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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RBA governor Glenn Stevens' December statement
At its meeting today, the Board decided to leave the cash rate unchanged at 2.5%.
Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined from their peaks, but generally remain at high levels by historical standards. Inflation in most countries is well contained.
Overall, global financial conditions remain very accommodative. Volatility in financial markets has abated recently. Long-term interest rates remain very low and there is ample funding available for creditworthy borrowers.
In Australia, the economy has been growing a bit below trend over the past year and the unemployment rate has edged higher. This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment. Further ahead, private demand outside the mining sector is expected to increase at a faster pace, though considerable uncertainty surrounds this outlook. There has been an improvement in indicators of household and business sentiment recently, but it is still unclear how persistent this will be. Public spending is forecast to be quite weak.
Recent data on prices and wages show inflation consistent with the medium-term target. The Bank's assessment is that this is likely to remain the case over the next one to two years.
The easing in monetary policy that has already occurred since late 2011 has supported interest-sensitive spending and asset values. The full effects of these decisions are still coming through, and will be for a while yet. The pace of borrowing has remained relatively subdued overall to date, though recently there have been signs of increased demand for finance by households. There is also continuing evidence of a shift in savers' behaviour in response to declining returns on low-risk assets. Housing and equity markets have strengthened further over recent months, trends which should in time be supportive of investment.
The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy.
At today's meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.
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Housing market has strengthed as global conditions run below average: Glenn Stevens' December Statement

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With economists predicting official interest rate rises next year and banks starting raise their fixed rates, we spoke to mortgage experts to ask if now is the right time to moved your mortgage to a fixed rate.
 
Shane Oliver – Head of investment strategy and chief economist, <a target="_blank" href="https://www.ampcapital.com.au/?">AMP Capital</a> <img style="float: right;" alt="shane-oliver-profile" src="/images/stories/2013/10/25/shane-oliver-profile.jpg" height="150" width="125">
FIX FOR THREE YEARS
The best thing to do is fix when interest rates are at a low level. Some people make the mistake of only fixing after interest rates have been up for a while and they find they are locked in at the top. Right now we’re either at or close to the bottom of the interest rate cycle so it does make sense to start to lock in a relatively low interest rate.
Soon the cycle will start to go back up again and it will get more expensive to lock in as interest rates go up. In fact some banks have already increased interest rates – a month ago a few of them raised interest rates. They’re still at relatively low levels, and given the fixed rates at the moment are fairly close to the variable rates, you’re looking somewhere in the 5% to 5.5% zone depending on the sort of deal you get in that range. It makes sense to lock in now because the question a borrower needs to ask is what they think the variable rate will average over the rate they might fix. At the moment you can lock in for three years somewhere at 5 and 5.5%, depending on the bank. The likelihood is the rates will average above that over the next three years so you might end up paying a little bit more initially but over the course of three years you’ll probably find the variable rate will go up again and average more than they are at the moment.
I think the best deals are around two to three years. I’d probably lock in around there rather than the five year rates as they tend to be somewhat more expensive. What we have seen in the economy this year is longer term borrowing costs start to rise. We’re still quite low but as those longer term borrowing costs start to rise as evidenced by rising government bond deals it will eventually start to put upwards pressure on fixed mortgage rates. And there’s also signs that the interest rate cycle will turn up more generally and the reserve bank will follow that. It does make sense to lock in. But it’s always the case not to do the whole lot. If you fix the lot you’re locked in if you want to pay some of it off in a hurry it’s often a bit harder and can work against you. And if you fix a portion of it then in the off-chance interest rates fall then you can lock the rest in. It’s probably best to do it on a partial basis rather than fix the whole lot.
 
Lisa Montgomery - Chief executive officer,  <a target="_blank" href="https://www.resi.com.au/">Resi </a><img style="float: right;" alt="Lisa-Montgomery-profile" height="150" width="125" src="/images/stories/2013/11/15/Lisa-Montgomery-profile.png">
FIX A PORTION FOR ONE TO THREE YEARS
That downward trend of rates in the fixed space looks like it’s hit its bottom and it probably did that around six to eight weeks ago. Since then we’ve seen an increase in mainly the three and five year rates of about 20 to 30 basis points. For those people who have been looking for the lowest point in the market I’d suggest they may have missed that. However there are still some excellent rates out there in the fixed space and a lot of people are still looking to do that given there have been a few murmurings about rates increasing next year. Probably not in the first quarter of next year but there’s the potential of that trend changing and rates rising into 2014 is a real prospect and so fixed rates are still appealing to borrowers.
So there are some great deals out there in the one, three and five year spaces. But five years is a really long time to fix your rate in. If you’re looking to fix in then maybe you’re looking at that one and three year period. But only if you’re looking for the certainty and you’re really looking for that stability because there are still some really good rates in the variable space and those rates have gone downwards since November 2011 and we saw some great rates in the variable space. But of course fixed rates have been very popular as we’ve seen many folks taking up these opportunities.
Fixing in some and leaving the rest variable is a good option. That means you’re not placing the entire loan amount into a fixed arrangement and you’re keeping a bit more flexibility in the variable portion of the loan and hedging your bets along the way. That option has been very popular with borrowers and will probably remain to be until next year.
Article continues on next page. Please click below.
 
<hr class="system-pagebreak">
Alex Parsons - Chief executive officer, <a target="_blank" href="https://www.ratecity.com.au">RateCity</a> <img style="float: right;" alt="alex-parsons-profiel" height="150" width="125" src="/images/stories/2013/11/15/alex-parsons-profiel.png">
FIX A PORTION OF THE LOAN
The banks’ three, four and five year fixed rates are moving up. Their perspective is interest rates are going to increase over time. On that basis after the last couple of years of a downward cycle we are bottoming out. And we are at the start of an upward cycle. The RBA put out another .25 drop in August, I don’t think they’re be a change early next year downwards. We’re at historic lows, the historic average for variable is around the 7% mark, we’re at least two percentage points below that.
One year fixed rates are still really competitive, there’s no doubt about that. I guess the average property buyer overlooks the fact they don’t need to have all their eggs in one basket. They can fix a portion of their loan and have a portion of it variable. It’s up to them. I do that myself. On the basis of that you have your feet in both camps. If one moves wildly you can only be half wrong.
The only risk is if there’s another quarter percent drop today or in February. Risk is not binary there’s a spectrum of risk and the spectrum of risk for fixing is relatively low. You’re not going to fix today on 5% for example and then have rates drop another 100 basis points. The risk is lower now than it has been in the past or will be in the future.
The banks all employ serious economists and they adjust their rates on the basis of internal analysis. When you start to see longer term fixed rates go up, you’ve got to think that’s their perspective. You look at their record and they make massive amounts of profits. Three, four and five year fixed rates have been moving up over the past few months.
 
Ross Le Quesne - Mortgage broker,  <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.aussie.com.au/%E2%80%8E">Aussie Home Loans<img style="max-width: 480px; float: right;" width="113" height="150" alt="laquesne-profile" src="/images/stories/2013/11/01/laquesne-profile.jpg"></a>
FIX FOR THREE YEARS
Definitely fix. A lot of my investors are fixing now. A lot of them are getting fairly good yields right now, around 6-7%, so they’re looking at locking in that yield. Rates are the bottom of the cycle. Three year fixed year rates have moved up .2% so it looks like we’re at the bottom. A lot of my investors carry quite a bit of debt because they have a number of properties. For example if someone has 1.5 million in debt and rates rise 1.5% that’s an extra $22,500 of net income they have to come up with. It’s a risk minimisation to fix. Over the next two to three years you know where your cash flow sits and by doing that you’re going to be covered if rates were to rise.
It’s proven we’re at the bottom of the market seeing the three rates have just bounced off the bottom. If you look at the history of interest rates since the GFC, the lowest rates were around 4.99%. As Mark Twain said, history doesn’t repeat itself but it does rhyme. If you look where we are it’s rhyming at the moment. It’s just come off the low which means we are at the bottom of the market. If you’re looking to lock then there’s no better time than now, or even better two months ago.
I deal with a lot of investors; with owner occupier it’s different. For an owner occupier, I’d say part fixed part variable. For owner occupiers their goals are to pay their loan off as quickly as possible and have the flexibility of a variable rate. For investors I say fix 100%, for owner occupiers definitely partially fix, maybe at 70/30 or 50/50.
Article continues on next page. Please click below.
 
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Jessica Darnbrough - Spokesperson, <a href="https://www.mortgagechoice.com.au/%E2%80%8E" target="_blank" rel="nofollow" style="font-size: 14px;">Mortgage Choice</a><img src="/images/stories/2013/12/03/jessica-profile-small.png" alt="jessica-profile-small" height="150" width="125" style="max-width: 480px; float: right;">
SPEAK TO YOUR BROKER
Ultimately, I shouldn’t say one way or the other. Fixed rates are very competitive at the moment, if people are looking to fix in then now is a good time to do so. Interest rates are going up from here; it’s probably as low as it’s going to be.
Whatever they feel comfortable with is best at the end of the day. It’s very popular for both owner occupiers and investors right now, so have a chat to your broker and your advisor and see what situation you're most comfortable with.
We see that three year rates are most popular among fixed rates, that’s what people tend to go for – it’s not too long or too short. But before fixing really weigh up your options.
Rates are arguably going to rise from here at some point in the future. But our variable rates at the moment are so competitive, it might be the case you feel more comfortable in a variable rate. Do whatever you feel most comfortable with. If you do need so surety around your finances then now would be a good time to fix.
<a target="_blank" href="mailto:awlash@propertyobserver.com.au">awlash@propertyobserver.com.au</a>
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Should you fix your mortgage now? The experts have their say

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Developer Ho Bee Australia’s strong reputation in Asia will aid in the sales of apartments in their $120 million Surfers Paradise tower, which will be the first high rise development to grace the Surfers Paradise skyline in five years.
The $120 million unnamed 41-storey apartment tower will be located between central Surfers Paradise and Main Beach, and will sit adjacent to the Surfers Paradise North light rail station.
<img alt="Ho-Bee-Surfers-Paradise-site-aerial-one" height="237" width="470" src="/images/stories/2013/12/04/Ho-Bee-Surfers-Paradise-site-aerial-one.jpg">
Site works are currently underway; with the last development to commence construction in the precinct being the Hilton Towers in 2009.
<img alt="Ho-Bee-Surfers-Paradise-site-aerial-two" height="276" width="470" src="/images/stories/2013/12/04/Ho-Bee-Surfers-Paradise-site-aerial-two.jpg">
Sales and marketing agent Deborah Provost says the Gold Coast is facing a critical shortage of new apartment stock.
“This product will go some way in filling that impending void,” says Provost.
“I have been dealing extensively with local, interstate and overseas buyers who are primed to make their next property play on the Gold Coast.
“They are encouraged by the dwindling supply of new apartments here and increasing property values sparked by burgeoning activity in the southern capital markets, but their options here are becoming limited in the traditional beach strip precinct between Broadbeach and Surfers Paradise.
“Currently, the majority of new apartment stock in projects like Hilton and Soul is priced above $1 million and to an extent that has polarised some prospective investors.
“Locally, we will be marketing the project to end-users and lifestyle buyers who know the area and its attributes well.
“Asian investors also have a penchant for beachfront apartments and we will be tapping into this market with targeted investor product,” says Provost.
<img alt="Ho-Bee-tower---artists-impression-cropped-one" height="459" width="470" src="/images/stories/2013/12/04/Ho-Bee-tower---artists-impression-cropped-one.jpg">
Barry Lee of DBI Design says the tower will be of international standard.
“The developers are capitalising on the strengthening local market, lack of new beachside apartment stock available or planned, and improving property market conditions across the country.
“This project is a symbolic step forward for our city.
“Its design will make a sophisticated and meaningful contribution to our city’s spectacular skyline, while delivering new levels of innovation in sustainability and community,” says Lee.
Lee says the tower will be the first project in Gold Coast’s new cycle.
The tower is anticipated to launch in the first quarter of 2014, at which time the name will be revealed.
<a target="_blank" href="mailto:ntrotman@propertyobserver.com.au">ntrotman@propertyobserver.com.au</a>
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Overseas investors to tap into Surfers Paradise's first highrise in five years

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A two-bedroom villa in Liverpool was Sydney’s most affordable auction over the past weekend, according to Australian Property Monitors.
Located at <a target="_blank" href="https://www.realestate.com.au/property-villa-nsw-liverpool-114933223">4/8 Reilly Street</a>, it sold for $320,000 through Century 21 Fairfield.
Prior to this sale, it last sold in 2009 for $235,000, according to RP Data records. It also sold in 2001 for $145,000, in 1999 for $126,000, and in 1998 for $118,000, according to RP Data records.
Listing agent Nickolas Dilles told Property Observer it was a “very good” auction, with about 25 people in attendance and six registered bidders. The auction saw “very spirited bidding”. 
Dilles revealed that the reserve price was $290,000, and the successful bidder was an owner-occupier.
He added that most of the registered bidders were investors, but “owner-occupiers will pay a premium”.
Dilles also said that the property market in the Liverpool, Fairfield and Cabramatta areas is “extremely busy” at the moment.
“It’s very very vibrant. Anything on the market’s sold in around 10 days,” he said.
He added that a shortage of stock and good returns were contributing factors to the areas’ popularity.
Dilles noted that there is a lot of investor activity in the area at the moment, and believes there is a “50/50” split between investors and owner-occupiers.
In the next six to 12 months, Dilles thinks the property market in Liverpool and its surrounds will continue to grow.
“It’s continuing to escalate, primarily because there’s no stock around. There are many properties being sold at their first open house,” he said.
According to Century 21 Fairfield’s estimated asking rent of $345 per week, the price reflects a 5.61% yield.
According to the <a target="_blank" href="/news">latest RP Data report</a>, the median sale price for units in Liverpool is $278,500, up 5.1% on last year. The average discount required to sell a unit is 6%, while private treaty sales average 64 days on market.
The median asking rent for units is $325 per week, and gross rental yield currently stands at 6.1%.
dleow@propertyobserver.com.au
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Cheap Liverpool, NSW villa sells for $320,000, reflects 5.61% yield

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One of oldest clichés in journalism is that they never let the facts get in the way of a good story. And we’re seeing that shallow principle in play daily as media hammer the myth that first-home buyers are being squeezed out of the market.
All the available facts say otherwise.
Last week two new reports were added to the great pile of evidence that affordability is particularly strong right now. Some of the regular indexes have affordability at its best in 10 years. The one published quarterly by the Commonwealth Bank and the Housing Industry Association showed further improvement in the September quarter, with all capital cities benefiting.
Financial ratings firm Canstar published research showing that while the national average mortgage is today four and a half times bigger than it was in 1990, affordability is much better today than then because interest rates are much lower and wages have risen. Repayments as a proportion of income are considerably lower than they were in 1990.
We can add that to the ABS report which found that average house prices, relative to average incomes, are today at the same level as they were in 1995; and to the affordability index published by the Adelaide Bank and the Real Estate Institute of Australia, which basically concurs with the Commonwealth Bank report.
The thing that appears to conflict with all that evidence is that first home buyer numbers are low at the moment. Far too many attention-seekers are leaping to the erroneous conclusion that the only possible explanation is that young people cannot afford to buy.
The real explanation has nothing to do with affordability. It has to do with choices. Many recent surveys have found that today’s twenty-somethings are not prioritizing home ownership the way previous generations did. They are opting for lifestyle and travel. Home ownership can wait.
The surveys indicate many young adults prefer to rent in an inner-city suburb rather than moving to the suburbs and taking on a mortgage. Some are renting in the city while getting on the property ladder by buying an investment property in a cheaper location, often a regional centre.
It’s a major demographic shift, similar to the one that has Australians delaying parenthood. We no longer live in a nation where young adults move automatically to marriage, children and a suburban mortgage.
But someone seeking a bit of media limelight can always generate some cheap publicity by declaring the ‘Great Australian Dream’ dead. Media will always run that and in a nation of 23.3 million people you can always found a twenty-something malcontent willing to have a public whinge about how hard it is to save a deposit.
Journalists seem to think we’re all desperate for news about the sad plight of the wannabe first home buyer. They apparently imagine Australians are gathered in pubs and homes across the country talking about nothing else. What else could explain their obsession for this story line?
I have to confess I’m not interested in first home buyers. Even at their peak they have never been a major force in real estate and their importance to the property market and to the nation is greatly over-rated.
Buying a first home today is what it has always been: really hard. It’s a massive commitment and you have to really want it. It takes compromise and sacrifice. If you want it badly enough, you’ll go get it. It has always been thus.
The nation offers everyone shelter. But no one has a divine right to own the shelter. And certainly no one has a right to achieve ownership in their dream location as a first purchase.

<hr>
Terry Ryder is the founder of <a rel="nofollow" href="https://www.hotspotting.com.au/" target="_blank" style="font-size: 14px;">hotspotting.com.au</a> and you can contact him via <a target="_blank" href="https://mailto:%20ryder@hotspotting.com.au">email</a> or on <a target="_blank" href="https://twitter.com/hotspotting" style="font-size: 14px;">Twitter</a>.
 
 
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First home buyer affordability is as good as it has ever been

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“Since FY 2000, at the macro level, rents have not been able to cover costs (mortgage, maintenance, rates) and policy has produced a country of loss-making landlords who rely upon negative gearing.” Chief Economist of a large international financial organisaton.
The above statement echoes a common perception about the merits of property investment in Australia. Similar views are shared by many prominent and respectable social, economic and finance commentators and hance, get a lot of circulation in the media. Since media has big influence on public opinion, such views get absorbed by wide sectors of the community without much scrutiny as to their merit. The result is that we end up in a situation where there is a widespread misunderstanding about residential property investment.
Let me try to clarify this misunderstanding by explaining how income losses originate in the early years of residential real estate investments and what implications it has for the returns on such investments. In other words, why “losses” and “profits” can go hand in hand in property investment - and why it is not a misnomer as you may expect at first…
 
1. Property investors are price takers and, as individuals, have minimal impact on the market.
As much as investors would like to buy cheap to make big profits from day one, they are not the only buyers in the market. Hence, they have to pay prices that the market dictates. Investors also compete for tenants so, incomes from letting of residential properties are influenced by prevailing rental market conditions.
To illustrate the point, imagine you could buy a property for $500K, pay 5% in interest on 100% of the value of the property plus $5K in oncosts (i.e. $30K p.a. in total) and rent it for $40K p.a. (8% gross yield) to make a profit before tax of $10K. That property would also grow in value by 3% p.a.
So $0, nil, zip, zilch, nothing invested up front (apart from a promise to the lender to repay debts in due course or if something goes wrong) and a starting profit of $25K (comprising $10K cash and $15K in capital). There is only one question to ask - how many such properties would you like? You could probably stop working with 10, make most of your dreams come through with 20, and live a multimillionaire lifestyle with 30…
Let’s introduce a twist to this scenario and say, your cousin would like to do the same… and other members of your family, and your friends, and their family and friends… Suddenly, there would be a little bit more competition for the properties you intend to buy. So, how much such investment would be worth to you? Would you pay $600K for the property to earn “only” $20K p.a. (i.e. paying $35K p.a. in total costs and earning $5K net from rent and $15K in capital gains on original value of $500K)? Or maybe $700K would still be a good deal?
And let’s consider this case from a renter’s perspective. If it costs $40K p.a. to rent, would it be worth to buy the place for $600K and pay $35K p.a. in total costs and having an opportunity of making extra $15K p.a. in capital gains? Would paying $700K for the property be still a good deal?
The point is that prices at which properties change hands are the outcome of a complex set of circumstances, leading to individual decisions of buyers and sellers - the participants in the process, who collectively make the market. By default, since there can be only one buyer per property (whether a single person or a team), the price is usually the highest offer from all interested parties and is inevitably influenced by the cost of renting of comparable premises.
The following section explains how paying market prices works out for investors in the long run…
 
2. Long term returns on non-leveraged property investments match returns on share portfolios
<a href="https://www.asx.com.au/documents/resources/ASX_Report_2013.pdf" target="_blank">Exhibit 5,7 &amp;8</a>
If you accept conclusions of <a href="https://www.propertyobserver.com.au/residential/more-liquid-shares-just-outperform-property-over-last-20-years-if-you-dont-mind-the-volatility-rismark-study/2013081963840" target="_blank">studies on returns from shares and non-leveraged residential property</a>, both these investment classes deliver comparable results over a long term. As an example, according to RP Data, on average, property delivered gross rental yields of 3.6 to 7.8% p.a. (based on 1996 to 2013 data series) and capital appreciation of anywhere between 4 to 13% p.a. (2001-2011 data series) - results vary by State and type of property. These are<a href="/news"> quite respectable returns</a> and reflect <a href="https://www.propertyobserver.com.au/residential/the-two-speed-decade-for-home-value-growth-tim-lawless/2012021553403" target="_blank">relatively low risk of this investment class</a>.
In other words, investors who bought properties with cash, or who paid off the initial loan, are consistently generating positive returns form their investments. So, labelling property investors “loss making landlords” is rather unfair generalisation.
The next section explains implications of a prospect of stable long term returns for the risk appetite of property investors…
 
 
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3. Low volatility creates opportunities for higher leverage
Since cash purchases of residential real estate are very rare, due to sums involved and difficulties in acquiring fractional ownership of a property, such investments are usually made with borrowed money. Buying an asset with borrowed money is called leverage, or gearing, and both owner occupiers and investors can take advantage of it.
Volatility in property prices is relatively low, especially on the down side. So, it is quite common for investors to buy residential properties with loans of up to 100% of purchase price plus full cost of purchase expenses (in such cases lenders take additional security over other unencumbered assets of the investor). The last six decades of persistent growth in property prices created expectations that this upward trend will continue in the future which gives borrowers and lenders confidence to enter into arrangements that are otherwise considered very risky (<a href="https://www.propertyobserver.com.au/residential/should-you-invest-in-shares-or-property-tim-lawless/2012110757682" target="_blank">e.g. for share portfolios</a>).
By applying maximum leverage to investments that already deliver positive returns investors have the opportunity to turn respectable profits into more substantial ones. However, the leverage comes at a cost in the initial stages of the investment when interest payments are not fully covered by income from rent. As borrowed money is paid off and/or rental incomes grow, those losses are eliminated.
The next section explains how those small losses can deliver big returns over time…
 
4.  Losses are actually additional capital injections that make leverage possible
Explanation of this step requires applying unconventional approach to account for profits. In short, the logic goes like this: the loan is required to secure possession of an income producing asset and it has an annual cost which initially is not covered by income from that asset (the reasons are explained in point 1 above). The annual operating loss (regardless whether reduced by negative gearing or not) and/ or investor’s contribution to the purchase price are considered capital outlays for the investment - not the purchase price of the asset. It therefore follows that these real cash outlays are what should be used in calculations of investor’s true returns.
To illustrate, a $500K apartment bought last year in Sydney with 100% loan (so, no cash outlay) that increased in value by say, 10% over the last 12 months (so, $50K gain) but generated $10K after-tax loss (i.e. which is actual cash invested), delivered in reality 500% return to the investor (of course net returns will be less due to capital gains tax and other costs if property is sold).
And it works in a very similarly way for owner occupiers. For example, a property purchased with 10% deposit that doubles in value (i.e. 100% return on purchase price) in reality is a 1,000% gross return on the original cash investment (for net return figure all costs of owning that property over the period would have to be deducted).
Of course, it is needless to say that the less leverage applied, the more those returns will approximate normal returns (as outlined in point 2 above). Also, that both property owners and investors can lose equally big if their bet on rising property prices goes the other way and properties decrease in value over time.
I am first to admit that this method of accounting for profits is controversial and can be criticised on a number of grounds. More importantly, this information taken out of context and in hands of unscrupulous peddles of “make zillions in property” seminars can be outright dangerous. However, it does not change the fact that for home owners and investors alike it is the real, hard cash that counts at the end of the day, not paper profits calculated for tax or other accounting purposes.  This method has its merits as it shows true net cash position after disposal costs, relevant taxes and debts are accounted for. It also demonstrates that even small increase in property prices can lead to substantial returns for property owners. There is no “black magic” or “secret formula” involved – this is simply how leverage works.
And to conclude…
 
5. Government or taxation policies have nothing to do with it
As I explained in my previous article <a href="https://www.propertyobserver.com.au/news/let-s-get-the-facts-straight-negative-gearing-benefits-less-well-off-investors-more-than-it-does-the-rich/2013111266324/Page-1" target="_blank">“Negative Gearing: The three facts that will challenge your assumptions”</a>, there is very little about negative gearing that would allow drawing a conclusion that landlords in Australia have to rely on it exclusively to make their property investments viable. There are no other government policies that would directly contribute to the viability of property investing either. Residential property as an investment class has its own merits - for owner occupiers as well as investors, with or without negative gearing, with or without leverage.
Majority of Australians already participate in this class of investment, either as owner occupiers and/or investors. We are not a nation of gullible property speculators, sinking money into dubious assets - but it takes some financial acumen to understand it. Off-the-caff comments, sensationalising selective aspects of property ownership or investing, without explaining the context, will not help those who are unable to participate in the Australian Dream. Promoting basic financial education is more pragmatic and would be more considerate...
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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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Putting property investment losses into perspective

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It was interesting to see that dwelling values across Australia’s capital cities increased by a mild 0.1% in November which was considerably lower than the increases of 1.6% during September and 1.3% in October. 
RP Data’s senior research analyst Cameron Kusher noted that the slowing rate of capital city home value growth indicated a potential moderation in overall growth.
He's among the growing band of forecasters who think it may be the case that the peak rate of value growth has now passed in Sydney and Melbourne.
Despite the headline grabbing 8% national annual growth figure, the data is actually a very mixed bag. 
Sydney and Perth are the only capital city markets in which home values are now higher than they were at their previous peak. 
Over the three months to November 2013, home values didn't increase in Hobart (-4.7%) and Canberra (-3.5%). They increased by 5.8% in Sydney, 1.5% in Melbourne, 1.1% in Brisbane, 2.6% in Adelaide, 2.5% in Perth and 1.8% in Darwin.
For a while this year it was the common presumption that the RBA was unlikely to cut for fear of overinflating property.
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But any continued moderation of price growth will allow the Reserve Bank of Australia to cut rates again in 2014 if they have concerns on the overall economy. 
It would appear, with three Saturdays to go, that the tail end of 2013 is seeing auction clearance rates finally flatlining, and more likely actually easing.
Auction results do a remarkable job in reflecting and projecting market trends.
So when auction clearance rates were on the rise, prices were generally going up too.
The opening months of 2014 will be a fascinating to watch especially the labour market which is always a lagging indicator of the economy's direction.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
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Price growth moderation allows the RBA to cut rates in 2014

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Investors should look for units in residential towers which have a sense of community about them, according to architects.
Hayball director Rob Stent says towers that build a sense of community retain their value better than other more bland developments.
One tower he designed six years ago now includes heavily booked communal facilities, multiple book reading clubs, dining clubs and networking meetings.
He describes it as a vertical neighbourhood where people have a sense of belonging and community which makes the building sought after.
“Being sought after retains the values and has a higher sense of owner pride. It's a self-perpetuating thing,” Stent told Property Observer.
“Having a building with the right settings you have the value retained. That's what developers that have a longer term perspective on brand and investors with a longer term eye to increased capital values should be having a look at.”
Australian apartment dwellers are more and more looking at shared spaces as a way to offset the space constraints of unit living.
Head of architecture at Monash, Diego Ramírez-Lovering, says Australian residents are becoming more and more used to communal living.
“In Australia it's not quite Sweden where 10 families will happily share a kitchen. It may get there one day,” Ramírez-Lovering says.
Also important is the concept of a 20-minute neighbourhood where people can walk to most places they need to go.
“This issue of the surroundings is an incredibly important issue; we see a lot of people moving out to the fringes buying a house and land package which is relatively affordable,” Ramírez-Lovering says.
“But they then spend a fortune on commuting all around town for employment and recreation and so on. I would say the key is to try and get these clusters of activity so you don't have to go too far.”
They were speaking to Property Observer from Synergy Property’s Nord development, in North Melbourne, a site with a Walk Score of 93.
Hayball has been working on the project for two years and marketing for the project is just underway.
The development includes units of three-bedroom configurations which Ramírez-Lovering says is an increasingly important part of new developments in Melbourne.
“There is a situation in Melbourne with higher density living that has resulted in sub-standard new apartments of impossible size up to 32 square metres and blind bedrooms,”  Ramírez-Lovering says.
“You can understand how the market gets to that point but it's interesting to understand that as we shift to a more intense and dense city and apartments become the norm and have much more diverse households living in them.
“Having apartments that are adequately sized that provide great amenity is so crucial.”
Stent says anecdotal evidence shows renters are less interested in lower quality unit stock now.
“Agents say they’ve never been so busy at painting and carpeting these old style apartments. They're no longer sought after. People are making the choice if they’re renting to go somewhere else that has more amenity or comfort or interior style and quality.”
{qtube vid:=C_G1HxDUK2M}
 
Transcript
I'm very interested as to how we're going to as architects really engage in a really meaningful way in terms of the challenges that are facing our community. We're going to be faced with enormous challenges - the aging population; the productivity commission news is alarming. That's been there for some time. People should be aware of it. How are we going to provide the housing and healthcare for an aging population which will be a significant part of the population with a diminished tax base. Look at the figures in terms of in Melbourne there's 2030 looking to be 6-7 million, recent ABS just released. Our increasingly diverse population is very different to what it was 15-20 years AGO. With not only our ethnic diversity but our demographic diversity in terms of also household configurations. Single households are the fastest growing households in Australia - what that means for housing. We're starting to see evidence the house and land package on the fringe is no longer appealing to many people. There’s still a lot of housing of that nature being build but there’s a need to provide alternative means of housing to satisfy diversity.
Developers that are in tune with those changes increasingly focus on providing a range of housing and not just sticking to the same old. The ones which will be adaptable and ready to meet the changes will be successful. Those that do the same old same old will be less successful because it's been a very simple process.
From investor’s point of view, if they're looking at a development they need to look at those sorts of developments through these eyes. Who’s out there that’s going be giving them the bigger market, that's a much broader market more diverse market than in Australia's history. It is a diverse population now. I n terms of where investors look they'll have to look at our society. That's having a number of attributes in the apartments. Whether there's flexibility in terms of apartments, spatially, what else it offers to provide an opportunity that you can't find in your apartment because of size constraints because of the commercial constraints that you would have augment. For example a playground or a playroom or spaces where you can have a party of have friends and family around.
We did the development some time ago with about 400 apartments, about six years old now. It’s born out in terms of what can emerge in terms in communities in a vertical scale. It has heavily booked communal facilities, there's 3-4 book reading clubs in the building, dining clubs, a whole series of networks and meetings in the building. It’s like a vertical neighbourhood. People do have the sense of belonging and community which makes buildings sought after. Being sought after retains there values and has a higher sense of owner pride. It's a self-perpetuating thing. Having a building with the right settings you have the value retained. That's what developers that have a longer term perspective brand and investors with a longer term eye to increased capital values should be having a look at.
In Australia it's not quite Sweden where 10 families will happily share a kitchen. It may get there one day but the interesting thing is to look at is what’s more successfully with sharing, or less successful. In one of your buildings I looked at, one of the key locations for sharing was the laundry. That makes so much sense because it's student housing. However this notion about rethinking our preconceptions about sharing are. There can be much more sharing than there is now on the other hand not all sharing works. Private open space is held dear dear by the population. That will shift over time. This issue of the surroundings is an incredibly important issue; we see a lot of people moving out to the fringes buying a house and land package which is relatively affordable. But they then spend a fortune on commuting all around town for employment and recreation and so on. I would say the key is to try and get these clusters of activity so you don't have to go too far. That is challenging because the housing usually comes first and services follows. I think that's a flawed model. There are different ways to think about it in alternative ways.  A notion that a house might not just be a house but it might be your office. It might not just be for your immediate family. It might be possible to sell or rent a portion of your house if circumstances change. So Thinking about housing because there is so much of it particularly in middle and outer suburbs, in ways which acknowledges all these changes function in much more flexible ways to accurate these things because the services very often take a long time to get there.
I live in Richmond. We’ve got a great deal of diversity just in our street. Our neighbours are three two-storey 60s built flats. There's leasing boards on them all the time. According to agents they say they’ve never been so busy at painting and carpeting these old style apartments. They're no longer sought after. People are making the choice if they’re renting to go somewhere else that has more amenity or comfort or interior style and quality. People need to be mindful that quality apartments are what people live in to purchase or rent. What we're seeing is some of the lower quality stock being hard to move. Some of the smaller apartments have resistance in terms of rental.
There is a situation in Melbourne with higher density living that has resulted in sub-standard new apartments of impossible size up to 32 square metres and blind bedrooms. You can understand how the market gets to that point but it's interesting to understand that as we shift to a more intense and dense city and apartments become the norm and have much more diverse households living in them. Having apartments that are adequately sized that provide great amenity is so crucial. It's great to see the inclusion of 3 bedroom apartments even though it seems like such a small detail the ability to have families in what was homogenous environment is a great idea.
<a href="mailto:awalsh@propertyobserver.com.au" target="_parent">awalsh@propertyobserver.com.au</a>
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Architects point investors towards residential towers with a community feel

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The reported seasonally adjusted estimate for total construction work done rose by +2.7% to $53,427 million for the September quarter, outshining expectations and being driven by increases in non-residential and engineering construction.
<a href="https://2.bp.blogspot.com/-O10dgtQhl98/UpkudK9hXuI/AAAAAAAAK98/mKcYB0PLYgc/s1600/ABS+Construction.jpg" imageanchor="1"><img height="255" src="https://2.bp.blogspot.com/-O10dgtQhl98/UpkudK9hXuI/AAAAAAAAK98/mKcYB0PLYgc/s400/ABS+Construction.jpg" width="470"></a>
Source: ABS
It was pleasing that total construction work done beat analyst expectations, yet not so smart was the fact that residential construction once again went nowhere, for a third consecutive print. Given that the economy is supposed to be rebalancing away from engineering construction (i.e. mining) and into residential projects, this doesn't look so great.
If you live or work in inner Sydney this might come as a surprise given that there is an uplift in construction happening here. However, it is not so elsewhere, and for this reason property analyst Michael Matusik is in the camp of those <a href="https://matusikmissive.com.au/2013/11/27/rates-to-fall/" target="_blank">expecting further rate cuts</a>:
"The continued subdued nature of new housing starts – despite record low interest rates &amp; a high number of actual dwelling approvals – means a lower than anticipated economic growth rate for next year; something below 3% per annum.  Very few new jobs will be created across the country if GDP stays below 3%.  Anything less than 2.5% usually means job losses.
"Whilst the RBA jawbones for a lower Aussie Dollar – yes, something in the mid 80 cent range would be very good – the only real tool we have to help get housing starts increasing again (and by ten-plus percentage points per annum) - and with that type of growth rate, many more jobs – is interest rates.
"At present new housing construction – for the year ending September – grew by just 1% across Australia.  New housing construction is actually contracting across Queensland – down 2% on last year.
"Despite talk to the contrary of late, interest rates need to fall again and soon. We need to build more new homes."
Matusik is <a href="https://www.propertyobserver.com.au/trends/seven-reasons-why-prices-might-rise-25-in-select-australian-east-coast-cities-over-next-three-years-michael-matusik/2013081464226" target="_blank">b</a><a href="https://www.propertyobserver.com.au/trends/seven-reasons-why-prices-might-rise-25-in-select-australian-east-coast-cities-over-next-three-years-michael-matusik/2013081464226" target="_blank">ullish about the outlook for east coast residential property</a> and in particular for Sydney, Melbourne and south-east Queensland, noting that prices could rise by as much as 25% over the next 3 years.
Private capital expenditure - actual and expected
Most of us are probably familiar with the doomsday scenario by now: mining capital expenditure tanks "off a cliff" through 2014 and beyond, our terms of trade collapse, unemployment rises and Australia sinks into recession. In contrast, what we actually want to happen is a relatively smooth transition from mining construction to mining production.
In this context, total new capital expenditure rebounding by 3.6% in the third quarter was a welcome surprise to the upside.
<a href="https://1.bp.blogspot.com/-kVRGoW5GxdM/UpkxlZdSeFI/AAAAAAAAK-I/2bdRkSRgow0/s1600/private+and+actual.jpg" imageanchor="1"><img height="296" src="https://1.bp.blogspot.com/-kVRGoW5GxdM/UpkxlZdSeFI/AAAAAAAAK-I/2bdRkSRgow0/s400/private+and+actual.jpg" width="470"></a>
Source: ABS
The "estimate four" figure for total capital expenditure in for 2013-14 came in strong at $166,832 million which is 3.2% higher than the estimate three for 2013-14. In plain English, this means that capital expenditure next year is expected to hold up a little better than had been feared - perhaps more of a plateau or a gentle taper rather than a cliff?
<img height="180" src="https://www.abs.gov.au/ausstats/abs@.nsf/be4aa82cd8cf7f07ca2570d60018da27/1ecf42b5ec12e8bcca2573460014f2df/Body/0.121E!OpenElement&amp;FieldElemFormat=gif" width="470">
Source: ABS
Similarly, the estimated figure for expected mining capital expenditure ticked up a little. The widely feared 'capex cliff' has not materialised to date.
<img height="180" src="https://www.abs.gov.au/ausstats/abs@.nsf/be4aa82cd8cf7f07ca2570d60018da27/1ecf42b5ec12e8bcca2573460014f2df/Body/1.3B8C!OpenElement&amp;FieldElemFormat=gif" width="470">
Source: ABS
There could be any number of reasons for this, including project cost overruns. Paradoxically, such inefficiencies appear to be a positive in capital expenditure actual prints (in line with the 'parable of the broken window' - if our aim it simply to boost GDP we should all go and smash a window tomorrow).
From my own experience I know how hard it can be to estimate capital expenditure in mining surveys and material blowouts are not uncommon. Expected figures which may appear entirely reasonable at the feasibility/FID stages can go badly awry over time. Labour costs are high in Australian mining and construction activities are tightly regulated (as they might say in mining parlance: "you can't go to the bathroom without filling out a form", or words to that effect).
New home sales
A weaker month <a href="https://hia.com.au/media/~/media/Files/MediaMicrosite/Media%20Releases/New%20Home%20Sales%20Take%20a%20Breather%20in%20October.ashx" target="_blank">recorded by the Housing Industry Association in October</a>. The small sample sizes mean that the data set is volatile, particularly at the state level. Clearly, new home sales are significantly stronger than they were in Q3 2012, with total sales up by around 25% year on year (in particular house sales are up strongly by more than 33%).
The largest increase across the three months to October this year was in South Australia (+10.5%), followed by Victoria (+6.0%), Western Australia (+5.3%), Queensland (+5.1%), and New South Wales (+2.0%). The trend in new home sales remains up, albeit not in an earth-shattering manner.
<a href="https://3.bp.blogspot.com/-xdqmii0NWeM/UpkyzMz-H3I/AAAAAAAAK-Y/hGcepL1te2E/s1600/HIA.jpg" imageanchor="1"><img height="295" src="https://3.bp.blogspot.com/-xdqmii0NWeM/UpkyzMz-H3I/AAAAAAAAK-Y/hGcepL1te2E/s400/HIA.jpg" width="470"></a>
Source: HIA
Affordability
The HIA caused a stir by <a href="https://hia.com.au/media/~/media/Files/MediaMicrosite/Media%20Releases/Low%20Interest%20Rates%20Continue%20to%20Drive%20Improved%20Housing%20Affordability.ashx" target="_blank">also releasing its housing affordability index</a> this week, showing 'affordability' at an 11 year high thanks to 225 basic points (2.25%) of interest rate cuts since 2011. Clearly repayments have dropped sharply, but entry prices remain elevated.
Dwelling prices
RP Data's <a href="https://www.rpdata.com/research/daily_indices" target="_blank">Daily Home Value Index</a> sees dwelling price growth lately as moderate or having moderated everywhere except for Sydney. Melbourne dwelling values will be reported as having fallen by more than 2% in November, although to some extent the index is likely have been impacted by a change in the sales mix.
<a href="https://3.bp.blogspot.com/-3fJJmMKEbM4/Upk2VSnIvqI/AAAAAAAAK-g/52Z1jZgRILU/s1600/RPD.jpg" imageanchor="1"><img height="212" src="https://3.bp.blogspot.com/-3fJJmMKEbM4/Upk2VSnIvqI/AAAAAAAAK-g/52Z1jZgRILU/s400/RPD.jpg" width="470"></a>
Source: RP Data
Summary and risks to the outlook
So, where does this all leave us? The rebound in total capital expenditure combined with improved retail sales suggests that the Q3 GDP print next week might be a little better than had been expected, perhaps in the realm of 0.6%-0.7% for the quarter. However, residential construction is not firing across Australia and the official cash rate appears set to be stuck in the 2-3% range for the foreseeable future.
<a href="https://3.bp.blogspot.com/-J84z62z_mms/Upk2zTtBB3I/AAAAAAAAK-o/HYL6l987DsA/s1600/RBA+rate+tracker+301113.jpg" imageanchor="1"><img height="290" src="https://3.bp.blogspot.com/-J84z62z_mms/Upk2zTtBB3I/AAAAAAAAK-o/HYL6l987DsA/s400/RBA+rate+tracker+301113.jpg" width="470"></a>
Source: ABS
I've alluded to some of the risks for 2014 and beyond above, including any severe drop in mining capital expenditure or a major weakening of our terms of trade from historically very high levels.
<img alt="Terms of Trade graph" height="382" src="https://www.rba.gov.au/chart-pack/images/15-commodity-prices/15br-tot-small.gif?accessed=2013-11-30-12-31-27" width="470">
Mining production is increasing, the iron ore spot has held up well at $135/tonne at a time of year when support may begin to return to the price, and the Aussie dollar is threatening to sneak into the 80-90%range which may help producers to remain competitive.
The biggest unknown is probably the outlook for China. No surprises that growth in China looks set to hit its target, but significant question marks still remain about the stability of the model. The Chinese economy is imbalanced, with a very high percentage of GDP growth being driven by investment rather than by consumption: the building of apartments (tens of millions of which reportedly sit vacant), infrastructure and factories.
Whether or not China is able to rebalance away from investment towards consumption in the years ahead is unclear, and consequently it needs to be considered whether the growth rates that we have come to expect from China are sustainable going forward.
<img alt="GDP Growth – China and India graph" height="404" src="https://www.rba.gov.au/chart-pack/images/1-3-world-economy/1tr-gdpci-small.gif?accessed=2013-11-30-12-30-57" width="470">
 
<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>.
 
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>' is out now.
 
 
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Some positive signs for the economy, but residential construction is going nowhere

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December brings out the opportunity for property experts to delve into their Christmas stockings and bring out a crystal ball to predict what some of the key trends for the pending 12 months may be.
Whilst uncertainty remains over weather commercial tenant demand will bounce back or if shoppers will start buying anything other than groceries again, one thing that is certain is that the continued emergence of Asian capital into all commercial property markets across our major capital cities.
Whilst the latest wave (post 2010) of Asian investment is being compared to the highs of the Japanese assault on Australian property in the early 1990's when  investigate in more detail it is so different for so many reasons and on so many different levels.
Malaysian and Singaporean investment dominated 2013 with a wide range of transactions being completed in both Melbourne and Sydney, deals varied from development sites to commercial office investments but the flow was strong and is expected to remain this way in 2014.
Whilst it is widely accepted that the stimulant for investors from these countries to target Australia has been based on their own political instability, the fall in the value of the Australian dollar and cooling measures that have been instilled on developers in their home countries, the Chinese investors and developers seem to be driven by many different reasons to their nearby counterparts from South East Asia.
Chinese investments into the Australian property market arguably presents our industry with the greatest opportunity for job and industry growth than any other single structural buyer shift spanning back more than 30 years.
Next year will see the continued dominance of Chinese investors wanting to acquire both development and passive opportunities as the relationship between Australian property and Chinese players grows with additional education across a wider range of markets, and more established infrastructure to assist the Chinese in completing transactions locally. Good news stories are being sent back to China off the back of sustained strong performance for Chinese developers, as they continue to deliver on many projects that they have been working on for some time.
As a property industry, we must better equip ourselves to benefit from the structural change that is occurring on so many levels. We must work hard and with purpose to ensure that we do not jeopardize in any way the intent and established level of comfort to date that Chinese investors have towards Australian property.  We must remain competitive on all levels from the federal government to local council and do what we can to encourage, foster and assist in the development of Chinese investment into our markets.
 
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 Mark Wizel is director of CBRE Melbourne city sales and Victorian retail investment properties
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