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

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

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

How Sterling Global designed 623 Collins from Melbourne's history

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

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

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

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

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

Sydney’s property market is known for high prices, competitive bidding, and mounting pressure on first home buyers. But change is on the horizon.

From late 2025, eligible first home buyers in New South Wales will have access to a new federal government initiative aimed at addressing affordability: the Help to Buy Scheme.&nbsp;

<h2>What is the Help to Buy Scheme?</h2>

The program introduces a shared equity model intended to reduce the upfront cost of entering the property market, particularly in high-demand urban areas such as Sydney.

The scheme operates under a shared ownership structure in which the federal government takes an equity stake of up to 40 per cent for new homes, or 30 per cent for existing dwellings. This arrangement allows eligible buyers to significantly reduce their loan size and avoid the added cost of Lenders Mortgage Insurance (LMI).

Under this model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required. The government’s contribution is not a loan but a co-ownership stake in the property. As such, there is no interest or rent charged on its portion.

Because the government’s equity combined with the buyer’s deposit typically meets or exceeds the 20 per cent threshold, LMI does not apply. The remaining balance, generally between 60 and 70 per cent of the property’s value, is financed through a standard home loan with a participating lender.

The government's equity in the property remains in place until the buyer chooses to repay it voluntarily or until the property is sold. Buyers can buy back the government’s share over time, in increments of at least five per cent, depending on their financial situation.

There is no fixed repayment timeline, but the amount to be repaid will be based on the property's market value at the time of repayment, not the original purchase price.

<h2>How do you qualify for the&nbsp;Help to Buy Scheme?</h2>

To qualify for the Help to Buy Scheme, applicants must meet the following conditions:

<ul>
	<li>Be an Australian citizen at least 18 years of age.</li>
	<li>Be a first-home buyer who does not currently own property.</li>
	<li>Intend to live in the property as their primary residence.</li>
	<li>Earn less than $100,000 per year for individuals, or $160,000 for couples.</li>
	<li>Purchase a property within the regional price caps, currently $950,000 in Sydney, though this is expected to rise to approximately $1.3 million ahead of the program’s launch.</li>
</ul>

While the Help to Buy Scheme does not solve affordability challenges across the board, it does offer a more accessible pathway for a defined segment of the market, particularly younger buyers with moderate incomes who have been priced out of traditional lending routes.

The scheme is expected to commence in NSW in late 2025, as part of a national rollout.

Under the new model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required

Help to Buy Scheme: What first home buyers in NSW need to know

The First Home Owners Grant (FHOG) is a government initiative designed to help eligible first-time home buyers by offering financial assistance towards the purchase or construction of a new home.

While the FHOG is a nationwide program, it is administered separately by each state and territory, meaning the eligibility criteria, grant amounts, and property requirements can vary depending on your location. This means that the amount available and the conditions attached to the grant will differ, so it is important to check the specific guidelines for your state or territory.

It’s important to note that the FHOG is just one of several incentives available to first home buyers. In most states and territories, the grant is not linked to stamp duty exemptions or concessions, with the exception of the Australian Capital Territory (ACT). The FHOG is typically a one-off payment, reducing the overall cost of purchasing or building a new home before any stamp duty concessions are applied.

Below, we provide a breakdown of the First Home Owner Grants available across Australia, outlining the specific details for each state and territory.

<h2>New South Wales First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $600,000. For land purchases and owner-builders, the threshold extends to $750,000.

Stamp Duty Benefits: Provides full stamp duty exemption for homes valued up to $800,000, with concessions available for properties up to $1 million.

<h2>Victoria South Wales First Home Owner Grant</h2>

First Home Owner Grant: Provides a $10,000 grant for first-home buyers purchasing or building new homes valued up to $750,000.

Stamp Duty Benefits: Offers full stamp duty exemption for properties up to $600,000, with concessions available up to $750,000.

<h2>Queensland First Home Owner Grant</h2>

First Home Owner Grant: Offers $30,000 for contracts signed between 20 November 2023 and 30 June 2025. The FHOG applies to new homes valued up to $750,000.

Stamp Duty Concessions: Provides additional concessions for properties valued up to $800,000.

<h2>Western Australia First Home Owner Grant</h2>

&nbsp;

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $750,000 in the southern regions and up to $1 million in the northern regions.

Stamp Duty Concessions: Available for homes valued up to $600,000 for transactions entered into on or after 9 May 2024.

<h2>Australian Capital Territory First Home Owner Grant</h2>

First Home Owner Grant: Replaced by the Home Buyer Concession Scheme, offering full stamp duty concessions for eligible buyers.

<h2>South Australia First Home Owner Grant</h2>

First Home Owner Grant: Provides up to $15,000 for new homes, including houses, apartments, and townhouses. As of 6 June 2024, there is no property value cap for eligibility.

Stamp Duty Relief: Available for new homes and vacant land purchases.

<h2>Tasmania First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes and off the plan purchases.

Stamp Duty Exemption: Between 18 February 2024 and 30 June 2026, first home buyers of established homes valued up to $750,000 receive a full exemption on property transfer duty.

<h2>Northern Territory First Home Owner Grant</h2>

First Home Owner Grant: The Northern Territory provides a $10,000 grant for new homes only. Additional government grants and concessions are available for first home buyers.

Stamp Duty Exemption: The only stamp duty exemption available to property buyers is the House and Land Package Exemption (HLPE).

Eligibility criteria and application processes differ across states. Prospective buyers should refer to their respective state revenue offices for full details on grant availability, conditions, and additional concessions.

Every First Home Owner Grant for new property by state

In the ever-evolving landscape of sustainable architecture and environmentally conscious design, systems and ratings in place can help determine the energy efficiency of residential buildings in Australia.

Australia has multiple building rating systems that evaluate energy efficiency and sustainability in existing and new building designs.

Some systems assess individual building components, while others provide an overall rating for the entire structure.

A rating system ensures that homes are comfortable and energy-efficient, whether you are buying, renovating, or building.

NatHERS (Nationwide House Energy Rating Scheme) is a common way for new homes to meet energy efficiency requirements.

As new developments continue to shape the urban environment, understanding NatHERS ratings becomes essential for developers and homeowners. This article delves into the concept of NatHERS ratings, their significance, and how they contribute to creating energy-efficient homes.

<h2>What is NatHERS?</h2>

NatHERS is a national initiative implemented by the Australian government to promote energy efficiency in residential buildings. The scheme aims to provide a standardised method for assessing the thermal performance of homes, considering factors such as insulation, orientation, ventilation, and building materials.&nbsp;

NatHERS ratings are the most common way new homes meet the National Construction Code's (NCC's) minimum energy efficiency requirements.&nbsp;

NatHERS assessments provide thermal and whole-home ratings for new homes, townhouses, and apartments.

The rating helps evaluate the energy performance of buildings, guides homeowners and developers to make informed decisions about the energy efficiency of their properties, and encourages the construction of more sustainable, comfortable, and cost-effective homes.

<h2>How NatHERS Ratings Work</h2>

NatHERS ratings are determined through four accredited software tools (AccuRate, BERS Pro, FirstRate5, HERO) using a calculation engine CSIRO developed to predict building temperature based on various factors.

The tools can model complex effects of building mass, insulation, window size, and other elements.

The outcome is a star rating that reflects the building's overall thermal efficiency, indicating how well it can maintain a comfortable indoor temperature without excessive reliance on heating or cooling systems.

The star rating scale ranges from 0 to 10, with a 6-star rating being the minimum requirement for compliance with the National Construction Code (NCC).&nbsp;

Achieving a higher star rating demonstrates a commitment to energy efficiency and sustainability, as the building is better equipped to minimise its environmental impact and reduce long-term energy costs.

Anyone can use NatHERS tools, but accredited assessors can provide certified ratings and professional advice.

<h2>Benefits of Higher NatHERS Ratings</h2>

Energy Efficiency: Buildings with higher NatHERS ratings are more energy-efficient, requiring less heating and cooling energy. This reduces the structure's carbon footprint and lowers occupants' energy bills.

Cost Savings: Homes with higher NatHERS ratings are generally more energy-efficient, resulting in reduced energy consumption for heating and cooling. This translates to lower energy bills for homeowners, making sustainable living environmentally friendly and economically viable in the long run.

Environmental Impact: Lower energy consumption directly translates to a reduced environmental impact. Buildings with higher NatHERS ratings contribute to the overall goal of mitigating climate change by lowering greenhouse gas emissions associated with heating and cooling systems.

Improved Comfort: Buildings with high NatHERS ratings offer better thermal comfort to occupants. Proper insulation, well-designed ventilation, and optimal orientation maintain a consistent and comfortable indoor temperature, providing occupants with a more enjoyable and healthier space.

Market Value and Desirability: Higher NatHERS ratings can enhance the market value of a property. As energy efficiency becomes a more significant consideration for homebuyers, a well-rated building may attract a premium price and stand out in the real estate market.

Compliance with Building Codes: NatHERS ratings are a vital component of the National Construction Code (NCC), and compliance with these ratings is often a mandatory requirement for new developments. Local councils and planning authorities may set minimum energy efficiency standards that must be met to obtain development approval.

The Nationwide House Energy Rating Scheme (NatHERS) is a crucial initiative shaping the future of energy-efficient, resilient, and cost-effective homes. With its recent upgrades, NatHERS has evolved into a world-leading tool for the building sector, supporting the global commitment to achieving net-zero emissions by 2050.

Staff Writer

What is a NatHERS rating in new off the plan apartment developments?

Mixed-use developments have gained significant popularity across Australia in recent years due to their unique blend of residential, commercial, and recreational spaces.

Unlike traditional single-purpose developments, mixed-use projects offer a harmonious integration of various functions within a single locale.

Residential units seamlessly coexist with commercial establishments, retail outlets, dining venues, entertainment hubs, and recreational facilities, with the combination not only enhances convenience but also fosters a vibrant lifestyle and a sense of community.

<h3>Convenience and accessibility</h3>

Mixed-use developments are designed with convenience in mind. They often integrate residential units with commercial spaces, retail outlets, restaurants, and recreational facilities, creating a self-contained community.

[smartcode_project:default project_id=114215 project_image_fid=204874]

The proximity allows residents to enjoy the convenience of having essential amenities and services within walking distance. Whether it's grabbing a cup of coffee, going grocery shopping, or accessing healthcare services, everything is conveniently located, saving residents time and effort.

<h3>Vibrant lifestyle and community</h3>

One of the major advantages of mixed-use developments is the vibrant lifestyle they offer. With a diverse range of amenities and communal spaces, residents have ample opportunities to interact, socialise, and build a sense of community.

[smartcode_project:default project_id=107714 project_image_fid=214122]

The presence of parks, community centres, and shared spaces fosters a lively atmosphere, encouraging residents to engage in various activities and events. The vibrant lifestyle within these developments creates a unique sense of belonging and camaraderie among the residents.

<h3>Potential for higher rental yields and property value appreciation</h3>

Mixed-use developments tend to attract a broad range of tenants and buyers due to their versatile nature. This high demand can result in higher rental yields for investors and potentially lead to property value appreciation over time.

[smartcode_project:default project_id=139989 project_image_fid=212887]

The integration of commercial and retail spaces attracts businesses, which can provide a stable rental income stream. Additionally, the popularity of mixed-use developments often drives up property values, making them a potentially lucrative investment in the long term.

<h3>Enhanced security and maintenance</h3>

Mixed-use developments typically have comprehensive security measures in place. With controlled access points, CCTV surveillance, and professional security staff, residents can enjoy enhanced safety and peace of mind.

[smartcode_project:default project_id=108019 project_image_fid=212658]

Additionally, these developments often have dedicated maintenance teams responsible for the upkeep of common areas, landscaping, and infrastructure. This ensures that the overall appearance and functionality of the development are well-maintained, creating a pleasant living environment for residents.

<h3>Live-work-play balance</h3>

One of the key attractions of mixed-use developments is the ability to achieve a desirable live-work-play balance. The integration of residential and commercial spaces allows residents to live closer to their workplaces, reducing commuting time and improving work-life balance.

The proximity to various amenities and recreational facilities encourages an active and healthy lifestyle. Residents can easily access fitness centres, parks, restaurants, and entertainment options, all within the same development, leading to a more fulfilling and convenient way of life.

alisonwarters@gmail.com

The top five reasons to buy in a mixed-use development

When buying a property, everyone needs to be aware of the additional costs that come as part of the buying process.

Often the largest outlay, after the deposit which goes to the bank, is stamp duty.

<h2 style="line-height: 1.38;">What is Stamp Duty?</h2>

Stamp duty is an extra tax to pay the government when you buy land, a property, and other certain assets.

It happens when the legal ownership is transferred. It can also be known as property transfer duty or transfer duty.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="415" src="https://www.youtube.com/embed/C32BWkB5--c" title="YouTube video player" width="660"></iframe>

<h2>Who pays Stamp Duty?</h2>

In some circumstances, you may get an exemption. For some states, you won’t have to pay for stamp duty if you are a first home buyer or a pensioner for houses under a particular price. There are also stamp duty concessions, where you may be entitled to a discount.

<h2>How much does Stamp Duty cost?</h2>

Each state has different rules which affect how much you need to pay. These rules can affect the rate you pay, and the timeframe you will need to pay in. Before you buy land or a property, make sure you check the up-to-date information for your state’s stamp duty.

You can use a free stamp duty calculator online to see approximately how much you’ll need to pay. Find out if you’re eligible for an exemption by enquiring on a project via Urban!

Overall, the stamp duty you need to pay will depend on:

<ul>
	<li aria-level="1">How much your land/property is worth</li>
	<li aria-level="1">Where your land/property is located</li>
	<li aria-level="1">What type of land/property it is</li>
</ul>

Want to find out more? <a href="https://www.youtube.com/@UrbanAustralia?utm_source=YouTube&amp;utm_medium=Video&amp;utm_campaign=Subscribe&amp;utm_id=Subscribe">Subscribe to our YouTube channel</a> for more property videos.

Ellen Walker

Off-the-plan property explained: What is stamp duty?

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

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

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Work in the future will no longer be a place you go, but a thing you do. With new ways of working evolving, modern office environments need to be flexible and responsive to change to attract talented staff and boost productivity.
However, property is traditionally an inflexible resource, with buildings lasting longer than many companies. While the average office lease in Australia is around six years, larger firms typically take out 10 or 15 year terms with extension options. In a good quality, well maintained office fit out, many of the fittings and furnishings can wear well for nearly 15 years.  In comparison, product life cycles for many industries are now less than two years and technology is changing our lives in ways we could have barely imagined even seven years ago when the iPhone first debuted.
When considering renewing or relocating your office, you need to think long-term about whether your workplace actually supports the way people work and how your business will react to change.
For starters, many of the key decisions, like building selection and the amount of space need to be made several years prior to occupation.
This presents a real challenge for project teams as they gaze into their crystal balls and predict the future. Both in terms of internal questions, like what markets their organisation will be operating in and its consequent labour force composition, plus external questions like the direction technology is heading and what sort of workplace prospective staff will expect. Colliers International's research team has had a crack at identifying what might be on the horizon that could affect the way we design and use office space. We don't claim to be futurists and aren't in the business of predicting disruptive technologies so our point of departure is what we are starting to see today.  
Here are the seven forces transforming your office:
1. The new world economic order
Prevailing weak economic conditions leading to a focus on cost reduction and in many cases making employees more accommodating of changing and constrained working conditions. At the same time, organisations are becoming hyper competitive in order to survive, meaning the facilitation of product and process innovation has become paramount.  
2. Demographic change
The need to balance differing generational expectations at work and deliver work life balance. Ageing populations in many economies, combined with other factors such as weaker economic growth, are challenging traditional notions of apprenticeship, skill mastery and graceful retirement.  
3. Technology
Having enabled and created the expectation of a mobile and connected distributed workforce, we now need to think differently about the role and functional requirements of office buildings.  
4. Health and well-being
Healthy workers are more productive and effective workplace Arrangements can facilitate this in many ways.  
5. The regulatory environment
Restrictions and obligations on business activity are becoming tougher in many parts of the world. Sometimes this goes counter to what we hope to achieve through our workplace strategy.  
6. Sustainability
We have a duty to the planet and future generations to limit our environmental footprint at individual, business and community levels. We also need to make our organisations more resilient in the face of increasing severe weather and other events related to the impacts of climate change. Workplace strategy can play a significant part in this goal.  
7. Urban planning
Given the foregoing trends, how must our cities, buildings and workplace expectations adapt? I'll be examining each of these forces over a series of posts in the coming weeks. 
David McEwen is a management consultant working at the intersection of workplace strategy, sustainability and technology with <a href="https://www.colliers.com.au/%E2%80%8E" target="_parent" rel="nofollow">Colliers International</a>.
You can connect with David on <a href="https://www.linkedin.com/profile/view?id=9321351&amp;locale=en_US&amp;trk=tyah&amp;trkInfo=tas%3Adavid" target="_blank">LinkedIn</a>.
This article first appeared on <a target="_blank" href="https://www.colliers.com.au/News.aspx">Colliers International News</a>.
 
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dmcewan-RAeaafS4AZ

The seven forces that are transforming your office

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Just $200 million was given in first home buyer grants across NSW last year.
<a target="_blank" href="https://www.osr.nsw.gov.au/sites/default/files/file_manager/fhog_apps_received_3.pdf">It was the lowest year on record</a>. The aim of attracting first home buyers into new homes - not established ones to boost construction - has allowed the state government to get the good idea headlines, but then saved millions in the budget bottom line.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2014/02/12/chart-two-feb-12-big.gif" title="Click to enlarge"><img src="/images/stories/2014/02/12/chart-two-feb-12-small.gif"></a>
Source: NSW Office of State Revenue statistics
 
The list is an interesting mix of old and new, of greenfields and increased urban density.
<a target="_blank" href="/news">Parramatta</a> buyers topped the list of recipients with around $5.4 million in grants in the 2150 postcode. Parramatta, one of Sydney's oldest locations is undergoing a transformation with major residential projects including <a target="_blank" href="https://vbycrown.com.au">V by Crown</a> headlining its renaissance. 
The $300 million “vertical village” was officially launched in 2012, with construction of the 27-storey tower – set to be Parramatta’s tallest building – well underway. V by Crown recently reached $150 million in sales, with more than 270 apartments sold up since the project was launched in 2012.
<a target="_blank" href="/news">Spring Farm</a>, which sits second on the list of recipient postcodes at 2570, is one of the newer suburbs on the south-western rural/urban precinct. 
Spring Farm is surrounded by <a target="_blank" href="/news">Elderslie</a> to the north, <a target="_blank" href="/news">Narellan Vale</a> to the northeast, <a target="_blank" href="/news">Mount Annan</a> to the east and <a target="_blank" href="/news">South Camden</a> in the south. Until recently it principal land use has been the poultry production by the Tegal family and Neville Clinton, along with extensive orchards and vineyards along the floodplain of the Nepean River. 
The first urban development in Spring Farm was in the Ettlesdale Road area in the 1960s. In 2006 the population of the Spring Farm was 287 predominantly made up of young families with 44% of the population under 25 years of age.  
The area is planned to have around 3,900 housing lots with three separate developers, the Cornish Group with 1100 lots, Landcom 1,400 lots and Mirvac, 450 lots.
I noticed Mirvac recently sold a seven hectare holding to the Starhill Property Group for $7 million last November. In 2008 at Mirvac's Ayre three-bedroom, two-bathroom townhouses were for sale starting from $335,000. House-and-land packages in Mirvac's Ayre started from about $357,000 in 2012. 
Lots of land have been selling at around $200,000 plus since the first Spring Farm estate was opened in 2007 off Richardson Road.
<a target="_blank" href="/news">Arncliffe</a> and <a target="_blank" href="/news">Waterloo</a> were the most established suburbs in the top 20 postcode recipient list.
<a target="_blank" href="/news">Woollongong</a>, with $2.1 million in grants, rounded out the list.
The top 20 postcodes securing around $71 million of the total funding which is a mix of the grant and stamp duty concessions.
There were around 9,500 recipients who secured the mix of grants.
<div title="Page 1" class="page"></div>
Click to enlarge
<a rel="shadowbox" href="/images/stories/2014/02/12/chart-one-feb-12-big.gif" title="Click to enlarge"><img src="/images/stories/2014/02/12/chart-one-feb-12-small.gif"></a>
Source: NSW Office of State Revenue statistics
news@propertyobserver.com.au
 
<div title="Page 1" class="page"></div>
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jchancellor-FAypfDUnLy

Just $200 million in NSW first home grants last year

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Scams involving tax are not uncommon. They <a href="https://www.smartcompany.com.au/finance/tax/1656-tax-office-warns-against-tax-refund-scam" target="_blank">surface regularly</a>. The scams range from the very basic to the quite sophisticated. People and businesses need to be on their toes not to be fooled by the scammers.
Most recently, NSW Fair Trading Minister Stuart Ayres said Fair Trading had received a report of a <a href="https://www.propertyobserver.com.au/news/ato-scam-alert-fake-landlord-tax-exemption/2014013067441" target="_blank">scam letter offering landlords living overseas the opportunity to claim a tax exemption on rental income</a>.
He said the letter advises agencies managing landlords to forward forms to them to complete and return to the scammers. The forms require detailed personal information as well as photocopies of passports and mortgage account numbers. The covering letter in the scam email is badly written with numerous errors of grammar and spelling (this is not uncommon).
The letters aim to harvest details from real estate agents about Australian properties they manage on behalf of non-residents. The scammers may then seek to assume the identities of the non-residents and sell their Australian properties without the real owners' knowledge.
Ayres said Fair Trading had issued a warning about the same scam in July last year after it was reported by a real estate agent in Lennox Head. The ATO confirmed the scam to Fair Trading and that identical fake Her Majesty’s Revenue and Customs letters had been sent to real estate agents in the United Kingdom since at least March 2012, he said.
The scam letter may also feature fake ATO branding, as well as branding from other revenue jurisdictions (e.g. from HMRC in the UK). Ayres said these types of widely circulated scams are regularly sent to other international jurisdictions and the perpetrators often fail to change all details. A similar scam was identified in Western Australia in 2012.
The HMRC and ATO signature on the scam letters is identical and in some places in the ATO letter, the scammers have failed to replace the HMRC references, he said.
ATO Chief Technology Officer Todd Heather said the ATO's brand was often employed in scams due to the Tax Office's intensive interaction with the community and their willingness to comply with requests from the ATO. “Scammers are relying on more sophisticated methods to trick people into handing over their financial or personal contact details,” he said.
The scam flagged by Fair Trading, as with many others reported to the ATO, asks people for their personal details so they can likely commit identity theft and other types of fraud. Heather said the ATO has seen this scam over the past two years and have dealt with it by informing real estate industry associations and asking them to warn their members.
In 2013 alone, the ATO received almost 50,000 reports from the public about ATO branded scams.
To avoid being scammed, NSW Fair Trading offers some sensible advice:
<ul>
<li>
Don't respond to offers, deals or requests for your personal details. Stop. Take time to independently check the request or offer.
</li>
<li>
Never send money or give credit card, account or other personal details to anyone who makes unsolicited offers or requests for your information.
</li>
<li>
Don't rely on glowing testimonials: find solid evidence from independent sources (not those provided with the offer).
</li>
<li>
Never respond to out of the blue requests for your personal details.
</li>
<li>
Always type in the address of the website of a bank, business or authority you are interested in to ensure you are logging onto the genuine website.
</li>
<li>
Don't open unsolicited emails.
</li>
</ul>
Regularly updated information on tax-related scams and online security is available on the <a href="https://www.ato.gov.au/General/Online-services/In-detail/Online/Online-security/">ATO website</a>. 
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany.</a>
 
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thayes-XhNcNKLNWa

Beware of tax scams: How to make sure you don’t get fleeced

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RP Data has been tracking the average number of days properties take to sell and the average vendor discount since the beginning of 2005.  Both measures have recorded a significant improvement throughout 2013 and the average number of days on the market is currently at a historically low level.
<img style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="171" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/02/VEE.jpg" alt="VEE" class="aligncenter size-full wp-image-2859">
Average vendor discount excludes properties sold at auction and those which have sold above their list price and measures the difference between the first advertised price and the ultimate selling price of a home.  The figure is then expressed as a percentage.  As at December 2013, the average discount for a capital city house was -5.7% and for a unit it was -5.5%.  At the same time in 2012, discounting levels were recorded at a much higher -6.9% for houses and -6.3% for units.  The current levels of vendor discounting are the lowest they have been since early 2010 for houses and mid to late 2010 for units.
An analysis of sales across the combined capital cities found that over the final quarter of 2013, 29.5% of all houses and 37.5% of all units sold transacted at a price which was at or higher than the original list price.  These figures were greatly improved from the 25.3% for houses and 30.8% for units at the end of the September 2013 quarter.  Although a relatively high proportion of properties are selling above the list price, the majority of homes continue to experience price negotiation and ultimately sell at a reduction from their original list price.
<img style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="171" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/02/TOM.jpg" alt="TOM" class="aligncenter size-full wp-image-2860">
The average time (days) on market figure excludes properties sold at auction and is measured by looking at the difference between the first advertised date of the property and the contract date once sold.  Based on a data series from the beginning of 2005, the average days on market figures for the combined capital cities are at historic lows of 38 days for houses and 35 days for units.  At the same time in 2012 the average days on market for capital city houses was recorded at 56 days and for units it was 53 days.
With homes seeing lower levels of reductions to the original list price it is no wonder that we are seeing an improvement in the average number of days on market.  Lower discounting levels mean that buyers and sellers are generally able to come to an agreement on price quicker.
<img style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" height="174" width="470" src="https://blog.rpdata.com/wp-content/uploads/2014/02/VEE-by-TOM.jpg" alt="VEE by TOM" class="aligncenter size-full wp-image-2861">
Looking at the level of discounting taking place in the market across the average time on market we see that well priced new stock is selling quickly at a very low discount level.  Across house and unit sales, homes that sold in less than 30 days had an average vendor discounting level of -3.3% in December 2013. 
At the same time, those homes that sold between 30 and 60 days had an average discount of -4.7%, -4.9% was the average discount for homes selling between 60 and 90 days, homes sold between 90 and 120 days on the market had an average vendor discount of -7.2% and homes which sold after more than 120 days had a typical discount of -8.5%. 
The data highlights the importance of setting an appropriate initial list price. Homes which are appropriately priced sell quickly and with a low level of discounting, whereas the longer you keep the property on the market it generally results in a larger discount in order to achieve the sale.
The improvement in both discounting and time on market is reflective of the broader housing market conditions.  Property transactions have increased measurably over the past year and home values have also risen.  These conditions are reflective of the increasing level of competition for those properties available for sale and have undoubtedly contributed to the improved discounting and time on market figures.
With mortgage rates likely to remain at their current low levels over the coming months and housing market activity likely to rebound from its usual December and January slumber, we would anticipate that discount levels will potentially improve further over the first half of 2014. The average time on market is also likely to remain at current low levels.
From a sellers perspective, setting an attractive initial list price will help to ensure that the selling process is a quick one and who knows, you may be one of the circa one third of the market that is selling their homes for more than their initial list price.
Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
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ckusher-ujnxiKuFQs

About a third of homes selling above listed price - vendor discounting to fall further

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As the deadline for the senate inquiry into housing affordability approaches, some notable submissions have thus far been made.  
Saul Eslake, one of Australia’s most respected economists and previous member of the now disbanded ‘National Housing Supply Council,’ has submitted the address he gave last year at the 122nd Annual Henry George Commemorative Dinner, in which he eloquently outlines <a href="https://www.prosper.org.au/2013/09/03/saul-eslake-50-years-of-housing-failure/" target="_blank">Australia’s “50 Years of Housing Failure.”</a>  
Eslake advocates the need to remove policies that stimulate demand, such as negative gearing, in favour of those that increase supply. He backs ‘rethinking’ infrastructure financing and removing stamp duty, in favour of a broad based tax system on the unimproved value of land, as was recommended in the 2009 Ken Henry tax review.  
Any detail Eslake misses on the supply side, is dutifully covered by Senator Bob Day.  
Senator for South Australia, a registered builder and founder of major construction companies, such as Homestead Homes and Home Australia. Day’s submission is his May 2013 policy paper - ‘<a href="https://www.bobday.com.au/PDF/Home-Truths-Revisited-May-2013.pdf" target="_blank">Home Truths Revisited</a>,’ - in which he shares an intricate understanding of the history and complexities of supply side policy, which have seen land prices increase more than ‘tenfold,’ in comparison to the cost of building, which has seen ‘virtually no increase at all.’  
Importantly, for my industry colleagues who write that price rises were simply down to the increase in demand stimulants (such as dual income households), Senator Day notes, “while influential bodies like the Productivity Commission and the Reserve Bank focused their attention on demand drivers, like capital gains tax treatment, negative gearing, interest rates, readily accessible finance, first home buyers' grants and high immigration rates… the real culprit, the real source of the problem, was the refusal of state governments and their land management agencies to provide an adequate and affordable supply of land for new housing stock to meet the demand.”  
Other notable submissions come from Grace Mutual Limited, a not-for-profit entity who “designs investment mechanisms to attract wholesale funding into the social sector” - in particular the National Rental Affordability Scheme.  
GML outline the ‘unduly complex’ regulations that have disadvantaged investors, noting; “Large numbers of NRAS incentives (at least 4,000) were awarded for the construction of student housing,” yet “There appears little evidence that this has any positive impact on the middle to low-income families that were the target of the original policy.”  
And the last two submissions to date (2/2/2014) come from “home loan experts,” who want to abolish negative gearing, but predictably think that the first home buyer grant should stay; as well as an anonymous paper, with an overview of the points made by both Saul Eslake and Bob Day, noting as I did back in <a href="https://www.macrobusiness.com.au/2013/12/what-must-the-senate-do-about-housing-affordability/" target="_blank">December 2013</a> that nothing has been done since the last Senate inquiry.  
Rinse and Repeat  
To emphasise - The 2008 Senate report, entitled <a href="https://www.propertyoz.com.au/library/A%20good%20house%20is%20hard%20to%20find%20report%20JUNE%202008.pdf">“A good house is hard to find: Housing affordability in Australia”</a> made the same points regarding:  
<ul>
<li>
Australia’s tax policies, such as capital gains tax and negative gearing, which impact affordability and market activity.
</li>
</ul>
<ul>
<li>
Each states planning laws, overviewing the construction industry's future skilled labour workforce, the impact of urban boundaries on land prices, and the funding of community infrastructure.
</li>
</ul>
<ul>
<li>
The need for a diverse range of accommodation suited to both young and old alike, advocating greater competition within the building industry.
</li>
</ul>
<ul>
<li>
Both the both the public and private sector, addressing tenancy laws, and renters rights.
</li>
</ul>
  It was both comprehensive and detailed in content, and yet - five years later - at every level - both state and federal government have failed.  
Failed to provide a ready surplus of ‘cheap land.’
Failed to overhaul infrastructure funding.
Failed to boost a sluggish construction sector in relation to population growth.
Failed to reign in speculation.
Failed to overhaul a system that results in too few rental properties for low-income households. And;
Failed to reduce the need for social housing or raise standards in the public sector.  
Instead, we’re left with a new record median house price, which sits close to $600,000 ($597,556 APM), following the highest quarterly rise for four years. This is built on the back of a diminishing first home buyer sector, which is instead supported by record numbers of investors, benefitting from a pace of growth in Sydney which all agree, is ‘unsustainable.’  
As far as affordability is concerned, we’re simply sitting on a merry-go-round of repeated mistakes.  
Housing affordability a mystery too complex?  
This is not due to any lack of understanding on the government’s part. There is no secret or mystery to housing affordability.  
The solutions are well understood;  
<ul>
<li>
They were discussed at length in the previous senate inquiry.
</li>
</ul>
<ul>
<li>
The RBA has outlined them in papers, as recently as the 2011 bulletin entitled ‘<a href="https://www.propertyobserver.com.au/https://www.rba.gov.au/publications/bulletin/2012/sep/2" target="_blank">supply side issues in the housing sector</a>.’
</li>
</ul>
<ul>
<li>
AHURI has repeatedly tacked both <a href="https://www.ahuri.edu.au/downloads/NRV3/AHURI_Final_Report_No105_Housing_affordability_a_21st_century_problem.pdf" target="_blank">supply</a> and <a href="https://www.ahuri.edu.au/downloads/publications/EvRevReports/AHURI_Final_Report_No182_The_spatial_and_distributional_impacts_of_the_Henry_Review_recommendations_on_stamp_duty_and_land_tax.pdf" target="_blank">tax </a> policy.
</li>
</ul>
<ul>
<li>
<a href="https://vcoss.org.au/" target="_blank">VCOSS</a>, <a href="https://www.shelter.org.au/" target="_blank">Shelter</a>, the <a href="https://www.tenantsunion.org.au/" target="_blank">Tenants Union</a>, the ‘<a href="https://www.demographia.com/dhi.pdf" target="_parent">Annual Demographica Housing Affordability Survey</a>’ and <a href="https://www.macrobusiness.com.au/leith-van-onselen/">Leith Van Onselen</a>, have all provided their own valuable contributions to the ‘solutions’ surrounding housing affordability.
</li>
</ul>
<ul>
<li>
And this senate inquiry will do the same.
</li>
</ul>
The recommendations fall in line with other countries and states that have successfully achieved a consistent correlation between gross median house price and income – and so to some degree of detail share the following two points in common:  
1) They have taxation system that discourages speculation, but encourages productivity. The most successful of which is well-administrated broad based land value taxation system. This system has been adopted in various cities in the US. Like Pennsylvania for example, where the tax on the unimproved value of land is heavier than that of property (a process of which I explain in full <a href="https://www.macrobusiness.com.au/2013/11/land-tax-must-kill-negative-gearing-stamp-duty/">here</a>).  Or as in Texas, where property is taxed, yet income isn’t; reducing the level of speculative demand.  
2) They have created an environment in which liberal supply side policies ensure ‘fringe’ land is sold close to its agricultural value, ensuring zoning laws do not impede development, and there remains strong competition within in the construction sector.  
Why we have failed.  
The reason countries like Australia, the UK and certain states in the USA for example, fail to successfully move away from the boom and bust cycle, was summed up neatly in a 2007 parliamentary report entitled <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fpartypol%2F4ZLN6%22">‘New directions in affordable housing: Addressing the decline in housing affordability for Australian families: executive summary’</a> - in which it confidently stated; 
 
“Improving housing affordability does not (emphasis mine) mean reducing the value of existing homes, which are usually the primary asset of any individual or family.”  
It’s a comment that sits right up there along with ‘saving doesn’t mean spending less’ or ‘dieting doesn’t mean reducing calories.’  
If only it were so…!  
To create a sustainable and affordable housing market, in line with the majority of recommendations put forward in the senate inquiry, would inevitably have a dampening effect on existing house and land values, in particular sites which are banked for ‘idle’ speculation.  
Article continues on next page. Please click below.
 
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Is the fear over falling prices justified?  
The fear is understandable when you consider residential real estate is Australia’s largest domestic asset class; with an estimated aggregate value of over $4 trillion, pinned to a banking sector which has the highest exposure to residential mortgages in the world, in a country in which most are home owners.  
However, please don’t fall into the trap – as many of my industry colleagues do - of thinking that just because a large number of home owners in Australia own their own properties debt free, it prevents a potential ‘crash’ in prices.  
A huge portion of private debt for the appropriation of business and commerce is secured against residential real estate.  
A lack of active buyers in the market - (which produces an atmosphere in which price falls are inevitable) – stagnates turnover and prevents those who need to ‘fund’ their retirement through an equity release from doing so. It prevents those that need to move state to find employment elsewhere, from doing so. It locks people into their homes – unable to downsize or upsize – and the effects are felt across all demographics.  
Businesses which run into financial trouble are unable to reach into their house ‘ATM’ and secure additional funding. As a result, industries close, lay-offs are invoked, investment ceases - the list goes on.  
Importantly, it does not prevent a major economic crisis.  
It did not prevent it in Ireland, America, or other countries in Europe, which also had a large proportion of owners, who owned outright.  
We are not immune from a major downturn – no market, which exhibits land cycles is – and be assured, when it does happen, it won’t matter whether the banking system is ‘wiped out’ or not (as suggested as another reason we cant ‘crash’). The government will rush to their assistance – leaving ordinary people to suffer their debt consequences alone, as has been demonstrated repeatedly on an international scale.  
Rising house prices or a stable market?  
An economy that relies on high, rising house prices is one that’s ultimately set to fail.  It’s a symptom of poor housing policy and can only supported over the longer term, by making debt ‘ever more affordable.’  
Therefore the best protection is political reform, which ensures stability across gross price to income ratios - and if managed proficiently in line with the two points outlined above;  
<ul>
<li>
It would assist productivity,
</li>
<li>
Boost the construction sector,
</li>
<li>
Aid infrastructure financing,
</li>
<li>
Keep prices accessible for new homeowners and business – which need to buy or rent land to compete with established players.
</li>
<li>
Ensure tenants are not subject to ever increasing yields.
</li>
<li>
Weather the unwanted impact of real estate ‘booms and busts.’
</li>
<li>
Protect vendors from plummeting property values during an economic crisis - (whenever that point in Australia’s future is) – and;
</li>
<li>
Reduce inequality between the asset rich and income poor.
</li>
</ul>
  Land speculators would not advantage from it – but ordinary taxpayers would love it.  
What the Senate and government must agree to allow, prior to commencing its inquiry.  
Thankfully, we don’t need to have an initial debate with the senate over whether the market is or isn’t affordable – as has been the case with various commentators across the mainstream media.  
Instead, we need collaborative assurance from the government, that any outcome from yet another Senate inquiry, will allow land prices to reduce – the process of which would have a gradual roll-on effect across the established real estate sector.  
Once have an affirmative answer to that question can we begin the debate over how this could be achieved - and once we do, it must ensure the following:  
<ol>
<li>
That fringe land is immediately available for residential development, overriding existing urban boundaries and zoning requirements that render it otherwise, and ensure it remains close to its agricultural value.
</li>
<li>
Increase competition within the construction sector, simplifying the planning process, and eliminating upfront infrastructure costs.  Additionally, a review of the many hidden taxes such as development overlays, application fees, stamp duties and so forth, that are charged through the planning and development process, must be reduced to ensure they are ‘fair and transparent’ as advocated by the HIA.
</li>
<li>
The removal/phasing out of policies such as the first home buyer grant and tax incentives that reward speculation into the established sector, and those that rely on housing inflation to stimulate demand.
</li>
<li>
Reopen the discussion to abolish stamp duty; moving instead toward a broad based land value taxation system. Following practices across the world where it has been deployed <a href="https://www.propertyobserver.com.au/https://blog.p2pfoundation.net/successfull-examples-of-land-value-tax-reforms/2011/02/05" target="_blank">with success,</a> and noting that the ACT is adopting such measures, over a slow transitional <a target="_blank" href="https://www.canberraconnect.act.gov.au/app/answers/detail/a_id/1397/~/tax-reform">20 year</a> period. And;
</li>
<li>
Ensure we build for home buyers, not just investors; paying particular attention to the needs of an ageing population, for which downsizing into apartments is not the preferred, or readily adopted option.
</li>
</ol>
Additionally, the government should work closely with organisations such as Shelter and the Tenants Union, to satisfy that the quality, provision and standard, of both rental and public housing, is improved and maintained, along with an overhaul of tenancy laws for long-term tenants.  
However, if both state and federal government refuse to let land prices drop, acting reactively to affordability issues, rather than proactively, then I suggest you use whatever vote you have wisely. Ignore both major parties; instead, place it behind smaller players who act in the best interests of community and not just their back pockets.  
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
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The real question the Senate inquiry must ask: Will the government allow land prices to decrease?

Palm Beach v Portsea: Jonathan Chancellor and Margie Blok offer 30-plus insights

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Two leading international economists have forecast a property bust, if interest rates stay low and house prices continue to rise faster than wages growth.
Former top government economist Quentin Grafton has signalled the growth in house prices is a concern.
“While I am cautious enough not to claim there is a ‘boom’ that inevitably implies a bust, the recent growth in the national median house price of 9% in 2013 (14% in Sydney) is of concern, especially when it is about three times greater than nominal wage growth (and also inflation),” he will say in a speech to the Australian Bureau of Resources and Energy Economics.
“Should the house price growth spurt continue for much longer there could be an overshoot that may create an ‘overhang’.”
Australia’s ratio of house prices to income is the second highest in the world, although it remains slightly below its peak.
Grafton, now a professor with the Australian National University’s Crawford School says Australia has had one of the most rapid rises in nominal house prices of all developed countries since 1997.
Australia also has a household debt-to-income ratio of around 150%.
“The risk is that if Australia were to continue its historically low interest rates (the cash rate is at 2.5%), the housing price surge will continue,” Grafton says.
It’s unlikely the Reserve Bank will lower the official cash rate again, choosing on Tuesday to keep interest rates on hold. However, the RBA is still faced with a need to keep rates low enough to support economic growth.
“Successfully achieving all of these objectives simultaneously while avoiding a housing price boom, and in the midst of competitive devaluations from key trading partners, is a big ask of any central bank,” Grafton says.
“Given that Australia’s major banks borrow 30-40% of their funds from offshore capital markets, any rapid fall in house prices would pose a dilemma for the big four banks and would likely result in an Australian-made credit crunch.”
A UBS survey of bank chief financial officers released yesterday revealed banks are lowering their lending criteria, offering more competitive mortgages and discounting fees.
“Loan officers indicated lending standards have been loosened materially in both mortgages and large corporate lending over the last six months,” the report says.
“In housing, improved market prospects and competition were cited as the factors driving a loosening in standards. This has led to a material reduction in both price and fees in mortgage lending.”
Grafton’s predictions are not as dire as other forecasters, with United States demographer and economist Harry Dent saying this week Australian property prices will fall between 30-50%.
Dent says Melbourne and Sydney will be the worst affected and the crash will likely occur if the stock market suffers major losses or the Chinese property market declines.
“Bubbles ultimately peak when the people buying can’t afford to buy it,” he says as quoted by <a target="_blank" href="https://www.news.com.au/finance/real-estate/us-demographer-predicts-hit-to-aussie-home-prices/story-fndba8uq-1226816510923">News.com.au</a>.
“I see it like a popcorn popper, different markets are bursting at different times … but all of real estate in coastal cities all around the world is greatly overvalued and they're all going to burst whether it be 30 per cent or 40 per cent ... or 90 per cent in the worst case.”
Dent predicts the “China bubble” will burst next year and when it does, Australia will be the hardest hit.
“I see real estate going down 60-65% in the US, it's probably more like 30-50% in Australia, but that's still enough for you to say, ‘Hey why would you go buying real estate?’” he says.
Dent accurately predicted the 2008 GFC, but Australian Property Monitors senior economist Andrew Wilson told SmartCompany there will always be doomsday predictions when the market is doing well.
“These predictions are no surprise because there is a revival in the market at the moment. However they’re fruitless. They suggest catastrophic outcomes, but the underlying fundamentals and the historical evidence suggests this won’t occur,” he says.
“Equating incomes with house prices lacks relevance. The real issue is income versus mortgage repayments. The evidence clearly shows the average income required to pay a mortgage in most capitals is about 25% of weekly disposable income and that’s remained the same for a number of decades.”
Wilson says the only way there will be a major crash in house prices is if there is another global financial crisis “unlike what we’ve ever seen before”.
“We have a very rigid lending environment which is another factor in insuring a resilient housing market over the median to long term,” he says.
“Banks are competing more vigorously for market share at the moment which is pushing mortgage rates down…. But interest rate levels are really only where they were in 2008. They haven’t dropped to levels you might associate with a higher risk.”
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany.</a>
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Economists warn of a property bust if interest rates stay too low

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Auctions can be confronting situations, particularly for the inexperienced buyer, and the first rule that must be remembered is that “winning” at auction doesn’t necessarily mean walking away with the property.
If the home starts getting bids that you cannot afford, or that are more than the property is worth, then the best way to ‘win’ is to walk away. Often easier said than done.
This week, Property Observer took part in #loanchat – a Twitter conversation where people are encouraged to chime in and ask questions – with the topic being about auctions.
Here are the top tips
1 Practice and visit auctions ahead of time
If you can, it’s worth going to a number of auctions ahead of the time that you wish to place a bid. This will not only give you an understanding of what prices properties are going for, and the interest levels, but you will also find yourself more comfortable and familiar with the auction process
Auctions are an experience you don’t want to be dropped into cold. Try to visit as many as you can to get a feel of the language.
If you can’t head to any auctions ahead of time, then try to watch some videos of auctions online so that you know what to expect, and see some online guides.
For instance, this video on bidding tips:
{qtube vid:=IG45EARH8YM}
 
2 Have a game plan, including a budget, figured out beforehand
Do not go into an auction unsure about how much you’re willing to spend – know your upper limit and stick to it. However, you may find yourself needing to be flexible by $1,000 or $2,000 to make sure you don’t miss your ‘dream home’ by a few thousand.
Don’t give away how close you are to your limit – many buyer’s agents say they easily get the upper hand as it’s obvious when inexperienced purchasers are reaching their limit. Keep any notes with your limit on out of sight. 
 
3 Get an ‘auction buddy’ if you’re unsure
If you don’t trust yourself at auction, or could do with the support, then it’s recommended to consider an ‘auction buddy’ – someone who can come with you, keep you accountable and ensure that you’re not acting emotionally.
Make sure that you choose someone who isn’t emotionally invested in the purchase and who will play your ‘devil’s advocate’ when you want to pay more than you initially decided to.
 
4 Know exactly what it is your buying (and check out that contract ahead of time)
Do not go into an auction without being clear on your borrowing capacity, your expectations for the property and knowledge of what the asset is like. Ensure you’ve ‘popped the hood’ and undertaken a building and pest inspection, as well as had a solicitor look through the contract so you know what you’ll be signing.
Remember to negotiate any changes ahead of auction time.
 
5 Get as much information as possible
While getting plenty of information is crucial, ensure the advice that you seek out is independent and well-researched.
Too often, investors take advice from the real estate agent, who is acting in the vendor's interest. Prospective buyers should always be looking for impartial advice in every part of the buying process, including auctions. See out your own comparable properties, undertake your own research, and be sure to match it against what you are being told.
Similarly, double check any claims about rental yields achievable.
You'll also want to be figuring out the vendor's motivations - try and find out as much about the current owner as possible. This may just help to secure you the upper hand.
If you want to see <a href="https://www.statecustodians.com.au/help/Ask-Heidi-Blog/February-loanchat-Wrap-Up" target="_blank">a full wrap-up of loan chat then have a look here</a>.
 
<div align="center"><hr width="100%" size="2" noshade></div>
 
 
YOU MIGHT ALSO WANT TO READ:
How to <a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/new-south-wales/ten-tips-to-avoid-becoming-spring-auction-pushover-buyers/2013091665044" target="_blank">avoid becoming an auction pushover buyer</a> (10 tips) 
<a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/residential/seven-tips-for-buying-before-auction-john-mcgrath/2013072562631%20www.propertyobserver.com.au/auctions/five-tips-for-buying-at-a-busy-auction/2013101865803" target="_blank">John McGrath's seven tips</a> for buying before auction
<div align="center"><hr width="100%" size="2" noshade></div>
 
 
<a href="mailto:jduke@propertyobserver.com.au" target="_blank">jduke@propertyobserver.com.au</a>
 
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jduke-EHk3XBmHkn

Five tips to win at auction, and how to know when to walk away

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Sydney prices skyrocketed last year, Harry Dent is <a target="_blank" href="https://www.propertyobserver.com.au/news/property-crash-is-like-popping-popcorn-especially-in-melbourne-harry-dent/2014020567560">diagnosing bubbles</a> all over the country and housing affordability is on everyone's mind. So Property Observer has turned to a range of industry experts for their thoughts on whether Australian property is overvalued.
Cameron Kusher – Senior research analyst, <a href="https://www.rpdata.com/">RPData<img style="float: right;" alt="cameron_kusher_new" src="/images/stories/2014/02/07/cameron_kusher_new.jpg" height="150" width="120"></a>
IF YOU'RE COMING TO AUSTRALIA FROM OVERSEAS, YOU MIGHT THINK OUR PROPERTY IS OVERVALUED – BUT THERE ARE GOOD REASONS FOR IT.
I don’t think you can say that the market is overvalued here in Australia. When you’re looking at examples of other countries, property here does look expensive. But there are good reasons why property prices are high in certain capital cities. Our population is so centralised, and job opportunities are centralised to a few capital city marketplaces – so there’s lots of competition for available stock. Plus there’s the fact that the supply of new housing and land for new housing is very restricted by our government, through their land releases.
So if you’re coming to Australia from overseas, you might think our property is overvalued – but there are good reasons for it.
Whether or not the price of Australian property is beneficial, and to whom, is another question for another day.
 
Catherine Cashmore – Market analyst<img style="float: right;" src="/images/stories/2013/12/12/CatherineCashmoreProfile.jpg" alt="CatherineCashmoreProfile" height="150" width="125">
YOU'D BE HARD PUSHED TO FIND ACCOMMODATION ON THE FRINGES OF OUR CAPITAL CITIES FOR LESS THAN SIX TIMES MEDIAN INCOME
It's important to draw a distinction between property and land.
The raw cost of 'building' a home has seen very little increase over the past decade or so - and therefore is not overvalued. However - due to housing policy that encourages speculation into the established sector, and fails to ensure fringe land identified for residential development, is sold close to its agricultural value - the cost of an average subdivided plot has increased more than tenfold.
Meanwhile, in the late 1990s a typical first homebuyer’s budget would have secured a modest family home, in a reasonably facilitated suburb, for three times median income. Today you’d be hard pushed to find accommodation on the fringes of our capital cities for less than six times median income, and in Sydney, it's closer to 10 times.
To some extent, lower mortgage serviceability rates buffer the effects for initial owners who generally work out how much they can borrow month to month, rather than concentrating on the total outstanding amount.
However, for prices to continue to increase, thereby inflating the 'entry cost' further, the system relies on debt being 'ever more affordable' to keep afloat, and the risk of still having outstanding mortgage debt to service upon retirement is significantly higher.
Today - due to the costs of an initial purchase, buyers enter the market later, have less time to pay off their mortgage, and often will end up reaching into their ‘super’ account upon retirement to clear the debt - after which, they obviously don't want to see the price of their biggest asset - which has been a chain around their neck in terms of monthly mortgage repayments - drop.
To some extent, it's a self perpetuating circle - voting for a politician who recognises an economy that relies on 'ever rising' house prices, is one that is ultimately set to fail, by way of an eventual sharp correction, is therefore not desirable for many owners.
But are prices overvalued?
<ol start="1">
<li>Land prices are inflated to multiples what they would be if used for other purposes - with sites often 'land banked' in lieu of any development </li>
<li>Yields are generally low - averaging around 4% for a unit and 3.5% for a house. </li>
<li>First homebuyers are having to find inventive ways to 'enter' the market if they want to gain a foothold onto the onerous housing ladder - borrowing a deposit, or being 'first time investors' and capitalising on family assistance to do so. </li>
<li>Mortgage/household debt has gone from 30% - or one third - of disposable income in the 70s, to almost one-and-a-half years disposable income today.</li>
</ol>
Therefore, ‘Yes!’ land is overvalued. But will people keep buying it?
Of course - land is a necessity to all business and commerce, as well as our personal needs - and whilst buyers are able to service the debt, there will always a market for it.
However, take careful note - as time progresses, and values increase, this significantly valuable resource will increasingly fall into the hands of  'those who can' and not necessarily 'those who need' – and the consequence of such, does not take much intelligence to guess.
Article continues on next page. Please click below.
 
 
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Terry Ryder – <a target="_blank" href="https://hotspotting.com.au/">hotspotting.com.au<img style="float: right;" src="/images/stories/2013/10/25/Terry-Ryder-for-profile.jpg" alt="Terry-Ryder-for-profile"></a>
THE ONLY CLAIMS THAT AUSTRALIAN HOMES ARE "OVER-VALUED" COMES FROM INDIVIDUALS OR ORGANISATIONS WITH ULTERIOR MOTIVES
Australian property values are pretty much where they should be, relative to the strength of the economy, the wealth levels of the nation, the low rate of unemployment, the absence of over-supply (except in specific sub-markets) and the low level of interest rates.
Both regular affordability indexes (HIA-CommBank and REIA-AdelBank) says that affordability levels are the best they have been in 10 years. An ABS report found that, relative to incomes, our house prices are at the same levels as in 1995 and the Reserve Bank has stated on a number of occasions that Australian house prices are unremarkable by world standards.
The only claims that Australian homes are "over-valued" come from individuals or organisations with ulterior motives, mostly from the US, including the Demographia report which is published by a developer lobby group campaigning for a major relaxation of regulations "retracting" developer activity and the very strange Harry Dent who makes his living by making doomsday predictions, not one of which have ever come to pass.
 
Louis Christopher – Managing director, <a target="_blank" href="https://sqmresearch.com.au/">SQM Research<img style="float: right;" alt="Louis-Christopher-profile" src="/images/stories/2013/12/12/Louis-Christopher-profile.jpg" height="150" width="125"></a>
THERE HAVE BEEN TIMES WHERE THE MARKET HAS BEEN MUCH MORE OVERVALUED THAN IT IS NOW
The overall market is, in our opinion, only modestly overvalued. But it’s a difficult question to answer, for many reasons.
For example, if credit is turned off tomorrow, we’d have a crash in this country. And on that basis, you could say “the market is overvalued.” But assuming we continue to have low interest rates, the data suggests to me that we’re only modestly overvalued.
Looking at house price changes in comparison to total income changes – that metric suggests that property is slightly overvalued – and that’s one of the reasons that we’ve been relatively bullish on the market.
Of course if we had a cash rate at 6%, I’d say the market is overvalued, and we’d be due for a correction. One of my concerns is that the market is sensitive to interest rate changes, particularly with the number of investors in the market at the moment. When we get an interest rate rise, I believe it will negatively influence the market in a fairly significant way. Markets would be fairly susceptible to a 50 basis point increase.
But if interest rates stay the same, we only have a little bit of overvaluing. Sydney’s starting to look that way, but in the scheme of things I’ve seen worse, particularly back in 2003. I’d say it’s only moderately to modestly overvalued.
Hobart’s looking undervalued at this point in time, and Brisbane’s looking neutral – neither undervalued nor overvalued. The Gold Coast is starting to look quite undervalued now, and we’re expecting a pickup in their market.
In Adelaide, we don’t think the market’s going to do much. It’s at fair value, considering issues to do with the economy. Perth is looking a little overvalued, given that we know what’s happening with the downturn. Darwin is also looking overvalued, to an extent. And Melbourne’s only modestly overvalued.
But we don’t believe that the market in general is excessively overvalued, assuming the global economy remains in the current status quo.
You could argue that property expensive, but if I looked at the data from the last 20 years, there have been times where it’s been much more overvalued than it is now – particularly in 2003.
jrichardson@propertyobserver.com.au
 
 
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Is Australian property overvalued? The experts have their say

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Despite talk of a housing bubble in Australia, house prices have been flat in real terms over the past six years since the pre-financial crisis peak in December 2007. The weighted average of established house prices in Australia’s capital cities has just kept pace with inflation, according to the <a target="_blank" href="https://abs.gov.au/ausstats%5Cabs@.nsf/mediareleasesbyCatalogue/CEE35CDA94704AB0CA257A4C00126898?Opendocument">Australian Bureau of Statistics</a> house price index.
Much discussion has focussed on short-term factors that have supported housing prices since the crisis: Chinese buyers, low interest rates, the switch from shares into property by investors, and the renewed willingness to take on debt since households and investors have repaired their balance sheets post-crisis.
But we need to bear in mind potential long-term drivers of house prices, one of which is population ageing. We’ve known about population ageing in Australia and other developed countries for a long time. It’s like the Queen Mary - we can see it coming from a long way off, but it’s difficult to turn around.
Predicting house prices
There have been some over-hyped predictions about the potential effect of population ageing on house prices in the past. The so-called “asset meltdown” hypothesis was fuelled by some influential <a target="_blank" href="https://www.nber.org/papers/w2794">US</a> <a target="_blank" href="https://piketty.pse.ens.fr/files/PoterbaRESta2001.pdf">economists</a>. They said that the retiring Baby Boomers would sell down their assets, like housing and shares, to pay for their retirement, causing asset prices to plunge. The infamous Mankiw and Weil paper, for example, predicted that US house prices could fall by up to 40% as the baby boomers started to retire between 1990 and 2007. Suffice to say, this didn’t happen!
My <a target="_blank" href="https://econpapers.repec.org/article/blaausecr/v_3a43_3ay_3a2010_3ai_3a3_3ap_3a240-253.htm">research</a> for Australia suggests such a prediction is way out of the ball park (as are many other predictions of calamitous change to be wreaked by population ageing – but that’s a topic for another day). That said, ageing will affect house prices. But it will be a slow-burn effect, occurring gradually over several decades, and the magnitude will be modest.
According to our <a href="https://econpapers.repec.org/article/blaausecr/v_3a43_3ay_3a2010_3ai_3a3_3ap_3a240-253.htm">analysis</a> based on both econometric estimation using historic data as well as predictions from a household behavioural model, ageing will cause house prices to be lower than they otherwise would be, by somewhere between 3% and 25% over the next 35 years.
Two factors drive the effect of ageing on house prices in Australia. First is the declining population share of 35 to 59 year olds who have the highest incidence of property purchases, including both investment and owner-occupied housing. Investment housing has increased as a share of total housing purchases in the last two decades according to <a target="_blank" href="https://www.rba.gov.au/Statistics/Bulletin/D05hist.xls">data</a> from the Reserve Bank of Australia, and it is the 35 to 59 year olds who tend to be housing investors.
Second, older people may trade down in order to release housing equity to support their retirement. The latter effect has, however, become weaker as households have the ability to <a target="_blank" href="https://theconversation.com/your-home-as-an-atm-home-equity-a-risky-welfare-tool-22000">withdraw equity</a> in their house without needing to sell it, through facilities such as equity redraw loans and reverse mortgages.
Housing bubbles and baby booms
The link between house prices and demographic change could also run the other way: from house prices to the population age distribution.
High house prices tend to reduce fertility rates according to the <a target="_blank" href="https://www.nber.org/papers/w17485">international evidence</a>, at least among non-home owners, although it may increase fertility among existing home owners. High house prices reduce the affordability of children for non-home owners, but increases the affordability for existing home-owners by increasing their wealth. In fact given financial and emotional investment in both housing and childbirth it stands to reason that these decisions are related in quite complex ways, and depend on government policies in the areas of family assistance and housing affordability. I plan to investigate these relationships for Australia with co-authors from Macquarie University and the ANU.
One of the lessons from economics is that it’s very risky to extrapolate from the past by drawing straight lines from historic data into the long-term future, for two reasons: the economy has powerful self-correcting forces that we tend to underestimate; and unexpected shocks – Donald Rumsfeld’s “unknown unknowns” – can throw the data off course for a considerable period of time.
This was the fate of Mankiw and Weil’s prediction of a possible 40% fall in US house prices over 20 years – in fact house prices rose dramatically over that period. Compared with the slow-burning effect of population ageing, events like financial booms and crises have a much greater potential to cause swings in house prices over the short to medium term – say five to ten years. And this is the period that matters for most people.
The long term is interesting and we should keep an eye on it. But we’d do well to remember the maxim of the great economist John Maynard Keynes who said: “In the long run we are all dead”.
Ross Guest is head of the department of accounting, finance and economics and professor of economics at Griffith University.
 He is an adjunct professor with the Australia and New Zealand School of Government (ANZSOG) and a national senior teaching fellow with the Australian Government Office for Learning and Teaching.
This article was originally published at <a href="https://theconversation.com">The Conversation</a>. 
 
<img alt="The Conversation" height="1" src="https://counter.theconversation.edu.au/content/22750/count.gif" width="1">
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