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.

[smartcode_project:default project_id=5743 project_image_fid=372394]

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.

[smartcode_project:default project_id=5743 project_image_fid=927]

<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.

[smartcode_project:default project_id=5743 project_image_fid=375255]

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.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

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.

[smartcode_project:default project_id=5743 project_image_fid=925]

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.

[smartcode_project_cta:default project_id=5743]

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.

[smartcode_project:default project_id=145324 project_image_fid=372749]

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.

[smartcode_project:default project_id=145324 project_image_fid=354343]

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.

[smartcode_project:default project_id=145324 project_image_fid=354347]

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.

[smartcode_project:default project_id=152069 project_image_fid=374394]

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.

[smartcode_project:default project_id=152069 project_image_fid=374399]

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.

[smartcode_project_cta:default project_id=152069]

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.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<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.

[smartcode_project:default project_id=95289 project_image_fid=366769]

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.

[smartcode_project:default project_id=95289 project_image_fid=366762]

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

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

jrichardson-uRX5hFdKfN

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

<html><body>
It's gone. Car manufacture and assembly is dead in Australia.  It is now time to break that emotional bond with locally-produced cars and it's time to rapidly retrain and redeploy this vast workforce.

The recent announcements from Holden, Ford and now Toyota regarding the winding down of their manufacturing operations in 2016/2017 has naturally caused a lot of angst among the aforementioned company employees as well as the workers of the companies in the respective supply chains.   That being said, the skills these people possess are too valuable to simply wither away into the ether.

Urban.com.au has previously reported on the pre-fabricated building sector in action (<a href="/news/one9-hall-street-moonee-ponds-34-apartments-5-days" target="_blank">One9, Hall Street Moonee Ponds, 34 apartments, 5 days</a>) as well as examples from overseas (<a href="/news/avi-friedmans-outside-the-box-thinking-on-affordable-housing" target="_blank">Avi Friedman's outside the box thinking on affordable housing</a>) and we now feel it to be even more necessary to champion an expanding pre-fabricated building sector in Australia.

Jemma Green and Peter Newman from Curtin University, writing in the <a href="https://theconversation.com/building-a-housing-industry-from-the-relics-of-a-car-industry-23195" target="_blank">Conversation</a>, best explain it:

<blockquote>
While many of the Australian modular builders are focused on single and two storey dwellings, one company has setup a factory in Melbourne which is making multi-storey dwellings: <a href="http://www.hickory.com.au/unitised-building">Hickory Group</a>. Although the company has been building using conventional methods for generations, five years ago it established a modular factory which now employs more than 150 people and is producing more than 500 apartments every year. Many of the employees are drawn from the depleted Victorian automotive manufacturing sector. Since inception, the factory has produced multi-storey modular residential and hotel projects across the country, and engineered a system that can achieve architecturally diverse high-rise buildings.
</blockquote>

Green and Newman furthermore <a href="https://theconversation.com/building-a-housing-industry-from-the-relics-of-a-car-industry-23195" target="_blank">explain</a>:

<blockquote>
The workforce for modular building requires skills that are usually associated with auto manufacturing, rather than traditional building skills. This includes factors such as design upfront, proactive rather than reactive thinking, procuring materials upfront and warehousing components. There is a clear opportunity to up-skill the auto manufacturing industry to building manufacturing.

...
</blockquote>

<blockquote>
Modular will never completely replace conventional building approaches, but it will take a much greater share in the market, particularly for multi-storey buildings. This 21st century innovation offers a much more sustainable option for the construction sector.

Australian manufacturing has a window of opportunity here - to turn around the manufacturing industry from ailing to growing. If we don’t seize the day in building manufacturing, foreign companies will certainly fill the gap in the market, which could lead to job losses in traditional building.
</blockquote>

We agree.

There is a threat any Royal Commission into unions operating in Australia will suck the oxygen out of any potential momentum the manufacturing and construction sectors may gain in the short term and we call on the Victorian and Federal Governments to:

<ul>
<li>demand the corporate entities operating the Holden, Ford and Toyota brands play a major financial role in up-skilling their soon-to-be retrenched workforce for transition into other manufacturing sectors.</li>
	<li>not get bogged down by ideological schadenfreude but rather engage directly with the urban industry and relevant trade unions so that the construction sector can freely innovate and place itself in a position to grow and soak up the talent which will be let go from the automotive sector in the next few years.</li>
	<li>focus Public Transport policy on obtaining a greater public return out of existing road assets by priortising investment in road-based public transport over new commuter freeway projects.  This should involve: bus route straightening, shortening and most importantly of all, dramatically improve frequency and operating hours of all bus routes.</li>
	<li>significantly lift the paltry amount of money spent on expanding non-motorised public transport infrastructure such as bicycle lanes and other pedestrian infrastructure throughout Metropolitan Melbourne.</li>
</ul>
Post 2017 as car manufacture and assembly in Australia ceases, the nation will no longer have an emotional bond with "our" cars and the car will just become another imported commodity.  And with the right public transport policies and budget priorities local bus body builders such as <a href="http://www.volgren.com.au/" target="_blank">Volgren</a> are well positioned to grow and take on laid-off Holden, Ford or Toyota employees. 

Will the pre-fabricated building industry or bus body manufacturing industry supply the sheer number of vacancies required to provide the entire automotive industry workforce with a job over the next 3 years?  Not likely, however they are well positioned to grow considerably if Government, Unions and Industry work together to ensure the environment exists for a dramatic upswing in innovation and growth within the construction sector and demand is boosted for more numerous cleaner and greener vehicles to operate a better bus network for Melbourne.

Preserving the skillsets and providing for the least painful transition for effected automotive workers into other manufacturing sectors is paramount and policy-makers should grasp the opportunity to reshape our cities from the outer suburban edges to the inner urban areas around more sustainable transport solutions that Holden, Ford and Toyota could never provide.
</body></html>

The factory line worker's skillset: long may it live

<html><body>
The Australian Bureau of Statistics (ABS) released housing finance data for December 2013 yesterday.  The data provides a good summary of the mortgage lending environment throughout 2013.  It shows that 2013 was clearly a year where there was a strong rebound in demand for mortgages.
<img class="aligncenter size-full wp-image-2871" alt="Chart 1" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Chart-1.jpg" width="470" height="173" 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 total number of owner occupier housing finance commitments in December 2013 was 14.1% higher than in December 2012.  This figure is split into refinances of established dwellings and non-refinances or new loans.  The number of refinance commitments is 12.5% higher over the year and the number of new loan commitments is 14.8% higher. 
The data shows that demand for mortgages has increased measurably throughout 2013.  This is also reflected in home values data, the RP Data-Rismark Home Value Index showed that capital city home values rose by 9.8% in 2013.
<img class="aligncenter size-full wp-image-2872" alt="Chart 2" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Chart-2.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;">
The number of owner occupier finance commitments for the construction of new dwellings was 14.5% higher over the year, commitments for the purchase of new dwellings were 13.2% higher and non-refinanced commitments for the purchase of established dwellings were 15.1% higher over the year.  It is important to note that non-refinanced purchases of established dwellings accounted for 75.8% of all owner occupier new loan commitments in December 2013.
Over the 12 months of 2013 there were 598,364 total owner occupier housing finance commitment, up 9.5% from a year ago.  Refinance commitments accounted for 32.4% of all housing finance commitments in 2013 and the remaining 67.5% was for new loan commitments.
<img class="aligncenter size-full wp-image-2873" alt="Chart 3" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Chart-3.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;">
In December 2013, the total value of housing finance commitments (the amount borrowed) was $27 billion.  From a banking perspective, the money lent is much more important than the number of loans and the total value of finance commitments was 27.0% higher over the year.  
Looking at the value of commitments, commitments to owner occupiers for refinances were 20.4% higher year on year, owner occupier new loan (ex-refi) commitments were 19.0% higher while investment loan commitments increased by 40.7%.  The total value of housing finance commitments, excluding refinanced loans increased by 28.5% year on year.
<img class="aligncenter size-full wp-image-2874" alt="Chart 4" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Chart-4.jpg" width="470" height="170" 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 proportion of housing finance commitments provides further insight into how much is being lent to different cohorts of the market. 
As a whole, 60.2% of lending over the month was to owner occupiers made up of 43.4% for new loan commitments and 16.8% for refinances.  The rest (39.8%) was lending for investment purposes.  The 43.4% of lending to owner occupiers for new loans was the lowest proportion since January 2004.  The 16.8% of lending for refinances by owner occupiers was the lowest proportion for that segment since September 2010.  The 39.8% of lending for investment purposes was the greatest since October 2003 (41.2%).  The 41.2% of total lending for investment in October 2013 was also the highest proportion of investment lending on record.
In my opinion the level of investment lending is a concern from the market, given it is currently at near record levels.  Obviously with mortgage rates low and returns on relatively risk-free asset classes so low, investors are moving into other, slightly more risky, asset classes such as residential property.  This is what the RBA was hoping for – however, the high level of lending to investors is not without potential risks in the future. 
The move to residential property investment seems to be purely a move chasing capital growth.  In strong investment driven markets such as Sydney and Melbourne home values increased by 14.5% and 8.5% respectively in 2013.  Gross rental returns on residential property in these cities is extremely low at 4.0% and 3.5% respectively at the end of last year. 
If these investors are not necessarily committed to the housing market long-term, then we could potentially see an influx of investment-grade properties come to the market in the future as these investors look to exit the housing market and place their investment dollars elsewhere.
<img class="aligncenter size-full wp-image-2875" alt="Chart 5" src="https://blog.rpdata.com/wp-content/uploads/2014/02/Chart-5.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;">
Despite the fact that we have near record low mortgage rates and home values had been falling through 2011 and the early part of 2012, the level of activity by first home buyers has been extremely low. 
In December 2013, the number of first home buyer finance commitments was actually 1.9% higher than the previous December (note these figures are not seasonally adjusted).  Throughout 2013 there were 82,599 first home buyer housing finance commitments indicating that they accounted for just 13.8% of all owner occupier finance commitments over the year.  The number of first home buyer finance commitments in 2013 was a record low for a calendar year period.
Overall the data highlights that 2013 was a strong year for mortgage lenders with escalating demand for mortgages.  The increase in demand has largely been driven by subsequent purchasers (upgraders or downgraders) and investors. 
The rising level of demand for mortgages has subsequently resulted in an increase in property sales and fuelled the 9.8% annual increase in capital city home values.  As noted the heightened level of activity by investors in the market is potentially a cause for concern and no doubt one that the RBA and APRA will be keeping a close eye on. 
Keep in mind that in many instances investors are using interest-only loans and these are obviously attractive when interest rates are at record low levels, but potentially not as attractive when/if interest rates are normalised.
With mortgage rates still at low levels and the market expectation that there will be no increase in the cash rate until 2015, it is difficult to see how there won’t be a further lift in housing finance commitments throughout 2014.  It will be interesting to see if we see a further lift in investment activity in the market and whether or not we see a rebound in first home buyer volumes throughout the year.
Cameron Kusher is senior research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
 
 
</body></html>

ckusher-ujnxiKuFQs

Near record level of investment lending a concern for the market

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

jake-cSmGT7VXVf

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

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

cmcevoy-Go82SmsJA9

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

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

kjiminez-eaYKfU7qd2

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

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

tdixon-SLWH4X4fad

Demand for Australian commercial property set to be rampant this year

<html><body>
Hi Margaret,

I have a duplex approved vacant block in Queensland. The block size is 928 square metres. I don't want to build two houses/units that are attached. I have checked with the local council (Logan City Council), they have informed me that it is possible to have two detached houses build on that block (which we will have to apply for).

Now I also asked them if I could subdivide that block into two lots. They said that was possible as well with application of subdivision costing $1,095 plus $520 per lot which comes to a total of $2,135. They said that the headworks charges would come to approx $28,000. This $28,000 is for one block as there will only be one additional block.

I asked them if there is any other charges that I may come across. They said there would be a water meter connection (which a different department of the council informed would be $1,414.41).

They said that I will also need to hire a surveyor, at least for official drawings for sealing. I estimate the total cost of subdivision to be around $40,000 (including some contingencies). the subdivision is on a corner block so roadworks will not be required. The duplex block is part of a subdivision that happened approx 1 year ago and therefore the infrastructure and all services are all new.

Now I am trying to figure out whether it is better to have the block subdivided into two lots and then build a house each on it or build two detached houses on it without subdividing. If I subdivide, I think the bank valuation would be higher but the rental income would be the same for both scenarios. But if I subdivide, then the return on investment through rent would be less.

Can you please shine some light on things or views that I am missing out on. What do you think I should do?  Should I spend to subdivide (while the extra money spent for subdivision may turn out to be the same valuation that the two blocks combine will generate), or should I build detached houses without subdividing and let the subdividing idea sit for future.

Kind regards,

Chetan

Margaret's answer on the next page. Please click below.

 

<hr class="system-pagebreak">
Hi Chetan,

It seems like you have already  done a lot of the due diligence in considering the true costs of this subdivision, so well done.  Often people don’t consider this big picture and instead rush ahead, only to find out too late that the costs exceed the benefits.

It is true that, most often, two separately titled blocks can fetch a better valuation than a single-titled, two dwelling lot.  In my experience the difference is between $30,000 and $50,000, depending upon where the block is.  However, usually the rental return remains the same – tenants are rarely aware of the title arrangements and won’t know whether they are on a separately titled dwelling or not.

You need to consider your personal circumstances before working out if it’s worthwhile spending this money now, or later.

If you will be relying on equity to allow you to leverage into more property, you will want every cent of equity that you can get.  It’s possible that subdividing now will allow each individual block to gain value at a greater rate, giving you more overall equity and allowing you to leverage into more property sooner.  That extra $10 - $20,000 in equity might add up to $100,000 in borrowing capacity (subject to your qualifying), and you could then acquire more property now.

On the other hand, if you have plenty of equity elsewhere in other property and are not stopped from further leverage, I cannot see the point in subdividing at this stage.  Keep the money and use it to pay down debt, which in itself will provide some more leveraging power.

Down the track, when you wish to liquidate your portfolio to access retirement funds, you will probably want to subdivide then, as it will be easier to sell two separate blocks and you should fetch a higher price for each than you could get for the two combined.

Regards,

Margaret

Margaret Lomas is a best-selling author and writes and hosts the popular 'Property Success With Margaret Lomas' and heads up the panel on 'Your Money, Your Call', both on Sky News.

She is the founder of <a href="https://destiny.com.au/dotnetnuke/en-au/home.aspx" rel="nofollow" target="_blank">Destiny</a>.

Have a property question? <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>

<h2 style="font-size: 14px;">Properties you may like:</h2>

[smartcode_project:default project_id=6284]

[smartcode_project:default project_id=7742]

[smartcode_project:default project_id=24323]
</body></html>

mlomas-KC9MUPZ6Ca

I want to build two houses on one block; should I subdivide now or later? 

<html><body>
Is it the hip pocket (or if you like it, the head) or the heart that currently rules the residential property market?
While not always expressed in those exact words, I suggest that almost every time we plan a project or plan a marketing campaign this thought is always lurking in our thinking.
Marketing almost always involves a big dose of emotion – it’s the fuel of many an auction. We know that even the most hardened consumer will at times be in a sort of conundrum. Are they being ruled by their heart or by their heads? And when we have markets that are full of change, with limited opportunities (supply), does this lead to anxiety, or is this simply the excitement of the times?
Markets are tied up with many different emotions. It’s the stuff that fuels the constant media attention and chatter, and we are seeing this now almost everywhere. Buyers and vendors are anxious not to miss out on the best price, on that ideal home or block of land, or on a great investment. The mixture might be different, but it creates a very active atmosphere and I suggest this makes a good starting point to consider how we might best approach development, marketing and buying residential property in 2014.
So with the sway of both our hearts and heads in mind, let's look at the three familiar topics of infrastructure, investment and supply. If we do that, I think we can shine a light on some key aspects of the market and thus balance out some of the ‘emotions’ we see developing.
Infrastructure
No matter if we’re dealing with an inner-city apartment or a new housing estate – the need for infrastructure is a constant.  Developers can find their projects delayed or made less attractive, and buyers have always had infrstructure as their priority. Without the right services and facilities, they stay away or they look for big price incentives.
Infrastructure is also linked to employment opportunities and with possibly higher unemployment headed our way this entire area will be a big hot spot in 2014. We are also set to see the community turn from expectation and planning to a fervent desire to see real action, which in some areas is happening.
Almost without exception buyers are, along with much of the general community, looking for delivery, be that new light rail, improved motorways, more schools or even very big ticket items like a new airport for Sydney. These projects need to move into the build phase. While there might be some planning issues, private developers will then move to deliver their part of the agenda with new shops, offices and industrial facilities. Again we need to remind ourselves that the current Prime Minister has stated that he wants his government to be known as the ‘infrastructure government’.
However, given how important this topic is, there must be room for better and quicker funding, and this might be a fertile area for SMSF investments. In 1994 there were 70,000 such funds, while today it’s in excess of 510,000 worth $520 billion – so infrastructure bonds might be welcome. At the same time, this would help secure new development which is another key area of investment sought out by the SMSF sector.
From a buyer’s point of view, quality infrastructure has always been a constant need, no matter how far you go back in history buyers always want well located homes, close to shops, employment, schools and with transport access. In the city they might also want access to parks, bike lanes, child care and cafes – that’s only going to continue in 2014 and we all know that emotions run high when infrastructure is lacking or under pressure. Developers understand this reality but the lag between government responsibility and the delivery of private facilities needs to be closed.
Investment
In 2013 we saw a strong trend towards some parts of the residential market being dominated by investors, and at the same time there has been a big drop in the numbers of first time buyers in the market. Investors have also been active at a time when prices have also been on the increase, again this is not ideal for the FHB. Although a rise in consumer confidence over the past six months has in part been linked to higher house values, it is often said that Australian consumers are more content and happier to spend when home values are on the increase.
Some parts of the investment market have also been strongly influenced by off-shore buyers, and with recent falls in the Aussie dollar this is a trend that may even accelerate in 2014. The SMSF sector is also unlikely to have any less of an appetite for real estate in 2014, although there are some concerns being raised about over-lending to such funds. However as Sydney in particular retains its spot as the third most unaffordable city in the world, after Hong Kong and Vancouver our residential market remains an attractive investment. Here, the key question is this: will population growth and demand remain strong enough to absorb supply, both as owner-occupiers and of course with enough people to rent investment stock?
In 2014, the flow-on impact of a robust housing market with improved levels of construction will be a key economic imperative as we move from reliance on the mining sector, which any tax review will almost certainly take into account.
Supply
There is no doubt at all that in 2014, we will be dealing with a demand led environment in almost every market. In some markets, like Sydney, the lag in supply may take a decade or longer to re-balance and that will be captive to a great extent to what happens with infrastructure and investment. We have also yet to consider how climate change may soon start to impact future supply, extreme summers and more bushfires might place increased cost pressures on development and this may in fact further hinder supply.
Demographics will also have a very big impact on supply, the delays with changes to planning laws in NSW are in part a demonstration of how sweeping changes to demographics are clashing. Established areas are going to have to adjust to the realistic demands of a growing city. An argument about more apartments in established areas, or more homes on the outskirts of the city is partly being sustained by a shift in demographics.
In any community we can see how different waves of immigration are in part leading to greater acceptance of apartment living. In 2011 apartments accounted for 25.6% of where we live, but currently approvals are running at 75% in favour of apartments and so within 20 years 50% of us may well be living in apartments.
If the need for more housing is to be satisfied, no matter where people want to live, then despite the hurdles involved government planning has to respond and developers in turn need to deliver a quality of product to meet demand and thus help to create valued communities.
In 2014, there will also continue to be huge demand for new land releases. In June 2013 land sales reached an eleven-year high, partly reflecting that fact that supply has been running at about 20% per annum below the level of demand and there is also no retreat from the strong desire for detached homes alongside more demand for apartments. It’s simply the varied requirements and aspirations of the demographics involved.
The outlook for 2014 is complex, but given the nature and size of the market that is not unusual or unexpected. Interest rates, the fate of the Aussie dollar, rising unemployment, the Federal Tax Review and Budget and China’s growth prospects are big picture issues.
Planning and infrastructure delivery are also big issues, while demand will continue to out-strip supply. However, if robust demand pushes prices ever higher then investors, who are usually more flexible with their buying options, will start to look at all options across the country.
Any of the points discussed are major topics in themselves, however, developers need to ensure that new product meets the changes in demand that are always taking place with shifting market demographics, while committed buyers are sure to remain fully engaged with their market and should seek a good relationship with local real estate agents and keep both head and heart in balance.
Peter Chittenden is managing director for residential of <a href="https://www.colliers.com.au/Colliers%20Corporate/Residential.aspx" rel="nofollow" target="_blank">Colliers International.</a>
</body></html>

pchittenden-eLqUUC8TWW

Is it the head or the heart that currently rules the market?

<html><body>
Property investors need to be ever vigilant. Many feral creatures prowl the real estate domain looking for ways to devour consumers, often using deception to lure buyers. A significant part of my 30-plus years as a researcher and writer have been spent investigating real estate scams and I know property to be a dangerous place for the unwary.
Many developers are using marketing companies to shift stock at the moment. These specialist marketers can earn massive fees, way beyond the commissions paid to mainstream real estate agencies who sell properties on behalf of vendors.
Why would developers pay 6% or 10% commissions to marketers when agencies will do the job for 2% or 3%? Because the stock in question is proving difficult to move, usually because the local market is oversupplied or otherwise in serious decline. They need an outfit which is happy to use dodgy methods to flog this unwanted stock to distant investors, often at above-market prices.
Right now developers are struggling in oversupplied regional centres like <a href="/news">Gladstone</a> and <a href="/news">Mackay</a> or in mining towns with falling markets such as <a href="/news">Moranbah</a> in Queensland and <a href="/news">Port Hedland</a>, <a href="/developments/karratha-wa-6714">Karratha</a> and <a href="/news">Newman</a> in Western Australia.
No informed investor would buy in any of these places at the moment because they are all in serious decline and the bottom has not been reached. All are locations that will recover in time, but that time has not yet arrived.
The glossy promos pumped out by the marketers make no reference to the parlous state of these markets. They speak of vibrant local economies, strong markets and the prospects of double-digit rental returns – all claims that are blatantly false.
Sometimes real estate media will publish the propaganda from these organisations, without providing any journalistic filter to the “information”. One property magazine last week published verbatim a press release from a marketing company which claimed Moranbah was “on the cusp of another property boom”. This was written by the team marketing a unit development in Moranbah so there was an obvious vested interest in talking up Moranbah’s prospects.
When a magazine publishes this kind of rubbish it’s dangerous for consumers because it’s presented as genuine editorial and credible information.
I have no doubt Moranbah, which has been a real estate growth star in the past, will recover in the future. But right now it’s the nation’s  number one no-go zone. Rents are about one-third of their previous levels and the median house price declined 42% in the past 12 months. The coal sector, which is Moranbah’s only industry, is still in downsizing mode with commodity prices low and costs still way too high. The biggest miner in this region, the BHP-Mitusubishi joint venture, has just announced further job sheding to trim costs.
Another alarming example of marketing hyperbole which casts the truth to one side was a promo from marketers seeking to peddle high-priced townhouses in <a href="/news">Wandoan</a> in Queensland.
The promo said the new townhouses were in “the heart of the Wandoan CBD”. Anyone who knows Wandoan will laugh at the notion of it having a “CBD”. Wandoan is the quintessential one-horse town, with a population around 350.
The project was proclaimed “Wandoan Central, The Property Investors Dream”. The marketers claimed investors would “easily earn up to an amazing 14.4% return”. The townhouses had asking prices around $450,000, in a town where you can buy houses on land for $100,000 to $150,000 less than that.
Let’s be clear about Wandoan. The only reason anyone would build a unit development here is because international mining company Xstrata (now Glencore Xstrata) was planning a $6 billion coal mine and there were also plans for $1 billion rail link to the coast from this region. We have alerted our clients to this because, if those projects go ahead, Wandoan will become a much larger town.
But, as I’m sure the marketers of Wandoan Central know, both those big projects have been deferred. The new Glencore Xstrata is scrapping projects to trim costs and the Wandoan mine is one that’s been chopped. And without projects like this, the rail line is not feasible.
There are also companies pumping out propaganda on Karratha and Port Hedland, oblivious to rising vacancies and falling prices and rentals. The claims made about the yields that can be achieved in the current market are patently untrue.
Karratha prices are on a serious downward path. Locations which previously had median houses prices in the $800,000s are now down in the $600,000s and vacancy rates have hit 7-8%. Sales volumes are dropped and prices have followed.
These locations will recover in time, but the time to re-consider their prospects for investors is a considerable way off.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank" rel="nofollow">hotspotting.com.au</a>.
You can contact Terry via <a href="https://mailto:%20ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://twitter.com/hotspotting" target="_blank" rel="nofollow">Twitter</a>.
 
</body></html>

Latest Expert Insights

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

Guides

Editor's Picks

Guides

Developments

New apartments

New townhouses

News

Latest Expert Insights

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

Guides

Editor's Picks

Receive the latest news stories to your inbox

Guides

Developments

New apartments

New townhouses

News