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

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

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

How Sterling Global designed 623 Collins from Melbourne's history

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

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

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

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

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

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

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

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

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

Every First Home Owner Grant for new property by state

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

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

Staff Writer

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

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

alisonwarters@gmail.com

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

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

Ellen Walker

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

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

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

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Lend Lease has reported a steep drop in demand for apartments in its Victoria Harbour precinct in Melbourne’s <a target="_blank" href="/news">Docklands</a>, with interim results boosted by its largest project, the $6 billion Barangaroo South project.
The property developer and infrastructure developer announced interim after tax profits up 38.3% to $302.3 million to December 31.
Lend Lease explained that the increase in profit was “largely due to the recognition of the profit on the first two commercial towers at its major project, Barangaroo South in Sydney".
However, it noted that its development business had been partially offset by “reduced residential activity in the period”.
The outlook for its residential business is mixed, with Lend Lease noting that consumer sentiment towards the housing market "improved slightly in the period, with mortgage affordability increasing due to lower interest rates, steadier house prices and rising income" but at the same time "low consumer confidence and uncertainty in the labour market has lessened the impact on sales".
Off-the-plan apartments sales fell 29% from 710 sales in the December 2011 half year to 502 for the six months to December 2012.
Lend Lease recorded 10 apartment settlements totalling $10.4 million over the six-month period – representing an average price of $1.04 million, compared with 17 sales totalling $33 million (average price of $1.94 million)  in the previous corresponding period.
Lend Lease says the fall of 47% "reflect[s] the change in the product mix from premium apartments to smaller, more affordable apartments in response to changes in market demand".
The previous period included settlement of a higher number of high value apartments.
Residential lot sales fell 10% from 1,625 to 1,460, with the average price per residential lot decreasing by 17% from $243,850 to $201,500, "reflecting a change in the product mix".
Lend Lease has 37 residential projects at various stages of development with a pipeline of 69,000 units.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2013/02/lendleasefeb18.gif"><img src="/images/stories/2013/02/lendleasefeb18thumb.gif"></a>
Lend Lease also reported off-the-plan sales of 121 out of 203 apartments released in its Studio Nine development in Richmond (pictured below), which will feature 505 apartments and townhouses when completed on the heritage site that was once the Heinz canning factory, and then a broadcast studio.
<img src="/images/stories/2013/02/studio91.jpg" width="470" height="358" alt="studio91">
Lend Lease had offered very high <a href="https://www.propertyobserver.com.au/developments/studio-9-richmond-offering-buyers-a-10-annual-return-on-deposits-while-awaiting-construction/2012080955948" target="_parent">10% interest rate on deposits paid for apartments in Studio Nine</a>, with apartments priced from  about $455,000 to $1.85 million
Construction commenced on Wertheim Square apartments in Stage 1 of Studio Nine in November.
 
<hr class="system-pagebreak">
 
Victoria Harbour is Lend Lease’s second biggest project by value, with an end value of $4.5 billion.
Victoria Harbour is a 30-hectare precinct connected to the CBD via Collins Street and is primarily a commercial precinct with office buildings completed for ANZ, NAB, Ericsson and Myer.
Completed residential projects in Victoria Harbour include Convesso, the first part of the twin project Convesso Concavo and Serrata, a joint-venture project with Japanese developer Sekisui House.
Construction of Concavo is due to start this year, with a sky bridge connecting it with Convesso at level seven.
In its full year results last year, Lend Lease reported that 15 units remained available for purchase in Convesso, which features 220 one-, two- and three-bedroom units.
Other major Lend Lease projects that feature residential include the $1 billion Waterbank urban regeneration project in Perth and the $2.5 billion RNA Showgrounds project in Brisbane, where off the plan marketing has begun for its first residential apartment development, The Green.
Across all its businesses, revenue rose 8% to $6.25 billion with two the majority of this attributed to its Australian business, where revenue rose 5.2% from $3.8 billion to $4 billion.
Over the six-month period to December Lend Lease launched Lend Lease International Towers Sydney Trust with funding for the first two commercial towers, as well reached agreement with James Packer’s Crown Limited group to build an international hotel and casino on the site.
Lend Lease also secured pre-commitments from Westpac and KPMG to take up 71% of the commercial floor space for the first two towers.
The value of Lend Lease’s investment property portfolio have increased by $219.2 million to $3.63 billion primarily due to the acquisition of two retirement villages, Little Bay, in Sydney’s eastern suburbs and Martha’s Point on the Mornington Peninsula and capital expenditure and revaluations on senior living and other development properties. These increases were offset by the sale of the Glen Woodley retirement village in Adelaide.
In December Lend Lease was selected as preferred bidder by the NSW Government to deliver the $1 billion Sydney International Convention, Exhibition and Entertainment Precinct project, as part of the Destination Sydney consortium consisting of Lend Lease, HOSTPLUS, Capella Capital, AEG Ogden and Spotless.
Lend Lease will pay investors an unfranked dividend of 22 ¢ per share on March 27.
 
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lschlesinger-FZcF9M3vE6

Lend Lease profits up 38% but steep drop in Docklands apartment sales 

<html><body>
For those interested in the Australian residential property market, below are a collection of figures illustrating long-term trends. Housing prices and land values are compared to a basket of fundamental metrics. Australians are fortunate because much data on real estate and financial markets are publicly available, going into depth not seen in other countries.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb151.gif" alt="soosfeb151">
Comparing housing prices to inflation is one of the more common indicators in property market analysis. If the trend is fairly even over time, then there is no indication that people are favouring housing relative to other goods and services. On the other hand, if there is a wide divergence between housing prices and inflation, this tells us that people are considering housing to be relatively more important. Interestingly, every rise in real prices has led to a downturn, with the one exception of 1961-1964. <img height="252" width="470" src="/images/stories/2013/02/soosfeb152.gif" alt="soosfeb152">
Another popular method of determining property valuation is comparing housing prices to rents. In a fairly efficient market, the costs of buying and renting should closely match each other, though due to factors such as taxes, risks, and interest rates, it is unlikely that costs will equal. Since the post-World War II boom, the ratio has unevenly decreased. Upswings in the ratio suggest the presence of a bubble: the mid-70s, early 80s, late 80s, and today.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb153.gif" alt="soosfeb153">
As with inflation and rents, housing prices have also outstripped incomes as well. Unfortunately, the ABS does not provide a long-term median household disposable income (HDI) series, so the denominator is derived by dividing aggregate real gross household income by the number of occupied households on an annual basis. This results in an unusually high HDI as averages are typically greater than medians, and is further amplified as the HDI is stacked with artefacts like superannuation which cannot be drawn upon to finance debt repayments. While the outcome is a rather low ratio, it keeps in line with that developed in Stapledon’s 2012 housing paper and shows a substantial increase from 1996 onwards. A more realistic median measure would result in a higher ratio, and the latest Demographia report shows it to be so.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb154.gif" alt="soosfeb154">
It is easy to see the major cause of the Great Depression: a deflating land bubble, centred in the commercial property market. Every major rise in the ratio has resulted in a downturn, correlating with, and arguably, causing the economic recessions of the mid-70s, early 80s, and early 90s. The ratio has doubled from the trough in 1996 through to the peak in 2010. The substantial rise in the ratio during the late 1970s was likely due to an anomaly in splicing multiple land value series together, though part of the rise is justifiable because of a residential bubble. <img height="252" width="470" src="/images/stories/2013/02/soosfeb155.gif" alt="soosfeb155">
The same story emerges when land values are compared with GDP per capita, which is arguably a better fundamental metric than GDP itself. As with the previous figure, the ratio has doubled during the same time period.
 
<hr class="system-pagebreak">
 
<img height="252" width="470" src="/images/stories/2013/02/soosfeb156.gif" alt="soosfeb156">
The Kavanagh-Putland Index measures the ratio of property sales to GDP. This metric is considered useful because in times of speculative fervour, investors flip properties to one another, increasing the total value of sales on an annual basis. When real estate markets tank, sales inevitably fall as potential buyers stand by the wayside waiting for further price falls. The ratio peaked in 2004 after housing prices jumped in the years previous.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb157.gif" alt="soosfeb157">
The value of housing stock to GDP has likewise moved in the same direction as house prices to inflation and land values to GDP. It is the land component rather than the dwellings that has increased in value over GDP.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb158.gif" alt="soosfeb158">
The primary determinant of the boom bust cycle in the land market is availability of credit/debt used to speculate on rising capital values of real estate. While data on private debt goes back to 1861, aggregate land values only begin in 1910. Debt peaked in 1893, driving a colossal commercial land bubble that burst, causing the worst depression in Australia’s recorded history. Again the same occurred during the 1920s, with the same result. It took until the 1970s for the debt cycle to assert itself once again, with one boom and bust after another. Debt reached the highest peak on record in 2008, driving the largest land boom on record. <img height="253" width="470" src="/images/stories/2013/02/soosfeb159.gif" alt="soosfeb159">
Unsurprisingly, the cause for the massive rise in housing prices and land values, along with net rental income losses, is the colossal increase in household debt, primarily composed of mortgage debt. It has more than quadrupled since 1988, rapidly accelerating during the 90s and 2000s. The ratio peaked in 2010 as did housing prices, which is clearly no coincidence. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1510.gif" alt="soosfeb1510">
As household debt has climbed, so too has debt as a percentage of household assets. The ratio will rise as housing prices continue to soften. It has tripled from 1990 through to 2008 before the GFC, falling and then resuming its upward climb. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1511.gif" alt="soosfeb1511">
The same has occurred with housing debt to disposable income, tripling over the same time period.
 
<hr class="system-pagebreak">
 
<img height="253" width="470" src="/images/stories/2013/02/soosfeb1512.gif" alt="soosfeb1512">
Despite very high interest rates during the early 1990s, the ratio peaked in 2008 due to the staggering debt load of households, even at lower interest rates. It is no surprise that this ratio closely matches the net income losses experienced by property investors as shown in the next figure. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1513.gif" alt="soosfeb1513">
Perhaps the most telling of all data are investors’ ability to finance the debt and routine expenses on their residential properties. In the midst of the late 1980s commercial land bubble, an element of residential speculation caused real housing prices to increase, most notably in Sydney and Perth. Speculators suffered income losses from 1988-89 to 1991-92 while seeking capital gains. The market later stabilised before making the largest net income losses from 2000 onwards, signifying a zero net yield and massive residential bubble.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1514.gif" alt="soosfeb1514">
The obvious cause of these losses is due to the rise in interest repayments rather than running expenses, which have remained stable at around 50% of gross rental income. Interest repayments peaked in 2008, driven by higher interest rates before the GFC hit.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb1515.gif" alt="soosfeb1515">
Not only is investment properties overvalued, the entire residential stock is. The vast majority of properties are owner-occupied, at almost 70%. Since 2004, all owners on aggregate have been running net income losses, which do not bode well for them once capital values stop increasing. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1516.gif" alt="soosfeb1516">
Once again, it is interest repayments that are the cause of the income losses. A slight uptick in expenses during the 2000s surely didn’t help, but has since then fallen back to its long-run average.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1517.gif" alt="soosfeb1517">
Despite the best efforts of the National Housing Supply Council (NHSC) and the FIRE sector to spruik a housing shortage, the long-term trends show dwelling growth has consistently outpaced population growth since WW2. From 2008 to 2009, the trend reversed temporarily. <img height="251" width="470" src="/images/stories/2013/02/soosfeb1518.gif" alt="soosfeb1518">
Perhaps the only positive factor is the government’s relatively low position of gross debt to GDP. The fashionable idea often repeated these days is that rising public debt poses a risk to the economy has little substance in reality. Compared to the pre-WW2 era, the governments of today are a picture of fiscal responsibility and prudence, with the rise in taxation revenue helping to offset the need for using debt. In the event of a substantial and prolonged downturn in the economy, the federal and state governments are well-placed to debt-spend.
<img height="251" width="470" src="/images/stories/2013/02/soosfeb1519.gif" alt="soosfeb1519">
A better measure of government debt is net rather than gross debt, and even better is the net rather than gross interest repayment burden, expressed as a percentage of GDP. What matters for countries that have high levels of government debt is how great the net interest repayment burden is. This is what separates the US and Japan – countries with a relatively high level of government debt – with the basket-case PIIGS nations (Portugal, Italy, Ireland, Greece and Spain). Australia is currently situated in an excellent position, and even if the government debt to GDP ratio were to rise, this does not necessarily translate into higher net interest repayments if the RBA further cut interest rates from already historical lows and purchases government bonds. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1520.gif" alt="soosfeb1520">
Increases in the government debt to GDP ratio are typically due to two occurrences: World Wars (1914 – 1918 and 1939 – 1945) and responses to economic downturns caused by private debt-financed speculation: the 1890s, 1930s, mid-1970s, early 1980s, early 1990s and the GFC in 2008. The rise in the ratio before the 1890s was due to colonial government mass construction of public infrastructure. It is obvious to see which type of debt today presents an overwhelming macro risk to the economy. Government debt will inevitably rise to counter private debt-deleveraging but it is very unlikely that political parties will engage in the necessary and timely expansion needed to ward off the adverse effects of debt-deflation.
<img height="195" width="470" src="/images/stories/2013/02/soosfeb1521.gif" alt="soosfeb1521">
In conclusion, the data presented should provide more than enough evidence to suggest that Australia’s residential property market (specifically land market) is vastly overvalued, driven by debt-financed speculation and the relative non-taxation of land rent. While land bubbles have been a continual feature of the Australian economy, what separates this cycle is the relative enormity of the boom in both land values and private debt. A smaller private debt to GDP ratio during the 1880s and 1920s was enough to produce two devastating depressions, including a number of recessions during the mid-1970s, early 1980s and early 1990s.
The question is often asked why housing prices are so high. Instead, the real question is to ask why prices are so low. The banking and financial system is ready to lend absurd amounts of debt to the willing army of “greater fools,” and has constructed an elaborate chain from mortgage brokers’ offices through to the business development managers (BDMs) at the banks in order to commit extensive fraud by manipulating loan application forms. This is the “six degrees of separation” Denise Brailey has uncovered. Consequently, the only determinant that prevents the banks from lending more credit is debtors’ ability to finance repayments out of current income. Only when it becomes difficult to finance repayments will the housing and land markets finally capitulate.
It is often claimed “this time is different”. It certainly is, but not for the reasons usually given: Australia has not experienced a land bubble of this magnitude in its history. 70% of adults own property, solvency of the FIRE sector is dependent upon ever-increasing capital values and the governments’ addiction to housing-related tax revenue and votes, it is none too surprising bubble deniers have been out in full force, asserting housing prices are based upon fundamental valuations. Also unsurprising is that all bubble deniers have conflicts of interest, and in an age of the secular equivalent of religious fanaticism and greed, facts and history are conveniently dispensed down the memory hole.
The only option left to policymakers is to continually kick the can down the road, hoping the bust does not occur on their watch. The result, as seen with the Rudd government’s additional first-home owner’s boost, was precisely that. This intervention restarted the debt machine, re-inflating housing and land prices to a new, higher peak in 2010. The overarching private debt bubble, which began in 1964, will likely come to an end once and for all when the government runs out of fuel to throw on the fire.
Philip Soos is a researcher at the School of International and Political Studies at <a target="_blank" rel="nofollow" href="https://www.deakin.edu.au/">Deakin University.</a>
This article originally appeared on <a target="_blank" href="https://www.macrobusiness.com.au/">Macrobusiness</a>.
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psoos-uR5EGb6SbQ

How 150 years of Australian housing prices shows that the bubble will likely come to an end: Philip Soos

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One of the remarkable developments over the past year is that investors and analysts can now track home prices on a daily basis just like the sharemarket, interest rates, currencies or commodities. And just like the other markets, prices can rally a long way in a short space of time.
But that generally means that a period of correction or consolidation has to follow.
As we discuss in the last paragraph on page two, the sharemarket has jumped out of the blocks in 2013. But it started 2012 in a similarly positive fashion, only to face periods of correction over the year.
Certainly, Australian home prices also started 2013 positively. In fact, Sydney home prices lifted 2% in the first 28 days, putting the market on track for gains of around 26% over the year. But prices have indeed consolidated through to mid-February.
Currently Sydney home prices have lifted 1.9% over 2013, outpacing a 1.2% lift in Perth home prices, 0.7% rise in Brisbane-Gold Coast and a 0.4% increase in Adelaide.
Melbourne prices have eased 0.2% this year, dragging the five-city index down to a 0.9% gain.
If home prices grow at the same rate over the year, home prices would lift around 16% in Sydney and 10% in Adelaide with the five-city index up 7.5%.
But the current annual growth rates are probably more instructive, showing gains of around 0-3% over the year.
Indeed, we think it is reasonable for home buyers and investors to price in gains of around 2-3%, still way short of the long-term average growth rate of around 7-8%.
The week ahead
On the domestic front, the main interest is the semi-annual testimony from the Reserve Bank governor on Friday. And in terms of economic data, figures on wages dominate, together with a spattering of other indicators such as car sales and imports.
In the US, housing and inflation data will be the highlight. And in a raft of countries including the US and Europe, "flash" readings on manufacturing conditions are issued.
In Australia, the week kicks off with data today on new vehicle sales. Industry data has already been issued by Australian Federal Chamber of Automotive Industries via its VFACTS report. And on Monday the Bureau of Statistics (ABS) will recast the data in seasonally adjusted and trend terms. In original terms sales totalled 85,430 vehicles in January, up 11.3% on a year ago showing that the new car market is exceedingly healthy.
On Tuesday the Reserve Bank releases the minutes from the February board meeting, while the ABS issues January data on merchandise imports (in other words, imports of goods). Apart from car sales, there are few indications of sales or production activity in January so far, so the import data should prove instructive.
On Wednesday the ABS releases the wage price index, the main gauge of wage pressures in the economy. We are tipping growth in wages of 1% in the December quarter and 3.7% for the year. But the risk is that our forecasts prove to be a touch too high.
The Reserve Bank noted in its quarterly statement:
"Business surveys suggest that wage pressures eased further in the December quarter. Liaison with firms also indicates that there has been a pick-up in the share of firms expecting no growth in average wages over the year ahead, and that skills shortages and wage pressures in the resources sector have eased."
On Thursday there is another ABS publication on wages, but the main use of the "Average Weekly Earnings" publication is to provide dollar estimates on wages rather than to gauge wage pressures in the economy.
And on Friday the Reserve Bank governor delivers his semi-annual testimony to the House of Representatives Economics Committee. With any luck the focus will be on economics rather than activities at the note printing subsidiary. Getting some sense on what cash rate could be considered "normal" would be helpful.
In the US, the week begins with the Presidents' Day holiday on Monday with financial markets and government offices closed. And on Tuesday the National Association of Home Builders will issue the activity index for February.
On Wednesday the usual weekly data on mortgage activity and chain store sales is issued alongside figures on housing starts and producer prices. Housing starts soared by 12.1% in December so economists understandably expect some retracement, with the median decline tipped being around 3%. There will be less interest in producer prices (business inflation) with inflationary pressures benign at present.
On Thursday the regular US weekly data on new claims for unemployment insurance (jobless claims) is issued alongside data on consumer prices, existing home sales, the leading index and Philadelphia Federal Reserve index. The main highlight is home sales with a modest 0.2% increase expected in January after the 1% decline in December.
Also on Thursday, survey group Markit will issue "flash" manufacturing readings for the US and a number of European nations. While it is possibly overdoing it to have two readings on manufacturing each month, financial markets are still showing interest in the data.
Sharemarket, interest rates, currencies and commodities
In the coming week the Australian profit-reporting (earnings season) gets into full swing. On Monday amongst the companies that are expected to report are Amcor, Bendigo Bank, BlueScope Steel, Lend Lease and Pacific Brands.
On Tuesday, results include those from Asciano, Coca Cola Amatil, Fantastic, Sonic Healthcare, Mt Gibson Iron and Commonwealth Office Property Fund.
On Wednesday earnings results are expected from BHP Billiton, Fortescue, GWA Group, Ramsay HealthCare, SEEK Limited, Super Retail Group, Suncorp, Tassal, The Reject Shop and Woodside Petroleum.
On Thursday, AMP, APN News &amp; Media, ASX Limited, Brambles, Centro Retail, Fairfax Media, IAG, Origin Energy, Qantas and Toll Holdings are included in a packed schedule of earnings results. And on Friday, Billabong, Crown, Investra, Santos, Telecom NZ, and Transpacific Industries are listed to report earnings.
In the first 30 days of 2013 the Australian sharemarket has lifted almost 7% with the All Ordinaries up 6.9% and the ASX 200 up 6.8%. If the gains were to be replicated over the entire year the indices would post gains of around 60%.
However, it is instructive to turn back the clock 12 months. In the first 30 days of 2012 the key Australian share gauges were up around 5% – not as good as 2013 but still on track to gains of 44%. In the end, the All Ords rose by 13.5% over 2012 with the ASX 200 up 14.6%.
In short, we shouldn't get too carried away. A period of consolidation will inevitably arrive.
Craig James is chief economist at CommSec.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.</body></html>

cjames-5S2v74qSNK

Residential growth still short of long-term trend: CommSec

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Investor activity has dominated the Australian property market over the last 12 months, which is no surprise; banks are “bidding” for buyers in a highly competitive market, reducing interest rates principally on fixed-term loans outside of the RBA’s cash rate cycle, and if the right property is sourced, current rental yields are also offering attractive returns.
However, first-home buyers have seen their savings eroded, and as the latest ABS finance data outlines, intermittent first-home buyer “cash injections” or the oft-quoted myth that rising yields are pushing greater numbers into the market are having scant effect. Saving a deposit and sourcing a suitably affordable property is no easy task.
It’s not being sensationalist to emphasise that despite all our statements regarding improved housing ‘affordability,’ and half-hearted attempts from both state and federal governments to inflate the market with incentives that fail to offer long-term solutions, the results for initial buyers are overwhelmingly clear and will consequently bear an effect on the future of both our real estate market and economy as a whole.
The latest figures from the ABS show the number of first-home buyer loans in December 2012 fell to 14.9%. It’s the fourth consecutive month that this segment of the market has been in decline.  Further information from RP Data’s latest media release indicates housing finance activity by first time buyers is 17% below the average figures recorded over the previous 11 years leading to 2012.
A further drop in variable rates currently being offered by a proportion of lenders may inspire a bit of latent activity – however they are all short-term fixes, and you have to wonder what effect will result when rates eventually rise – especially if wage growth doesn’t match pace.
According the RP Data’s calculation of annual price changes (which is based on six months of statistics) – house prices are already rising “faster than wages and disposable household income growth”. Any help first-home buyers get on the borrowing side they’ll inevitably lose on the other.
We’re losing a valuable demographic of property buyer, which will have a flow-on effect across the property chain as a whole. As the changes push through the generation gap, increasing numbers will retire while still factoring as short-term renters.
In lieu of first-home buyer participation, the predominant activity in the inner-city affordable sector of the apartment market is being fed by investors.
Certainly most off-the-plan and new unit developments are sidelined for this demographic (usually via offshore funding); however, investors also dominate the established apartment market, which would otherwise be favoured by first-home.
The percentage of investor-owned apartments in both Darwin and Brisbane falls close to 70% – and in the other capitals, it comes in between 60 and 70%.
As we’re all aware, property to some extent connects together like a flowchart. Supply is fed in from the bottom to allow those upgrading (and then downsizing) a ready market to sell into in order to make the move.
However, when investors predominantly negatively gear into the asset class most favoured by first-home buyers – which results in inflated property values – and the state government fails to come to the party with feasible affordable alternatives, our property wheel of upgrading and downsizing becomes somewhat stagnated.
Investors tend to hold property for extended periods of time in order to build equity – many choose to invest as part of their self-managed super funds and subsequently do not sell until retirement. Therefore the ready supply which would usually come from initial home buyers selling and upgrading inevitably starts to slow.
It’s clear from the 2011 census data that greater numbers of first-home buyers are being forced onto the rental ladder and subsequently getting stuck in the yoyo of rising yields and a lack of affordable inner-city options until they either meet someone with whom to combine wages or gain access to the “mum and dad” equity pot.
Proportionally we’re growing older as a nation – census data tells us the number of 20- to 44-year-olds has expanded on average by 4.6% per year in the five-year period leading up to the last census – however by 2020 it’s expected to slow to 1.2% per annum (a trend clearly demonstrated by the United Nations World Population pyramid, which extrapolates the data out to 2050).
<img src="/images/stories/2013/02/cashmorefeb15.jpg" width="438" height="448" alt="cashmorefeb15">
<img src="/images/stories/2013/02/cashmorefeb151.jpg" width="437" height="448" alt="cashmorefeb151">
 
<hr class="system-pagebreak">
 
Considering the predominant home buying activity takes place within the ages of 22-44, it seems reasonable to assume that there’ll eventually be proportionally greater demand from those downsizing as we progress through these buyer type changes.
However, if the flow-on home buyer effect doesn’t follow through, the mismatch of household size comparable to property type will continue to stagnate our property buying and selling terrain and further tie down supply in the areas most want and need to reside – areas within easy commutable distance to city suburbs, jobs and essential amenities (schools, hospitals, doctors, public transport systems and so forth).
Our census data already demonstrates that most lone person households are tottering around in accommodation that’s far too big for their requirements. Building an abundance of one bedroom apartments won’t suffice – only 14% of the total single person households (of all ages) opt for one-bedroom units. We therefore need a wider diversity of options (something I’ll expand upon in another column).
If we were building homes that were viable for first home buyers to gain a foothold that would not only maintain consistent market demand in order to build equity for those wanting to upgrade after seven or so years, but also provide feasible accommodation for this demographic to settle for an adequate period of time – then having an investor-dominated inner-city terrain could perhaps be balanced somewhat so as not to affect the flow of our home buyer property chain.
However, as we all know, the new home options are either limited to outer-suburban estates lacking in infrastructure, which every Joe on the street recognises is an essential component needed at the start of each project if we’re to lure home buyers outwards, or alternatively, <a target="_blank" href="https://www.propertyobserver.com.au/residential/why-high-rise-accommodation-will-not-solve-our-housing-shortage-catherine-cashmore/2013021059249?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=observers">inner-city high-rise ‘rabbit hutches</a>.
The lack of feasible and affordable new alternatives and the consequential property stagnation is all producing a ripple effect of unfortunate consequences.
The financial burden of fostering a rental nation in terms of tightening vacancy rates and competitive rising yields is obviously unwise in terms of our national wellbeing; however, there is no one golden answer to solving the home buyer property crisis.
A number options should be considered – including reserving a proportion of high-quality new inner-city accommodation for our home buyer demographic alone, reducing the heat in the investment sector by way of tightening negative gearing incentives on multiple purchases, and considering changes to stamp duty as outlined in the Henry Review.
One thing we should not do is ignore the problem, or try and solve it by way of easy inflationary credit.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
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catherinecashmore-6LXia3pPQj

Why investor activity is causing our property markets to stagnate

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A Melbourne private investor has paid $1.65 million on a passing yield of 5.67% for the ground-floor shop that houses the premises of Fred Perry men’s fashion store on Little Collins Street in the Melbourne CBD. 
<img src="/images/stories/2013/02/fredperry.jpg" width="470" height="353" alt="fredperry">
The 32.5-square-metre strata retail premises at 188 Little Collins Street sets a new record, according to the selling agents Nick Peden and Clinton Baxter from Savills, for the highest rate per square metre – $50,769 per square metre – for a CBD retail property outside of Swanston Street. 
<a target="_blank" href="https://www.realcommercial.com.au/property-retail-vic-melbourne-500597599">Fred Perry has a lease on the store until March 2017, with a five-year option at a net rental of $93,600 per annum</a>. 
<img src="/images/stories/2013/02/fredperry2.jpg" width="470" height="353" alt="fredperry2">
The brand dates back to the late 1940s, when former Austrian footballer Tibby Wegner approached three-time Wimbledon champion Fred Perry with an idea to use his name to sell sportswear. 
They started off modestly with the very first sports sweatband, quickly adopted by tennis players across the courts of Britain. In 1952 the pair launched what was to be Fred Perry's most famous garment: a slim-fit cotton pique shirt with laurel wreath embroidery. 
<img src="/images/stories/2013/02/fredperry3.jpg" width="470" height="353" alt="fredperry3">
The selling agents said the property attracted a great deal of interest from investors keen to take advantage of the secure lease profile and prime CBD location. 
There was competition for the premises from both local and offshore investors, which “demonstrated confidence in the CBD retail market and a desire to secure good-quality CBD property," says Peden. 
"The property offered an excellent opportunity to acquire an extremely well located and affordable retail investment property within the Melbourne CBD. 
"With the low interest rate environment and prospects for strong growth due to the CBD’s rapidly rising population, we were able to sell the property within 14 days of placing it on the market, at the vendor’s price, with minimal marketing expenditure," says Peden. 
This sale represents Savills ninth CBD sale in the past few months.
Space in Little Collins Street comes at a premium. Last week Savills retail director Michael Di Carlo alongside colleague Jeremy Marmur negotiated a new lease for food and beverage retailerMadam Squint, at 353 Little Collins Street property at more than $2,000 per square metre net for a 47-square-metre, ground-floor retail premises on a three-year term. 
Madam Squint is a new concept in Asian salad and sandwich bars specialising in rice burgers.
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Melbourne private investor pays $1.65 million for premises of Fred Perry on sought-after Little Collins Street 

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Australians are not saving enough for a self-funded retirement. Or should I say, they are not putting away enough now to live at the standard they want to live at in retirement.
Superannuation has been in the news lately because the government is tinkering with super. But poor savings rates for retirement can’t be all the fault of government. Superannuation – when introduced in 1992 – broke the rules that said governments and employers carried the burden for funding our retirements. It shifted private retirement savings from a “defined benefit” system (where the employee is promised a certain amount at retirement by the employer) to a defined contribution system, where every employee has to have 9% of earnings put in a superannuation fund.
This shifted responsibility and risk to the individual, many of whom lacked the skills to do it. But there also came with this system empowerment and individual choice for Australians, younger generations in particular, who would have an entire working life to build their savings.
So the fact that few young Australians are optimising this tax-friendly retirement system with top-ups to their employer contributions is an interesting story.
Why are young Australians not engaged with their super? And when I say young, I mean people from their 20s to 30s – people who are out of school and working.
I don’t think this is about whether the super guarantee is 9% or 12 or 15. If people aren’t embracing it at 9% they won’t be any more interested when it’s higher.
I decided to use Twitter to see what people were thinking about retirement, and two clear strands of thinking came back. Firstly, we have a system where all the burden falls on people to make the right decisions, but no one seems to be teaching basic investment strategy in high schools.
While teachers will understandably groan at adding one more thing to an already crowded curriculum, there really has to be an investment primer for teenagers before they join the work force.
The second point concerns modern life: when you get into the phase that brings kids, mortgages and/or career ambition, the last thing you are thinking about is topping up your super and devising a retirement strategy.
A number of respondents simply said that with a mortgage and kids, are you kidding about super?
Which is the nut we have to crack: we need people to top up their super when they’re at their highest earning years in order to provide the income they need to live well in retirement. But for most people these years overlap with mortgages and kids while the cost of living is rising.
There are no easy answers but I will go back to basics and remind everyone that super is their money and it’s their retirement. It’s never too late to become informed and active about super. You may thank yourself for it one day.
I would love to know your thoughts. <a href="https://www.twitter.com/@markbouris" target="_blank">Talk to me on Twitter</a>.
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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mbouris-tauSvXGAM2

Australians are not saving enough for retirement

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With demand for office space in the Melbourne CBD set to plateau over the next two years according to consultants Charter Keck Cramer and vacancy rates rising in other capital cities, office landlords will need to be increasingly creative to secure tenants.
One possibility is to consider turning unused office space into a co-working community space, as pioneered by the HUB Melbourne project at the bottom of Bourke Street in the Melbourne CBD.
Co-working communities are an open-plan office spaces which offer membership to mainly entrepreneurs and small businesses and provide not just the necessary business technology, but also a shared community to exchange ideas and innovations and work together where appropriate and mutually beneficial.
The community aspect is the principle difference between a co-working community space and renting a serviced office.
HUB Melbourne has the second highest membership in the world of any co-working community after San Francisco with a second HUB building under development on William Street on the Sydney CBD fringe and set to open in May.
HUB Melbourne was developed in 2011 and opened with 120 members. It now has over 700 members, all of whom are connected to a global community of 5,000 co-working HUB members on six continents.
It can be found on the top floor of Donkey Wheel House at 673 Bourke Street, a striking heritage-listed building dating from 1890.
<img alt="HubMelbourne_DiannaSnape_03" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_03.jpg" width="460" height="307">
The building was once the headquarters for the Melbourne Tramway and Omnibus Company with HUB Melbourne occupying the third-floor space, once a ballroom.
This includes the developing of tables, chairs and partitions placed on wheels to allow flexible configurations of space, lights constructed from recycled bicycle spokes wrapped in cardboard and extension cords bound in crochet. The space also incorporates velvet theatre curtains to section off work zones and absorb sound.
On any given day up to 60 people work at hub, some sitting at desks, others on couches and some in deck chairs as if they were at the beach.
There are no leases, no rental contracts and membership includes super-fast Wi-Fi, printing, tea and coffee, meeting rooms and a mailing address.
Individual monthly membership fees range from $200 per week for one day a week use to $600 for unlimited use.  One day casual passes can be purchases for $50.
Team of up to five can buy memberships ranging from $300 for one day a week membership to $2,000 for unlimited use.
Users of the space include fashion designers, architects and consultants.
<img alt="HubMelbourne_DiannaSnape_01" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_01.jpg" width="460" height="307">
The space was a designed by architects HASSELL in collaboration with HUB founder and CEO Brad Krauskopf.
HUB will also collaborate with Hassell on the fit out of the 500 square metre Sydney co-working space.
According to Steve Coster, principal at architects HASSELL who lead the team that designed the HUB Melbourne space, the concept of a workplace shared by a community of independent users or organisations that leverage social capital to create innovation and business opportunities.
“More than just a shared space or serviced office, co-working communities are focused on creating a network of mutually supportive relationships, connections and entrepreneurial opportunities among members,” he says.
He tells Property Observer, the growth of HUB Melbourne has been spurred on by an increasing prevalence of independent workers following the large-scale redundancies following the GFC.
As a result, there are many contractors or entrepreneurs, whose only other option is to work from home.
“Working at the HUB creates opportunities for referrals and collaboration with others,” he says.
In addition, he says the big corporates are also keen on the concept as a way for smart, innovative people to work in a space which promotes fringe ideas and allows the setting up of start-ups, and growing these businesses.
“For freelancer workers and small start-up organisations, co-working communities provide a community of like-minded individuals and relief from isolation. For large organisations, they provide an opportunity to access more dynamic, short-term, project based skills and capabilities,” says Coster.
According to Coster, the success of the community at HUB Melbourne is achieved through a range of mechanisms.
“Spaces must be authentic, welcoming, comfortable and meaningful for their members because they can only exist if people choose to pay to use them. With remote work on the steady increase, the value of desirable, meaningful places will only become more critical.
“The space has been designed to ensure a deep and genuine sense of ownership by users. It has also been designed to be easily reconfigured, as fast as the speed of business. Technological support is also crucial, provided through a ‘bring-your-own-device’ model, where network access and high-cost elements form a basic framework for rapidly changing technology platforms provided by the users themselves,” he adds.
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Co-working office spaces food for thought for investors as vacancies rise

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Any Commonwealth Bank customer currently paying the Commonwealth Bank’s (or any major bank for that matter) standard variable rate of 6.4% is either an undesirable mortgage customer or a mug.
Such a conclusion can be drawn from comments made by Commonwealth Bank CEO Ian Narev to journalist questions at the bank's recent interim results briefing.
Asked by Channel Nine finance journalist Ross Greenwood why the bank published a standard variable rate when any customer “worth their salt” can get a 100 basis point discount, Narev responded that the standard variable rate was simply a “transparent benchmark” against which every individual home lending rate is set.
“So everybody's rate is relative to the standard variable rate. And I do not think there is any customers, I hope there is no customer who would say we have not been completely transparent to them about their rate.
“We describe it by reference to the benchmark rate, and that is the rate we talk about in the market. So it is very important for us indeed in terms of the legal framework in which we operate, it is very important that customers understand exactly what they are paying and it is something we are very focused on,” said Narev.
January mortgage approval figures compiled by Mortgage Choice, which writes one in 10 home loans in Australia, show that 20% of borrowers took out a standard variable mortgage over the month – one in five.
Logic would dictate that given the dominance of the Commonwealth Bank in mortgage lending (it has 25% of the market), there would be a significant proportion of borrowers paying the bank's standard variable rate as would the other major banks.
ANZ has a standard variable rate of 6.40%, NAB is at 6.38% and Westpac the highest at 6.51%.
Fairfax economic commentator Michael Pascoe told David Koch on Sunrise last week that variable mortgage holders should not be paying an annual interest rate of more than 5.5%.
During the media conference, Narev added that over the past 18 months the Commonwealth Bank had passed on more reductions to the standard variable rate than any other major bank.
Explaining the need for a standard variable rate, Narev said it was the structure under which the banking system operates and that all banks price to it.
“But we are still very keen to get good customers in a way that creates a fair price for them and value to our shareholders and that is something we are very focused on,” he said.
Commonwealth Bank chief financial officer David Craig said the bank was “sort of locked into having a standard variable rate because it is the legal baseline upon which all existing mortgages are priced”.
While Narev would not be drawn on whether the Commonwealth Bank would cut variable rates out of cycle of the RBA, he did hint that it was a possibility.
“I am not allowed to say anything in terms of future prospects on pricing. What I could say is that it is a competitive market and if we reach a different environment in terms of both the volatility and the cost of funding that is conceivable, [then] yes."
For borrowers looking for a little more transparency outside of the major banks, these are the lowest advertised variable and fixed mortgage rates based on listings on mortgage comparison websites <a href="https://www.ratecity.com.au/" target="_blank">ratecity.com.au</a>, <a href="https://mozo.com.au/" target="_blank">Mozo.com.au</a>,  <a href="https://www.infochoice.com.au/" target="_blank">infochoice.com.au</a> and <a href="https://www.homeloanfinder.com.au/">homeloanfinder.com.au</a> as of February 18:
Where the headline rate is the same, the lender with the lowest comparison rate gets preference.
Lowest variable rate offerings:
<table border="1" cellspacing="0" cellpadding="0" width="470"><tbody>
<tr>
<td valign="top" width="134">
Provider
</td>
<td valign="top" width="124">
Loan name
</td>
<td valign="top" width="97">
Rate
</td>
<td valign="top" width="116">
Comparison rate*
</td>
</tr>
<tr>
<td valign="top" width="134">
Easy Street
</td>
<td valign="top" width="124">
Honeymoon Home Loan Special
</td>
<td valign="top" width="97">
4.99%
</td>
<td valign="top" width="116">
5.77%
</td>
</tr>
<tr>
<td valign="top" width="134">
Loans.com.au
</td>
<td valign="top" width="124">
Blackboard Special
</td>
<td valign="top" width="97">
5.09%
</td>
<td valign="top" width="116">
5.12%
</td>
</tr>
<tr>
<td valign="top" width="134">
UBank
</td>
<td valign="top" width="124">
UHomeLoan for refinancing variable loan with a special upfront discount of 0.25%p.a.
</td>
<td valign="top" width="97">
5.12%
</td>
<td valign="top" width="116">
5.12%
</td>
</tr>
</tbody></table>
 Lowest one-year fixed-rate offerings
<table border="1" cellspacing="0" cellpadding="0" width="470"><tbody>
<tr>
<td valign="top" width="137">
Provider
</td>
<td valign="top" width="123">
Loan name
</td>
<td valign="top" width="95">
Rate
</td>
<td valign="top" width="114">
Comparison rate*
</td>
</tr>
<tr>
<td valign="top" width="137">
UBank
</td>
<td valign="top" width="123">
UHomeLoan for refinance fixed rate one year
</td>
<td valign="top" width="95">
4.83%
</td>
<td valign="top" width="114">
5.34%
</td>
</tr>
<tr>
<td valign="top" width="137">
Loans.com.au
</td>
<td valign="top" width="123">
Dream Loan Express - Fixed P&amp;I 1 year
</td>
<td valign="top" width="95">
4.89%
</td>
<td valign="top" width="114">
5.28%
</td>
</tr>
<tr>
<td valign="top" width="137">
Newcastle Permanent
</td>
<td valign="top" width="123">
Fixed rate home loan
</td>
<td valign="top" width="95">
4.94%
</td>
<td valign="top" width="114">
5.97%
</td>
</tr>
</tbody></table>
 
Lowest three-year fixed-rate offerings
<table border="1" cellspacing="0" cellpadding="0" width="470"><tbody>
<tr>
<td valign="top" width="131">
Provider
</td>
<td valign="top" width="131">
Loan name
</td>
<td valign="top" width="96">
Rate
</td>
<td valign="top" width="111">
Comparison rate*
</td>
</tr>
<tr>
<td valign="top" width="131">
homeloanHQ
</td>
<td valign="top" width="131">
Rate Lock Home Loan
</td>
<td valign="top" width="96">
4.99%
</td>
<td valign="top" width="111">
5.53%
</td>
</tr>
<tr>
<td valign="top" width="131">
eMoney
</td>
<td valign="top" width="131">
Pro Pack 75 – 3 Year Fixed Rate Home Loan
</td>
<td valign="top" width="96">
5.00%
</td>
<td valign="top" width="111">
5.67%
</td>
</tr>
<tr>
<td valign="top" width="131">
My mortgage freedom.com.au
</td>
<td valign="top" width="131">
Fixed Rate (LVR&lt;75%)
</td>
<td valign="top" width="96">
5.09%
</td>
<td valign="top" width="111">
5.62%
</td>
</tr>
</tbody></table>
*A comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure.
For information on refinancing, watch our free webinar <a href="/news">The Do's and Don’ts of Refinancing Your Existing Home Loan ... and How to Avoid Unnecessary Hurdles</a>.
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No one pays the 6.4% standard variable rate: Commonwealth Bank boss Ian Narev

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The majority of economists expect the Reserve Bank to leave the cash rate on hold at 3% at its March 5 monetary policy meeting.
Of the 28 economists polled this week by Bloomberg, 20 except the cash rate to remain unchanged.
However, the major banks are divided on this issue with ANZ and Westpac tipping a rate cut to 2.75% and NAB and the Commonwealth Bank expecting the RBA to hold firm.
The other respondents tipping the cash rate to fall in March are all investment banks with a strong foreign flavour.
Joining Australia's Macquarie Bank forecasting a rate cut are French bank BNP Paribas, German bank Deutsche Bank, American banks Merrill Lynch and Goldman Sachs and Malaysian-based CIMB.
The majority of economists don’t expect a rate cut in April either (18 out of 28) while a small majority (17 out of 28) expect a rate cut in May.
Macquarie Bank and Goldman Sachs expect two rate cuts by May taking the cash rate to an all-time low of 2.5%.
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No rate cut in March say economists, but major banks divided: Bloomberg

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There were 1,076 sales in Perth this week, up 64% from 656 the same week last year, according to the Real Estate Institute of Western Australia. 
The most actively traded suburb was Perth CBD, with 26 sales.
<img height="531" width="290" src="/images/stories/2013/02/reiwafeb15.gif" alt="reiwafeb15">
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