-align: bottom;" height="347" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Capital-city.jpg" alt="20140302 Capital city" class="alignnone size-full wp-image-2930"></a>
Last week was Sydney’s second week this year where the number of auctions held in the city was more than 1,000. So far this year, Sydney’s auction clearance rate has been consistently recorded at or above 75%, which is much stronger than conditions seen at the start of last year. Last week, the preliminary auction clearance rate was recorded at 77.9%, with 1,019 properties taken to auction in the city. Over the previous week, there were 1,101 Sydney auctions and the final auction clearance rate was recorded at a strong 84.2%, the highest auction clearance rate seen in the city since September last year.
One year ago, there were only 751 Sydney auctions held over the week and the clearance rate was much lower, recorded at 61.1%. The increase in the number of properties taken to auction across the city demonstrates that vendors are becoming increasingly confident of a successful sale and are more willing to market their property under auction conditions.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;" rel="wp-prettyPhoto[g2927]" href="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Sydney.jpg" target="_blank"><img style="margin: 0px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; height: auto; vertical-align: bottom;" height="310" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Sydney.jpg" alt="20140302 Sydney" class="alignnone size-full wp-image-2932"></a>
A preliminary auction clearance rate of 73.9% was reached from 1,319 auctions this week in Melbourne. This compares to 65.6% for the same time last year from fewer auctions.
This represents a substantial lift on the results a year ago and is a very strong result for the Melbourne market as it follows the highest volume of auctions for February on record.
Last month there were 2,623 auctions with a clearance rate of 71.5%. This was higher than the 2,571 recorded in 2010 although the clearance rate in February that year was 79.0%.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;" rel="wp-prettyPhoto[g2927]" href="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Melbourne.jpg" target="_blank"><img style="margin: 0px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; height: auto; vertical-align: bottom;" height="311" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Melbourne.jpg" alt="20140302 Melbourne" class="alignnone size-full wp-image-2931"></a>
In Brisbane, less than half of all properties where RP Data recorded an auction result this week sold (42.4%), however, much like the other cities, there were more auctions held in the city this week (148) compared to the same week last year (111), when the clearance rate was recorded at a lower 37.7%. Over the previous week, Brisbane’s auction clearance rate was recorded at 63.6% with 161 properties taken to auction.
Although conditions across the Brisbane auction market are currently much weaker than across the larger auction markets of Sydney and Melbourne, it is important to remember than unlike Sydney and Melbourne, auctions account for a much smaller proportion of the overall Brisbane market.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;" rel="wp-prettyPhoto[g2927]" href="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Brisbane.jpg" target="_blank"><img style="margin: 0px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; height: auto; vertical-align: bottom;" height="309" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Brisbane.jpg" alt="20140302 Brisbane" class="alignnone size-full wp-image-2929"></a>
Last week, Adelaide recorded a strong clearance rate of 75.0% with 97 auctions held in the city. Over the previous week, 118 Adelaide properties were taken to auction and RP Data recorded a final auction clearance rate of 59.8%. So far this year, Adelaide’s clearance rate has been recorded above the 70% mark, however prior to this, the clearance rate in Adelaide had not exceeded the 70% mark since back in September last year. The number of auctions held across the city over the same week last year was 70, with a clearance rate of 38.9%.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;" rel="wp-prettyPhoto[g2927]" href="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Adelaide1.jpg" target="_blank"><img style="margin: 0px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; height: auto; vertical-align: bottom;" height="312" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/03/20140302-Adelaide1.jpg" alt="20140302 Adelaide" class="alignnone size-full wp-image-2935"></a>
Auction volumes across the capital cities will be lower over the coming week due to multiple public holidays around the country. Currently, RP Data is expecting 1,402 auctions to be held across the capital city markets over the coming week.
Shana Miller is a research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
Melbourne auction commentary provided by Robert Larocca, RP Data’s Victorian housing market specialist
                      
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Capital city auction conditions a lot stronger than this time last year

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Each quarter the Australian Prudential Regulation Authority (APRA) publishes data on the exposure of Australian Authorised Deposit-taking Institutions (ADI).  The data is extremely useful as it provides highlights of all outstanding exposures (mortgages) and also some information about those written over the quarter.
<img class="aligncenter size-full wp-image-2915" alt="investor loans" src="https://blog.rpdata.com/wp-content/uploads/2014/02/investor-loans.jpg" width="470" height="171" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
The data indicates that across all ADIs, 66.7% of the value of outstanding loans is to owner-occupiers with the remaining 33.3% to investors.  Over time there has been little change to these proportions indicating pretty much a two thirds owner occupier to one third investor split.
<img class="aligncenter size-full wp-image-2916" alt="loans with offset" src="https://blog.rpdata.com/wp-content/uploads/2014/02/loans-with-offset.jpg" width="470" height="171" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Looking at the type of loans mortgagees have is also interesting. At the end of 2013 a record high 34.6% of all mortgagees had a loan with an offset facility.  The figure was up from 34.2% over the September 2013 quarter and 33.38% at the same time in 2013. 
The rising proportion of loans with an offset facility indicates to me that many mortgagees are utilising these facilities to reduce their mortgage liability whilst still having access to those funds.  This is supported by recent RBA data which indicates the typical mortgagee is around 21 months ahead in their mortgage repayments.
<img class="aligncenter size-full wp-image-2917" alt="offset loans" src="https://blog.rpdata.com/wp-content/uploads/2014/02/offset-loans.jpg" width="470" height="171" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Housing finance data has told us that the level of investor lending is at its highest point since late 2003 and not far off all-time highs.  Many investors choose to use interest-only mortgages mainly due to the taxation benefits they afford. 
The APRA data shows that a record high 35.0% of all outstanding loans are interest-only mortgages.  This figure is up from 34.6% at the end of the September 2013 quarter and 33.8% in December 2012.
<img class="aligncenter size-full wp-image-2918" alt="avg outstanding balance" src="https://blog.rpdata.com/wp-content/uploads/2014/02/avg-outstanding-balance.jpg" width="470" height="171" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
The average amount outstanding for a residential loan was recorded at $233,500 at the end of December 2013.  The figure is also a record high, up from $231,700 at the end of September 2013 and $228,300 at the end of December 2013.
When you consider that at the end of 2013 the median dwelling price across the combined capital cities was $540,000, the level of debt compared to the typical home price is relatively low however, this is unlikely to be the case for more recent purchasers and those with only a small deposit (we will touch on this shortly).
Perhaps more concerning is the fact that the typical amount outstanding for interest-only mortgages is $295,300, up from $294,300 at the end of the previous quarter and $294,100 at the end of 2012.  Those mortgagees that are not reducing their principal have much higher overall debt levels than those who are.
The data also highlights some information on those residential loans written over each quarter.  Over the final quarter of 2013, a record high 35.7% of new loans were for investment purposes, up from 34.4% in September 2013 and 32.8% in December 2012.  It is important to remember when I say record high the data is only available from March 2008 and housing finance data from the Australian Bureau of Statistics (ABS) suggests that investor activity was higher than current levels back in late 2003.
Over the quarter, the proportion of interest-only mortgages hit a record high of 38.8%, up from 37.2% the previous quarter and 35.0% at the same time the previous year.  Of course, the risks are that these buyers stretch themselves too far and when mortgage rates begin to be normalised they have an increased risk of default.
<img class="aligncenter size-full wp-image-2919" alt="80pct lvr loans" src="https://blog.rpdata.com/wp-content/uploads/2014/02/80pct-lvr-loans.jpg" width="470" height="172" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Perhaps most intriguing out of all the data is the fact that more than one third of all loans have a loan to value ratio (LVR) of greater than 80%.  What this means is that the mortgagee has less than a 20% deposit when purchasing and obviously these loans are inherently more risky.  As a result most ADIs will require the mortgagee to pay mortgage insurance on these loans. 
The high proportion of loans with an LVR of more than 80% is extremely topical at the moment given that New Zealand has recently introduced macroprudential tools to their lending environment.  What the Reserve Bank of New Zealand (RBNZ) have done is reduce the amount that NZ banks can lend to higher risk mortgages (greater than 80% LVR) only 10% of total lending can be for loans with an LVR of more than 80%.
Over the quarter, 34.4% of all new loans had an LVR of more than 80% which was down slightly from 34.6% over the September 2013 quarter and the same proportion as in the December 2012 quarter.  Although there has been a slight reduction, the proportion of higher LVR lending remains quite high. 
Interestingly, only 13.6% of total lending was for a LVR of more than 90% compared to 20.8% on an LBVR of between 80% and 90%.  The data indicates that most new mortgages are less risky (less than 80%) however, the higher risk lending still accounts for a large proportion of the overall market.
Overall the data provides a useful snapshot of the current lending environment.  The data indicates that the prevalence of investors and subsequently interest-only mortgages within the market is rising.  As we have highlighted previously, this is not without risks particularly if housing market conditions or monetary policy settings shift rapidly.  Should interest rates rise rapidly in the future, the interest proportion of mortgage repayments would also quickly rise with most mortgagees on variable rate mortgages. 
From an investors perspective this may make ownership of an investment property less attractive and from a high LVR purchasers perspective it could make meeting the mortgage repayments more difficult.  A high proportion of loans are still being written at an LVR of more than 80%.  As mentioned these mortgages are typically insured so the risk to the ADI itself is lessened however it doesn’t necessarily reduce the overall market risk if we see arrears and default levels climb in the future.
Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
               
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Decoding outstanding mortgage data: Is investment property looking less attractive?

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The Reserve Bank’s official cash rate is expected to remain at, or near, record lows for most of the year. That’s great news for mortgage holders but investors may be wondering what it means for capital values.
Interest rates are a key determinant of Australian property prices as the cash rate affects funding costs, with most people taking out a mortgage to buy, says ANZ chief economist Warren Hogan.
“When interest rates go down it will clearly support property prices and typically result in rising prices. When interest rates go up it will act as a headwind to property prices and will relate to property prices coming down,” Hogan says.
But it’s not a simple relationship, he says. “It depends on the situation in the market and the economy ... If you are cutting rates because the economy is in a hole you will not see prices rise.”
A range of other factors also drives property prices, diluting the effect of interest rate movements, says BIS Shrapnel senior manager – residential property, Angie Zigomanis.
“One of them is the general demand-supply situation in the city; affordability and economic conditions within the market as well,” Zigomanis says.
Population expansion and employment growth also influence prices, says Atchison Consulting managing director Ken Atchison.
“In Australia, migration has been a huge driver of demand due to the strong growth in the working population,” he says.
Atchison Consulting’s analysis shows only a weak relationship between changes in the RBA cash rate and changes in residential property prices in Australia.
<img width="470" height="318" src="/images/stories/2014/03/03/zoe-march-3-four.gif" alt="zoe-march-3-four">
Source: Atchison Consultants
From mid-1995 to mid-1996, cash rates were falling as property prices rose. The same occurred between 2000 and 2001. But at other times, such as around 1991, 2008 and 2011-2012, property prices fell as cash rates were cut.
Atchison’s analysis shows that US interest rates set by the Federal Reserve and the US dollar-Australian dollar exchange rate have as much of an impact on Australian residential property prices as local exchange rates.
<img alt="zoe-march-4" height="322" width="470" src="/images/stories/2014/03/04/zoe-march-4.gif">
<img width="470" height="335" src="/images/stories/2014/03/03/zoe-march-3-three.gif" alt="zoe-march-3-three">
Source: Atchison Consultants
Atchison says that’s because foreign investors are attracted to Australian property when interest rates elsewhere are low and the exchange rate is in their favour.
Additionally, Atchison says when interest rates overseas are lower, Australian banks find it easier to raise capital offshore for lending to Australian borrowers. With the banks more willing to lend, Australians find it easier to buy.
Local interest rate changes come into play in driving property prices indirectly through their impact on the broader economy, Atchison says.
The RBA lifts rates to reduce spending in the economy and control inflation. Higher interest rates force people and businesses to spend more on loan repayments, reducing their disposable incomes.
Conversely, cutting rates reduces mortgage holders’ interest costs, giving them more money to spend on goods and services.
Lower interest rates also make it more viable for businesses to invest and property developers to commence housing construction, which creates jobs and drives the economy.
Zigomanis says low cash rates improve the affordability of housing loans, which provides a trigger for price growth to occur. “Interest rates keep falling until the housing market stabilises and in a rising market, interest rates rise to stop the growth,” he says.
Despite the recent surge in property prices, most commentators expect the official cash rate to stay low for most of 2014. RBA governor Glenn Stevens noted in February, when rates were left on hold at 2.5%, that: “On present indications, the most prudent course is likely to be a period of stability in interest rates.”
Zigomanis says that with interest rates as low as they are, incremental changes will have less of an effect on the residential property market than they would have at times when rates were higher.
“People factor in a certain level of interest rates when they purchase. People look at what their interest repayments are now and where they could be,” Zigomanis says.
Less than six years ago the official cash rate was 7%. Less than two-and-a-half years ago it was 4.75%. “That’s probably in the back of minds for a lot of purchasers now potentially it could go back up to that level,” he says.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
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What the cash rate means for capital home values

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One of RP Data’s core services is supplying real estate agents with timely property data to assist them with undertaking comparative analysis of their local market place (amongst other things), which they in turn use to determine the appropriate listing price of a property.  Our services are used by approximately 70% of all real estate agencies nationally.  One of the important bi-products of our market share is monitoring the level of agent activity across our data platforms.
As a simple example, counting the number of Comparative Market Analysis (CMA) reports as well as monitoring other platform activity such as the number of logins and searches provides a unique insight around the number of homes which are likely being prepared for sale.  We use this metadata to provide a lead indicator for new listings about to enter the market.
RP Data’s Listing Index (RLI) is currently at record levels after the seasonal slump in real estate agent activity.  It’s normal for the market to slow down over the last week of December and throughout most of January; the slump is typically followed by a surge in real estate agent activity as industry participants emerge from the festive period.  The graph below tracks the national RLI. We recorded more than 65,000 activity events from real estate agents over the 28 days ending February 9, which is a record number across the series which extends back to January 2009.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/National.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2889" alt="National" src="https://blog.rpdata.com/wp-content/uploads/2014/02/National-580x154.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="125" width="470"></a>
The activity occurring across the RP Data platforms correlates well with the number of new listings entering the market over the coming weeks so we are expecting more properties to hit the market for sale as we approach the autumn season. Prospective vendors are likely to be confident considering the current housing market conditions are mostly favouring sellers rather than buyers – putting it simply, it’s a great time to be selling a property.
There is some variability in the amount of activity we are seeing from region to region.
Sydney’s RLI has returned to a level slightly higher than last year which is normal for this time of the season.  The index was elevated over the second half of 2013 in line with the strong housing market conditions and we expect listing numbers to track at roughly the same rate as what was recorded over the past six months which has been about 7,500 new listings each month.   Considering the run rate of sales across Sydney is tracking at about 8,860 per month we expect effective supply levels to remain tight across the Sydney market.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Sydney.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2891" alt="Sydney" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Sydney-580x149.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="121" width="470"></a>
In Melbourne the RLI is at record levels; the second half of 2013 saw a consistent ramp up in agent activity in line with the strong housing market conditions that were very much evident over the same period of time.  The post festive season surge will settle around the first week of March, so we would expect agent activity to return to approximately the same level we were recording at the end of 2013.  New listing numbers across Melbourne were tracking at around 7,800 per month compared with a run rate of sales of about 7,400 per month so we are potentially going to see an increase in total effective supply levels across Melbourne over the coming months.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Melbourne.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2888" alt="Melbourne" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Melbourne-580x151.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="122" width="470"></a>
Brisbane agent activity is absolutely surging at the moment with the RLI for Brisbane moving about 20% higher than what was recorded during mid-December.  It is likely the Brisbane housing market is right on the cusp of accelerated market activity as attention moves away from Sydney and Melbourne to Brisbane where capital gains to date have been modest, yields are substantially higher and affordability isn’t as much of a concern as the other major capitals.  We have been seeing an average of about 3,900 new listings enter the market across Brisbane each month compared with a run rate of sales at 3,950 per month; so demand and effective supply levels look broadly in line currently.  We anticipate there will be a ramp up in market activity over the first half of 2014 which is likely to be accompanied by an increase in new listing numbers as well.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Brisbane.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2884" alt="Brisbane" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Brisbane-580x148.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="120" width="470"></a>
Agent activity has been on an upwards trend across Adelaide over the past twelve months, with the RLI currently at similar levels as what was recorded late last year.  Confidence in the local SA economy has been dented by the weakness in the manufacturing sector, however the housing market has been slowly improving despite the weaker economic conditions.  We have been tracking about 1,880 new listings being added to the local market each month compared with a sales rate of about 2,240 each month.  Transaction numbers are outweighing listing numbers, keeping effective supply levels tight.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Adelaide.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2883" alt="Adelaide" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Adelaide-580x155.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="126" width="470"></a>
Perth has seen a rise in agent activity over the first month of the New Year, however current activity levels are slightly below record levels but higher than late 2013.  It’s likely that agent activity levels will settle back to around the same pace as what was recorded late last year; not quite as exuberant as what was recorded during early 2013, but still above the long term trend.  The average number of new listings has been tracking at about 4,000 per month while transaction numbers are showing a run rate of 3,690 per month which indicated a growing level of effective supply overall.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Perth.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2890" alt="Perth" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Perth-580x150.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="122" width="470"></a>
Agent activity across Hobart has held relatively steady over the past year after a solid increase during the second half of 2012.  The local Hobart market was the only capital city where dwelling values posted a fall over the past twelve months and conditions overall remain sluggish.  We have been tracking about 410 new listings being added to the market each month and about 350 home sales which suggests plenty of choice for prospective buyers and not a great deal of urgency in their purchase decision.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Hobart.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2887" alt="Hobart" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Hobart-580x154.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="125" width="470"></a>
The agent activity trend shows more volatility than other markets across Darwin, partly due to the small size of the market.  Activity levels are currently well below the highs recorded back in early 2013, but similar to what was recorded in October/November last year.  We are tracking about 250 new listings entering the Darwin market each month compared with a rate of sale at 289 per month, so effective supply looks relatively tight across this market.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Darwin.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2886" alt="Darwin" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Darwin-580x153.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="124" width="470"></a>
The Canberra housing market has slowed substantially over 2013, however listings activity showed a consistent increase over the last four months of 2013.  The bounce back in agent activity hasn’t been as strong in 2014 which may indicate new effective supply levels are starting to ease.  Over the past six months we have seen an average of 580 new listings being added to the market compared with 610 sales per month on average suggesting that effective supply additions to the market are being absorbed sufficiently.
<a href="https://blog.rpdata.com/wp-content/uploads/2014/02/Canberra.jpg" rel="wp-prettyPhoto[g2882]" style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; vertical-align: baseline; background-color: transparent; color: #bf0000; text-decoration: none;"><img class="aligncenter size-large wp-image-2885" alt="Canberra" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Canberra-580x152.jpg" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="123" width="470"></a>
Tim Lawless is national research director of <a target="_blank" href="https://www.myrp.com.au/" rel="nofollow">RP Data.</a>
                                        
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Real estate agent activity gathers pace

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Myer has set up a new corporate entity as a mechanism for a possible network of free-standing stores, a Myer spokesperson confirmed to SmartCompany.
The new business, FSS Retail, which is understood to stand for Free Standing Stores, was recently set up by the department store giant, as reported by Fairfax.
Fairfax obtained documents showing the new entity was set up 12 days ago.
It is understood that this could see Myer acquire more retail businesses and operate stores outside of its department store network.
FSS Retail has three directors, Myer chief executive Bernie Brookes, Myer chief financial officer Mark Ashby and Myer head of strategic planning Greg Travers, <a target="_blank" href="https://www.smh.com.au/business/myer-move-to-extend-its-retail-options-with-fss-retail-20140302-33tyb#ixzz2ur1YFavy">Fairfax reports</a>.
A Myer spokesperson told SmartCompany that it was “created as a formal mechanism” in case the business wished to pursue free-standing stores, but no further details of potential acquisitions could be revealed at this stage.
Myer currently owns the fashion business Sass &amp; Bide, and operates the womenswear brand’s 25 retail stores in Australia and internationally.
The new entity comes amid reported further talks between Myer and David Jones regarding the merger proposal Myer put to its rival in November last year.
It also comes as Myer reappointed <a target="_blank" href="https://www.smartcompany.com.au/marketing/sales/35746-david-jones-and-myer-merger-talks-simmer-as-accc-keeps-close-eye"> Bernie Brookes for another year</a> as chief executive and managing director, and suggested he would be a good chief executive for a combined business with David Jones.
Retail Doctor Group director Brian Walker toldSmartCompany that a move by Myer to create a network of free-standing retail stores was smart.
He says the department store concept is maturing and the business needs to find new ways to best represent its shareholders.
“Its core business is as a mass-merchandise retailer… it is the house of many brands,” he says. “This is what Myer can do to continue to drive its shareholder’s returns.”
He thought it made sense for the business to develop an equity funding arm, and to have a stake in individual retail brands.
Walker says the move also reflects the impact of international retailers coming to Australia, which is shaking up ownership models as local businesses scale up to achieve profits.
“The way to achieve scale is to consolidate and to acquire,” he says.
“Myer can make more money from its existing operations… or make more acquisitions.”
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
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Myer could be on acquisition strategy as it sets up new business for free-standing stores

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By any comparative measure, the Australian economy has performed remarkably well over the last two decades.  
We’ve had strong gains in the labor force throughout the 1990s, rapid population growth and a surge in the value of key commodity exports through the 2000s.  
Resilient wage inflation duly capitalised into rising property prices, by way of a dramatic and accelerated run up of household debt in the lead up to the GFC.  All of which was buffered and prevented from any significant deleveraging, by the Rudd administration in 2008, when he threw sizeable cash handouts to families along with infrastructure investment to avoid plunging Australia into a technical ‘recession’.  
From this alone, our economic platform deserves the title “The world’s star performer”.  
However, whilst we may stand out in the wealth stakes, we’re not a happier nation for it.  
Last week <a target="_blank" href="https://www.abc.net.au/tv/qanda/txt/s3938479.htm">Q&amp;A</a> featured a question from a young Australian and recent school leaver which touched on the sensitive subject of depression asking: “What can the government do to “fix it?”  
Like every other Western nation, Australia has experienced a sharp rise in the number of people suffering depressive illness over the last decade, with the average onset of the disease moving downwards in terms of age since the 1990s.  
Organisations such as <a target="_blank" href="https://www.beyondblue.org.au/">Beyond Blue</a> report that more than one in five Australian’s experienced depression, anxiety, or both, over last past year, and as the gentleman stressed, he was no exception.  
The comments that followed were sensitive in nature – focusing primarily on individual treatment and prevention within the health system. And whilst the cause of depression is both complex and varied, the first acknowledgement on what the government could do ‘collectively,’ came from Clive Palmer:  
“We need to have some sort of vision,” said Mr. Palmer “Create an environment that makes people realise the world is not as bad as we think it is… if you cut things, if you cut budgets, if you take things from people, you make them more worried about the future, and more uncertain.”  
This was reiterated by Ged Kearny, President of the Australian Council of Trade Unions:  
“I get very concerned when I hear about cuts to public health… they're just another barrier to person, particularly a young person, getting help.”  
They are appropriate observations considering our rising population, skewed toward an aging demographic, which by its very nature will necessitate additional funding over the next decade into both health and education.  
So, it was somewhat unfortunate, at the same time panellists were discussing cuts, Prime Minister Tony Abbot was giving a speech to the <a target="_blank" href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-02-25/abbott-flags-spending-growth-cuts-health-education/5281606">Australian-Canada Economic Leadership Forum</a> in Melbourne, hinting at just this – as summarised bluntly by Christopher Pyne, Minister for Education:  
"[The Prime Minister] said that the current growth in education and health expenditure was unsustainable, and that is true.”  
What’s Tony Abbot’s vision for economic growth?  
“You can’t spend money until you’ve earned it! – Or until you have the means to pay it back!”  
Was the <a target="_blank" href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-02-25/abbott-flags-spending-growth-cuts-health-education/5281606">cautionary opening statement</a> Mr Abbot posed.  
It’s a somewhat startling assertion considering it comes from the ‘issuers’ of our monetary supply, offset through taxing those who do have to earn dollars before they can spend it - whilst our government ‘earns’ nothing. Rather it is elected, and charged, to balance the budget in the best interests of its working population to promote economic growth – for which education and health are vital pillars.  
Abbot goes onto say - the best way to build a stronger economy is for Australia to once again to: “Enjoy a surplus.”  
Which may lead you (like me) to wonder how exactly the average private household will enjoy this surplus, considering we have the highest unemployment rate since 2003, along with an increase in those registering as “long-term” unemployed, up 13.5% since January 2013, and more part time jobs being created than full time?  
In Victoria, where manufacturing industries are concentrated, unemployment is at its worst level since 2002, whilst youth unemployment, which represents the demographic driving the future of our economy, has reached a <a target="_parent" href="https://www.theage.com.au/victoria/youth-unemployment-reaches-crisis-point-says-brotherhood-of-st-laurence-20140223-33aks">‘crisis’</a> point.  
Just over 12% of young people between the ages of 15 and 24 are currently out of work.  
Regional localities reflect the worst - 20% in Cairns and Tasmania, 18% to 19% in north Adelaide, 17% in Western Sydney, the Illawarra, parts of Melbourne and regional Victoria – with the trade off being the increased cost of metropolitan accommodation for those “job seeking” in capital cities.  
Additionally, the latest “ABS labour price index” records wage growth at its lowest level on record – climbing just below the rate of inflation for the last calendar year - whilst the cost for ‘essentials’ such as health, childcare, utility services, and petrol, in some areas, has reached record highs.  
Considering our household debt to disposable income has barely deleveraged since property prices hit their peak in 2010 – the very talk of reaching a surplus within three years, particularly by way of cuts to essential services, or even the increased number relying on job seekers allowance - is foolhardy,  
When the government tightens its belt, the private sector picks up the slack. Therefore, “repairing the [government] budget” with the claim that it’s putting Australia “back on the right track”, is not putting the fate of Australians on the right track.  
Austerity, at a time of rising unemployment, does not lead to productive economic growth.  And from depression and unemployment statistics alone, it seems Australian’s are not enjoying a return to surplus.  
They’re are working longer, retiring later and in the face of rising unemployment, the only ‘vision’ the working population seemingly have to hold to is more of the same.  
So what are we left with?  
After 30 years of demise, the manufacturing industry is in the depths of <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/the-extinction-of-australian-manufacturing/">recession</a>.  
Retail is losing the battle to the World Wide Web and residential construction is still struggling to pick up the cyclical slack created by the mining sector.  
Abbot’s “infrastructure promise" to speed up the flow of money from Canberra into the states, to upgrade road and rail projects, is positive news and sorely needed, however, <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/one-auction-and-its-impact-on-the-welfare-state/">remember</a> where those gains will be most acutely felt.  
Without effective <a target="_blank" href="https://www.macrobusiness.com.au/2013/11/land-tax-must-kill-negative-gearing-stamp-duty/">land value taxation</a>, the investment creates the ‘future speculative hotspots,’ where the improvements will be capitalised into rising land values, rather than fed back into servicing, maintaining, and further extending essential community facilities.  
Land is an absolute necessity to all commercial and personal needs, therefore as land values rise; it will affect a continued strain on business and <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/its-housing-thats-killing-productivity/">productivity</a>, and once again, we’re stimulating the cost of irreplaceable fixed assets, rather than the employment sectors needed to underpin a longer trajectory of economic growth.  
But this is what Australia is remarkably good at – creating a booming land market.  We’re right up there with the world’s best performers.  
Article continues on next page. Please click below.
                                  
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The housing bubble success story
Following a rapid 12-month cyclical upswing of housing inflation, residential real estate prices are once again reaching their 2010 peak.  
Outside of normal ‘corrective’ downturns, we’re continually lectured by an overcrowded mass of vested industry commentary that our housing market can ‘never fail’. Or at least not to the extent suggested by personalities such as Harry Dent or respected Australian economist Professor Steve Keen, who are quickly bundled into the same category and labelled as nothing more than irresponsible fear mongers for implying as such.  
Our commentators waste no time offering their own economic analysis of property cycles, which unfortunately missed any prediction of the subprime crisis.  
Albeit, housing affordability for both renters and home buyers, has rarely escaped headline news since before the last election and whilst to a limited extent we seemed to have progressed past the point in which rising prices are marketed as overwhelming positive news, it certainly hasn’t destroyed the myth that they’re somehow ‘good’ for the long-term health of our nation, as owners leverage off the so-called ‘wealth effect’ – relying on the unearned equity in their housing investments to fund both lifestyle and commercial activities.  
Australia’s biggest employer – aged related care (the health and social assistance industries) – derives a large percentage of its funding from people selling their housing, which their children additionally hope to inherit to assist their own journey onto the ladder and the perpetual fear of any downturn in established values has painted the government into a corner.  
Is the housing market on Rocky Roots?  
Yet, fear mongering or not, we know from the above statistics alone, the estimated $5 trillion worth of wealth contained in the house and land market is sitting on rocky roots.  
It’s no longer supported by the boom of productive activity and wage growth that assisted in generating the inflation during the 1990s and 2000s – producing the ‘strong’ monopolised banking sector which capitalised on the mortgage market as a population of buyers and speculative investors rapidly expanded.  
Outside of future prospected wage increases, significant gains are only achievable by manipulating demand side stimulants, tapping into foreign investment, (currently <a target="_blank" href="https://www.theage.com.au/victoria/everestlike-growth-in-melbournes-residential-towers-20140228-33r9x">driving</a> the inner city apartment and development market), whilst limiting effective and feasible <a target="_blank" href="https://www.macrobusiness.com.au/2013/11/rethinking-urban-growth-boundaries/">‘cheap’</a> supply - which the government has successfully achieved to date, by way of policies such as negative gearing, first home buyer grants, and a truly diabolical record of supply side reform.  
As mentioned in one of the most recent <a target="_blank" href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Affordable_housing_2013/Submissions">submissions</a> to the Senate’s housing affordability enquiry, by Prosper Australia: “It took forty years from 1950 to 1990 for housing prices to double, but only fifteen years between 1996 and 2010 to double again.”  
Whilst most will agree growth may be more subdued as we continue, it’s imperative we highlight the destructive nature of this system, which isn’t assisting making us a happy nation, and for a moment, stand back and take stock.  
Ask yourself a question  
Just for the moment, forget the raft of industry commentary and the prospected dates for the next ‘crash’ predicted and ask yourself a question:  
What will the next decade bring?  
If through manipulation alone, Australia manages to achieve more of the same and keep the housing boat afloat:  
<ul>
<li>
What will the consequential effect be on small business and industry?
</li>
</ul>
<ul>
<li>
Who will benefit most?
</li>
</ul>
<ul>
<li>
Will it be your children who have to save even longer to get on the ladder?
</li>
</ul>
<ul>
<li>
Or their children who will need to save longer still?
</li>
</ul>
  Remember if we were to have a crash, it’s not the wealthy that will suffer and it’s ordinary working families who are then left in a position where they’re unable to borrow to take advantage of lower prices.
 
Is the future, long-term wealth inequality?
 
The boom/bust land cycle, which we’re told by industry advocates is the best way to build the individual wealth of its nation, is a system which derives its very existence from a long drawn out speculative process. This ultimately accentuates inequality, under utilises land, always marginalizing those at the bottom of the income stream, whilst advantaging those at the top – as I explained <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/housing-and-the-inequality-divide/">here</a>.  
Nowhere is the divide between rich and poor more evident than the land market which results in a slow process of social polarisation. In Australia, it has given us a segregated schooling system where social disadvantage in education is stronger here than <a target="_blank" href="https://crawford.anu.edu.au/public_policy_community/content/doc/Australia_Inequality-and-Prosperity_final-15-March-13.pdf">any other</a> comparable western nation.  
Whilst inequality in wages and business activity can be equalised through competitive activity, land – by its very nature – is fixed in supply and therefore the only cure to rising prices in a soft economic environment, is the produce of additional supply.  
Meeting that demand by extending upwards is a challenge. Land values in the inner suburbs are already high and although it can assist the needs of apartment dwellers, investors, student renters, and to a degree, downsizers, family buyers (our largest home buying demographic) have no option but to head to the fringe if it’s affordability they’re after.  
But, due to ineffective land tax and supply policy, the fringe suburbs, which capture the bulk of our city’s population growth, do not have the funding needed to facilitate urban sprawl, hence the process of <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/housing-and-the-inequality-divide/">social polarisation</a>.  
They have the highest concentration of mental illness, such as obesity and depression, and prices are further manipulated by larger developers who drip feed their stock onto the market, of which the government currently has no control.  
Not politically sellable?  
From the time a child learns to enjoy a family game of Monopoly, Australians are nurtured on a system that teaches the key to building wealth that is through the leverage and speculation of capital growth in land values. Therefore, none of this is easy to change.  
To do so, requires complete structural reform of land value taxation and housing supply <a href="https://www.macrobusiness.com.au/2013/11/urban-zoning-and-affordable-housing-are-opposites/">policy</a> - therefore we’re told it’s not politically sellable.  
The most solid prediction of the year  
The most most solid prediction of 2014 to date, is the one that will result from the Senate’s housing affordability enquiry.  
After the numerous submissions have been tabled and discussed. The <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/the-housing-question-that-the-senate-must-address/">question</a> I stressed in my own submission will remain unanswered;  
“Will the government allow land values to drop?”  
Assuming this is correct, then Prime Minister Tony Abbott has a care of duty to explain to the public directly how propping up the current status quo will continue to erode the opportunities of future generations.  
He must explain how the government’s failure to provide effective land value taxation and supply side reform to lower land prices, will lock them into longer mortgages, a life times worth of double income debt, push more into long-term tenancy and additionally point out how the current system <a target="_blank" href="https://www.macrobusiness.com.au/2014/02/housing-and-the-inequality-divide/">enhances</a> poor education and health outcomes, social polarisation, and places a strain on core productivity.  
Your choice!  
Ultimately the choice lay with the voting population and in a country that holds to the motto of a fair go, I expect clearly evidencing the consequences of our current housing market will be a lot less ‘sellable’ than educating how we can establish a sustainable approach. <a target="_blank" href="https://www.macrobusiness.com.au/2013/11/land-tax-must-kill-negative-gearing-stamp-duty/">If handled correctly</a> reducing taxes on productivity will ultimately make each and every one of us better off.  
It’s time we allowed Australians to make an educated choice.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
                                                     
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Australia - an economic star performer, but are we any better off for it?

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Property, and contracts, can be a stressful situation - particularly for the inexperienced. Here are five quick things you should know about your property contract. If you have any tips, add a comment at the end.
1) Offers usually do best with an expiration date
Without an expiration date, you will need to rescind the offer or the seller can accept at any time. You can also use this time limit to dissuade the real estate agent from using it as a negotiating tool with other prospective buyers, as well as to show them you are serious about closing a sale quickly.
2) Just because it’s standard, it doesn’t mean you can’t modify it
Head to your solicitor and have them go through the contract with you paragraph by paragraph. While some elements are standard, there are many areas that provide plenty of flexibility allowing you to get the terms and conditions that you want. Never assume that just because something is the “norm” it means you can’t change it to get a better result for yourself. For instance, you may want to negotiate early access to the property or modifications before you move in, or you may want to provide extra conditions. You may make it subject to a valuation, financing, building and pest inspection or even an inspection of the latest body corporate records.
3) Settlement dates can make or break a deal
Typical settlement dates are 30, 60 or 90 days, but don’t feel that you can’t change this. The main thing to remember is the importance of the settlement date to both the vendor and the buyer. There have been many situations where too short a settlement date is the “make or break” factor for the seller, who needs more time to move on, and vice versa.
4) You can submit more than one contractual offer
If a seller is asking for longer in the settlement, and this doesn’t suit your plans well, you may look to offer an identical contract, but instead of for the 30 days proposed at $720,000, you might offer 60 days and $710,000. You can submit a number of offers for them to compare, that may secure you a better deal. You may also submit unconditional contracts along with one with a number of conditions, but with a lower price. This gives the vendor something to compare against and consider.
5) Chattels need a double-check
Chattels, or all those ‘extras’ such as window furnishings, blinds and appliances, deserve a mention in the contract. Do not necessarily assume that because you have seen it at the property it will be coming with the home – even if the real estate agent has told you that it will. Get this in writing, in the contract, in as much detail as possible.
<a href="mailto:jduke@propertyobserver.com.au">jduke@propertyobserver.com.au</a>
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Five things you should know about your property contract

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It’s always advisable to carefully check the title of a property you are thinking of buying to avoid any last minute surprises that may interfere with the sale.

In Western Australia, Landgate is the state government department which has responsibility for keeping the records of who owns each piece of land. The document on which ownership is recorded is called the Certificate of Title.

The Certificate of Title will record the present owner, note if the property is currently mortgaged and what rights other people and the wider community may have on the property and which might affect the buyers use and enjoyment of the land.

Before entering into a contract for the sale of land or strata title it’s wise to have a good look at the Certificate of Title.

[smartcode_project:default project_id=31240]

The selling agent is required to conduct a search and should therefore be able to show you a copy.

Sometimes there are restrictions on the title that may affect its transfer when property is being sold. This might occur when another person or organisation has a financial claim or interest over the property in addition to the mortgage. Such a caveat effectively prevents the registration of any transfer of ownership until the caveat is formally withdrawn.

Restrictions on the land are called ‘covenants’ or ‘easements’ and can be placed to ensure that it is not used in certain ways or that buildings conform to certain requirements.

This is often done on land within a sub-division to try and ensure that the buildings are of a uniformly high standard.

Other covenants may prevent views from being blocked or natural light being impeded.

Generally, to remove a covenant an application must be made to the person who imposed it and this may be complicated. Anyone seeking to remove a covenant should therefore seek expert legal advice.

An easement is the legal term for a right, which someone other than the owner, has over the use of the land for a specific purpose.  For example, the neighbours may have a right-of-way to enable access to their property or the Water Corporation may have the power to obtain an easement to use part of the land for sewerage or water pipes.

Covenants and easements are reasonably common and in most cases will not affect the value or saleability of the property. However, before buying you should ask the selling agent if they exist, request copies and read and understand them before making a commitment to buy. You may also wish to seek further legal advice.

Generally, a bit of common sense should address your concerns and after taking the information into consideration you will be in a better position to make an informed decision on a purchase.

David Airey is president of the <a href="https://reiwa.com.au/home/default.aspx" rel="nofollow" target="_blank">Real Estate Institute of Western Australia.</a>

This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx" rel="nofollow" target="_blank">reiwa.com</a>
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Understanding covenants and easements

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Properties being sold by auction should be advertised with the reserve price to stamp out misleading price guides.
With auctions becoming the sales method of choice, particularly in Sydney and Melbourne, the process must be improved to provide greater transparency for buyers.
Vendors who choose to sell via auction should be required to publish the auction reserve price seven days out from auction day to create a more transparent process.
Buyers can then pay the building and pest inspection costs and legal fees with confidence knowing that they have a real chance of owning the property rather than wasting money trying to buy a property that they could never afford if their budget is below the vendor’s reserve.
Despite it being a breach of the Act, many selling agents and vendors still under-quote the value of properties up for auction and something needs to change.
As expected, buyers accept the selling agent’s price guides on face value for properties listed for auction and why wouldn’t they?
Unfortunately though for the buyers, the vendor’s real expectations and subsequent reserve are often significantly above the price guide and often far more than they can afford.
For example an auction I attended for a client last Saturday had an advertised price guide of over $1.5 million up until the day of the auction.
The auction bidding stalled at $1.970 million, some 30% above the guide and the auctioneer then stopped the auction and asked the agent to seek the vendor’s instructions before eventually selling the property to that bidder.
I can assure you the mood at the auction turned to one of frustration and anger for many buyers holding bidding cards as surely the reserve should have been met that far above a price guide.
Unfortunately this happens every weekend leaving thousands of people unnecessarily out of pocket.
While the Queensland government’s proposed approach has some merit in removing bait advertising it doesn’t address the issue of buyers wasting time and money on inspections in situations where vendors set unrealistically high reserves.
Patrick Bright is the founder of Sydney-based buyer’s agency <a rel="nofollow" href="https://%20www.epspropertysearch.com.au/" target="_blank">EPS Property Search</a>.
                                          
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Bringing down the hammer on dodgy price guides

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Chinese investors were the largest source of foreign investment in Australian property in the 2012-13 financial year, according to the latest figures from the Foreign Investment Review Board (FIRB).
The FIRB's annual report reveals $5.9 billion of purchases came from China, a 44% annual increase that enabled it to eclipse Canada's $4.9 billion and the USA at $4.4 billion.
<img src="/images/stories/2014/03/03/insights-march-3-small.gif" alt="insights-march-3-small" width="470" height="298">
However total foreign investment in Australian real estate actually fell over the recent years from $59.1 billion to $51.9 billion.
It accompanied an overall decrease in the value of total foreign investment which fell to $135.7 billion from $170.7 billion seemingly as a consequence of the turning of the mining and resources construction boom.
The <a href="https://www.firb.gov.au/content/default.asp" target="_blank">Foreign Investment Review Board</a> gave approval to 11,668 purchases of Australian residential properties by foreigners last financial year, up 19% on the previous year.
<img src="/images/stories/2014/03/03/insights-march-3-two--small.gif" alt="insights-march-3-two--small" width="470" height="215">
According to FIRB’s annual report released last Friday, a total of $17 billion in foreign cash was injected into Australian residential last financial year.
A further $35 billion into commercial real estate took the total to 12,025 foreign purchases.
Of these, 4,573 were in Victoria, 3,580 were in New South Wales, 1,734 in Queensland, 1,267 in Western Australia and 567 in South Australia.
Some 10,458 of the approvals were for property sold at $1 million or less.
Then 1793 approvals between $1 million and $50 million.
<img src="/images/stories/2014/03/03/insights-march-3-three.gif" alt="insights-march-3-three" width="470" height="258">
There were 396 approvals at $50 million and higher, which while there is never any official paperwork from the highly secretive FIRB, would include just the one residential house purchase, <a href="https://www.propertyobserver.com.au/news/the-altona-aftermath-buyers-baulking-at-the-ambitious-asking-prices-sydney-s-top-20-house-sales-in-2013-he-said/she-said/2014011667215" target="_blank">the Point Piper harbourfront, Altona which sold at $52 million</a>, but perhaps not the beacon it's made out to be.
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No divestiture orders were made, continuing the trend set in 2010-2011 and 2011-2012. I am aware that there had been earlier orders where the buyers failed to undertake its development undertakings.
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Temporary residents allowed to buy one property to live in numbered 5,091 last financial year.
A further 4499 approvals were granted for foreign individuals to purchase a new dwelling.
There were 50 approvals for developers seeking to sell up to 100 percent of their off the plan developments to foreigners.
The chief economist at HSBC Australia, Paul Bloxham, told News Ltd papers the increase in foreign buyers was contributing to house price pain.
But he quickly acknowledged the biggest factor driving up house prices had been lower interest rates.
"But it’s certainly a contributing factor,” he said.
“In certain market segments you’re certainly seeing an impact. Off the plan apartments are likely to be an area where prices are being more driven by foreign buyers.”
While growing in number, foreign purchases only represented about two or three per cent of total housing turnover, according to Mr Bloxham.
<a href="/news">A recent survey by HSBC Bank of affluent Asians</a> across seven countries in the region, including mainland China, found Australia was among their top investment destinations, but that the Chinese did not actually top the intended buyers list.
<a href="mailto:news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
                       
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