High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

[smartcode_project:default project_id=5743 project_image_fid=372394]

For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

[smartcode_project:default project_id=5743 project_image_fid=927]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

[smartcode_project:default project_id=5743 project_image_fid=375255]

The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

[smartcode_project:default project_id=5743 project_image_fid=925]

The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

[smartcode_project_cta:default project_id=5743]

Joel Robinson

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

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

[smartcode_project:default project_id=145324 project_image_fid=372749]

Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

[smartcode_project:default project_id=145324 project_image_fid=354343]

The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

[smartcode_project:default project_id=145324 project_image_fid=354347]

According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

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

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

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

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

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

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

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

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

Every First Home Owner Grant for new property by state

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

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

Staff Writer

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

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

alisonwarters@gmail.com

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

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

Ellen Walker

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

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

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

<html><body>
Last year ABC’s Q&amp;A ran a one-hour special with then Prime-Minister, Julia Gillard.  
At the time, Labor’s popularity was at an all time low, with the latest Galaxy poll showing a primary vote of 31%, compared to the Coalition's 49%.  
The Q&amp;A special followed a 12 month gap since Julia Gillard had faced the live audience in which voters – including those in the land of social media - can directly grill Australia’s politicians and business leaders about issues close to the heart.  
Inevitably, Julia Gillard was questioned about the growing cost of housing – significantly negative gearing – which as I explained <a target="_blank" href="https://catherinecashmore.wordpress.com/2013/10/22/a-few-thoughts-on-negative-gearing-the-contradictory-policy-which-benefits-investors-whilst-negatively-impacting-renters/">here</a>, has assisted in distorting the preferences of our buying market, not aiding new supply, but instead boosting the competition and subsequently price of second hand stock.  
Audience member Robyn Tracey asked - “Has Australia lost the will for reform of our taxation system? Has a flat rate of tax been considered to replace our present complicated system? Why hasn’t negative gearing been abolished despite recommendations to do so by the Henry Tax Review and by leading economists?”
 
Gillard’s answer was predictable;  
"For negative gearing, we didn't agree with the Henry tax review. We ruled that out. We think that, you know, an abolition of negative gearing would cause distortions to the property market that we didn't want to see…"  
Tony Jones then questioned why GST had not been included in the Henry tax review, to which Ms Gillard commented:  
"GST, at the end of the day, is a regressive tax and so we are looking for tax reform in other areas."
 
Well, you can’t get a much more regressive tax than negative gearing, which disproportionately benefits high-income earners, over those on a lower wage.  
Close to <a target="_blank" href="https://www.businessspectator.com.au/article/2013/9/6/economy/big-budget-bucks-down-property-drainpipe">40%</a> of households in the top income quintile access negative gearing and benefit from a tax concession of more than $70 per week.  
This is compared to less than 5% in the bottom quintile who benefit no more than $10 per week, and of course, there is also limited ability to negatively gear in a self managed super fund.  
The continued Labor stance against negative gearing is not out of step with the Coalition. Whilst still in opposition, Tony Abbot dismissed claims that the Liberals would include negative gearing as part of their tax review, and any rumour suggesting otherwise, <a target="_parent" href="https://www.liberal.org.au/latest-news/2013/05/21/tony-abbott-transcript-joint-doorstop-interview-bundamba-qld">“had no substance whatsoever.” </a> Not surprisingly, it left many advocates across the real estate and finance sector breathing a collective sigh of relief.  
Therefore, when last Monday’s Q&amp;A subtitled <a target="_blank" href="https://www.abc.net.au/tv/qanda/txt/s3873461.htm">‘Open for business'</a> aired, featuring the highly acclaimed founder of Aussie Home Loans John Symond - a company which profits significantly from negatively geared investors – it was some surprise to hear him advocating for tax reform and a moderation of the current rules.  
In reply to audience member Leanne Murphy – who asked:  
“Do you think negative gearing should be abolished, or at least quarantined, only available for new dwellings, thus giving low-income earners the opportunity to get into the property market?”
 
Mr Symond answered:  
“Absolutely. I come back to overhauling the tax system. Negative gearing wasn't designed for people who can afford to go and buy $1 million, $2 million, $3 million houses or apartments for negative gearing to offset the bulk of their interest payment off their tax. So negative gearing does need to be looked at in the tax system because I don't think it is fair at the moment. I think it leans very heavily to the high income earners and that needs to be brought into line.”
 
His comments were followed in a similar vein from the other panellists who agreed something needs to be done, but swiftly pushed the momentum back under the carpet with the excuse we hear all too often;  
“I believe, is an absolute political hot potato and no government is going to touch it,” said Carol Schwartz.  
Clearly from Abbot’s comment above, in the present context this is correct. However, meanwhile it’s worth asking if the landscape is changing?  
To hear business leaders finally admit we’re heading down the road which is further dividing the gap between the haves and have nots, is clearly mirrored across the social media network as a new generation of voters increasingly question the legacy they’ve been left with.  
Many other countries have instilled the concept of home ownership being part of the national dream and structured their tax policies accordingly, favouring vendor over renter.  Banks have happily fed our owner-occupier ambitions, resulting in a disproportionate amount of credit pumped into the residential market - pushing up our private debt to disposable income ratio to a peaky 150%, and as a consequence over the 2000s established median house prices in Australia have more than doubled.  
Generations have been bought up with the concept that, a mortgage, in a world full of spending temptations, is a forced savings account for retirement.  
Certainly, owning your own home outright by the time you reach 65 is advantageous; no one wants to be servicing a loan or rental payments on a restricted income stream.  
However, it’s an interesting concept, to have a forced savings account which requires the investor to pay a hefty sum of interest rather than receive it - as would be the case with other assets, where additional interest is collected.  
Not only is the house seen as a savings account, but also one against which buyers can leverage, enabling the purchase of a second home – usually by way of an interest only loan.  
So imbedded is this concept that even the most committed owner-occupiers I assist, searching for what they hope will be their last home in an environment where we’re all trying to squirrel away funds for retirement, are understandably very concentrated on the equity their purchase can achieve and how they can best aid their children along the way.  
In Australia our homes have been conceived as investments because they ‘always’ increase in value.  At least, this has been the case for a good number of years, benefitting the property lottery winners who got in early enough to take advantage of healthy capital gains.  
Unfortunately, the homes we’ve built to offset house price inflation, have done quite the reverse.  Heavily burdened with tax overlays, located in areas where zoning restrictions have encouraged land banking by larger developers, thereby reducing competition from smaller home builders, has done more to harm the construction industry, than aid.
With the median price for a house and land package in fringe suburbs starting around $400,000, there’s little to encourage families into the infrastructure sparse landscapes, yet this is where we expect homebuyers to migrate if they want to purchase a detached dwelling for less than capital city medians.  
With the only other option being a smallish apartment closer to town, for which the first home buyer demographic usually have to pitch against an investor, yet must purchase wisely if they want to leverage enough equity for the necessary upgrade after a few years of residency. Well, quite honestly, it’s become a fools game, which I suggest is not unlike musical chairs – everyone competing for the same second hand stock – not prepared to accept a lesser quality alternative.  
As such, first home buyers now enter the market as ‘first time investors’ – usually living off their parent’s goodwill in order to do so – and hoping to achieve similar capital gains.  
Rising house prices are part of an environment that has been manipulated by successive governments because – as <a target="_blank" href="https://www.goldmansachs.com/our-thinking/view-from/a-view-from-australia-2013/toohey-bio.pdf">Tim Toohey</a> recently put it in a Goldman Sach’s report:  
“The wealth effect – i.e. increases in house prices/equity markets driving higher consumer spending – has been painted as the messiah for the domestic cyclical space.”  
Supposedly, when our house prices rise, it feels like Christmas for the economy, and thus, out come the credit cards boosting retail spending, and numerous other offshoots.  
However, as Toohey goes on to point out;  
‘The proportion of the population 60 plus and entering the asset drawdown phase of their life is now the dominant demographic force, contributing 50% of the population growth, and this is projected to rise to 60% by 2020.’
 
Therefore, as suggested with house price appreciation the “future for consumption growth is unlikely to reflect the past. “
 
It’s against this backdrop that a friend of mine was contacted a few weeks ago by a company posing as a market research group, who with clever questioning, managed to convince him to allow an ‘advisor’ to come to his home and demonstrate how he could reduce his income tax to ‘almost zero’.  
The sales representative proceeded to show lots of – (to quote) – ‘scary’ figures indicating how he would not have enough money upon which to retire, and then demonstrating how negative gearing into property - which the company would ‘choose’ on his behalf, would reverse this, to enable him to achieve ‘retirement riches’.  
Backed up with an extensive list of client testimonials, the service was of course offered free of charge – the rep explaining that he received payment from referrals to ‘partners’ such as financial advisors.  
Clearly in an era of ‘worried money,’ it’s not hard to conceive how inexperienced investors might be tempted to trust the advice of shoddy operators - in response, ASIC needs to look at the industry as a whole when it comes to unethical spruiking and not super funds in isolation.  
Notwithstanding, the information most buyers read in investment magazines and websites, is provided anecdotally by industry advocates, often bordering on financial advice, yet with no regulation overseeing the quality of the content – it’s left to ‘self regulation’ – reader beware.
 
Changing a well-weathered mindset is not going to be easy without political reform.  However, I really do ponder at the strength of social media in an age where younger generations are increasing asking questions and engaging in conversations, which in previous times would have been limited in their scope.
Questions such as, whether rising property prices are not so much the golden egg of economic growth, but rather a burden weighing on the progressive future of younger generations.  
Media headlines across mainstream outlets have suggested the need for a national conversation on housing affordability, however in reality the talking has been done.  
We’ve had the Henry Tax review and additionally numerous independent academic reports published, outlining exactly how to ease established house prices whist boosting effective supply. In truth, it’s action that’s needed, not conversation.  
Taxation of property should be progressive, discouraging practices such as land banking, and using property merely as a speculative investment. A broad based land value tax would assist in this respect.  
Additionally, renting should be accepted as more than a short term option with practices in other countries – such I pointed out <a target="_blank" href="https://www.macrobusiness.com.au/2013/11/what-australia-can-learn-from-germanys-rental-system/">last week</a> - forming the basis for investigation as to how we can assist our own tenants.  
However, the most important change we can effect is to take away the headwinds affecting supply of family accommodation - a subject which has been covered in depth by <a target="_blank" href="https://www.macrobusiness.com.au/2013/09/australia-must-look-to-texas-on-housing-policy/">Leith Van Onselen.</a>  
Wherever you sit in relation to this subject, it can’t be denied the environment is changing, and like it or not, a new era of disillusioned voters will eventually have the upper hand.  


<hr>
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
</body></html>

catherinecashmore-6LXia3pPQj

Housing policy reform: Do we have a changing landscape?

<html><body>
From a three-and-a-half year high last month, business confidence <a target="_blank" href="https://business.nab.com.au/monthly-business-survey-october-2013-5029/">data</a> for October shows the post-election honeymoon is over, with business conditions continuing to underperform in non-mining sectors.
As Treasurer Joe Hockey recognised in his “Australia: Open for Business” speech in New York last month, the initial positive reaction of business to the change of government needs to be matched up with action. After all, slogans only go so far.
Australia’s lack of competitiveness, and its impact on investment and business confidence, is not only a result of the high Australian dollar caused by the mining boom, but is also to some degree self-imposed.
Chiefly among the culprits for the lack of competitiveness are the increased burden of regulation, a cumbersome Industrial Relations system, a tax system in need of reform, and our ambivalent attitude towards foreign investment.
There are some encouraging signs that an “open for business” agenda has begun to take shape. In a recent speech at the Sydney Institute, Parliamentary Secretary to the Prime Minister Josh Frydenberg <a target="_blank" href="https://www.joshfrydenberg.com.au/guest/SpeechesDetails.aspx?id=225">articulated</a> a well-thought through deregulation agenda. Deregulation may be an important first step toward increasing our competitiveness and encouraging investment.
The need for deregulation
The increased burden of regulation is well documented and mostly pre-dates Kevin Rudd’s 2007 election. The last six years arguably saw a steep increase in the pervasiveness of regulation with a number of high profile legislative changes such as the carbon tax, the mining tax and changes to the Fair Work Act, bypassing the regulatory impact statement process.
In the latest <a target="_blank" href="https://www.weforum.org/issues/global-competitiveness">Global Competitiveness Report</a> published by the World Economic Forum, Australia ranked 128 out of 148 countries in terms of the burden of government regulation. I would not take this ranking too seriously – for example China ranks 14 and Vietnam 106 – as it is based on perceptions that are not easily transferable across different cultures. Nonetheless, the increased burden of government regulation is a reality.
One example is that of food manufacturer Simplot and its struggle to gain authorisation from Biosecurity Australia to import pancake “pods”.
Given the need for deregulation to reduce the heavy cost of regulatory compliance, the next question is how to go about it.
What it takes to deregulate
The recipe for a successful deregulation program is neither new or untried. It includes a concerted effort to repeal existing, ineffective regulation.
One of my favourites stories about excessive regulation involves Law no 9502 enacted by the Sao Paulo City Council in 1997. This law mandates that signs be posted next to lifts requiring users to check whether the lift is there before walking into it. Millions of dollars are spent to meet this legislative requirement with no significant impact on behaviour.
As the Simplot example above highlights, there are likely to be many opportunities for the federal government to eliminate ineffective but costly regulations.
There are also opportunities to avoid duplication and better coordinate with states and territories. Some states such as Queensland have already been quietly but steadily working through a similar deregulation agenda.
Another important element of a successful deregulation program includes ensuring that new regulation, no matter how politically important, is subject to a rigorous cost-benefit analysis in the form of a regulatory impact statement. While it is well understood that cost-benefit analysis is very sensitive to assumptions, a key benefit of requiring a regulatory impact statement is that it forces government bureaucrats to identify the range of costs and benefits and, in the process, increases the scrutiny of a policy decision or new regulation.
Finally, the new government deregulation agenda should also include a commitment to an ex-post evaluation of regulation. This is now common practice in other developed countries and is part of the process of ensuring that regulators are held accountable for their decisions.
It could be argued the introduction of an ex-post assessment of a regulatory decision would make the regulator’s job more difficult and costly, as it would be expensive and complex to undo decisions that have been proven to be mistaken. This line of argument, however, misses the key point. The requirement for an ex-post assessment incentivises the regulator to get it right in the first place.
Overall, the deregulation agenda, while an important first step towards developing an open for business strategy, is to some extent the low hanging fruit. The hard yards, which have a much higher impact on investment and business confidence, are changes in the industrial relations system, tax reform and the treatment of foreign investment.
A more ambitious, politically challenging agenda
Despite existing rhetoric, real unit labour costs (non-farm) fell steadily between 1985 and 2010, and have remained broadly stable since then. This means that it may be possible that a more efficient industrial relations system could lead to a better allocation of resources and lower business costs while maintaining real wages at current levels. Framing industrial relations reform along these lines might provide a starting point for a foreshadowed review of the Fair Work Act by the Productivity Commission.
An open for business agenda must necessarily encompass tax reform. The BCA seems to prefer a wider base, lower rate approach. A proposed approach is to finance a reduction in the corporate tax rate via extending the GST to cover food, health and education. For consistency, such an approach should also include eliminating a range of existing tax concessions that have eroded the tax base. The politics of such an approach would, however, be very difficult.
I have <a target="_blank" href="https://theconversation.com/reduce-the-corporate-tax-rate-not-so-fast-4014">argued</a> elsewhere for a more ambitious change in the tax system involving the introduction of an Allowance for Corporate Equity (ACE), which would enable firms to deduct an imputed return on equity. The key conclusion is that tax reform is a long and hard road and will certainly test the government’s commitment to an open for business agenda.
Another thorny issue that will test the government’s commitment is its apparent ambivalent attitude towards foreign investment. This is illustrated by the divisions within the Coalition on whether the Treasurer should allow the acquisition of GrainCorp by Archer Daniels Midland despite its clearance by the ACCC from a competition perspective. A clear statement by the Treasurer when he makes his decision on the 17th of December could go a long way in establishing the government’s credentials as business friendly.
Whilst the change of government has sparked business confidence, the new government must capitalise on this momentum by taking definitive policy action.
There are many opportunities for policy change towards an open for business agenda for Australia, through deregulation and tax reform in particular.
Initial signs show that deregulation is on the agenda and this would be an important start. But broad based changes that encompass reforms to the industrial relations system, foreign investment policy and the tax system, whilst more difficult to achieve, are crucial for promoting a business-friendly environment in Australia.

<hr>
Flavio Menezes is a professor of economics and currently the head of the School of Economics at the <a target="_blank" href="https://www.uq.edu.au/?">University of Queensland</a>.
This article was originally published at <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/abbotts-open-for-business-honeymoon-is-over-19546">original article</a>.
 
 
 
<img width="1" src="https://counter.theconversation.edu.au/content/19546/count.gif" height="1" alt="The Conversation">
</body></html>

FMenezes-vfCCGrib4N

The honeymoon is over: Business confidence in Tony Abbott’s government drops

<html><body>
With first home buyers' apparent low numbers, RateCity has said that it's the First Home Saver Account Scheme that needs urgent looking at.
The government program, launched in 2008 by Kevin Rudd, was predicted to help hundreds of thousands of future home buyers. However, statistics from the Australian Prudential Regulation Authority show that $491 million is held in 45,000 First Home Saver Accounts as of June 2013.
CEO of RateCity, Alex Parsons, said that there are a number of things the government could be doing to improve the scheme.
“Right now, only nine institutions offer these accounts – and despite some offering them in the past, none of the big four banks currently do, so it’s little surprise that many potential buyers haven’t heard of them, and don’t use them,” said Parsons.
“It’s a way for banks to support real saving initiatives for first home buyers – and any scheme that helps would-be buyers to build a larger deposit should be encouraged."
RateCity data points to the average base interest rate being paid on these accounts being 2.54%.
A number of conditions are in place, including that a $1,000 minimum deposit must be reached yearly for four financial years before you can withdraw. The account's balance is capped at $90,000.
“The fact that the major banks have stopped offering the products suggests that they are not attractive enough to the mainstream market to be viable in their current form,” said Parsons.
“A relaxation of some of the conditions, aided by some smart and effective marketing by the government may breathe life back into what is essentially a great idea to encourage responsible borrowing.”
<a href="mailto:jduke@propertyobserver.com.au" target="_parent">jduke@propertyobserver.com.au</a>
</body></html>

jduke-EHk3XBmHkn

Calls for urgent revision of First Home Saver Account Scheme

<html><body>
Are apartment and unit owners the new ‘second-class citizens’ of the Australian housing market?
With the release of proposed strata title law reforms in NSW, it’s a question that needs to be asked. This new legislation, if passed, will for the first time enable a majority of lot owners in a strata scheme to force their neighbours to sell against their will.
Are we seeing the beginning of the strata law wars - where neighbours can now force you from your home unit?
If a block of units is old and costing too much in strata levies, currently every single owner within the apartment building must agree before the strata scheme can be demolished, or sold to a developer. However, under the <a title="NSW Strata Law Reforms" href="https://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes.page" target="_blank">new laws put forward by NSW Fair Trading minister Anthony Roberts</a>, only a majority of 75% is required.
In what other form of residential property is your home at the mercy of your neighbours? If you own a free-standing house it’s yours for life; as long as you continue to pay the mortgage, you live in the home that you love until the day you die. (The only rare exception is where the RTA requisition land for road building, but even then you’re given plenty of notice and fair market vale for your property. And besides, it’s a government planning initiative).
This is different. These strata laws potentially set neighbour against neighbour in a fight to control your housing destiny. That’s powerful, emotive stuff. Strata is already notorious for conflict amongst residents, but this proposal could take disputes to dangerous new highs.
Apartment living has skyrocketed over the last decade and the trend is forecast to grow exponentially over coming years. Indeed, the <a title="50 percent NSW Residents in strata living by 2050" href="https://www.parliament.nsw.gov.au/prod/parlment/hansart.nsf/V3Key/LA20120614005" target="_blank">NSW government predicts 50% of all residents will live in strata schemes by 2050.</a> That’s amazing growth, and the surge of money and capital into apartment complexes by property investors and developers is no surprise.
But what if the effect of these laws is to create an underclass of home-ownership? “The home you have, when you may not have a home for life?”
<a title="Home ownership sacred cow" href="https://www.businessspectator.com.au/article/2013/10/24/australian-news/housing-australias-great-boondoggle" target="_blank">Home ownership is a ‘sacred cow’ in Australia. </a>Our whole culture of wealth creation is built around housing – <a title="ABS Household wealth" href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6554.0Main%20Features22011%E2%80%9312?opendocument&amp;tabname=Summary&amp;prodno=6554.0&amp;issue=2011%9612&amp;num=&amp;view=" target="_blank">70% of total household wealth is held in property.</a> So how will the market for unit and strata title apartments hold up when the core notion of housing – a secure place to live and a repository for wealth in retirement – is threatened by these laws?
I think it’s possible values for strata title property could fall. Particularly if there are insufficient safeguards or these laws are poorly implemented. And you can just see the inevitable TV news coverage: imagine the first elderly resident forcibly removed from their home to make way for the bulldozers. What a bad look. And not just for the resident, but for market confidence in strata as a class of investment asset.
I’m not suggesting that these laws don’t need reform, they clearly do. But the danger here is that by setting ‘neighbour v neighbour’, the popularity of strata living could tumble.
At the very least, substantial processes and dialogues among the lot owners will be required for any strata schemes where sale, demolition or redevelopment are being considered. At Housenet, <a title="Strata Pages Tool" href="https://blog.housenet.com.au/body-corporate-hard-work-not-with-this-strata-management-tool/" target="_blank">we’ve been thinking about this for a while</a>. Which is why we created our <a title="Strata Pages" href="https://www.housenet.com.au/strata" target="_blank">‘strata pages’ feature</a> – a free management tool for lot owners and managers. Strata schemes can create private online social networks that are a big help with:
<ul>
<li>
Communication
</li>
<li>
Ready access to strata scheme information
</li>
<li>
Rumours and disputes
</li>
<li>
Managing events and maintenance
</li>
<li>
Dialogue and relationships between lot owners
</li>
</ul>
Clearly strata lot owners in NSW – and perhaps elsewhere if these reforms are adopted by other states – will have a lot to talk about in coming months and years. Let’s hope they’re implemented with care and that all lot owners get a fair outcome.

<hr>
Darren Moffatt is founder and chief executive of Housenet.com.au and is a property and social media enthusiast.
This article was originally published at <a href="https://www.housenet.com.au/">Housenet</a>. You can read the orignal article <a target="_blank" href="https://blog.housenet.com.au/strata-law-wars-why-neighbours-can-now-force-you-from-your-home-unit/">here</a>.
 
 
 
</body></html>

dmoffat-fpcbA2NB4A

The war on strata law: Are apartment owners the housing market's ‘second-class citizens’?

<html><body>
With an early, devastating start to the bushfire season in <a href="https://theconversation.com/sydney-fires-caused-by-people-and-nature-19327" target="_parent">New South Wales</a> and Queensland, recent disasters in Victoria and Tasmania, and projections that current trends will continue under climate change, it is time to look beyond emergency responses and controlled burning. The calls for a broader perspective on bushfire management are <a href="https://theconversation.com/reducing-bushfire-risk-dont-forget-the-science-19065" target="_blank">mounting</a>.
Bushfire risk is both a spatial planning and an emergency management challenge. The majority of bushfires start close to the urban fringe. Most of the financial losses come from damage to private property and public infrastructure. If the object is to cost-effectively manage the risks to people, property and infrastructure, it is not enough to focus only on emergency management and disaster recovery.
<a href="https://www.nccarf.edu.au/publications/limp-leap-or-learn" target="_blank">Our research</a> shows that spatial planning, including conventional land use and a wider range of legal instruments, is a critical tool for adapting to climate change, particularly the increased frequency, intensity, and altered distribution of bushfires.
New standards for bushfire-prone areas
The <a href="https://www.royalcommission.vic.gov.au/" target="_blank">Royal Commission</a> into the 2009 Victorian bushfires recommended development be substantially restricted in areas of highest bushfire risk and that planning provisions give clear priority to the protection of human life.
A host of amendments to planning laws in Victoria were directed towards these recommendations. These provide important lessons for the rest of the country.
A key initiative was state-wide <a href="https://services.land.vic.gov.au/maps/bushfire.jsp" target="_blank">bushfire hazard mapping</a>. This now forms a core part of all Victorian planning schemes. Land in bushfire-prone areas must undergo specific risk assessment during development assessment. Development can only proceed if the level of risk to human life, property, and community infrastructure is acceptable.
The assessment of what constitutes an “acceptable level of risk” is teased out in specific planning provisions. It generally involves a combination of defendable space and construction standards. These limit the amount of discretion available to development assessment agencies.
Development approvals in bushfire-prone areas must now include conditions requiring the maintenance of bushfire mitigation measures. These include construction standards, defendable space, water supply and access. In new subdivisions, construction standards and building envelope information must be included on the property title, to alert future owners of these requirements.
The emphasis on protecting human life should help in minimising risks. But land use planning for bushfire also needs to consider other priorities, such as native vegetation and biodiversity conservation. Achieving this balance will require local councils to have the courage to say no to development proposed for high risk, high conservation value areas, rather than managing risks through through vegetation removal.
Existing communities – is retreat the answer?
These changes account for new development, but what about people already living in bushfire prone areas?
Even where communities are destroyed, there is intense political pressure to commit to rebuilding in the same location. This is fine for areas where future risks can be managed effectively (without compromising other policy goals like conservation). But high risk areas may need other strategies. The Bushfires Commission recommended the government consider retreat for exceptionally high risk areas.
But the <a href="https://www.rdv.vic.gov.au/fire-recovery-unit/fru-news-room/voluntary-buy-back-community-consultation-process" target="_blank">property buyback scheme</a> that followed was voluntary and lacked strategic focus. The result was a lower concentration of properties in high risk areas. This arguably just spreads emergency resources more thinly.
Mandatory retreat policies are rare, and would probably be overkill as a response to fires. An alternative could be designating hazardous areas as “future acquisition”, as previously occurred in the Dandenong Ranges near Melbourne. This would give current owners the security to remain, but give local or state government the power to acquire land when the owners decide to leave.
Insurance can also <a href="https://theconversation.com/fire-and-flood-how-home-insurance-can-help-us-adapt-to-climate-change-17568" target="_blank">help shift development</a> to less risky areas. Governments need to harness this power to drive behavioural changes. Insurance policy pricing and coverage can send price signals about the riskiness of certain areas, and influence property choices.
Some policies require the property owner to rebuild in the same location following fire. But there are examples, such as floods and earthquakes, where insurers permit policyholders to apply their payout to rebuilding elsewhere.
Short of mandatory retreat policies, there are other ways of influencing the behaviour of property owners and buyers. For example, notations on a property’s title or similar information in sale contracts and rental agreements can indicate the bushfire attack level of the property’s construction. Similarly the number of times bushfire has affected the site can alert future occupants of the risks.
Levies on at-risk properties such as those applied in Victoria can also provide market signals about the full costs of living in certain locations, as well as raising the revenue required to support emergency services to these areas.
None of these tools may be popular with property owners who fear cuts to property value, or new imposts. But they are important complements to the current risk management strategies for bushfire-prone areas.
 
Jan McDonald is professor of environmental law at the <a href="https://www.utas.edu.au" target="_blank">University of Tasmania</a>.
Andrew Macintosh is associate professor  at the ANU College of Law and the ANU Centre for Climate Law and Policy at the <a href="https://www.anu.edu.au/" target="_blank">Australian National University</a>.
Anita Foerster is research fellow at the <a href="https://www.utas.edu.au" target="_blank">Univeristy of Tasmania</a>.
Jan, Andrew and Anita receive funding from the <a href="https://www.nccarf.edu.au/" target="_blank">National Climate Chanage Adaptation Research Facility</a>. 
This article was originally published at <a href="https://theconversation.com">The Conversation</a>.
 
 <img width="1" height="1" alt="The Conversation" src="https://counter.theconversation.edu.au/content/19377/count.gif" style="font-size: 0.8em;">
</body></html>

jake-cSmGT7VXVf

New building standards and policies required for bushfire prone areas

<html><body>
Federal Treasurer Joe Hockey says raising Australia’s debt ceiling from $300 billion to $500 billion will stave off a United States-style debt crisis. After the government announced it would introduce legislation to raise the debt ceiling, the Labor opposition offered a compromise of a rise to $400 billion. Hockey says that’s inadequate, and matters are coming to a head as the government <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2013-11-13/carbon-mining-tax-parliament-legislation-tony-abbott/5087200">introduced legislation</a> to Parliament yesterday.
So what are the consequences of raising the debt ceiling in Australia and what should it be raised to? We asked the economists?—?who think much of the debate on this issue is a beat-up …
Steve Keen - Economics professor at University of Western Sydney:
We should be raising the debt ceiling. It’s sensible for the government to borrow money to finance part of expenditure, particularly if that involves infrastructure and development, which we’ve let wane badly in the last 20 years.
Putting a number on what we should raise the debt ceiling to is a bit like saying how many cards should there be in a playing deck. The government can issue as much money as it likes. The fact we have a numerical debt ceiling rather than one related to GDP is silly. There’s no real point where a government that issues its own currency has a debt ceiling, but if we have one it should be related to GDP rather than an absolute number, and it should be at least five times what it currently is.
It’s insane to worry about the government debt. The level of government debt is less than Australian credit card debt. There’s been a total beat-up of the debate in the last three years.
Michael Knox - Chief economist and director of strategy at Morgans:
Australia should raise its debt ceiling. We have around about four years before we get back to balancing the budget, so we need to borrow more money and we also need to finance the existing stock of debt which we have.
The amount by which the debt ceiling is raised shouldn’t be an issue. You’ve got the side of politics that wants to increase the debt ceiling and say they want to move towards a balanced budget in four years. Unless the other side wants to move towards a balanced budget earlier, there’s no rational reason not to increase the debt ceiling.
I can understand why this might happen in the US context, but I can’t understand why it is happening in the Australian context. The side of politics in the US that tried to limit the debt ceiling has done it in order to reduce government spending. In Australia you’ve got the side of politics that usually wants to increase spending trying to limit the increase of the debt ceiling. It’s inherently contradictory.
Frank Gelber - Chief economist at BIS Shrapnel:
This is a non-issue. We need to raise the debt ceiling. Now it’s in the political arena. The question is by how much. Do you raise it by $200 billion, or do you raise it by a little less so you have to discuss it again sooner?
I don’t have an opinion on how much the debt ceiling should be raised by, but we’re going to need the $500 billion eventually. The debt ceiling will be raised, 100 [billion] gives them years to raise it again if they need. The question is whether you have to justify every incremental raise. In practical terms I don’t think it’s going to make a big difference to our credit rating.
<hr>
This article first appeared on <a href="https://www.crikey.com.au/">Crikey</a>.
 
 
 
</body></html>

Economists debate: Should Joe Hockey increase the debt limit?

<html><body>
Look, I'm a sceptic when it comes to the ability to forecast property price movements. Firstly, because median prices by city are sometimes of questionable value and can smooth diverse trends from across different market sectors, suburbs and property types. And secondly, because of the huge range of unknown factors which must impact the market.
It doesn't stop people trying. Over in Blighty, Savills can tell you <a target="_blank" href="https://pdf.savills.com/documents/Savills%205%20year%20prime%20market%20forecasts.pdf">what price growth to expect</a> in your region in 2018! Now how's that for a powerful crystal ball? This chart below tells you most of what you need to know about human ability to forecast the future:
<img width="470" src="https://4.bp.blogspot.com/-Jq4nsW2zhtA/UoUexxFxEhI/AAAAAAAAKx4/Gf3MnNuG5-M/s320/RBA+GDP+forecast.jpg" height="429">
That is to say, even the Reserve Bank's "army of economists" have only around 90% confidence that we won't slide into negative growth in the next couple of years. Meanwhile, the 90% confidence interval also comprises a scenario whereby GDP growth almost roars off the top of the chart.
The future is far more unpredictable than most seem to think. The impacts of wild volatility in currency markets, financial crises, the impact of foreign buyers, superannuation funds and plummeting interest rates may all appear obvious in the rear view mirror, but what lies ahead is inherently difficult to judge...perhaps impossible. Indeed, in recent times we have seen forecasters failing to forecast the direction of certain city dwelling prices, let alone the quantum.
Of course, it is possible to build models based upon past events, but to pretend that they are highly scientific or can predict and factor in the impacts of, for example, fiscal cliffs, debt ceiling crises, sequesters, outbreaks of war and so on, is misleading.
One thing we can say with some level of confidence is that due to total household debt in Australia being far higher than it has been in cycles past at around 150% of GDP (and levels of inflation significantly lower), over the course of a full market cycle the impact of lower interest rates and their ability to stimulate housing markets must surely be lower that of days gone by.
<img width="470" src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6tl-hhfin-small.gif?accessed=2013-07-10-16-54-59" height="422">
There are two ways to deal with this uncertainty in making property price forecasts (or guesses?). One is to produce a range of "if...then..." scenarios, thereby covering off a huge range of possible outcomes ("prices could move by between -5% and +20%..."). The other is to bite the bullet and build a range of assumptions and accept that you will probably be wrong on some or all of them, and thus your predictions will be wrong too. Let's go with option two.
Assumptions for 2014
So, with the proviso that I'll almost certainly be wrong, let's start with some assumptions. Unemployment still seems to be in a moderate uptrend, so I'll go with the unemployment rate ticking up to 6% through 2014. GDP growth to trundle along sub-trend at somewhere close to 2.5%.
As for interest rates, economists are split. NAB think that the next move will be down to 2.25% in mid-2014. Others are more optimistic on the outlook and are looking for a hike to 2.75% in late 2014. The best we can say is that interest rates are unlikely to apply a substantial handbrake to dwelling prices in 2014 given that the official cash rate is likely to sit somewhere between 2% and 3% which is historically a very low rate.
<img width="470" src="https://4.bp.blogspot.com/-Emd60c7xhlY/UoUh2jhMfeI/AAAAAAAAKyE/RxtV7B-oNQE/s400/yield.jpg" height="311">
Source: RBA
This has led some very bullish property price forecasts in 2014. Dwelling prices look set to increase in 2013 by around 10%, but while it is possible that level of growth could continue with a low cash rate, there are a number of factors which could jam a stick in the spokes, so overall I'm going to tend towards a relatively subdued view.
Reality check
So, another investment propery book hits the shelves forecasting that "well located properties should continue to grow at 9% per annum". 9%! No mucking around with all that 7-8% per annum nonsense there! And I thought I was bullish in years gone by when I suggested that a rational proxy for future dwelling price growth might be the future growth of household incomes. The speed limit on dwelling prices must ultimately be our ability to service debt.
In my opinion, some Australians need a reality check when it comes to our housing markets. Below is what is presently happening to wages in Australia, which is to say, growing at 2.7% per annum...and slowing.
While you could build an argument to say that wages growth could be approaching the bottom of a cyclical bounce, there is absolutely no suggestion that incomes are growing at anything like the rate required to support long term property price growth at the levels seen in times past.
<img alt="wages-nov-18-one" height="394" width="470" src="/images/stories/2013/11/18/wages-nov-18-one.jpg">
The other factor I'd highlight for 2014 is the peak in mining capital investment. There are some suggestions that the fall in mining capex could be offset to some extent by growth in residential construction (as I read the charts, the relative numbers involved don't really appear to stack up for this) and for other sectors of the economy being stimulated (a better likelihood of this happening).
We might also be 'saved' in 2014 to some extent by cost overruns on some of the mega projects,<a target="_blank" href="https://gorgongasproject.blogspot.com.au/">such as Gorgon where some major cost blowouts are well underway</a> (the bean-counters being drafted in is never a good sign). However, note that the latest 'estimate three' for mining capex 2013-14 is some 13.6% lower than its 2012-2013 Estimate three predecessor. In other words, mining capex must fall eventually and this will represent a drag on economic growth, and probably employment too.
<img width="470" src="https://www.abs.gov.au/ausstats/abs@.nsf/be4aa82cd8cf7f07ca2570d60018da27/1ecf42b5ec12e8bcca2573460014f2df/Body/1.3CF4!OpenElement&amp;FieldElemFormat=gif" height="183" alt="Chart: Financial year actual and expected expenditure- Mining Capital Expenditure">
Property price predictions
OK, so now onto the real guesswork. Let's run through the cities in ascending order of size.
I'm going to omit Darwin, however. I've lived in Darwin previously. I didn't understand the seasonal property markets then and nor do I pretend to now. Volatile, supremely expensive and unpredictable.
Hobart is a small city with a population of a little over 200,000. I would normally find it difficult to post or make a positive case for Tasmania given that the population growth is much flatter than the Bass Strait and that until last month the unemployment rate had been well above 8%. However, the unemployment rate has fallen to 7.9% and SQM's vendor sentiment implies that asking prices may have stopped falling.
Perhaps more important than this, the state government appears hellbent upon forcing the property markets northwards with its proposed introduction of an incredible <a target="_blank" href="https://www.themercury.com.au/lifestyle/new-home-grants/story-fnj64ocs-1226754568608">$30,000 first home builders</a> grant. Since I don't try to argue with market distortions (and indeed, such grants for new building may themselves distort median data) of this nature, I'll go with -1% to 2% growth for Hobart.
The <a target="_blank" href="https://www.canberratimes.com.au/act-news/cut-jobs-now-and-be-done-abbott-told-20130914-2trwk">Australian Institute forecast</a> that more than 5,000 planned job cuts in Canberra will send the city and the ACT into recession. Canberra is only a small city of around 360,000 population, and jobs cuts will hurt property markets. Amazing how times change. Only in March of this year, in spite of sky high prices in Canberra, <a target="_blank" href="https://blog.residex.com.au/2013/03/07/market-update-and-investment-seminar/#more-3061">Residex mused</a>: "I leave you with a question to ponder – given the position Canberra is in, should we all be immediately moving to buy an investment property there?"
The Residex Canberra theory was based on high pre-tax incomes in the city and the answer from an investor's perspective is "definitely not". I don't recommend investing in small cities with limited employment diversity in any case. It's impossible to gauge the likely outcomes precisely, but SQM's vendor sentiment index suggests that the likely trend is not good. Prices to fall -1% to -4% is my guess.
On average, at least, Adelaide has been a poor-performing property market for the past half decade. With a population of around 1.2 million and relatively sedate population growth in South Australia, it's not a city I have ever been bullish on for property.
However, unemployment in the state has fallen back to 6.6% and a glance at SQM's vendor sentiment index suggests that the bottom may now be in. For the aforementioned reasons, I'm still not going to go overboard on predicting capital growth, but inflation-adjusted prices in Adelaide (and Brisbane) are well below previous peaks and a generational low cash rate will surely have an impact at some point. 0% to 3% growth.
Perth, a city of around 1.6 million, does have low unemployment and very strong population growth, and has had a great run through 2013, recording median dwelling price capital growth of around 9% over the past 12 months.
However, there are some indications from RP Data's index that this growth has ground to a halt along with levels of mining investment, which may be no bad thing for the city's longer term prospects. On the plus side, SQM's vendor sentiment index still has a moderately positive incline for Perth. 0% to 3% growth.
I haven't been up to Brisbane for a little while, but the news I have heard from those 'on the ground' in the city has been positive, and the market does appear to be moving. Finger in the air guess of 2% to 5% growth.
I should probably be disqualified from guesses on Melbourne prices having previously pondered incorrectly as to whether the market had peaked. I wasn't the only one. All I can say in my defence is that, unlike some, at least I don't charge hard-earned dollars for my guesswork - it all comes for free (and a lot of free information is worth what you pay for it, after all).
One of the problems for Melbourne has been that although vacancy rates in certain types of inner city stock have been high, activity in much of the established stock has remained rampant, fuelled by the low interest rate environment.
I discussed with a colleague on the ground who suggested that low interest rates might see growth continue in the 5% to 8% bracket. I keep coming back to slow (and slowing) wages growth and falling mining capex and so I will have a stab at 2% to 5% growth.
The problem child - Sydney
And finally, the problem child...Sydney. After years of weak supply in the harbour city, SQM Research put the cat among the pigeons when it forecast in its base case scenario that Sydney would <a target="_blank" href="https://www.theaustralian.com.au/business/property/sydney-on-track-for-property-boom-prices-set-to-rise-20pc-says-sqm/story-fn9656lz-1226721006886">record housing price growth of 15-20% in 2014</a>, and 20-30% should Australia experience a strong economic recovery and interest rate rises by mid 2014.
Being a Sydneysider, I'm a vested interest in the Sydney market, but there has never been reason to doubt SQM's integrity (they correctly forecast market price falls in 2011, for example) and their forecast is based on some sound price-to-income logic. Sydney's housing markets were relatively more expensive in 2003 and early 2004 than they are today and thus there is certainly a chance that prices could continue unabated at the growth levels seen in 2013 until the market hits its next irrational peak.
There is a plenty of new apartment stock due to come online in certain sectors of the Sydney market (inner south, Central Park) but this is unlikely to be enough to halt the present cycle in its tracks in my opinion. However, 12 months is a long time and a lot might happen to slow the present exuberance. I'll have a stab at a more subdued 6% to 9% growth.
In fact, all of my numbers are lower than you'll see forecast elsewhere, and this is based mainly upon a gut feel that Australians will be somewhat disinclined to embrace taking on significantly more household debt from today's already elevated levels, despite low interest rates.
There will be a mass of conflicting factors such as the role of foreign capital, superannuation funds entering the residential markets and first homebuyers struggling to get aboard. But overall, a slower growth cycle is my best guess.
My best 2013 guesses therefore...
Hobart -1% to 2%
Canberra -1% to -4%
Perth 0% to 3%
Adelaide 0% to 3%
Brisbane 2% to 5%
Melbourne 2% to 5%
Sydney 6% to 9%
To be revisited in 12 months time to work out where I went wrong...
 
<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.
</body></html>

pwargent-M4siyDbqQY

Crystal ball gazing: Property market predictions for 2014

<html><body>
Data released by the Australian Bureau of Statistics earlier this week showed that the average size of Australian homes has started to trend lower over recent years. However, there are some surprising results at an individual state level.
Sydney is the most expensive capital city in the country and the New South Wales results act as a good proxy for that city. Despite the fact that Sydney is the most expensive city, the average size of a new house in New South Wales over last financial year was 266.20 square metres; the largest average floor area of any state.
<img class="aligncenter size-large wp-image-2699" alt="avg floor area of new houses" src="https://blog.rpdata.com/wp-content/uploads/2013/11/avg-floor-area-of-new-houses-507x580.jpg" width="350" height="401" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Despite the fact that New South Wales residential property is typically more expensive than other states, they continue to build the largest new homes. Across the other states, the average floor area of new homes were recorded at: 243.0 square metres in Victoria, 239.6 square metres in Queensland, 203.90 square metres in South Australia, 234.5 square metres in Western Australia and 200.30 square metres in Tasmania. 
The average floor area in New South Wales is much greater than all other states while the floor area in Victoria, Queensland and Western Australia are quite similar.  Typical new home sizes in South Australia and Tasmania are significantly lower than those across the other states.
<img class="aligncenter size-full wp-image-2700" alt="land table" src="https://blog.rpdata.com/wp-content/uploads/2013/11/land-table.jpg" width="470" height="354" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
You can’t build a house unless you have a vacant block of land to construct the home on.  The median land prices across the states as at June 2013 were recorded at: $204,000 in New South Wales, $189,000 in Victoria, $190,000 in Queensland, $150,000 in South Australia, $229,100 in Western Australia and $100,000 across Tasmania. 
This data highlights that the cost of vacant land in South Australia and Tasmania is significantly lower than that across the other states.  Not only are South Australian and Tasmanian new houses much smaller than those across the other states, the cost of purchasing the vacant land is also significantly lower.
Another component to consider is the typical size of the vacant land and how that impacts both the size and type of home that can be built but also the cost of purchasing the land.  Across the states, the median land sizes are recorded at: 700 square metres in New South Wales, 570 square metres in Victoria, 696 square metres in Queensland, 496 square metres in South Australia, 480 square metres in Western Australia and 933 square metres in Tasmania.
Outside of Tasmania, lot sizes in New South Wales are the greatest of all states.  Tasmania which has comparatively cheap land has a much larger typical lot size whereas; South Australia has a comparatively small lot size.
<img class="aligncenter size-full wp-image-2701" alt="income table" src="https://blog.rpdata.com/wp-content/uploads/2013/11/income-table.jpg" width="470" height="333" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Of course there are other factors outside of just the cost and size of land which determines the size of homes.  Specifically it is important to consider incomes, according to data released in the 2011 Census, median household incomes in South Australia and Tasmania are much lower than those across the other states.  This obviously has an impact on the price at which residents can purchase homes.
<img class="aligncenter size-full wp-image-2702" alt="people per dwelling" src="https://blog.rpdata.com/wp-content/uploads/2013/11/people-per-dwelling.jpg" width="470" height="279" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
If we also look at the average number of people per household along with the average number of bedrooms per dwelling we see that there is an excess supply of bed rooms.  In all states we have a greater number of bedrooms than we do persons per household, keeping in mind that most couples will share a bed.  Given this, we don’t actually need as much space as we have in most homes. 
Certainly some younger families will buy larger homes than they need to cater for their growing needs but the broader trends show we have an excess supply of units.  Builders, developers and price sensitive purchases probably need to consider foregoing an extra bedroom in order to reduce the cost of houses.
Overall, it seems somewhat counter-intuitive that the states where housing is most expensive they continue to build much larger new houses while the more affordable states build smaller homes.  Smaller homes and potentially smaller lot sizes would help to improve the affordability of homes in the more expensive states. 
From a potential buyers perspective they probably need to reassess just how much space they need when they are considering their purchase.  Of course, a reduction in the cost of land which could be aided by quicker development approvals, greater supply of land and reduced development fees and charges would also help reduce the cost of housing.
 
<hr>
 Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
 
 
</body></html>

ckusher-ujnxiKuFQs

Land costs are high, but that's not stopping the construction of McMansions

<html><body>
According to data released by the ABS earlier this week, the amount of loans financed to first home buyers in September recorded a new low at only 12.48%.
This week’s exclusive piece is putting the spotlight on this data and whether or not it’s a true reflection of what’s going on in the market.
Many property forums are arguing that first home buyers are no longer ticking the first home buyers box, and therefore skewing the statistics.
Todd Hunter of wHeregroup says he would like to know who came up with this data and where it came from on his latest <a target="_blank" href="https://www.wheregroup.com.au/blog/are-they-are-they-really/">blogpost.</a>
Professionals active in the property sphere were asked the following question.
Do you agree with the first home buyer statistics? Why or why not?
 
 
Paul Biller – Principal of <a href="https://www.1stcity.com.au/" target="_blank">1st City Hasemer &amp; Caldwell-Eyles<img src="/images/stories/2013/11/15/biller-profile.jpg" alt="biller-profile" style="float: right;" height="200" width="150"></a>
FHB LEVELS PLUNGED SINCE THE GOVERNMENT REPLACED FHB GRANTS WITH INCENTIVES
Yes, I agree with these statistics. There is no benefit to a first home buyer no longer ticking the first home buyer box.
Australia’s housing market is experiencing its strongest run in years. Investors and changeover buyers are being drawn back to the market following interest rate cuts and the positive outlook for housing. Yet despite historically low interest rates, rising prices are raising fresh concerns about housing affordability for first home buyers. Just one-in-eight borrowers were first home buyers in September - the lowest proportion in more than two decades.
First home buyer levels have plunged recently in some states by more than 10% since the government replaced first home owner grants with incentives to buy only brand new properties, however the bulk of first home buyers are still buying established dwellings because they are more affordable.
When the government announces it is putting an end to an incentive and telegraphs it, a lot of home buyers bring their plans forward. The result of the rush to get in before October 2012 means that many buyers who would have been in the market now, purchased last year instead. As a result of the new policies, the Australian Bureau of Statistics shows that first home buyers are becoming scarcer. There is too much competition with investors who are looking at the same properties and taking the opportunity to borrow with the lowest interest rates in 50 years and with a shortage of rental accommodation pushing up yields.
Other factors include stamp duty and the size of deposit required and ability to save for it. While monthly mortgages were becoming more affordable, first home buyers were struggling to put down a deposit as property prices continue to rise.
 
Jessica Darnbrough - Spokesperson for <a href="https://www.mortgagechoice.com.au/?" target="_blank">Mortgage Choice</a><img src="/images/stories/2013/11/15/jessica.darnborough-profile-2.jpg" alt="jessica.darnborough-profile-2" style="float: right;" height="200" width="150">
ABS STATISTICS COULD BE SIGNIFICANTLY LOWER THAN WHAT IS HAPPENING IN REALITY
 
The data from the Australian Bureau of Statistics is as true as it can be. The Australian Bureau of Statistics report on the data that is available to them.
That said, today, some of the states have removed the first home owners grant for established dwellings. As a result, many first home buyers who are purchasing existing properties do not have to declare that they are buying for the first time.
According to a recent survey by Mortgage Choice, 70.9% of recent first home owners said they had purchased an established dwelling. With this in mind, it is reasonable to assume that the first home owner numbers as reported by the Australian Bureau of Statistics could be significantly lower then what is happening in reality.
Next page: Kevin Lee and Ben Kingsley
 
 
<hr class="system-pagebreak">
Kevin Lee - Buyers agent at <a href="https://www.smartpropertyadviser.com.au/?" target="_blank">Smart Property Adviser</a>
<img src="/images/stories/2013/11/15/kevin-lee-profiel.jpg" alt="kevin-lee-profiel" style="float: right;" height="200" width="150">
FORGET THE 12.48% - WHO, WHAT, WHERE AND WERE THE OTHER 87.52%?
It never ceases to amaze me that first home buyers regularly receive a disproportionate amount of media and government attention when compared to the actual percentage of the total property market that they account for.
Could I be so bold as to suggest that this group is a 'political football' and therefore the recipient of so much government 'spin'. But they will never, ever save the country - how can they?
Forget the 12.48% who bought their first property - who, what, where… were the other 87.52%?
That's the number one question our politicians, policy makers, bureaucrats and property professionals should be focused on. With the right assistance/incentives this second group could (and should) have a much larger impact on the Australian economy.
However all the press is devoted to the precious few home buyers who are having their first go at becoming a rate payer. Weird isn't it!
By definition, most of this 12.48% won't do much for the next six or seven years. Sure they'll struggle to make their monthly repayments, buy some furniture, have a kid or two, maybe buy a new car, and send their kids to schools in the area.
Don't try to tell me that the other 87% of purchasers don't contribute in the same way?
It matters nought whether the purchaser is an owner occupier or investor - the end result is always the same.
Whether you purchase a property to live in yourself - or for someone else to live in - there's still a household to be formed, things to buy, kids to go to school, and people who will live a life there.
Let's face it, governments devoid of any real ideas, balls or brains created incentives for a minority group to stop renting and purchase their own home. First home owner grants of $7,000, then $10,000 then $14,000 ... but wait there's more. Buy now and we'll also throw in free stamp duty - in NSW that's a potential saving of another $23,000.
So the government spends millions of dollars to entice maybe 100,000 extra people to join this minority group. Why? Because this is what financially un-educated people do.
Smart people - those people with a financial education - set goals and take the necessary action to reach those goals. They get other people to pay off their debt for them.
Little do these bureaucrats know that many savvy first time buyers were in fact buying their first investment property, all they had to do was comply with the rules and live in the property for a very short period.
If these bureaucrats had any clue, they would incentivise all people who are trading up or down by removing (or at least reducing) the two most insidious taxes ever created: stamp duty and land tax. The average Sydney couple buying a modest home or investment property for $700,000 pays just over $27,000 NSW stamp duty for the privilege.
That's equivalent to furnishing that property, a pretty special holiday or a whole mouth full of dental work. Our economy would be so much stronger if that $27,000 was spent on goods and services for the individual, instead of employing another pencil pusher.
They were supposed to eliminate those state based taxes with the introduction of the GST, but our governments are like heroin addicts - their addiction to the tax is on the same level; they will do anything to get it and just can't give it up.
 
Ben Kingsley – Chair of <a href="https://www.pipa.asn.au/%E2%80%8E" target="_blank">Property Investment Professionals of Australia</a> (PIPA)<img src="/images/stories/2013/11/15/ben-kingsley-profiel.jpg" alt="ben-kingsley-profiel" style="float: right;" height="200" width="150">
THIS DATA IS NOW OVER SIX WEEKS OLD AND THE MARKET FOR FHB IS ON THE IMPROVE
I see no beneficial reason or hidden agenda by the ABS to alter the statistical reporting of this data.  The ABS do a great job in capturing and reporting this data on a monthly basis and have done so for many years now.  This housing finance series attempts to enumerate all providers in its scope of collecting this data and in the early 2000s the collection of this data was handed over the Australian Prudential Regulatory Authority (APRA), so the coherency and consistency of the data has remained robust over this period. The claims that first home buyer borrowers are choosing not to report their status as first home buyers on their loan applications to lenders doesn't make sense to me.  First home buyers have access to grants and/or incentive scheme across each state and territory at the moment, and lenders are heavily involved in the implementation of these grant and incentive as part of the lending application process, so first home buyers are almost certainly known to lenders and reported as such in this data in my view. Within our business in Melbourne, our observations of the soft activity by first timers in the market and also the number of first home buyers we are arranging finance and providing buyers agency services for supports this September reading.  However we need to recognise this data is now over six week old and the market for first home buyers in definitely on the improve and I'd expect this number will be the bottom of this cycle for first home buyers and the remainder of the year we will see an improve and 2014 I see even further growth in first home over grant numbers active in the market.
Nest page: Todd Hunter and Andrew Wilson 
 
<hr class="system-pagebreak">
Todd Hunter - Director at <a href="https://www.wheregroup.com.au/%E2%80%8E" target="_blank">wHeregroup</a><img src="/images/stories/2013/11/01/todd-hunter-profile-2.png" alt="todd-hunter-profile-2" style="float: right;" height="171" width="144">
THERE IS NO WAY TO ACTUALLY GAUGE WHO IS A FIRST HOME BUYER AND WHO IS NOT

It’s being bantered all over the press everywhere, the property market has out priced first home buyers and they have magically disappeared from the market place. They are gone and don’t look to return anytime soon. Are they?
 
I personally would like to know who came up with this data and where it came from. In New South Wales since the first home owners grant and the stamp duty concession was abolished, with the exception for new properties, there is no way to actually gauge who is a first home buyer and who is not. There are no forms to fill in, no boxes to tick on the loan application form, no sections to fill in on the land transfer. So I ask, how do they know this?
 
It sounds like some fancy media or marketing hype that someone has conjured up and now the media herds are running with it like no tomorrow. For those who have ever dealt with the wHeregroup, you would have had contact with one or both Rebecca’s. Well Rebecca - my personal assistant - has recently purchased her first unit. Now this unit was in the Sutherland Shire but was not new. Rebecca wanted to live in the Shire so rather than buy a new house and land package in the western suburbs, where there is available land, she opted to pay the stamp duty and live where she wanted to live. As the $7,000 grant is no longer available, her transaction went through undetectable as a first home purchase. In the past I have exposed inaccuracies in the stats and supposed property indexes. I wrote a <a href="https://www.wheregroup.com.au/blog/the-median-measurement-is-misaligned/" target="_blank">blog</a> on the median house price and how the figures can be easily skewiff.
 
Well it appears that this fictional statistic has also been skewiff, and it’s such an easy fix. All we need is a box ticked on the land transfer so the type of purchaser can be calculated correctly.
 
I do agree, however, that it is becoming increasingly more difficult to first home owners to get into the market; especially in the Australia’s capital cities, but come on lets not over exaggerate things, lets find solutions. It may mean that first home buyers may need to take a different tact in investing in property, whereas they may have to buy a cheaper investment property or two in large regional areas where house prices are still around the $300,000 – $350,000 mark and increase their wealth in those properties. So that when they sell they have a much larger deposit for their home. As the game changes so must your game plan. But one thing’s for sure, what we certainly don’t need is a whole bunch of negative inaccurate hype deterring our future generation from buying property.
These comments originally appeared on Todd Hunter's blog.
 
Dr Andrew Wilson - Senior Economist for Australian Property Monitors
Latest ABS data seems to indicate increased underlying barriers to home ownership <img src="/images/stories/2013/10/04/AndrewWilson-profile.jpg" alt="AndrewWilson-profile" style="float: right;" height="150" width="125">
trengthening housing markets and rising prices can be bad news for first home buyers waiting in the home ownership queue.
With prices rising faster than savings this can lengthen the queuing duration for first home buyers or alternatively necessitates revised property type and location choices.
Increased investor activity can also be a barrier for first home buyers as these groups tend to compete with each other for similar properties.
Latest ABS home loan data seems to indicate increased underlying barriers to home ownership and have fuelled the flames of first home buyer doomsaying. But a closer look at the data reveals a more positive environment, particularly on a local market-by-market basis.
The ABS reported that the proportion of first home buyers approved over September in New South Wales is the lowest on record at just 4.1 percent market share of home purchase loans. No real surprise here as significant first home buyer activity has been brought forward over the past two years as a consequence of state government changes to first home buyer incentives.
Similarly in Queensland low first home buyer activity is a consequence of demand brought forward over the past year due to changes to local incentive schemes. And Victorian first home buyer activity is also predictably waning following a recent surge in activity as the local state government followed the lead of other states and changed its incentive programs.
First home buyer activity in other state markets however remains consistently alive and well. In Western Australia the proportion of first home buyers in the market is a nation-leading 20.6 percent and clearly above the long-term average for that state. Similarly in South Australia the proportion of first home buyers at 14.7 percent remains above the long-term average for that state.
Tasmania first home buyer activity over September remains just below the long term average market share.
Expect first home buyer activity to gradually recover in New South Wales, Victoria and Queensland as underlying demand increases driven by Australia’s ever-resilient aspiration for home ownership.
 
Property Observer is looking into how ABS compiles this data and will publish a follow-up piece.
 
<a target="_blank" href="mailto:ntrotman@propertyobserver.com.au">ntrotman@propertyobserver.com.au</a>
</body></html>

ntrotman-Et3xWpamVh

Stand up and be counted: Are the FHB stats a true reflection?

<html><body>
Buyer’s agent Miriam Sandkuhler, founder of <a target="_blank" href="https://www.propertymavens.com.au/" rel="nofollow" style="font-size: 14px;">Property Mavens</a>, says many early-stage investors don’t understand their risk profile when they start building their folio. Sandkuhler was a finalist for the 2013 REIV Buyer’s Agent of the Year.
She says more risk adverse clients should avoid off-the-plan properties, as well as student or holiday accommodation.
{qtube vid:=m3cXd9A1li0}
“People don’t understand their tolerance to risk in terms of the type of return they’re going to get,” Sandkuhler told Property Observer for the 'How the experts buy' series.
“A high risk profile person would be someone who’s prepared to develop a property or renovate. Someone who’s more conservative and low risk is someone who’s otherwise more likely to leave their money in the bank or pay for a property in cash because they don’t like debt.”
She says buying off the plans comes fraught with risk.
“They’re to do with whether the developer gets financing, whether they’re a good builder, time frames of the development,” she says.
“It depends on the zoning of the property, if you have student accommodation or short stay accommodation that can have a level of risk.
“It means that the market from a resale point of view is a lot smaller and from a lending or a finance point of view you may not be able to borrow as much money so you’ll have to have a much bigger deposit to get into it.”
She says many investors are enticed by the idea of having as big a property portfolio as possible.
“Having multiple properties you have to manage multiple properties and there are maintenance issues that come with that.”
“If all you need are six really really good properties of a certain value then that’s all you need.”
 
Transcript
My name is Miriam Sandkuhler. I’m the founder of <a target="_blank" href="https://www.propertymavens.com.au/?">Property Mavens</a> which is a specialist property advisory firm. I’m an accredited property advisor and a licensed estate agent. And I basically work with investors to ensure they buy the right type of property for the right reasons.
People don’t necessarily know their tolerance to risk in relation to the type of return they’re going to get. Some people are much more conservative with investing than others. Some have got quite a low to moderate risk profile whereas other are higher risk profile. An example of a high risk profile individual is someone is prepared to develop a property or renovate.
Someone who’s more conservative or low risk is someone who might otherwise like to leave their money in the bank or they might like to pay for a property in cash because they don’t like debt or they might want to something very simple.
For example, if you don’t know your risk profile then it’s very easy to buy the wrong property for you profile for all the right reasons. If you don’t the type of risk attached to the type of property that you buy it’s also very easy to make a mistake.
If you buy off the plan there are a lot risks associated with that and they’re to do with very the developer gets the lending, whether or not it’s a good builder, time frames of the development. There a number of different areas. The market can go up and down. And we’ve seen a lot of that where people are settling on properties where it’s worth less than the contract price.
There are so many variables and so many risks associated with buying off the plan that most people aren’t informed off because obviously that’s not necessarily brought to light when people are purchasing in that manner.
Someone with a low risk profile probably doesn’t want to buy a development site. They may not want to buy an off-the-plan. When you understand your risk profile and you understand the risk of the property then you can make a better informed decision.
Alistair: What other properties do you think are higher risk profile?
So for example it depends on the zoning of the property. IF you have student accommodation, or short term or resort style accommodation that can have a level of risk because what it inherently means is from the market point of view the resale value is a lot smaller. It also means from a lending or finance point of view you may not be able to borrow as much money so you’ll have to have a much bigger deposit to get into it. The returns on that type of investment can be affected by the type of property it is.
Buying property is not simple. I know most people want an easy solution. It’s a little bit like going to the doctor for a headache and wanting a pill when in fact what they probably need is surgery.
So when you invest in property it’s easy to sign a contract but the process of understanding about what makes a good investment grade property and how to match that to your risk profile and having a plan in place all of those things are quite complex and they do take time and they take investigation.
I’ll often deal with clients who want to buy property but they have no clear reason as to what they want it to do. So they know it’s kind of the in thing and that’s what you do but they don’t know what the end result is. If you don’t have a plan it’s a little bit like trying to build a house without a set of plans. There’s no foundation from which to build the rest of the structure around. Having a documented plan is knowing how old am I now, when do I think I want to retire, how many years away is that. What sort of lifestyle do I want? If I want a $100,000 income it’s needing to calculate I have x number of years to accrue that. So what’s the process to get that and how many properties do I need to buy and how often do I need to buy them to meet my specific requirement. Part of that process is, I know everyone if out there spruiking buy 10 properties in 10 years. It’s not about how many properties you have. Obviously with having, multiple properties you have to manage multiple properties and there are maintenance issues that come with having multiple properties. So it’s about having a tailored plan specific to your individual needs. If all you need are six really really good properties of a certain value then that’s all you need. Unless you just endlessly want to keep going for the sake of it. Not everyone needs to have 10 or 20 or 200 properties, it’s not necessarily about that.
It’s understanding what is that asset going to do for you, what do you need it to do for you. And making sure that you’ve got a foundation or a documented strategy you can then implement and you can then measure back to that strategy. Every year you can see are you on target for that strategy, how far do we have to go so what do we need to do, when do we need to do it and monitoring that as you go.
It’s imperative to never ever sign your name to anything. Even if you have a three day cooling off, from a cautionary point of view you still want to get that looked at before you put pen to paper because there’s complexity around that. It’s law, you’re signing a legally binding contract and if you have haven’t had a lawyer or conveyance point out to you areas of risk or consideration then you’re leaving yourself vulnerable.
Again buying property is complex, you’re dealing with real estate law and legislation. If as a lay person you don’t have a really good understanding of real estate law then it’s possible to easily make mistakes that cost you money. You’re talking about needing to understand from an accounting and tax point of view before you start, how you need to structure a property; even before a name gets put on paper you need proper tax and accounting advice. Same with can you afford the property, you want to be seeing a mortgage broker who can look at your situation and work out what options are available to you and how many options there are in the market place that can help you.
The other thing is understanding that you need to be doing building and pest inspections s that before you buy the property at auction you understand the structural condition of it. There might be issues where’s the repairs or work that needs to be done so if you’ve got $20,000 worth of work on a property you need to factor that in when you’re buying or bidding on a property, you need to keep that in the back of your mind. Or at least allow for it.
If you buy a property and it’s not auction but private treaty, same thing, you want to be putting a condition in there that’s a building and pest inspection but it’s written in the favour of the buyer, not in the favour of the seller.
<a target="_blank" href="mailto:awalsh@propertyobserver.com.au">awalsh@propertyobserver.com.au</a>
</body></html>

Latest Expert Insights

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

Guides

Editor's Picks

Guides

Developments

New apartments

New townhouses

News

Latest Expert Insights

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

Guides

Editor's Picks

Receive the latest news stories to your inbox

Guides

Developments

New apartments

New townhouses

News