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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With personal finances left looking fragile after the annual Christmas spending splurge, I thought it best to offer a list of simple strategies that can help Australians improve their financial fitness in 2013. 
If done properly, this includes assessing all aspects of personal finances, including strategies to boost retirement investments, such as including property and super, savings, a review of insurance policies, staying ahead of tax obligations and making an effort to improve financial literacy as more and more Australians take more control of planning their financial future.
1. Maximise the potential of any investment properties. Renovations to an existing property can reap huge rewards in the long run, with even the addition of air-conditioning dramatically increasing a property’s yield in terms of the amount you are able to receive in rent. Also, holding an investment property within a self-managed super fund trust is one of the most tax-efficient ways of managing these types of assets.
2. Ensure your property agents cover all property investment expenses (excluding interest). After all, you are paying them. This will greatly reduce your accountant’s costs and reduce your administration, as the agent will give you monthly and annual statements showing all income and expenses and will attach relevant invoices to each statement for your compliance needs.
3. Ensure loans are properly structured. Interest rates are near all-time lows, so while this is not great for savers, it is terrific for borrowers, who should ensure that their loans are properly structured and rates are in line with the competitive market rate. Many borrowers have not been given access to what is called the professional discount, although most are eligible. This potential  0.7% rate decrease applied to pay down a loan reduces the average loan by over $2,300 per year which equates to an overall saving of over $104,000 and reduces the term by nearly 6.5 years. The use of honeymoon credit card rates can also be very beneficial to enhance the faster payment of credit card debt while not increasing actual cash requirements.
4. Be aware of tax deductions. The use of a specialist property accountant will be able to show you all the legal tax deductions available to you, including the proper set-up of loans and the use of trusts for the astute property investor. Many investors forget to claim depreciation, which is a non-cash expense relating to the wear and tear of the building and fixtures and fittings. When doing a renovation, you should also prepare a scrapping schedule, which puts a value on everything you rip out and throw away. The taxman will pay you for your junk via an expense in the year of renovation and then allow depreciation on the new work. Remember depreciation and scrapping schedules must be prepared by a qualified quantity surveyor.
5. Ensure your will and enduring power of attorney are up to date. We have all heard of the horror stories of the wrong people getting your assets or, even worse, the government. Wills are a way to protect family wealth, and the common will, where assets are bequeathed to your children or surviving spouse, can have dire consequences if the receiver becomes bankrupt, has a family dispute, or has other medical issues. For many, a better alternative is required and therefore a different type of will is needed. This is normally referred to as a testamentary will. In this scenario, your will makes provision for your assets (such as property) to go to a trust set up after your death and you have your loved ones in control of the trust. This protects the assets from divorce, bankruptcy and taxes minors at adult tax rates and not the dreaded 66% on income generated from a normal death distribution. An enduring power of attorney (EPOA) is also recommended as the will does not take effect until death. If in a coma, access to bank accounts or the ability to sell assets for your medical treatment may be delayed or stopped without the EPOA. Remember your will only looks after what you own in your name and does not cover your superannuation or trust assets. Other documentation is required for these.
6. Consolidate super. Many of us have held a number of super funds over our working lives. These various superannuation balances can be quickly identified by visiting <a href="https://www.findmysuper.com.au/">www.findmysuper.com.au</a>, then consolidating these funds within one appropriate fund will ensure that you have the maximum amount of capital working, while cutting out multiple administrative fees, reducing costs and increasing retirement benefits.
7. Have your life insurance in your superannuation. Life insurance in this day and age is a necessity. However, it must be purchased with after-tax dollars when held in your name, yet if life insurance is held in super, payment is tax-deductible, resulting in large savings. Payments can be funded either out of your super guarantee (9%), improving your weekly cashflow, or as an additional salary sacrifice, which is tax deductible.
8. Consider moving your super into pension stage. The trigger for this is your age, not whether you are working. It is understandable that for any number of reasons many of us are happy or need to continue working slightly longer than traditionally we would have in previous times. Many super trusts allow the option to trigger retirement in super while you are still working (a simple deed amendment will allow this if not currently available). The benefit of this strategy is that your super fund will no longer be taxed on income or capital gains from your pension balances. You will need to draw an annual pension, but this can be re-contributed if not needed. In your hands, the pension will not be taxed if you are over 60 and taxed at your marginal tax rates less 15% if you are between 55 and 60, greatly increasing cashflow.
9. Ensure tax returns are up to date. The ATO is increasingly clamping down on late tax returns, but tax office penalties should not be the only incentive to avoiding tardiness. Delaying your income tax returns can add additional costs and deprive you of funds if a refund is expected. Even if you are required to pay additional tax, it is recommended to start early and withhold lodgment until your due date. Working through a registered tax agent can allow you up until May 15 in the next year for lodgment.
10. Savings can be made by reviewing and consolidating existing insurance policies. Many Australians do not consider changing their existing insurance policies for a better deal, normally because they are concerned that they will need to undergo a new medical examination, which may impact costs or benefits of that policy. However, if you have undergone a medical in the past five years, in most cases there is no requirement to undergo another if there is no loading applicable and the same amounts are carried to a new insurer who in turn may be able to offer you a more competitive deal. There could also be benefits in having different policies with the one provider so as to source discounts.
11. Invest in your own financial education and literacy. There is an increasing amount of scrutiny on the financial services industry and the big super funds in terms of the value of their advice and returns in recent years. Many Australians are now opting for a more independent route in order to maximise their future financial wellbeing. A self-managed super fund may be the right option for you. Talk to a specialist SMSF adviser, who can not only discuss the normal areas such as insurance and investment plans but also understands the law and tax applicable to these funds. Many people are now using their SMSFs to purchase property with debt, but if poorly executed, this brings unintended penalties so work with a specialist to maximise your returns. Other useful sources of information include joining specialist associations such as the Australian SMSF Members Association, which is a voice for members and not driven for the benefit of the profession.
There is a lot of value in investing in improving financial literacy. Not knowing is like throwing money down the drain; as many of these steps show, simply altering the way existing finances are structured can dramatically increase your cashflow, giving you that added flexibility to generate more wealth, whether that be through property or other investments.
Ken Raiss is a certified accountant and director of <a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" target="_self">Chan &amp; Naylor</a> national accounting firm. Ken’s experience lies in working with large publically listed multi-national companies, which gives Ken excellent insight into international market trends. Ken specialises in educating “mum and dad” property investors and small business owners with advice on wealth creation, asset protection, taxation, superannuation and compliance.
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kenraiss-JsVyb3YKka

Maximise your investment properties and 10 other ways to improve your financial fitness in 2013: Ken Raiss

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The translation from English to Chinese is almost becoming a pre-requistite for significant property marketing campaigns.
And a simple flag that represents the nationality of the reader is the catchy way property sellers are presenting their offerings to an international audience.
The <a target="_blank" href="https://www.discoverypoint.com.au/summit.php?utm_source=Private%20Media%20AU&amp;utm_medium=300x600&amp;utm_term=6204922&amp;utm_content=12767542&amp;utm_campaign=Australand%20-%20Discovery%20Point_SCHAUS026_BRBLUE">latest Summit Discovery Point marketing campaign from Australand</a> has the easy translation available after pressing the Chinese flag located in the digital advertisement's lower right hand corner.
<img alt="discoverypoint" src="/images/stories/2013/02/discoverypoint.jpg" height="334" width="470">
Meriton has been a market leader in the arena.
Local estate agencies are also making the switch.
Fletchers, the Melbourne agency, has been an industry leader. Fletchers' site has 16 flagged buttons for its language translation.
In addition to the principal Chinese button, there is French, Japanese, Russian, Hebrew and Greek (pictured below).
<img alt="fletchers" src="/images/stories/2013/02/fletchers.jpg" height="617" width="470">
Last week the switch was done by Richardson &amp; Wrench Mosman.
"We did it due to the sudden influx of sale to mainland Chinese buyers," says Robert Simeon from the R&amp;W office.
The translation is via Google, which might not be the best translation tool.
For more on the allure of Australian property to Asian buyers, <a target="_blank" href="http://propertyobserver.com.au/ebooks/free-ebook-australias-allure-for-asian-residential-property-investment">download our free eBook. </a>Property Observer is also part of this trend, as the eBook is also available for<a target="_blank" href="http://propertyobserver.com.au/ebooks/australias-allure-for-asian-residential-property-investment-free-ebook"> free download in Chinese. </a>
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jchancellor-FAypfDUnLy

Pressing the right Chinese button for Australian real estate sales

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When I first arrived in Australia from a relatively small town in the UK, the high-rise developments that were starting to dominate the inner-CBD skyline provoked a sense of excitement. The thought of residing in one evoked pictures of sweeping views, a kind of modern-day luxury “hotel” with a concierge and rooftop gym. I was still coming to terms with the local real estate landscape, and my concept of what created an ideal ‘home’ for an Australian buyer was biased in the extreme.
I had numerous preconceived ideas formed by my experience of the UK housing market – one of which was the difficulty in adapting to the thought of living in a weatherboard house. To my UK “cold climate” brain, living in a house made of wood was a concept that should have died out with the war. I now deal with a proportion of property buyers who will only consider a weatherboard dwelling – no doubt tying it in with their own concept of what makes a “home” – usually envisioning an attractive Californian bungalow or single-fronted Victorian.
My first ‘real’ experience of high-rise accommodation didn’t disappoint. It was the Royal Domain development in Melbourne – one of the upmarket dwellings close to the top floor, and I was granted a private inspection. The apartment itself was fairly ordinary – had I walked through at ground level and been given the asking price, I’d have baulked at the offer. The fittings and fixtures were lacking in quality for the buying demographic it aimed to attract – not that you would have noticed, the main attraction was the view. I joked to the agent at the time that should I live there, I wouldn’t bother with a TV – I’d buy a good pair of binoculars instead. It promised to be far better entertainment.
The million-dollar-plus price tag was one thing, the owners’ corporation fees another. Some $18,000 a year – clearly to be expected, considering the block size and additional onsite features – but despite the agent spruiking the development’s “investment potential” it didn’t require real estate experience to assess it was about as good an “investment” as a retirement home.
The apartment above sat vacant – it had been purchased by an offshore businessman from China who only occupied it for events such as the grand final or Melbourne’s spring racing carinval. The market for this particular type of property was discretionary at best, and anything but consistent.
I’ve written numerous columns addressing the inadequacies of our high-rise culture in addressing the need for affordable accommodation. The reason I do so today is in response to a debate I had with the ACTU’s <a target="_blank" href="https://mattcowgill.wordpress.com/2013/02/06/housing-policy-its-all-connected/">Matt Cowgill</a>, who took up the challenge to express the broadly shared logic that increasing supply per se is the answer to a growing demand for affordable, well-located, accommodation.
Matt used different priced potatoes to demonstrate his well established economic theory of ‘supply vs demand”.
“There are three types of potatoes: kipfler, desiree and regular. Kipflers are expensive and not that common, whereas regular potatoes are cheap and plentiful. Desirees are somewhere in the middle.
“What would happen if some kind of bug struck the supply of kipflers, halving it overnight?”
Matt pondered, and in doing so, demonstrated that potato lovers would turn their demand to the closest equivalent – whether it be settling for a ‘regular’ type or moving from a ‘kipfler’ potato consumer to a ‘desiree’ potato consumer.
Needless to say, Matt’s theory is that property markets are connected and therefore fulfilling the needs of the “affluent” will reduce competition at the lower end of our market arena, making sure supply is readily available for the intended price demographic. In this particular discussion, we were using the abundance of new tower blocks in Melbourne as the proposed property type.
The theory when used with potatoes is sound – if I were shopping in my local supermarket and a certain brand of vegetable I needed for my evening meal were unavailable, I would settle for the next best thing – whether higher or lower priced – and make do. If a good supply were available I might choose a more expensive brand, thereby leaving a greater supply of the ‘regular’ type for those shopping with a lower budget. My choices, if consistent enough and mirrored for a long enough period of time by a large enough demographic of consumers, would evidently bear an effect on the price – the assumption is more supply equates to lower demand and a lower price.
Why doesn’t the theory hold with our current CBD high-rise supply of property? And more importantly, why are a large proportion of our towers sitting empty, with vacancy rates in the region of 8% to 10 % (SQM) and rents that hardly offer “affordable” value when compared with the established terrain?
Let me offer my own analogy: If a devastating tornado hit my local neighbourhood and I found myself without a roof over head I would also ‘make do’ – however, that’s not the reality of our buying market. Most home buyers work devilishly hard to save an initial deposit and therefore expect to see their somewhat pre-conceived idea of value represented in their purchase.
Whether you think a property buyer’s demands are unrealistic or not is irrelevant – we’re talking about a consumer market, not desperate homeless individuals who are prepared to bid on any old thing just because it fits into their budget. Therefore, if additional property is going to fulfil the needs of home buyers (or, for that matter, renters – assuming renters are also looking for a ‘home’), it needs to be done with that intention initially.
I’ve since inspected numerous high-rise/high-density developments, both in the CBD and the inner-and middle-ring suburbs where new apartment blocks are commonly five stories or more. Some are impressive in design – however, the majority are a huge disappointment. The quality of construction often shows “cracks”, and has clearly been developed to a strict “squeeze as many in as possible” budget.
 
<hr class="system-pagebreak">
 
The reason I’ve walked through so many is because I deal with clients from all ranges of the property buying spectrum – covering budgets of $300,000 to more than $3 million and spanning a broad range of individual buyer types. The overwhelming conclusion remains that this type of property was not built with the home buyer in mind, and due to the lack of diversity in supply, fails to attract many local investors, either – a point I’ll expand upon below.
A proportion of buyers come to me with high rise (and a view) solidly envisioned, however even if they have a discretionary budget to allow a purchase in one of the better-quality developments, once presented with the alternatives their finance will allow – such as a period terrace or townhouse – along with an assessment of the fees and drawbacks high-density apartment living necessitates, their initial preference pales in comparison.
Obviously, most local home buyers prefer houses to apartments – and for the high-rise price tag of a two-bedroom apartment, there’s far more bang for buck in established accommodation that doesn’t come with the additional risks of the view being built out, a queue to get out the car park during peak-hour traffic, the extortionate owners’ corporation fees and 150 immediate neighbours, the majority of whom are renters.
For lower-budget buyers, our older established apartments seem to have been built with the home buyer in mind and are therefore more attractive – usually offering larger floor plans in smaller block sizes. Therefore when home buyer apartment shopping does occur, this is the type of accommodation that’s generally preferenced. Home buyers can get better bang for their buck.
As for first-home buyers shopping with a budget in the $300,000s – let me quote from one such buyer who had a vision of her first home being in an inner-city high-rise or high-density development due to her desire to situate in the CBD.
“The latest trend in Melbourne is to build tiny New York-style apartments and then charge amazingly high prices for them. Most of the places advertised in or near the city for $350,000 or less are in student housing buildings and boast two small cupboards that might just accommodate a single bed each, and a slim hallway which doubles as a kitchen and living area... In this sub-$400,000 price range, a L-A-R-G-E two-bedroom apartment is considered to be 44.5 square metres, which would make an excellent studio apartment or a reasonable one-bedroom apartment.”
The author is now fully aware that $350,000 for the “new” (or even 10 year old) supply on offer is not value for money – yet a few suburbs out, in a different market all together, she can afford an established comparatively larger apartment with good proximity to shops and train station, with the substantial cash advantage of avoiding the high owner corporation fees that fund a swimming pool she’d have probably have been too busy to use. It just required a little guidance to open her eyes to established alternatives she is prepared to settle for.
If by chance she had found a high density ‘L-A-R-G-E’ apartment suited to her lifestyle, she may have come down with a bump when trying to acquire finance – it’s well known banks have strict lending criteria for first-home buyers trying to purchase small apartments in high-density accommodation. Each lender has its own restrictions relating to internal floor space, and most require a larger deposit to offset the risk.  Clearly the banks recognise high-density accommodation is not always easy to offload in a default situation.
Well, as I pointed out last week – individuals who can afford to invest in property are hardly leaving lower priced stock for the home buyers on a compromised budget. Because of our current negative gearing tax benefits – the best established property in our inner suburban market that does appeal to the first-home buyer demographic is a hotbed of investor demand, with over 90% opting to place their dollars in this sector. Investors understand, if they purchase properties home buyers also desire, the value of their property is likely to attract interest throughout all stages of the “property cycle” and therefore speculation is rife. First-home buyers are caught out at every inner-city hurdle – they face restrictions for new, and somewhat unequal ‘deepest pockets wins’ competition for established.
So who is benefiting from the abundance of new and proposed high-density developments? Well, the typical investor of new accommodation is the foreign demographic who face no restrictions when purchasing off the plan. In China – unlike Australia – older developments are poorly constructed and undesirable for home buyers; however the newer developments are highly.
Investors of these developments are seeking a good yield – however, a percentage of foreign investors also allow their property to sit vacant – once again it’s a cultural bias with the mindset of keeping the interior in ‘as-new’ condition for a future sale.
If someone can explain to me how building apartment blocks which are nether affordable or desirable for a large proportion of home buyers – and despite our tight rental market, contain a large proportion of units left to sit vacant – can bring down the cost of accommodation. I’d be the first marching the streets in favour of the plan.
As it is, it seems they were never built for home buyers in the first place. A couple of years ago when the boom of Melbourne’s’ high-rise construction kicked in, the City of Melbourne’s website described the new developments as being “relatively small one- and two-bedroom apartments largely targeted at the student market and owned by investors.” So has high-rise combated affordability for a diverse property shopping demographic? No – because it was never built with the intention of doing so.  Our property market is no longer about home buyers – it’s a money-making wheel, with every Tom Dick and Harry hoping to make a buck in the process.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
 
 
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catherinecashmore-6LXia3pPQj

Why high-rise accommodation will not solve our housing shortage

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Making predictions pertaining to our residential property markets has been challenging since 2007 – however it appears that in 2013 that task won’t be as difficult (I hope). The Reserve Bank of Australia (RBA) gave a clear indication that their manoeuvring of the cash rate in 2013 will be closely reflective of Australia’s property data. <a target="_blank" href="/news" title="Housing prices have moved higher: RBA governor’s statement ">Housing prices have moved higher: RBA governor’s statement</a>, which confirms my prediction last week that I believe the official cash rate will not go below 3% in 2013.
<a target="_blank" href="https://www.theage.com.au/business/the-economy/next-rate-cut-up-to-the-banks-20130205-2dw23" title="Next rate cut up to banks ">Next rate cut up to banks, </a>which is exactly what the RBA would be hoping,so it did not take long before <a target="_blank" href="https://www.propertyobserver.com.au/news/westpac-lead-the-big-banks-below-5-on-nfixed-home-loans/2013020659208" title="Westpac lead the big banks below 5% on fixed home loans">Westpac lead the big banks below 5% on fixed home loans</a>. It’s over to the others now – the NAB’s lowest fixed  rate is 5.34% for its one-year home loan, the Commonwealth Bank offers a one-year fixed of 5.19%, while ANZ offers a two-year fixed rate at 5.49% – so watch with interest should they decide to sharpen their respective pencils next week. If you’re planning on selling you should not sign  up, given when you are fixed you then qualify for break fees should you sell during your fixed term.
So the good news for property owners is that the <a target="_blank" href="https://afr.com/f/free/blogs/christopher_joye/house_price_recovery_under_way_I3OkqQO7imoCeJQYb1x3AN" title="house price recovery under way">house price recovery under way</a>, which overall is a pleasant change given for once, the <a target="_blank" href="https://www.propertyobserver.com.au/residential/for-once-the-statistics-agree-that-property-prices-are-rising-terry-ryder/2013020659198?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=upperright" title="statistics agree that property prices are rising">statistics agree that property prices are rising</a>. Having said that, we are of the opinion that we will see a gradual albeit minimal capital appreciation throughout 2013. Further evidence is that <a target="_blank" href="/news" title="AFG reports record January figures with $2.2 billion ">AFG reports record January figures w</a><a target="_blank" href="/news" title="AFG reports record January figures with $2.2 billion ">ith $2.2 billion </a>mortgages approved which represents their highest cumulative value ever recorded for the group. Australia’s population has a firm foot on the accelerator.
For those watching the Australian All Ordinaries closely, it currently sits at just below the 5,000 mark – historically when the All Ordinaries is north of 5,000 our property markets are booming. Although I foresee that what we are seeing presently is a false economy given investors have moved from protecting their cash reserves to re-investing back into the shock market. <a target="_blank" href="https://www.smh.com.au/money/investing/all-ords-at-17000-just-rally-round-this-forecast-20130106-2cb24" title="All Ords at 17,000? Just rally round this forecast">All Ords at 17,000? Just rally round this forecast</a> well that is a prediction for 2030 – so don’t panic.
<a rel="attachment wp-att-7402" href="https://www.rwm.com.au/2013/02/2013-a-different-market-get-on-with-online/7-02-2013-3-47-34-pm/"><img width="470" height="438" src="https://www.rwm.com.au/wp-content/uploads/2013/02/7-02-2013-3-47-34-PM.jpg" alt="7-02-2013 3-47-34 PM"></a>
As we reported last week the Mosman, Cremorne and Neutral Bay volume of listings is down considerably on previous years. Interestingly, this statistic is not only restricted to our demographic markets, as <a target="_blank" href="https://www.propertyobserver.com.au/residential/sydney-property-listings-fall-by-surprising-6-in-january-to-lowest-level-since-april-2010-sqm/2013020359117?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=latestnews" title="Sydney property listings fall by ‘surprising’ 6% in January to lowest level since 2010: SQM.">Sydney property listings fall by ‘surprising’ 6% in January to lowest level since 2010: SQM.</a> It is interesting to note that Mosman house listings continue to hover at the moment at approximately 25% down on this time last year. It will be fascinating to watch how these figures alternate through 2013.
However, our <a target="_blank" href="https://news.theage.com.au/breaking-news-business/construction-sector-continues-to-shrink-20130207-2e08j" title="construction continues to shrink ">construction </a><a target="_blank" href="https://news.theage.com.au/breaking-news-business/construction-sector-continues-to-shrink-20130207-2e08j" title="construction continues to shrink ">continues to shrink</a><a target="_blank" href="https://news.theage.com.au/breaking-news-business/construction-sector-continues-to-shrink-20130207-2e08j" title="construction continues to shrink ">,</a> which just so happens to be the 32nd month of contractions within our building industry.
Robert Simeon is a director of <a target="_blank" href="https://www.rwm.com.au/" title="RWM">Richardson  Wrench Mosman and Neutral Bay </a>and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog<a target="_blank" href="https://www.rwm.com.au/news/" title="Virtual Realty News">Virtual Realty News</a> since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.
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Gradual, minimal house price appreciation in 2013

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Since the GFC, money has been flowing to bank deposits. That is, low-risk, low return options where the saver has an element of "government guarantee" and money is either on hand or has a fixed return for a fixed term.
The move to cash has been at the expense of investment in shares. The market capitalisation of Australian equities in June 2007 was $1.59 trillion, and by June 2012 it had fallen to $1.18 trillion.
Correspondingly, total term deposits with Australian banks equaled $196.2 billion in June 2007, rising to $533.5 billion in June 2012.
There are signs that the market is warming again to the share markets. Should you join this trend?
There are three considerations: your goals, your timeframe and your risk tolerance.
A goal – for instance, to save for retirement – will tell you how much you need to save and how much your savings must earn. Large goals need the compounding effect of high yields over the long term, whereas small goals don’t need so much planning.
Your timeframe also dictates where you put your money. Bank deposits are useful for short-term goals because they allow ready access and they are government guaranteed.
Shares favour the long term. They are a good investment for young savers or those in mid-life cycle because the performance of shares is best measured over a decade.
This is where appetite for risk comes in. Over the past decade, Australian shares returned 9.1%, compared with the performance of cash at 5.4%.
However, in any year – or any week – of the 10-year performance of shares, the value of what you own can fluctuate, sometimes wildly. So you need to weather the ups and downs over a long cycle in order to get your 9%.
If your retirement falls in a month where the share market takes a significant downturn, and you rely on shares, you’ll have to wait for a market correction.
This is not an either/or argument. Strong investment portfolios are diversified, and operate as a matrix in how they deal with goals, timeframes and risk appetite. This usually means they have a mix of cash, shares, property and bonds.
Younger people aiming for a large retirement nest egg should weight their investments towards equities and property, and those approaching retirement should favour having a paid-out property and a weighting to cash investments because they don’t have the time to reverse any losses on shares.
One of the warnings I would give to those who want to shut out all risk, is that economies change and so do opportunities. My team at YBR is currently concerned about the chance that long-term interest rates will rise over the next two years, caused by economic growth and a return to consumer confidence.
If this happens, how many conservative investors will have money locked away in fixed-rate bonds? They’ll be losing out while owners of shares, bank deposits and floating rate bonds enjoy higher interest rates as economies expand.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Why you should have property, shares and cash in your investment portfolio: Mark Bouris

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Six out of the 10 suburbs picked by Australian Property Monitors senior economist Andrew Wilson as offering the best prospects for price growth have already beaten inflation over the first six months of the year.
Wilson picked Fairfield, Blacktown, St Ives, Rooty Hill, Lethbridge Park, Macquarie Fields, Doonside, Punchbowl, Ingleburn and Kingswood at the start of 2013 as his detached housing hotspots.
Apart from wealthy upper north shore enclave of St Ives, popular with South African expats, where the median house price is above $1 million, the nine other suburbs are all traditional “battler” locations in the western outer ring of the Sydney metropolitan region with Ingleburn, 44 kilometres south of the CBD, the furthest away.
They all have median prices well below the Sydney median house price of $673,000.
To date, the top performer has been Fairfield, 29 kilometres west of the city where the median house price has risen 12.1% to $474,000, followed by Blacktown (9.2%) and St Ives (5.8%).
The others recording price growth above inflation – currently at 2.6%  - are Rooty Hill, Lethbridge Park Macquarie Fields
<img height="237" width="470" src="/images/stories/2013/larry_uploads/APM_HOUSES1.jpg" alt="APM_HOUSES1">
Fairfield is a multi-cultural suburb with large Vietnamese, Arabic and Chinese communities. Just over a third (37.5%) of Fairfield’s 39,515 residents were born in Australia with 16% born in Iraq, according to the 2011 census. Vietnamese is the most commonly spoken language in Fairfield outside of English.
Homeownership is relatively high in Fairfield with just 30% of residents renting compared with 40% who rent across NSW.
However, Fairfield along with Lethbridge Park are among the most socially disadvantaged suburbs in Sydney, according to the Australian Bureau of Statistics.
Recent sales below $500,000 in Fairfield include a 1960s built weatherboard house with two-bedrooms at <a target="_blank" href="https://www.realestate.com.au/property-house-nsw-fairfield-114053147">61 Crosby Crescent</a>, which sold for $432,000 at auction on July 6 through Stephen Jurinic of Pretti Real Estate - Fairfield Heights. It was listed with expectations above $390,000. RP Data records show it last sold for $112,000 in 1995 – annual growth of nearly 8%.
Another recent sale was a renovated <a target="_blank" href="https://www.realestate.com.au/property-house-nsw-fairfield-108781911">six bedroom house at 462 The Horsley Drive Fairfield</a> also built in the 1960s within walking distance to the Fairfield CBD.
It sold for $485,000 through Muhammad Mushtaq of Ray White – Fairfield having last sold for $312,000 in June 2012. RP Data photographs show the house partially gutted and surrounded by fencing, prior to its renovation.
It currently rents for $550 per week – a gross yield of around 5.9%.
Property Observer reported earlier this month that <a target="_blank" href="https://www.propertyobserver.com.au/trophy-homes/fairfield-mansion-with-granny-flat-fetches-%241117-million-in-sydney-weekend-auctions/2013071363235">Fairfield mansion with granny flat</a> fetched a $1.117 million suburb record price in Sydney weekend auctions. The McMansion has seven bedrooms and a two-bedroom granny flat.
Wilson wrote recently in the Fairfax-owned Sun Herald that APM “relative affordability” of suburbs like Fairfield and Blacktown compared with the rest of Sydney was the reasons they were popular
“Because Sydney is the most expensive city in Australia, there is always that drive at the bottom of the market for budget-priced properties,” Wilson said.
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APM's Andrew Wilson’s top 2013 Sydney suburb picks showing price growth led by multi-cultural Fairfield

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The trendy inner Sydney suburb of Potts Point stands in stark contrast to the more affordable suburban unit markets picked by Australian Property Monitors senior economist Andrew Wilson to be the top performers for 2013 – most of which are showing good prospects of price growth.
Figures for the first six months of year show seven out 10 of Wilson’s top picks are beating inflation (2.6%) lead by Penrith on the western outskirt of Sydney, with unit prices up 8.4% to a median of $257,000 as of the end of June.
Potts Point ranks fourth best performing market out of the 10 chosen by Wilson with respectable price growth of 4.2% and a median unit price of $525,000 – more than double that of Penrith.
Ahead of Potts Point is the south west suburb of Wiley Park, where unit prices are up 7.9% for the first six months of the year and neighbouring Lakemba, where unit prices have risen 5.5%.
Both suburbs are within postcode 2195 in the Canterbury/Bankstown region with a high proportion of residents with Lebanese and Bangladeshi ancestry and with only a third of residents born in Australia, according to census 2011 data.
Around 88% of residents in these two suburbs are the children of parents born overseas.
The other inner city unit hotspot in the top ten, Ultimo, has yet to fire with unit prices treading water at median of $470,000.
Interestingly, Fairfield, the strongest performing detached housing suburb among Wilson’s 2013 picks with house prices up 12.1% over the first six months of the year has not shown the same strength across units, with median unit prices down 3.5% over this period with a median price of $273,000.
<img height="248" width="470" src="/images/stories/2013/larry_uploads/APM_UNIT_HOTSPOTS.jpg" alt="APM_UNIT_HOTSPOTS">
Recent Wiley Park unit sales include a two bedroom apartment in a <a href="https://www.realestate.com.au/property-apartment-nsw-wiley+park-108397731" target="_blank">small block on Shadforth Street</a> which sold for $257,000 through Carlos Almeida of Just Think Real Estate – Parramatta. RP Data records show it sold for $235,000 in 2009. It is currently rented for $310 per equating to a gross yield of around 6.3%.
Another sale in Wiley Park was a two-bedroom unit in a <a href="https://www.realestate.com.au/property-unit-nsw-wiley+park-113948619" target="_blank">1960s-built block at 279 Lakemba Street</a> which sold through Luke Knapton of Knapton &amp; Co Pty Limited – Lakemba.  It sold for $284,000 having previously sold for $236,000 in February 2010. It is currently rented for $330 per week equating to a gross yield of around 6%.
Around $500,000 plus gets you a two-bedroom unit in Potts Point. Recent sales include a <a href="https://www.realestate.com.au/property-apartment-nsw-potts+point-114369391" target="_blank">71 square metre apartment at 238 William Street</a> which sold for $565,000 through Romany Brooks of BresicWhitney – Darlinghurst.
RP Data records indicate it previously sold for $450,000 in 2008.
Part of a 2008 built block, the apartment has rented for $490 per week equating to a yield of 4.5%.
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Penrith, Wiley Park and Lakemba beat Potts Point for price growth among Andrew Wilson's unit hotspots for 2013

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In its first significant deal under the new name of Federation Centres, the former Centro business, has agreed to sell half-shares in four malls and a convenience centre to the Industry Superannuation Property Trust (ISPT), one of Australia’s biggest unlisted property trusts.
The four sub-regional shopping centres are Mandurah in WA, Cranbourne and Karingal in Victoria and Warriewood in NSW. The convenience centre is Halls Head also located in Mandurah, WA.
The transaction with ISPT represents a 2.9% premium to the June 30 2012 book value (pre-transaction costs) and average yield of 7.49%.
The signing of the co-ownership agreement with ISPT, follows the deal in May last year for the privately-owned Perron Group to pay a post-GFC record of $690.4 million to acquire a 50% share in a portfolio of three Centro flagship regional shopping centres.
The three shopping centres in this deal were the Colonnades in South Australia, The Glen in Victoria and the Galleria in Western Australia in a deal brokered by Simon Rooney, Australian head of retail investments at Jones Lang Lasalle.
Commenting on the latest deal, Federation Centres managing director and CEO, Steven Sewell said the transaction with ISPT is part of the transformation of the business under the new name.
“When combined with the previous Perron Group strategic alliance, on completion of this transaction with ISPT, Federation Centres will have undertaken co-ownership in eight centres with a gross value of $2.1 billion.
“With more than $1 billion in capital raised from these co-ownership arrangements, we will be well positioned to grow our business through redevelopment projects across our portfolio of quality Australian shopping centres and further acquisitions of syndicate properties.
Federation Centres will continue to manage the shopping centres to be held with ISPT.
ISPT has over $8 billion of property assets.
Subject to the satisfaction of conditions, the transaction is expected to be completed on or before 31 July 2013. Proceeds from the sale, net of transaction costs, will initially be applied to reducing debt facilities.
Daryl Browning, CEO of ISPT said he was looking forward to working with Federation Centres to “explore future development opportunities for the co-owned shopping centres to enhance returns for our investors”.
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Federation Centres sells half-shares in four malls to ISPT for $371.4 million

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The receivers of failed Victorian debenture issuer and mortgage lender Banksia expect to make a “significant” second payment of between and 20 and 35 cents in the dollar to investors by June 30 if it can successfully realise a portfolio of 565 loans.
In addition, the receivers will also seek to sell freehold property owned by Banksia to raise additional funds to repay debenture holders.
A first distribution payment of 20 cents in the dollar was paid to investors on December 7 out of cash holdings, the first part of an estimated total repayment to debenture holders of between 50 and 65 cents in the dollar.
Banksia operated from 10 branches across Victoria and NSW with its head office in Kyabram.
The loans have a face value of $270 million and represent the best performing loans out of a total portfolio of around 1,000 loans, which have a total face value of $537 million.
A return of between 55 to 70 cents is expected for investors in a smaller Banksia-managed fund, Cherry Fund Limited, also in the hands of the receivers.
<a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/industry-news/victorian-non-bank-lender-banksia-securities-collapses/2012102657456" target="_blank">Banksia collapsed in October</a> putting $660 million of small investor debenture funds at risk.
In a new circular to debenture holders, McGrath Nicol receivers Tony McGrath, Joseph Hayes, Matthew Caddy and Robert Kirm report that a public marketing campaign to realise a portfolio of 565 loans commenced in the first week of February and that “strong interest has been received to date from a range of parties including significant financial institutions”.
“Whilst we are unable to disclose the likely sale price for the identified portfolio, we expect a positive outcome
“Following a staged process, we expect final offers to be received in late March 2013 and a sale announced and completed during April 2013.  Whilst this timeline may ultimately require extension, it has been structured to allow for a further significant distribution to debenture holders by 30 June 2013,” say the receivers.
The receivers have identified around 87 impaired loans with a face value of $167 million.
“As the loan book continues to be managed, it is likely that additional loans will become impaired.”
The receivers say they are working with Banksia’s impaired loans team to encourage repayment and/or refinancing and where this does not happen, they are taking enforcement action.
“The Receivers are undertaking an individually tailored realisation program for each impaired loan/security property to maximise the return to debenture holders.”
Apart from the efforts to realise the loan portfolio and sell Banksia properties, the receivers are also  working closely with “Securities Hold Co Limited in relation to the $11.2 million intercompany loan, and continuing to liaise with the liquidator of Lehman Brothers in relation to Banksia’s collateralised debt obligation portfolio”
Debenture holder have launched a class action in the Supreme Court of Victoria against Banksia and its related companies, their directors, auditors and the trustee.
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Banksia investors to get “significant” second payment in June as receivers aim to realise half of loan portfolio and sell defunct branches

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The cash rate could fall as low as 1.5% because other sectors of the economy won’t pick up the slack from the declining mining sector, says former Reserve Bank board member professor Bob Gregory.
Gregory’s dark prediction is at the far end of the spectrum, the very far end in fact.
Bank economists reacting to today’s monetary policy statement put out by the Reserve Bank says it maintains an easing bias, but are circumspect on whether the cash rate will be cut much beyond one or two more times.
The Reserve Bank downgraded its economic forecasts today from a range of 2.25% - 3.25% to 2% - 3% with concerns about the pick-up in non-mining investment given the high Australian dollar and the labour market, though it did note a recover in dwelling investment and the housing market on the back of previous rate cuts.
Speaking at a recent economic conference, Gregory said interest rates could fall as low as 1.5% because the RBA will try to stimulate the economy to compensate for the end of the resources investment boom and a substantial decline in the prices of raw materials.
“Interest rates will fall. But I don’t think it’s going to work that much,” said Professor Gregory in comments reported on Wednesday by the Australian Financial Review.
Gregory’s conviction of a massive drop in the cash rate will be duly noted by many: aside from his former role as RBA board member from 1985 to 1990, he was also the first to diagnose the phenomenon of Dutch disease, where a mining boom drives up exchange rates and hurts the rest of the economy.
Along with the mining investment slide, Gregory predicts that real income in Australia could fall by 15% in the next few years with resulting lower living standards.
Commenting on the monetary policy statement, Westpac chief economist Bill Evans says the bank is encouraged that RBA governor Glenn Stevens “pointed out that there was scope to further cut rates should demand conditions require it”.
Evans points out that Stevens uses the word “scope” and “for the time being” in his comments on the cash rate.
“It is our experience that the use of [these terms] both indicate that the bank remains quite open to further easing policy.
Evans expects one further rate cut in the current easing cycle to take the cash rate to 2.75%.
ANZ’s head of Australian economics and property research, Ivan Colhoun, says the risks section of the report “details concerns the bank has about each of residential construction, mining investment, non-mining investment and public spending.
“These risks and the forecast for growth at or below trend over the next two years with low inflation suggests a strong bias to ease (as does the use of the term policy remained appropriate for the time being)”.
But, Colhoun says the RBA is still “clearly in assessment phase and will watch incoming data to decide whether the economy needs more stimulus.
“The continuing slow growth of employment and forecast rise in unemployment suggests clearly to us that the economy could afford to grow more quickly than at the present time and further gradual easing should be expected over 2013,” he says.
ANZ has moderated its forecast of a cash rate of 2% by year-end, but says there could be up to two rate cuts.
CommSec senior economist Savanth Sebastian says the RBA is "clearly in wait and see mode" after providing the domestic economy with 1.25 percentage point worth of rate cuts in a nine month period. “Overall, the average interest rate on outstanding housing loans is now about 25 basis points above its 2009 low” … “The cumulative reduction in interest rates is affecting interest-sensitive parts of the economy, though the full effects will, of course, take more time to become apparent”.
Responding to the monetary policy statement, Sebastian says that while the Reserve Bank may have downgraded growth forecasts over the next year, “the accompanying commentary certainly suggests that board members are more comfortable than even just three months ago”.
“The risks to the ‘global economy appear to be more balanced’ while domestically the ‘significant monetary stimulus already in place, and signs of lower interest rates are having some of the expected effects’.
“In addition the Reserve Bank was at pains to point out that the average interest rate on outstanding housing loans is only ‘25 basis points above its 2009 low’,” he says.
CommSec expects the RBA to leave the cash rate on hold over the next couple of months though it “remains watchful”.
“There are few signs that the RBA is preparing to cut rates again in the short term, but arguably there are more events likely to result in lower rates than higher rates in the period ahead,” says Sebastian.
Commonwealth Bank economist John Peters says the monetary policy statement confirms the RBA’s “clear easing bias”.
“The financial markets have another two rate cuts priced in over the next few quarters, with the first next month.
“The capex data later this month is likely to confirm the RBA’s view that mining investment looks set to peak late this year.
“It may be sufficient to convince them, along with a benign fourth quarter (of 2012) wages report, that more insurance, via another rate cut, is required,” he says
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