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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<div style="text-align: justify;">A very poor <a target="_blank" href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">Labour Force report</a> from the ABS today. The unemployment rate was recorded as 5.8%, but at 5.845% it might just as well be rounded up to 5.9%.</div>
<div style="text-align: justify;"></div>
 <img width="156" height="200" src="https://www.abs.gov.au/ausstats/abs@.nsf/a866861f12e106e0ca256a38002791fa/f756c48f25016833ca25753e00135fd9/Body/0.2D86%21OpenElement&amp;FieldElemFormat=gif" alt="Graph: Unemployment Rate"> Source: ABS <div style="text-align: justify;">But it was much more disappointing than that. Despite low interest rates (and a rapidly rising population) employment decreased 22,600 to 11,629,500 and full-time employment decreased 31,600 to 8,067,700. Yes, of course, the samples are small and the data is volatile, but that is a really poor result, and especially so for the full-time gigs.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">This leaves the Reserve Bank with a real dilemma. Futures markets had a fit and are now pricing in a rate cut to just 2.25% by the middle of the year as a 50:50 chance. Other data has been more promising but we can basically forget interest rate hikes while the jobs market is so weak.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">The currency markets think they know what is coming and the Aussie dollar had a minor panic attack falling to a 3.5 year low and brushing just 88 US cents, well over 15% below where it was.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">If you break down the data by state, the figures tell an interesting story. For example, here are the unemployment rates by state charted:</div>
<div style="text-align: justify;"></div>
<div style="clear: both; text-align: center;" class="separator"><a style="margin-left: 1em; margin-right: 1em;" href="https://4.bp.blogspot.com/-_RUeLGcNiyI/UtdfjutOZoI/AAAAAAAALSg/BpArfnUP4LU/s1600/UE.jpg"><img width="400" height="152" border="0" src="https://4.bp.blogspot.com/-_RUeLGcNiyI/UtdfjutOZoI/AAAAAAAALSg/BpArfnUP4LU/s1600/UE.jpg"></a></div>
<div style="clear: both; text-align: center;" class="separator">Source: ABS</div>
<div style="clear: both; text-align: center;" class="separator"> </div>
<div style="text-align: justify;">South Australia continues to struggle. I didn't include Tasmania on my chart, but the picture there is even worse with an unemployment rate of 7.7%. And here are the 12 months jobs growth figures charted:</div>
<div style="text-align: justify;"></div>
<div style="clear: both; text-align: center;" class="separator"><a style="margin-left: 1em; margin-right: 1em;" href="https://2.bp.blogspot.com/-8vchO8JSWl8/UtddzWEuXiI/AAAAAAAALSQ/Sq0uqSHLI1w/s1600/12m+jobs.jpg"><img width="400" height="146" border="0" src="https://2.bp.blogspot.com/-8vchO8JSWl8/UtddzWEuXiI/AAAAAAAALSQ/Sq0uqSHLI1w/s1600/12m+jobs.jpg"></a></div>
<div style="clear: both; text-align: center;" class="separator">Source: ABS</div>
<div style="clear: both; text-align: center;" class="separator"> </div>
<div style="text-align: justify;">Even more lame news for South Australia there, the state actually shedding jobs over the past 12 months, in contrast to all of the major states. But the 12 months jobs growth only tells a part of the story - check out what has happened to employment by state since 2010:</div>
<div style="text-align: justify;"></div>
<div style="text-align: center;"><img width="400" height="328" src="https://www.rba.gov.au/publications/smp/2013/aug/images/graph-3.20.gif"></div>
<div style="text-align: center;"></div>
<div style="text-align: justify;">New South Wales is adding jobs at a rate of knots, but Tasmania and South Australia are going nowhere. I'm aware that yield-focussed investors have been tipping Adelaide for property price growth for the last 5 years, but I'm afraid to say that they were badly wrong and the jobs market data continues to do them no favours.</div>
<div style="text-align: justify;"></div>
<div style="text-align: center;"><img src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6bl-dwelpri-small.gif?accessed=2014-01-16-15-33-33" alt="Dwelling Prices graph"></div>
<div style="text-align: center;"></div>
<div style="text-align: justify;">Not only has Adelaide failed to add jobs, it also fails to attract investors.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">If I had to pick one chart to explain why Sydney will be the gun property market performer this decade while other cities lag behind, it would be the one below from Westpac.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">There is essentially no interest in investment in South Australia and Tasmania, but Western Australia (+27% by housing finance value from June 2012 to November 2013) and Victoria (+37%) have really been picking up, as yield-starved investors seek out returns.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">As for New South Wales, at +74%...well, you can only expect the price of quality existing stock to boom in the inner and middle rind suburbs and they are doing just that.</div>
<div style="text-align: justify;"></div>
<div style="text-align: center;"><img width="400" height="270" src="https://www.macrobusiness.com.au/wp-content/uploads/2014/01/ScreenHunter_863-Jan.-16-11.08.jpg" alt="ScreenHunter_863 Jan. 16 11.08"></div>
<div style="text-align: center;">Source: Westpac</div>
<div style="text-align: justify;"> </div>
<div style="text-align: justify;">The Reserve Bank is now stuck between a rock and a hard place. It can't hike rates while the jobs data is so wretched, yet low interest rates will continue to fuel a boom in Sydney's housing market.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">In theory, APRA could implement macroprudential measures to limit credit growth, but as I noted <a target="_blank" href="https://petewargent.blogspot.com.au/2013/11/how-quickly-is-sydney-property-selling">here</a>, <a target="_blank" href="https://www.bis.org/publ/work433.pdf">detailed research from BIS</a> shows that such measures often tend to have very little (if any) discernible impact:</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;">"None of the policies designed to affect either the supply of or the demand for credit has a discernible impact on house prices."</div>
<div style="text-align: justify;"> </div>
<div style="text-align: justify;">It's pretty much as you were for the property markets.</div>
<div style="text-align: justify;"></div>
<div style="text-align: justify;"> 
<hr>
Pete Wargent is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</div>
<div style="text-align: justify;">
His new book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' was released on 1 September 2013.
</div>
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pwargent-M4siyDbqQY

Reserve bank stuck between a boom and a hard place

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The weekend is a great time to get things sorted for your investment properties; however you don’t want to burden yourself with too much to do. Here are three things that you can do to get yourself organised, without taking up hours of your time and without even leaving your house.
1) Get your receipts and expenses in order
Terrifyingly, a lot of investors still use a shoebox system to organise their receipts and expenses. If you are one of these, all hope is not lost. You will need these items at tax time to ensure you claim every legal deduction and make the most out of owning property. If you haven’t got a good system, it’s time to get one.
Whether it’s a ring binder folder per property, or a digitalised version on the computer (and backed up), get your paperwork in order. You might find some more extensive problems when you do this and get things in order – such as a missing depreciation schedule.
You may want to have a look at this list of <a target="_blank" href="https://www.propertyobserver.com.au/what-can-landlords-claim-on-tax/2011062050547">what landlords can claim</a>.
And these <a target="_blank" href="https://www.propertyobserver.com.au/tax/seven-rental-property-deductions-property-investors-are-allowed-to-claim-to-reduce-their-tax-bill/2013061762279">seven tips on deductions</a> will help out those who want to boost their return even further and ensure they don’t throw out anything important.
2) Run a some specific searches
Do some savvy web searching to find out if there are any changes coming up in your properties’ areas. For instance, have there been council proposals for transport links, or have the neighbours asked for extensive renovations and put this on display at the council office? Google your suburb, and check for latest updates. Be sure to jump onto your local newspapers’ website for announcements, and consider setting yourself up some Google alerts for your area while you’re at it. You want to ensure you have the opportunity to be aware ahead of time if your views might get built out or if your tenant will be put out by next doors’ renovation work’s noise.
You will also find that if you look up your suburb on our data page, the most relevant news gets pulled in for you.
3) Set up calendar alerts
If you don’t have a property investment calendar, you might want to start. Add in alerts to an online or print diary calendar about when leases come to an end, when rent is expected from different properties and when you’re due to check in with your broker, accountant or property manager. This will save you plenty of hassles in the long run, and ensure that all bills get paid on time. We also recommend putting key events into your calendar, <a target="_blank" href="https://www.propertyobserver.com.au/finance/the-property-changes-you-need-to-be-noting-on-your-2014-calendar/2014010967131">such as those featured here</a>.
Want more things to do this weekend? Here are <a target="_blank" href="https://www.propertyobserver.com.au/news/weekend-challenge-6-easy-ways-to-get-ahead-in-two-days/2014010967127">six ways you can get ahead.</a>
jduke@propertyobserver.com.au
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jduke-EHk3XBmHkn

Your weekend “must do” items: Three things to put on the list

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With unique charm and situated in prime locations, there’s a lot of appeal to owning a heritage property. But while the rarity of heritage residence ensures that they have long-term value on the market, the many restrictions on renovating, subdividing or altering them can leave many investors wondering whether they’re worth the hassle.
If a property or site is deemed to be significant to the heritage of a local area, it may be protected under a heritage overlay, enforced by the local council. While a property that is deemed a “heritage place” by the local council may not necessarily have strict restrictions on changes, a heritage overlay will require a permit to subdivide land, demolish or remove any part of a building, carry out construction (including building a fence), construct or display a sign, externally paint an unpainted surface or externally paint an advertisement onto a building.
Other controls over external painting, internal alterations and trees also may apply, depending on the individual property.
Renovating For Profit founder Cherie Barber says that it’s vital to understand what kind of heritage protection the property in question falls under. She notes the distinction between a heritage listed property, and one that falls in a heritage and conservation precinct.
“One is individual, and one is blanket. Heritage and conservation applies to a whole suburb. The council is saying, ‘we’re going to be very particular about the development in the suburb. We want all the houses to retain the underlying fabric of the suburb.’ So they’re very particular about the exterior. Those properties usually don’t have any restrictions on what you can do internally.”
However, that doesn’t mean that a renovating a property in a heritage and conservation precinct is cheap. To obtain approval for changes to a property, the council often requires that renovators and investors produce reports from experts in heritage constructions.
Barber advises renovators in heritage suburbs to expect delays when trying to get paperwork approved through the council.
“The typical lead time in approvals is four to nine months in my suburb, and each report can be thousands of dollars.”
Barber recently spent $70,000 on reports alone while building an extension on the back of a property in a heritage and conservation precinct, even though the property itself wasn’t heritage listed.
According to Barber, the paperwork required in applying for permits for heritage homes is one of the greatest costs to investors. In 2004, Barber purchased a heritage listed property in Balmain, intending to subdivide the plot. But before signing the contract, she negotiated a five day due diligence period.
“I got a town planner, an architect and a heritage expert, we met off site, and we discussed whether I could get my subdivision approved.”
Engaging three experts for the single consultation cost about $1000. Barber’s team agreed that she would have an 80% chance of getting the subdivision approved, with a 20% chance that the matter would have to go before the Land and Environment court. With that knowledge in hand, Barber built the costs of legal proceedings into her investment.
The approval did end up going before the Land and Environment court – a lengthy and expensive process, Barber says. With each witness charging $250 to $300 an hour, Barber notes that it isn’t hard to spend $5,000 to $10,000 per witness. In total, the court process cost her $90,000.
Two years after purchasing the property for $2.51 million – with one year spent negotiating with the council, and one year in court – Barber sold it for $3.75 million, without undertaking any construction on the property. Total costs, Barber says, were about $360,000.
While Barber managed to walk away with a tidy profit from “paper shuffling”, she warns that the process isn’t for those without some serious capital behind them.
“For newbie investors, that’s the stuff that can send you bankrupt.”
While it may seem that heritage controls exist to preserve a building exactly as it originally stood, the Victorian Department of Transport, Planning and Local Infrastructure <a target="_blank" href="https://www.dpcd.vic.gov.au/heritage/local-government/heritage-overlays-local-heritage-legislation">notes</a> that “not every building or landscape element will be significant”, and that making changes or removing “non-contributory” elements of heritage places is generally not an issue.
Such subjective terms make councils unpredictable, Barber says. As such, she advises that only the serious investor or renovator should approach a heritage property.
“You’ve got to be savvy. You need a good team of professional experts around you. You have your trade team and your professional team – ‘the suits’– your town planner, your architect, your lawyer, your structural engineer. And when you’re working on a heritage property, you’re going to need the suits more than the trade team.”
Wakelin Property Advisory founder Monique Sasson agrees.
“Normally they are extremely significant, 7 figure properties. There are two reasons you would buy one of those: as a loved and cherished family home, or as some kind of commercial enterprise, to have a heritage related business.”
“Either way, we’re talking about a very significant investment.”
“If you’ve got that kind of money, and you’re pretty set on holding on to the property for many years, then a heritage property can be great.”
“But if you’re buying it because it superficially looks good, stay away.”
While owning a unique heritage property might seem appealing, Sasson warns that the task should only be approached by those with the budget, the knowledge, and the commitment.
“This is not a purchase for the average investor. This is for a specialised investor.”
“For the average mum and dad investor – don’t go near it.”
Back in September Property Observer listed four of <a target="_blank" href="https://www.propertyobserver.com.au/new-south-wales/top-four-heritage-properties/2013093065369">our favourite heritage properties</a> covered throughout 2013. 
Amongst our picks was Bendigo's Fortuna Villa heritage trophy estate (pictured below). <a target="_blank" href="https://www.propertyobserver.com.au/victoria/fortuna-villa-heritage-trophy-estate-finally-sells/2013062662744">It finally sold in June</a> last year, for $2.21 million.
{yoogallery src=[images/stories/2013/04/april12fortuna]}
<a href="mailto:jrichardson@propertyobserver.com.au" target="_blank">jrichardson@propertyobserver.com.au</a>
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jrichardson-uRX5hFdKfN

Are heritage homes good investments?

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With 2013 well and truly behind us, Property Observer is looking forward to the year ahead. We’ve asked four market experts to weigh in on where we’ll see the best capital growth this year.
Which capital city will perform the best in 2014?
 
<img src="/images/stories/2014/01/17/CharlesTarbey.png" alt="CharlesTarbey" width="149" height="225">
Charles Tarbey - chairman of Century 21 Australia
BRISBANE IS THE NEXT TO MOVE
Brisbane. During the last year, other capital cities moved up in price far more than Brisbane did. And if I look at the three most vibrant ones – Brisbane, Sydney and Melbourne, the last two had the strongest growth. Three years ago, Brisbane and Sydney had very similar prices. But in the last 12 months, Sydney’s median prices have jumped almost 14%. The median price in Sydney is now close to $750,000, while it’s around $445,000 in Brisbane.
Sydney investors used to sell their properties in Sydney to downsize and buy in Brisbane, and still have a quarter of a million left over. That stopped three years ago, but now it’s back on the table.
If you look at discretionary spending, the majority of people who buy in the Sunshine Coast are from Melbourne. And as capital gains in Melbourne have increased, there’s a very big discrepancy in the prices of those sorts of properties in Melbourne and those currently available on the Sunshine Coast.
Brisbane and the surrounding areas have stayed flat in recent times, in part due to the floods, along with other factors. Astute investors will be picking up on those areas.
 
<img src="/images/stories/2014/01/17/victor.jpg" alt="victor" width="180" height="180">
Victor Kumar - Director and Principal of Right Property Group
BRISBANE IS CERTAINLY ONE TO WATCH AS SYDNEY HEATS UP
Growth in any area generally follows a period of higher yields (annual rent expressed as a percentage of purchase price), if all other fundamentals remain the same. Given that money is fairly cheap, where you can get sub 5% interest rates on loans, the higher yielding suburbs, and indeed states, will and have seen a buying frenzy.
The result of this is that there is excessive heat in the market. Buyers, and indeed first time investors and home owners, are starting to pay over the top in a bid to get into the market, in the hope of not missing out on a good growth spurt.
Adding to that volatility, there are a lot of investors jumping into the market with their super funds, taking a longer term view on their purchases and who are therefore not fazed about paying a few thousand dollars extra to be ahead of the competition. There certainly will be a substantial increase in pricing in most metropolitan areas.
Given that Sydney traditionally has been yielding 6.5% plus properties in areas that show good investment fundamentals, the market is in an absolute frenzy with the lower interest rates, and the added bite of new year’s resolutions and so forth, it is generally a market I would not buy in unless there are notable price points between new and old. Certainly, I would be concentrating more in the mortgage belt and coastal areas, so that when the heat does go out of the market at some point in time, there isn’t such a major correction.
Brisbane is absolutely the other market to watch. Rising prices in Sydney are leading to reducing yields, and Brisbane’s lower priced (in comparison to Sydney’s) properties will be giving the high yields most seasoned investors are accustomed to. There will be a natural influx of out of state investors there, which will and has led to a strong market recovery.
Generally if you are buying here, this year you will see good growth, and yields will decrease. Naturally my preference is on established properties in the mortgage belt area here outside of the flood zones.
Melbourne, in the suburbs where the fundamentals do work, is never going to be a high yielding proposition, yet the growth is likely to be pretty good, given the infrastructure changes and the influx again of self-managed super funds and out of state investors seeking new markets. It’s likely to show good strong growth.
Perth, Adelaide and the other main cities in the country are, in my opinion, likely to lag behind these three areas (Brisbane, Sydney and Melbourne) in terms of growth in 2014.
The point to note in all of this is that whilst the market in each state is being driven by factors such as media attention, lower interest rates, more buyers in the market and good infrastructure, even though a state is highlighted for growth or decline, there will still be pockets within these states which will be bucking the trend. Therefore due diligence is required before jumping into a state or suburb just because everyone else seems to be investing there.
See other expert opinions over page
 
 
<hr class="system-pagebreak">
 
<img src="/images/stories/2014/01/17/TL.png" alt="TL" width="200" height="168" style="font-size: 0.8em; vertical-align: middle;">
Tim Lawless - Head of Research, RP Data
BRISBANE SHOWING STRONG FUNDAMENTALS
Brisbane is arguably the best example of a city showing strong fundamentals. Gross rental yields are amongst the highest of any capital city (4.6 per cent for houses and 5.6 per cent for units), housing prices are much lower than Sydney and Melbourne (the median house price in Brisbane is 36% lower than Sydney’s and 24% lower than Melbourne’s). Population growth is strong and there hasn’t been a substantial uplift in new dwelling supply, indicating a persistent undersupply of housing. Rental vacancies are around the 2% mark according to the REIA which is likely to drive rents higher as well.
Perth’s housing market has likely passed peak growth conditions. We are seeing rental rates now tapering as Perth vacancy rates rise, transaction numbers are trailing off and yields are slightly below average. We are also seeing the rate of overseas and interstate migration into Western Australia slowdown, which is likely in response to a wind down in the major infrastructure project pipeline that is evident across many of the resource intensive regions of the state.
It is logical to expect those markets that have been very ‘hot’ in terms of capital growth will naturally start to cool over the coming year, in fact we may already be seeing early signs that peak capital gains have passed in Sydney and Melbourne.
The key challenge for those investing in the housing market over the coming year will be to balance rental income with expectations for capital gain. In our view, investors should be approaching the housing market with a balanced strategy: seeking out homes that will provide opportunities for long term capital gains whilst also returning a healthy rental yield. With typical yields across Sydney and Melbourne now below 4 per cent for houses and slightly higher for units, finding balanced investment opportunities that offer both rental income and prospects for capital gain are becoming more difficult.
 
 
<img src="/images/stories/2013/12/12/CatherineCashmoreProfile.jpg" alt="CatherineCashmoreProfile" width="125" height="150" style="font-size: 10px; float: left;">
 
 
 
 
 
 
 
Catherine Cashmore - Market analyst
A NUMBER OF CAPITALS TO BENEFIT, BUT A SLOWDOWN IN 2015 
There is nothing to indicate any slow down in the market's overall direction in 2014 - but I do think it will come in 2015.
Canberra and Adelaide are likely to remain soft however investors are the main players in this cycle and Sydney (gains of which could be in excess of 10%,) followed by Melbourne, Perth and Brisbane (+ 5-8%) are all set to benefit.
There are potential headwinds for the economy - as most are aware, job security is a factor for many buyers - unemployment is trending upwards and the Government is accentuating the problem with its unhealthy obsession to restore a surplus.
To offset this, money is flowing into the local established markets via strong immigration from China and India, for example, with other factors such as an increasing amount of wealth in self-managed super funds, which is a strengthening trend.
Interest rates are likely to remain low - which will assist mortgage holders and investors and for those entering the market, the concentration is most likely focused on their monthly payment rather than total upfront cost. However it's that upfront cost and the shortage of affordable supply, which will continue to deter first time buyers.
No doubt, the winners in this market have been - and will continue to be - investors and second time buyers - however, a growing and very vocal minority of low income earners and first time buyers, are starting to question the legacy they have been left with.
It won't change the current cycle, or stop the speculation - but perhaps it will inspire a much needed debate on the long term, feasible, and sustainable solutions.
Would you like to add your prediction to the list? Email <a href="mailto:jrichardson@propertyobserver.com.au" target="_blank">jrichardson@propertyobserver.com.au</a>
 
<div>For other 2014 expert predictions, see <a href="https://www.propertyobserver.com.au/trends/what-will-the-year-2014-mean-for-the-national-property-scene-the-experts-have-their-say/2013121166867" target="_blank">this exclusive here.</a>
</div>
<div> </div>
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Which capital city will do best this year? The experts have their say

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Property development and investment group Tipalea Partners has splashed $11.8 million on an industrial property in Port Botany, amidst structural change in South Sydney, which will see 20% of the current industrial market removed.
<img alt="matraville-jan-20-one-2" height="213" width="470" src="/images/stories/2014/01/20/matraville-jan-20-one-2.jpg">
"South Sydney remains such a strategically important industrial market in Sydney and it's undergoing massive structural change,” says Scott Spanton managing director of Tipalea Partners.
“The most significant change is that around 1,000,000 square metres of industrial land and buildings is earmarked for residential and commercial redevelopment over the next five years. This will effectively remove 20% of the current industrial market," says Spanton.
Tipalea Partners bought a 6,600-square-metre six unit industrial property on Beauchamp Road with an 8.1% indicative rental yield.
<img alt="matraville-jan-20-two" height="313" width="470" src="/images/stories/2014/01/20/matraville-jan-20-two.jpg">
"We expect strong rental and capital growth potential will be created by the ongoing displacement of industrial tenants as the gentrification of South Sydney continues between now and 2020.
“It's the perfect storm of investment conditions, critical infrastructure assets are being expanded, demand for space is increasing but supply is shrinking,” says Spanton.
The site is fully leased with expiries ranging from 2014 to 2018.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
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ntrotman-Et3xWpamVh

Tipalea Partners snaps up Port Botany site for $11.8 million

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In what appears to be another sign that rental affordability may be spanning out of control, university students are increasingly looking towards room sharing as an option.
Easyroommate Australia's manager, Sebastiaan Ram, is recommending room sharing as a cheaper and friendlier alternative to the pressure of living alone.
"One of the hardest things about leaving home for the first time is getting used to the extra costs - especially for those not lucky enough  to have qualified for a scholarship or government subsidies," Ram said.
With accommodation costs being one of the major expenses for a student, many will go to extreme lengths to stay on budget.
Property Observer decided to put this to the test. Heading to online listings through realestateVIEW and realestate.com.au, it appears that in the heavily student dominated and centrally located suburb of <a target="_blank" href="/news">Ultimo in Sydney</a>, one bedroom apartments can span anywhere from $800 for a modern-looking unit with a study, to $357 per week for a 'furnished loft' (the latter includes utilities). RP Data notes Ultimo's median price on a unit is $255,000, while the median asking rent is $550.
After going through the sign up process on Easyroommate, which asks you for your mobile number, email address and so on, and says that they will confirm these details, it shows accommodation from $140 to $450 per week for house sharing. The $140 option is to share a room in a townhouse (utilities included) with an unspecified number of people, while the $450 per week option is for your own room in a three bedroom unit (covers bills, cleaner, foxtel and wifi), in a Meriton apartment complex with a gym and other amenities.
There is another $140 per week per person share room situation, which looks to have four girls in just one room. The cheapest free to contact house share (not room share) with own room is $295 per night and fully furnished. The most expensive room-share situation is $220 for a "Girl or gay guy to share master" with ensuite.
According to the Australasian Survey of Student Engagement, the average Australasian university student sees 67% working off campus, with most reporting six to 15 hours of paid work per week. International students, by law, can only work a restricted number of hours per week.
In 2013, Universities Australia surveyed almost12,000 full-time undergrad and postgrad students and found that two-thirds were living below the poverty line, with 10% reporting they had an annual income below $10,000, and 40.3% noting theirs at $10,000 to $19,000.
Ram said that investors will rarely allow students to make major changes to their property, and suggested students undertake the following to make their accommodation feel more like a home:
1.       Often in a rented house painting of walls is not permitted, so why not bring your personality to your room with the use of art and posters. There are a number of ways to hang up art pieces without damaging walls such as white-tack
2.       Brighten up your space with the use of lamps lanterns or even statement lights. Extra lighting can give spaces a warmer and homelier feel.
3.       Bring the outside in with the use of potted plants, Succulents and cactuses have a calming effect, and are extremely easy to look after.
4.       Think of the floor as the fifth wall and accessorise it with bright, cheap rugs. They are easy to find and are a fantastic way to bring colour into a room. If you are moving out they are also an easy thing to pack up and take with you.
5.       It is quick and easy to change soft furnishings, use a nice throw to bring some colour to a bland sofa and pillows can also help. It is also extremely  easy to make curtains, you can then choose fabrics, colours and patterns that are personal to you, and bring your personality into your new home.
Source: Easyroommate
Not surprisingly, Australian students are most likely to stay at home to study where there is the option. 
<blockquote class="twitter-tweet" lang="en">
As a uni student it's next to impossible to rent on the Gold Coast, let alone find time to work! <a target="_blank" href="https://twitter.com/triplejHack">@triplejHack</a> <a target="_blank" href="https://twitter.com/search?q=%23housing&amp;src=hash">#housing</a> <a target="_blank" href="https://twitter.com/search?q=%23auspol&amp;src=hash">#auspol</a>
— Elise Eyears (@eliseeyears) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/eliseeyears/statuses/367552072587030528">August 14, 2013</a>
</blockquote>
<blockquote class="twitter-tweet" lang="en">
Squatters at <a target="_blank" href="https://twitter.com/search?q=%23SydneyUniversity&amp;src=hash">#SydneyUniversity</a> are protesting about high rent in Syd.Been squatting in empty building for a month <a target="_blank" href="https://t.co/yOGxWdvp">https://t.co/yOGxWdvp</a>
— Inner West Courier (@InnerWestNews) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/InnerWestNews/statuses/114537906059747328">September 16, 2011</a>
</blockquote>
jduke@propertyobserver.com.au 
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University students urged to look at room sharing: Easyroommate Australia

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In 1966, a British planner called <a href="https://www.theguardian.com/theguardian/2010/jun/27/maurice-broady-obituary">Maurice Broady</a> came up with a new term for the architectural lexicon: <a href="https://en.wikipedia.org/wiki/Architectural_determinism">architectural determinism</a>.
This was to describe the practice of groundlessly asserting that design solutions would change behaviour in a predictable and positive way.
It was a new phrase but the belief system behind it – that buildings shape behaviour – had allowed the heroes of architecture to make all kinds of outlandish claims.
A hopeful history
<a href="https://en.wikipedia.org/wiki/Leon_Battista_Alberti">Leon Battista Alberti</a>, an Italian Renaissance-era architect, claimed in the 1400s that balanced classical forms would compel aggressive invaders to put down their arms and become civilians.
<a href="https://en.wikipedia.org/wiki/Frank_Lloyd_Wright">Frank Lloyd Wright</a>, the US architect who designed one of the most famous buildings in America, <a href="https://www.fallingwater.org/63/about">Fallingwater</a>, similarly believed appropriate architecture would save the US from corruption and turn people back to wholesome endeavours.
British author and thinker <a href="https://en.wikipedia.org/wiki/Ebenezer_Howard">Ebenezer Howard</a> believed companies would be more efficient if their employees lived in village-like garden communities.
Swiss-born French architect <a href="https://en.wikipedia.org/wiki/Le_Corbusier">Le Corbusier</a> made claims about how his <a href="https://en.wikipedia.org/wiki/Villa_Savoye">Villa Savoye</a> building in France would heal the sick – and when it did just the opposite, he only avoided court because of the commencement of the second world war.
It took a long list of failures over the millennia before <a href="https://theconversation.com/explainer-what-is-postmodernism-20791">postmodern</a> theorists took to critiquing architectural fantasy with malevolent vengeance. The high-point of this trend was the delight shared over the demolition of the famously dangerous and dysfunctional <a href="https://en.wikipedia.org/wiki/Pruitt%E2%80%93Igoe">Pruitt-Igoe</a> urban housing complex in St Louis in the US.
It was designed by architects George Hellmuth, <a href="https://en.wikipedia.org/wiki/Minoru_Yamasaki">Minoru Yamasaki</a> and Joseph Leinweber to provide “community gathering spaces and safe, enclosed play yards.” By the 1960s, however, it was seen as a hotspot for crime and poverty and demolished in the 1970s.
<figure class="align-centre"><img width="400" src="https://c479107.ssl.cf2.rackcdn.com/files/38265/width668/jtc4qbzc-1387426104.jpg"><figcaption>The demolition of Pruitt-Igoe in 1972 fuelled resistance to deterministic thinking. Wikimedia</figcaption></figure>The loss of faith in architecture’s power has been regrettable. Architects’ well-meant fantasies once routinely provided clients with hope and sometimes even with results.
Without this promise, the profession was left inept before the better structural knowledge of engineers, the cumulative restrictions imposed by generations of planners, the calculations of project-managers and the expediency of a draughtsman’s <a href="https://en.wikipedia.org/wiki/Computer-aided_design">CAD</a> (computer-aided design) skills in turning a client’s every whim into reality.
Without fiction, architecture has become a soulless thing. But was determinism dismissed too soon? Is there a role for imagined futures without rationalist restrictions?
Restoring the faith
Just think of some of the ways architecture can manipulate your own experience. In his book, <a href="https://thehappycity.com/the-happy-city/">Happy City: Transforming Our Lives Through Urban Design</a>, US author Charles Montgomery points out that some environments predictably affect our moods.
The fact is that environments do affect us, regardless of whether by design or by accident. In 2008, <a href="https://www.schres-journal.com/article/S0920-9964%2807%2900493-8/abstract">researchers</a> in the UK found that a ten-minute walk down a South London main street increased psychotic symptoms significantly.
In <a href="https://www.researchgate.net/profile/Jan_Golembiewski2">my own research</a>, I find that the healthier a person is, the more a good environment will affect them positively and the less a bad one will affect them negatively. Mentally ill patients show about 65 times more negative reactivity to bad environments than controls and all these reactions translate directly into symptoms.
The same patients have about half the positive responsiveness. That’s fewer smiles, less laughter and a reported drop in feeling the “fun of life”.
But that’s not all. The potential for architecture is richer still. The ease with which architecture can embrace sublime aesthetics makes it great for generating awe.
Psychiatrists have found that <a href="https://www.psychiatrictimes.com/articles/have-you-ever-felt-awe-and-wonder">awe reduces the prevalence and severity of mood disorders</a>. Could sublime architecture even potentially save lives?
The psychological effects of architecture are difficult to prove, but difficulty doesn’t dilute the value of a building that hits the right notes and creates a sense of awe. Each building type has different functions, and for each there’s an imperative to use the building to help create an optimal mood, desire or sense of coherence, security or meaning.
<figure class="align-right"><img src="https://c479107.ssl.cf2.rackcdn.com/files/38266/width237/j8ztbzj2-1387426486.jpg"><figcaption>Awe reduces mood disorders: Gaudi’s Sacrada Familia church in Spain. Wikimedia</figcaption></figure>Fortunately, there’s a resurgence of belief that buildings can change behaviour, led by a few architectural journals: <a href="https://www.worldhealthdesign.com">World Health Design</a>, <a href="https://eab.sagepub.com">Environment Behavior</a> and <a href="https://www.herdjournal.com">HERD</a>.
Most of these focus on health care design, because that’s where behavioural changes have life and death consequences.
But nobody dares make any promises. As such, research rarely opens the black box of environmental psychology, leaving findings unexplained and prone to failure.
To give architecture back its mojo, a new interest in how architecture changes us must be fostered. Clients have to learn to trust architects again and research funding bodies have to re-gear to encourage research into how buildings affect our mood, health and behaviours.
Finally, architecture schools have to teach students how they might predict psychological, emotional, healing and functional effects.
All innovation, ultimately, is led by the imagination – even if that means taking risks and sometimes getting it wrong.
<hgroup class="profile-title grid-seven"><hr>
Jan Golembiewski is a researcher in Environmental Determinants of Mental Health at <a href="https://theconversation.com/institutions/university-of-sydney">University of Sydney</a>.
This article was originally published at <a target="_blank" href="https://theconversation.com/">The Conversation</a>.
</hgroup>
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Building a better world: can architecture shape behaviour? 

<html><body><div class="article-fulltext">Australians spent $2.738 billion in online sales between March to September last year, according to <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/8501.0Main%20Features2Nov%202013?opendocument&amp;tabname=Summary&amp;prodno=8501.0&amp;issue=Nov%202013&amp;num=&amp;view=" rel="nofollow">figures released today</a> by the Australian Bureau of Statistics.
The ABS retail trade data has for the first time included a separate category for online sales in a time series from March 2013 to September 2013.
The data shows the proportion of total retail turnover, which was derived from online retail sales has varied from 1.7% to 1.9% between March and September 2013.
ABS statistician Paul Slater told SmartCompany the new information provided a measure of what proportion of domestic retail sales is derived from online retail trade.
“It will help measure the response of Australian retailers to the online opportunity,” Slater says.
The statistics are intended to assist in the development of microeconomic policy and follow on from data released last year which found 1.8% of retail turnover in May 2013 was derived from online retail sales and of that percentage, 40% was from pure play online retailers.
But the figures do not include international retailers’ online sales in Australia.
“The existing publication is designed to measure sales by Australian resident businesses so sales by overseas retailers would be out of scope,” Slater says.
He says there are “no plans at the moment” to incorporate international sales into the figures, an omission which the Australian Retailers Association has highlighted.
Russell Zimmerman, head of the Australian Retailers Association, told SmartCompany he welcomes the additional information but “it would be lovely” to get figures on international sales as well.
“The real assistance is going to come once we get some real comparatives going and can see how online is trading year on year, that will assist retailers who may be sitting on the fence and deciding whether to get into the online space,” Zimmerman says.
The ABS release follows the publication yesterday of <a href="https://www.smartcompany.com.au/growth/economy/35067-aldi-criticised-for-racist-t-shirts-online-sales-increase-in-november-construction-index-steady-in-december-midday-roundup" rel="nofollow">National Australia Bank’s online retail sales index</a> which recorded total online retail spending for the 12 months to November of $14.6 billion.
“The improved growth trend for online retail sales reflects almost uniform improvement in conditions at category level. In year-on-year terms, the rate of growth was up to 10.7% – faster than that observed in some recent results,” NAB said in a statement. 
 
 
<hr>
 This article first appeared on <a href="https://www.smartcompany.com.au/" rel="nofollow">SmartCompany</a>.
 
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cwaters-YrtBR88nBe

ABS online sales data released for the first time: reveals spending of $2.738 billion

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What everybody is telling us
The most common opinion about property prices in Australia is that our real estate is significantly overpriced or, that we are even experiencing a “property bubble”.
Evidence cited in support of the argument that prices are too high is that, in the past, median property prices were three times the average household disposable income but now that multiple is as high as six times the average.
An alternative measure, used less frequently in debates, is the ratio of house prices to rental costs – this ratio is now almost double of what it used to be a couple of decades ago.
Both these statistics show that property prices have increased twice as much as household disposable incomes and rents in the last twenty odd years. Therefore, it is easy to jump to a conclusion that, from a historical perspective, residential real estate in Australia must be significantly overpriced. But is this a correct conclusion?
There is a problem
As outlined in my <a href="https://www.propertyobserver.com.au/news/the-analyst-in-search-of-a-property-bubble-arek-drozda/2014010666725" target="_blank">last article about a property bubble in Australia</a>, the above measures are rather inadequate for the purpose of describing short and medium term fluctuations in property prices, and whether these prices are “excessive” or not.
The key problem with the above ratios is that they have higher values now than in 2000’s, which in turn were higher than in 1980’s, which were higher than in 1970’s, which again were higher than in 1950’s… You get the picture. It is frankly impossible to draw any rational conclusions using these measures.
An alternative approach for better insight
To better depict what is actually happening in the market, we need to consider relationships between several factors that directly influence property prices – not simplistic measures like ratios of prices-to-rents or prices to household disposable incomes.
I have selected three different measures that, when presented together, describe more accurately what is happening with property prices. These are:
<ul>
<li>incomes – which reflect affordability; I opted for adult full time average weekly earnings which are more relevant to a property buyer cohort and are a less artificial measure than household disposable incomes; </li>
</ul>
<ul>
<li>rents (from CPI index) – which are indicative of a relative cost of accommodation for renters (since renting is a substitute for owning a property there is a direct relationship between the costs of both accommodation options); and</li>
</ul>
<ul>
<li>cost of buying – which is indicative of the relative cost of accommodation for owner occupiers (I am using a proxy measure which is simply equivalent to interest payments on a 100% loan on a median priced house); </li>
</ul>
I acknowledge that the “cost of buying” measure has its critics but there is a simple explanation why this is the correct statistic to use for direct comparisons with rental costs and affordability and not property prices. In particular, these days hardly anyone purchases a property outright so, the price of a property is only a secondary consideration in the purchase decision. 
Yes, you read it correctly. Far more relevant for the purchase decision is the annual cost associated with buying a property - comprising of mortgage payments, council and water rates, maintenance costs, etc. Even more importantly, consideration also needs to be given to how this cost compares with rental costs, since renting is a close substitute for buying.
That is, the maximum affordable price of the desired property is worked out based on the buyer’s existing financial resources (i.e. cash and/or equity in currently owned property) as well as the buyer’s borrowing capacity (which is directly linked to buyer’s income and prevailing interest rates).
All in all, in order to proceed with the purchase, personal or family financial capacity has to at least match the annual cost of buying.
Paying off the loan principal is omitted in the analysis since it equates to savings and is therefore deemed irrelevant (i.e. every dollar that is paid off becomes owner’s equity that can be drawn upon in the future). Again, I acknowledge criticism of this point of view but I leave detailed explanations of its merits until next opportunity. 
With this background, let’s now compare information on personal incomes, rents, costs of buying and property prices over the last 27 years.
The simple truth
<img width="470" height="299" src="/images/stories/2014/01/14/LOGIS.png" alt="LOGIS">
 
Source: Based on ABS data
The chart reveals quite an interesting picture. In particular, despite a six-fold increase in property prices, the cost of buying a median priced house in Australia has risen less than two and a half times in the corresponding period (the actual Sep-13 index value is 234.1).
The increase in the cost of buying is substantially less than increases in personal incomes (adult total full time weekly earnings May-13 index value is 341.5) as well as in the cost of renting (rent component of the Consumer Price Index Sep-13 value is 298.6).
In other words, relative to the incomes of Australians working full time, the cost of buying is significantly lower now than it was 27 years ago. And rents are also a lesser burden now than they were in 1986. Therefore, if housing was affordable then, it is even more affordable now.
Undoubtedly, this conclusion will raise a few eyebrows since it contradicts many “informed opinions” that circulate in the media. So, let’s examine the chart a bit closer to see how well it reflects the reality.
A few words about the chart 
The reason for selecting 1986 as a starting point is simply because this is when official ABS house price index data begins. This was neither an extremely low nor extremely high price point, hence is a quite reasonable year to use for benchmarking.
It is also very close to 1985, a year that Steve Keen, economist and a prominent media commentator, nominated as the year when “houses were affordable” and that he uses as a reference point in his analysis. So, no bias here whatsoever.
Let me also stress the fact that there is no conflict between this chart and the two ratios mentioned at the beginning of the article. That is, the chart clearly shows that property prices had grown at twice the rate of incomes and rents over the 27 year period.
However, in addition, this chart also illustrates the relationship between incomes, rents and the cost of buying which provides the explanation as to why property prices have risen so dramatically.
That is, current property prices are the result of incomes, rents and the cost of buying keeping in a relative balance over an extended period of time.
Turn over page for "The real story behind the numbers"
 
 
 
<hr class="system-pagebreak">
The real story behind the numbers
The story that this chart tells is surprisingly accurate. In particular, a combination of explosive rises in property prices and interest rates in late 1980’s resulted in buying costs reaching a level that could be considered a “bubble” (this was a period of high volume of sales and high prices).
Although the “recession we had to have” shook buyer confidence, prices did not fall. It was simply because a drop in interest rates brought down the costs of buying quite fast and this provided strong support for the then price level.
The cost of buying kept falling for almost a decade, to the extent that by early 1998 it was only half of what it had been in 1990. On the other hand, incomes and rents grew steadily, compounding the perception that properties were getting extremely cheap.
It meant prices had a lot of room to move. And they moved indeed – as much as three times in some locations in a relatively short period of time.
This jump in prices was merely a catch-up as Australians rediscovered their true financial capacity. It wasn’t until 2008 that a combination of continuous price growth and hikes in interest rates pushed the cost of buying again into an unaffordable territory.
The unfolding Global Financial Crisis quickly deflated this bubble – a reduction in buyer confidence led to a small drop in prices and the RBA swiftly engineered a big cut in mortgage rates to bring rates down to historically low levels and, in effect, dramatically reducing the cost of buying.
By March 2009 the cost of buying reached a bargain level again. These developments, combined with an additional stimulus for first home buyers, generated quite a lot of demand for residential properties, pushing prices higher in a very short period of time. The RBA reacted again, lifting rates in a hurry and the cost of buying caught up with the strongly growing incomes and rents at the time.
That brings us to present times. Renewed financial troubles reduced buyer enthusiasm for property. A moderate fall in prices from the peak reached in mid-2010, and interest rates retreating back to historically low levels, brought about a reduction in the costs of buying yet again.
However, the falls in those costs were not as sharp as in 2009, or as prolonged as in the 1990’s. Nevertheless, from a historical perspective, the reduction in the cost of buying was enough for real estate to be considered if not an outright bargain, at least well within the financial capacity of working Australians. And then prices started rising again…
Historical perspective with real data
The ultimate check of accuracy for the information presented on the above chart is a comparison of actual prices from the past and present – and the match is pretty good, as this sample of statistics for Sydney demonstrates:
 
<table cellspacing="0" cellpadding="0" border="0"><tbody>
<tr>
<td width="163" valign="top">
 
</td>
<td width="156" valign="top">
June 1987*
</td>
<td width="120" valign="top">
Sep 2013
</td>
<td width="130" valign="top">
Change
</td>
</tr>
<tr>
<td width="163" valign="top">
Median House Price
 
</td>
<td width="156" valign="top">
$104,000
(Sydney annualised)
</td>
<td width="120" valign="top">
$627,000 (Jun’13)
(Greater Sydney)
</td>
<td width="130" valign="top">
6.0 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Median rent: 
- 3B house 
</td>
<td width="156" valign="top">
$8,580
($165 p.w.)
(Metropolitan, dwelling)
</td>
<td width="120" valign="top">
$28,600
($550 p.w.)
(Greater Sydney)
</td>
<td width="130" valign="top">
3.3 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Median rent: 
- 2B apartment 
</td>
<td width="156" valign="top">
$7,280 p.a.
($140 p.w.)
(Metropolitan, dwelling)
</td>
<td width="120" valign="top">
$24,960 p.a.
($480 p.w.)
(Greater Sydney)
</td>
<td width="130" valign="top">
3.3 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Full Time Adult Total Earnings
(Seasonally Adjusted)
</td>
<td width="156" valign="top">
$24,528 p.a.
($471.70 p.w.)
(NSW Aug’87)
</td>
<td width="120" valign="top">
$75,634p.a.
($1,454.50 p.w.)
(NSW May’13)
</td>
<td width="130" valign="top">
3.1 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Buy cost proxy (100% mortgage on median priced house)
</td>
<td width="156" valign="top">
$16,120
</td>
<td width="120" valign="top">
$37,306
</td>
<td width="130" valign="top">
2.3 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Standard Variable Mortgage Rate
</td>
<td width="156" valign="top">
15.5%
</td>
<td width="120" valign="top">
5.95%
</td>
<td width="130" valign="top">
62% lower
</td>
</tr>
<tr>
<td width="163" valign="top">
Mortgage cost as % of full time adult wages
</td>
<td width="156" valign="top">
66%
</td>
<td width="120" valign="top">
49%
</td>
<td width="130" valign="top">
26% lower
</td>
</tr>
<tr>
<td width="163" valign="top">
Ratio of full time adult wages to median house price
</td>
<td width="156" valign="top">
4.2
</td>
<td width="120" valign="top">
8.3
 
</td>
<td width="130" valign="top">
2 times higher
</td>
</tr>
<tr>
<td width="163" valign="top">
Rent as % of full time adult wages (house)
</td>
<td width="156" valign="top">
35%
</td>
<td width="120" valign="top">
38%
</td>
<td width="130" valign="top">
Relatively unchanged
</td>
</tr>
<tr>
<td width="163" valign="top">
Ratio of median price to median rent (house)
</td>
<td width="156" valign="top">
1
</td>
<td width="120" valign="top">
1.8
</td>
<td width="130" valign="top">
Almost 2 times higher
</td>
</tr>
</tbody></table>
Source data: RBA, ABS, Housing NSW, Stapledon UNSW.
* Note: 1987 data used in absence of full set of statistics for 1986
Final comment
The chart presented in this article is a simple construct but is sufficient to explain what has happened with Australian property prices over the last three decades.
I am open to a constructive criticism but frankly speaking, in my extensive research on the topic, I did not come across anything else that would provide such accurate narrative to real life events.
The ratios favoured by economists and some property market commentators do not offer much of an insight in comparison. Since the validity of these ratios has been undermined, at least in my view, I believe it is time to find more suitable alternatives to better explain what is happening in the property market in Australia.
To conclude, the message is clear – based on the income capacity of working Australians, residential property in this country is not overpriced and prices are far from bubble territory. We can afford current prices – and we can afford them more than in 1986. The only hurdle is that it requires accepting a level of debt that many may not feel comfortable with.
 
<hr>
 Arek Drozda is an independent analyst who has worked in the public and private sectors for over 20 years in business development, data analysis and in building geographic information systems.
 
 
 
 
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Australian property prices explained: Independent analyst

<html><body>
Multiple stories are told by a simple set of numbers published this week by the Australian Bureau of Statistics.
Investors are opting in, first-home buyers are opting out, next-time buyers are still dominant and state government grant schemes are failing.
The ABS data for housing finance in November showed a 1.7% monthly rise in seasonally-adjusted terms or a 2.0% monthly rise in trend terms. It’s the highest number of loans for any month in the past four years.
The greatest significance is the trend, because the value of loans for housing has risen virtually every month since December 2012. Year-on-year, home finance is up 15%.
The figures show that 84% of November loans were for people buying established homes, with only 16% taking loans to build or buy new dwellings. This is a normal outcome and provides further evidence that state government grant schemes are not doing the job they were designed to do.
Most states and territories now have schemes that provide grants only to people building new homes. The idea is to encourage people to build new rather than buy existing, thereby stimulating the construction industry and creating jobs.
It doesn’t work because the sums involved are too small. The average difference in the cost of a new home versus buying an established home of similar standard in the same area is around $70,000. A grant of $7,000 or $10,000 doesn’t even go close to bridging that gap.
So around 85% of buyers, including first-home buyers, opt for secondhand dwellings.
The importance of government grants is hugely over-rated. Many politicians, economists, developers, real estate agents and commentators apparently believe grants make a big difference – and therefore when few are building new homes or first-home buyers are quiet a great cry goes up demanding governments increase grants. Meanwhile, some of the Generation Poor Me types claim that the grants force up prices, thereby making it harder for young buyers.
But an analysis of buying patterns and available research over time shows that grants have little or no impact. Even when grants were much higher than today – back in 2008-2009 when the Federal Government made up to $21,000 available – multiple surveys showed that first-home buyers were busy because prices and interest rates had dropped markedly, which made homes much more affordable. The FHOG was not their prime motivation to be active buyers.
Government grants don’t generate buying activity nor do they create price rises. They simply don’t make a meaningful impact because the amounts are too small. Price decline (in the three years before 2013) and interest rate cuts matter a good deal more.
There is mounting evidence that young Australians are not as active as before as first-home buyers because they have simply chosen not be. Affordability is particularly strong at the moment, thanks to low interest rates and the pre-2013 reductions in prices, as well as steadily rising incomes. But Generation Lifestyle First has chosen to delay home ownership, in much the same way as recent generations have chosen to delay parenthood.
The ABS statistics this week also showed that the market share of investors has continued to rise. Investors now comprise 39% of the market. This will inevitably lead to some blaming investors for rising prices and calling for the end to negative gearing.
But what the figures show is that the dominant force in the market is not the investor segment, nor the first-home-buyer-with-grant segment. The dominant force is next-time buyers – i.e. home-buyers other than first-time buyers. In November 61% of borrowers were home-buyers, most of them next-time buyers.
If you want to blame someone for rising home prices, blame them – not investors (allegedly fueled by negative gearing) nor first-home-buyers (apparently boosted by government grants) nor foreigners (the latest scourge of the embattled first-home buyer, because the Chinese are buying high-rise apartments on the Gold Coast and in inner-city Melbourne).
Not that blame is appropriate, given that most Australians benefit (as well as the nation) when the value of their greatest asset rises.
 <hr style="font-size: 14.545454025268555px;">
Terry Ryder is the founder of <a target="_blank" href="https://www.hotspotting.com.au/" rel="nofollow" style="font-size: 14px;">hotspotting.com.au</a> and you can contact Terry via <a href="https://mailto:%20ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://twitter.com/hotspotting" target="_blank" style="font-size: 14px;">Twitter</a>. 
</body></html>

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