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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Nearly a third of borrowers (30%) say they would ditch their Big Four bank if another lender offered them a 50 basis point discount off the rate they are currently paying, according to a survey by Australia’s biggest mutual lender, CUA.
More than half (56%) said they would “consider” switching for a 50 basis point discount.
Even a smaller discount of 25 basis points would tempt 60% of Big Four borrowers to consider refinancing with another lender.
Overall, the CUA’s National Mortgage Survey found a high level of discontent among borrowers who have their loans with Big Four banks.
A fifth (18%) said they would ditch their Big Four bank if they did not adjust their mortgage rates following an RBA cash rate cut with 60% saying they would “consider” doing so.
In addition, 70% of these borrowers would switch or consider switching for lower fees and charges.
“Overall, Australian mortgage holders are looking for a lender that provides competitive rates and makes decisions that are in the customer’s best interest,” says CUA’s general manager for products and marketing Jason Murray.
Borrowers who opt for a standard variable home loan would be 55 basis point better off with a CUA loan compared with a standard variable rate home loan offered by the Commonwealth Bank.
The CUA's standard variable rate is 5.85% (comparison rate of 5.91%) while the Commonwealth Bank's standard variable rate is 6.40% (comparison rate of 6.54%)
However, the Commonwealth Bank is more competitive on fixed rates and discounted variable rate offerings.
The lowest variable rate mortgage currently offered by CUA is its rate breaker package home loan at 5.42% with a comparison rate of 5.75%.
The CUA offers a three-year fixed rate of 5.30% with a comparison rate of 5.81%.
The Commonwealth Bank, offers a no-fee variable rate home loan at 5.70% with a comparison rate 5.70% and a one-year guaranteed rate of 5.34% with a comparison rate of 6.43%.
Its three-year fixed rate is 5.54% for non-home loan package customers and 5.39% for those that do opt for a packaged home loan deal.
Property Observer <a href="/news">compiled this list of the lowest home loan rates </a>offered by the major banks and their subsidiaries on January 8.
The CUA survey found that across all borrowers (not just those with a Big Four home loan), the propensity to refinance with another lender appears high with more than three-quarters (78%) of all mortgage holders saying they would switch or consider switching if their current lender failed to adjust rates following an RBA rate cut.
The results are based on a survey of 1,514 people carried out by Auspoll, commissioned by the CUA, of which four out of 10 have a mortgage.
Of those respondents that have a mortgage, 62% have their home loan with a major bank, 8% with a credit union or mutual lender and 31% with another lender (smaller bank or non-bank lender).
Respondents were questioned on their attitudes towards interest rates, switching home lenders and fixing their interest rates.
Other key findings from the survey were that fixed home loans remain largely unappealing to the majority of borrowers despite lenders continuing to cut fixed rates.
Only 7% of variable rate mortgage holders said they intended to fix their home loan in the next three months with 71% saying they had no intention of fixing.
The remaining 22% said they would fix their home loan, but not in the near future.
This is slight improvement on the 3% who said they would fix in last year’s survey and the 75% of respondents who said they had no intention to fix at all.
However, even among those survey respondents who expect rates to rise in 2013, fixed rates remain unappealing.
“Of those variable rate mortgage holders surveyed who believe rates are at the bottom of the cycle and will increase in 2013, still only 31% would plan to fix their mortgage in the future,” say CUA’s general manager for products and marketing Jason Murray.
Less than a third of those surveyed expect a cash rate cut in February and remain divided as to what will happen to interest rates in 2013.
Around 37% believe the cash rate will decrease further in 2013 while an almost equal number (38%) believe rates will be higher at the end of the year.
A quarter of respondents expect rates to stay the same in 2013.
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lschlesinger-FZcF9M3vE6

A third of borrowers would ditch big four banks for 50-basis-point discount: CUA

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There are 1,001 auctions planned for this week across Australia, according to RP Data, with 418 of them in Queensland and 180 in Victoria. 
The high number of Queensland auctions is due to a number of mega auction events being held by Ray White and other Queensland agencies.
Ray White Surfers Paradise is undertaking its 20th annual summer auction, dubbed The Event – which is now spread over three days, January 27, 30 and 31.
As one of Australia’s largest auctions, The Event will bring more than 100 residential, prestige, industrial and commercial properties as well as land sites and even boats go to auction.
Other auctions are being conmducted by the Professionals Surfers Paradise and LJ Hooker Labrador.
 
Click to enlarge
<a href="/images/stories/2013/01/rpjan301.gif" title="Click to enlarge" rel="shadowbox"><img src="/images/stories/2013/01/rpjan301thumb.gif"></a>
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Queensland still Australia's auction central this week as Ray White continues its main Event

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The most expensive auction in Queensland last week was a newly completed four-bedroom home in Broadbeach Waters, which fetched $1.55 million.
Located at 14 Eady Avenue, the 45-square-metre home boasts four bathrooms and a waterside pool and spa.
It sold last week through Nick Jamieson at Dytor and Yates Broadbeach Waters.
The owners bought the property in early 2012 for $870,000 when it contained a home with serious structural issues.
Due to one part of the house sinking, the original home was knocked over and the current one was built.
The property had previously sold in 2008 for $1.42 million, before the GFC hit.
The median house price in Broadbeach Waters is $669,500, according to RP Data.
The top 10 auctions for the week, preceed the <a target="_blank" href="https://www.propertyobserver.com.au/news/graham-spottiswood-s-alston-at-southport-sells-for-%2498-million/2013012858997">big auctions of the weekend</a> where prices of up to $9.8 million were achieved on the Gold Coast.
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/14_eady_avenue_broadbeach_waters_qld_4218/3332825">14 Eady Avenue, Broadbeach Waters, QLD, 4218</a>, four-bedroom house, sold on January 24 by Dytor &amp; Yates Broadbeach Waters for $1.55 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/7_mermaid_quay_noosaville_qld_4566/6499554">7 Mermaid Quay, Noosa Waters, QLD, 4566</a>, five-bedroom house, sold at auction on January 26 by Laguna Coolum Real Estate for $1.5 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/1a_werona_street_pennant_hills_nsw_2120/5415438">1A Werona Street, Pennant Hills, NSW, 2120</a>, five-bedroom house, sold on January 23 by Laing + Simmons Pennant Hills for $1.1 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/111_bradford_street_coolbinia_wa_6050/11927684">111 Bradford Street, Coolbinia, WA, 6050</a>, four-bedroom house, sold on January 24 by Rich Estate Mount Lawley for $1.075 million
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/215_jerrara_road_jerrara_nsw_2533/3138923">215 Jerrara Road, Jerrara, NSW, 2533</a>, six-bedroom house, sold on January 23 by McGrath Kiama for $950,000
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/34c_princes_road_torrens_park_sa_5062/10585039">34C Princes Road, Torrens Park, SA, 5062</a>, three-bedroom house, sold on January 24 by Murray Hill Real Estate Torrens Park for $885,000
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/2/4_edgecumbe_avenue_coogee_nsw_2034/1929679">2/4 Edgecumbe Avenue, Coogee, NSW, 2034</a>, two-bedroom unit, sold on January 22 by McGrath Coogee for $860,001
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/18_hill_street_spring_hill_qld_4000/7502362">18 Hill Street, Spring Hill, QLD, 4000</a>, three-bedroom house, sold on January 22 by Century 21 Vision iSOLD Brisbane for $800,000
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/14_longview_crescent_stanwell_tops_nsw_2508/6463402">14 Longview Crescent, Stanwell Tops, NSW, 2508</a>, five-bedroom house, sold on January 24 by Ray White Helensburgh for $780,000
<a target="_blank" href="https://www.propertyobserver.com.au/https://www.myrp.com.au/property-overview/2/35_the_boulevarde_cammeray_nsw_2062/1695156">2/35 The Boulevarde, Cammeray, NSW, 2062</a>, two-bedroom unit, sold on January 23 by Justin Ferguson Property Specialists Cammeray for $770,000
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New home at Broadbeach Waters tops RP Data top 10 sales

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With the proper guidance, commercial property will prove to be a very rewarding investment — and in different ways.
However, there are several golden rules you really should keep in mind.
1. Safeguard your equity
Never allow yourself to become totally mesmerised by return on capital. Your first consideration always needs to be the return of capital.
Protecting your equity will involve undertaking the proper due diligence at the time you purchase. However, it also relates to having the appropriate insurance policies in place — to protect your property in case of unforeseen calamity.
2. Control your costs
You can do this in two ways. First, by ensuring the lease structure provides for a net rental — where your tenant becomes responsible for the building operating costs.
However, this rule also relates to the interest on your mortgage. In the current market, it would be far better to avoid surprises and fix your rate than try to save 0.5% per annum on interest costs.
3. Look at how you can add value
Try to only purchase properties that  provide you with "an angle".
These include things like being able to subdivide the building into smaller components. Or recognising an under-let tenancy that is an approaching market review. Perhaps there's an opportunity to upgrade (or transform) the property, when the lease expires.
4. View commercial property for the longer term
Bought correctly, your properties will not only provide you with handsome returns now but also build up additional collateral within your overall portfolio. That way, you will be in a position to release additional equity and acquire further similar properties down the track.
5. Your tenant is ultimately your success
The intrinsic value of your commercial properties lies in both the amount of rent to be paid as well as the fact that it is paid.
Therefore, it is sometimes wiser to accept a slightly lower rental and lock in solid tenants on secure leases. Then you need to look upon those tenants as "your partners".
Their wellbeing will be reflected in the future returns your properties generate. If your tenants have something causing them concern, you should respond quickly and with genuine empathy.
You can be businesslike,and still show understanding — because your ultimate success is very much based upon a team effort.
Bottom line: Clearly, there is more to commercial property than what is contained in these five rules. But you can<a target="_blank" href="https://property-edge.com.au/starting-point"> explore this in far more detail </a>and gain an even better understanding of how commercial property really works.
Chris Lang is an advisor to commercial property investors, sell-out author and regular speaker on how to invest in commercial property. You can visit his website <a target="_blank" href="https://property-edge.com.au/">Property Edge Australia</a> to help you get the most out of your commercial property investing.
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The five golden rules of commercial property investment: Chris Lang

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Eight years ago, if we lived in Brisbane, were tempted to buy an investment property, and were a creature of habit, the chances are that the property we purchased also would have been in Brisbane.
The typical Brisbane house in 2003 cost $226,000 and would today be worth around $425,000. That’s pretty good growth on our capital, even with three years of this eight-year period being the GFC-gloom times!
If we lived in Perth and were that same creature of habit our investment capital would have performed slightly better ($202,000 to $469,000). In Sydney, where affordability constraints have acted as a deterrent for people buying homes, the typical house increased in value from $500,000 to $641,000.
What if we were that same person looking to invest in property eight years ago only this time we were not a creature of habit? What if we understood that property investment was not an act of “buying” but an act of reading the science of property markets and making the most money we could within a level of risk which we were comfortable with?
If we were this person, our research back then might have taught us that there was going to be an enormous demand for housing in West Australia’s Pilbara region, a demand that could not be matched by supply. We might have purchased a home in <a href="/news">Karratha</a>, where thousands of new jobs would be created to support a relatively new industry called liquefied natural gas. Or we might have purchased a similar home in <a href="/news">Port Hedland</a>, where new infrastructure would be built to support the most lucrative reserves of iron ore in the world.
If we purchased that home in Karratha or Port Hedland we would have paid $185,000 and $210,000 respectively – a similar price to what we could have paid for a home in most of the capital cities. The same home today would be worth an incredible $755,000 in Karratha and $1.1 million in Port Hedland.
With a current population of 19,000 in Karratha and 15,000 in Port Hedland, housing is now so expensive that many people elect to rent instead of buy. If you are one of those landlords you would today be receiving rent of $1,500 per week in Karratha or $2,650 per week in Port Hedland.
Of course, the key words used throughout this story are “if” and “might”.
The reality is that, of all of those Australians who could afford to invest only a small percentage of them actually do it. They either don’t understand how acute the consequences will be later in life or they allow the rat-race of life to take precedence over their own finances. Many others can afford to invest although they’ve never sought out a skilled advisor to assist them to (safely) maximise their investment returns – they are the creatures of habit.
The moral of this story is not to encourage property investors to buy property in Karratha or Port Hedland today. While rental yields there continue to be among the best in the country our research suggests that housing supply will catch up soon so rates of growth will normalise – and might even go backwards. In addition, home prices are such there now that we wouldn’t consider it wise to tie up so much capital in a single property.
Moreover, the moral of this story lies in the importance of investing as soon as you can afford to. And don't be a creature of habit! An astute share investor acknowledges that the share market will always contain a plethora of opportunities. Similarly, an astute property investor will look at the credentials of property markets across the country and not restrict their search to a handful of suburbs in their home town.
While Karrathas and Port Hedlands don’t pop up for property investors very often there will always been several locations throughout the country that have exceptional investment credentials; you are not going to find them being a creature of habit!
Simon Pressley is managing director of <a target="_blank" href="https://www.propertyology.com.au/">Propertyology</a>, a full-time property market analyst, accredited property investment adviser, and 2012 REIA / REIQ Buyers' Agent of the Year.
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Astute property investors are not creatures of habit and will buy to maximise their returns

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You know things are on the up when even builders are bullish.
There are growing signals from the economy and the property industry that 2013 will be a good year. Consumers have begun the new year with a new attitude, and real estate professionals are reporting the change in atmosphere. Some say they’ve never been busier.
But positive press statements from builders and developers? I never thought I’d see the day.
First, Master Builders in Queensland put about the view that the building industry would experience a turnaround in 2013. It reported an improvement in building approvals in 2012 and suggested most areas of the state would see more activity this year.
Second, the Urban Development Institute of Australia declared that the signposts are pointing to better times for the industry. It too reported that dwelling approvals were higher last year than in 2011 and forecast better times for 2013.
Master Builders housing policy director Paul Bidwell said: “We believe it is important to focus on the positives for the industry, including the four interest rate cuts during 2012, reasonably strong economic fundamentals, such as employment and population growth, and the Queensland Government's first-home owner construction grant, which commenced in September 2012.”
Well, yes. Couldn’t agree more about focusing on the positives. But, until a few days ago, the builder/developer lobby groups have been running a “bad news sells” campaign, with Master Builders and the Housing Industry Association acting as pall bearers rather than standard bearers for their industry.
I’m hoping this recent change means that they’ve learnt that negativity doesn’t work. Perhaps they noticed that people had stopped listening to their culture of complaint.
The previous negativity coming out of the home building sector was quite baffling. For years they’ve been talking down their own industry and wondering why no one was buying their products.
Imagine what would happen to car sales if the motor industry pumped out weekly press releases declaring that cars were hideously expensive and no one could afford to buy them. That essentially is what the home building industry has been doing for years.
Pessimism is highly contagious, and it’s no surprise that home buyers have been shunning new homes. The message they’ve received is that established homes are much cheaper.
Home loans have risen 6.1% – both for owner-occupiers and investors – over 12 months. But home building commencements have fallen. Buyers have been opting for old over new.
The home building industry has shot itself it both feet and now, hobbling around on crutches, is mounting a valiant fight-back with a smile on its face.
I wish them lots of luck, but they could have saved themselves a lot of pain by adopting optimism a lot earlier.
To help them with this new style of campaign, one that actually talks up their industry, here are a few helpful suggestions:
<ul>
<li>Try selling the benefits of buying new, rather than old. They include, for investors, lower ongoing maintenance costs and better depreciation benefits. For first-home buyers, they include government grants and stamp duty concessions which are available only for new homes.</li>
<li>Highlight the areas where new home building is thriving. There are plenty of them around regional Australia, headed by Gladstone and Mackay in Queensland.</li>
<li>Emphasise the array of special deals and discounts on offer around the nation from builders and developers.</li>
<li>When the ABS publishes statistics on home loans, building approvals and anything else relevant to real estate, paint it with a positive brush rather than the standard negativity approach.</li>
</ul>
The building industry could turn around in a matter of months.
Terry Ryder is the founder of <a target="_blank" rel="nofollow" href="https://www.hotspotting.com.au/">hotspotting.com.au</a> and can be <a target="_blank" rel="nofollow" href="https://www.twitter.com/hotspotting">followed on Twitter</a>. His next Property Observer webinar is February 12. 
<a target="_blank" href="/news">Free webinar with Terry Ryder: Finding the next Gladstone – where investors should look in 2013 for hotspots</a>
For many years the Queensland mining town of Gladstone has been among the first names mentioned when property investors and commentators discuss property investment hotspots.
However, according to <a target="_blank" href="https://hotspotting.com.au/">hotspotting.com.au</a>’s Terry Ryder, the reality is that investors have missed the best time to buy in Gladstone.
Investors would be better off looking for the up-and-coming locations with hotspot qualities.
In this webinar, Ryder will provide Property Observer readers with:
<ul>
<li>Regional locations that have the potential to match Gladstone’s past performance </li>
<li>Insights into the factors shaping these markets to aid property investment selections</li>
<li>Locations that property investors should avoid or be highly cautious about considering</li>
</ul>
Webinar date: Tuesday, February 12 at 12.30pm.
   
 
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Even builders are bullish that 2013 will be a good year for property: Terry Ryder

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So is Australia’s housing market “unaffordable” or not?
What we really lack in Australia is a realistic vision of how our housing market should appear. There are too many conflicting voices smothering the debate – from a myriad investors looking to profit from rising prices, hoping they’ll outpace inflation to enable retirement on a pot of ‘property gold’ to consumer organisations struggling to address the growing mountain of citizens requiring public housing or rental assistance.
Even with the peak-to-trough fall in house prices over recent years, with the median dropping nationally a little in excess of 6% coupled with an easing of lending rates to a little over their post-GFC record low, residential property prices in Australia still remain far too high for a large proportion of first-home buyers – the majority of whom don’t stand a chance unless they benefit from a deposit cash injection gifted by family or friends.
The  Annual Demographia Housing Affordability index, which generates the same media headlines year in year out, has once again highlighted what it claims is the “severely unaffordable” nature of our housing. However, last week its findings were disputed by APM senior economist <a target="_blank" href="https://www.propertyobserver.com.au/news/australian-housing-market-not-as-unaffordable-as-demographia-claims-andrew-wilson/2013012158795">Andrew Wilson</a>, who suggested because there were buyers ‘buying’ property, housing couldn’t be all that unaffordable, could it? After all, suggested Wilson, prices were rising in Sydney, banks were lending, and there has been “activity” in the marketplace of late.
As Wilson is well aware, the reason prices continue to rise in Sydney (and other metropolitan areas) can be directly attributed to decades of poor planning for population growth by both state and federal governments, which have ensured a majority of buyers remain well and truly hamstrung to the inner and middle suburbs of our capital city locations.
In this respect, Sydney is no different to New York and London – these cities are also on an upward trajectory due to shortages of affordable supply (despite the woeful economic climate both countries face).
To some extent this places a ‘floor’ underneath the cost of metropolitan housing in the highly sought-after areas of our capitals and hence, investors can still be fooled into thinking there’s no ‘ceiling’ to price inflation. Despite low consumer confidence and our new aversion to debt, the crystal ball predictions of annual 10%-plus rises in house values continue.
However, this does not mean our housing falls under the definition of “affordable”. Household debt to disposable income in Australia stands a little below 150% – high by historical standards and certainly not healthy. We’ve borrowed more in order to pay more.
As for any perceived “activity” in the marketplace – putting aside the woefully low transaction figures of late, which although stabilising, are at levels not seen since the late 1990s, and a construction sector that is struggling to recover from an 18-month low – it seems the remaining buyers  active in the market arena are investors and second-home buyers – because as far as first-home buyers are concerned, the latest home loan data from the ABS shows a significant fall in the sector nationally (down to 15.8% in November 2012 from the 18.7% high recorded in October). It couldn’t paint a clearer picture.
Outside of the “carrot and stick” approach of grants and incentives, which disproportionally spike housing costs and activity, thereby forgoing any perceived benefit while the grants remain in place – first-home buyers are not showing any great enthusiasm to buy into the Aussie dream. Notwithstanding, if you took a national survey, the majority would tell you in no uncertain terms and probably not quite so polity as expressed here, Australian real estate is both inflated and unaffordable.
Exaggerating the problem is the long-term trend, and overwhelming preference from this demographic when they do step in is for established dwellings over new.
This should come as no surprise – new houses are generally located in outer suburbia away from family, friends and any hint of an adequate supply of social amenities. High-rise dwellings are built on the mantra of “squeeze as many in as possible” and better resemble a rabbit hutch than an abode to call home.
Buyers who do move outwards tend to be families upsizing to larger four- and five-bedroom properties and therefore make the choice to compensate distance (and the cost of a commute) for an increase in accommodation. First-home buyers on the other hand would rather take a smaller property to purchase closer to the hub and bub of city amenities – thereby favouring apartments.
Herein lays a further problem. Banks don’t like lending to first-home buyers finance for high-rise dwellings – so any suggestion to build as many as possible to ease supply is of little benefit to this sector. Furthermore, construction (as I point out <a href="https://www.propertyobserver.com.au/developments/high-rise-accommodation-must-be-done-right-catherine-cashmore/2012111257776" target="_blank">here</a>) has often proven to be overwhelmingly poor, owners’ corporation fees high, and purchase prices simply do not represent value for money.
 
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On the other hand, established dwellings hint of an era when property was built with the home buyer in mind. Unlike new dwellings, which come with a “wow” premium on the initial price, older properties offer the potential to buy in at a lower cost and renovate. The floor plans in apartments are generally more spacious and the low-rise facade is in keeping with the predominant street aspect.
Living in a smaller block with an owners’ corporation of 12 occupiers is highly preferable to a high-rise monstrosity that contains 150 offshore investors who won’t be so actively motivated to pay future levies for long-term building improvements and general upkeep. It’s no wonder first-home buyers prefer the option.
Of course, local investors under our current system of negative gearing also prefer established over ‘new’ and therefore, considering our current terrain low fixed interest rates, and rising yields, it should come as no surprise that when a first-home buyer does come across an attractive property seemingly priced within their allocated budget, when faced with competition from an investor, the first-home buyer won’t be the one leaving the property with a signed contract in hand.
Research from RateCity suggests it takes an average single income wage earner on $70,000 per annum five years to save a deposit– with more than half of buyers in their 20s receiving help from family and friends.
Other analysis based on ABS borrowing figures places a single-income first-home buyer’s budget around the $300,000 mark.  To purchase something larger than a one-bedroom apartment at that price in Victoria, you need to head some 25 kilometres outside the city to areas such as Melton and Werribee – is it any wonder our ‘new’ buyer market is diminishing?
As for the Demographica study, comparing property markets across the world is difficult due to the way statistics are collated, with some markets substantially less transparent than others and each having its own unique demographic and structural requirements.
Australia and Hong Kong are both classed as ‘severely unaffordable’ – however I’d guess that you’ll find far more attractive living options in Australia for $350,000 than Hong Kong, where most are confined to an apartment in the sky.
The survey rates each selected country by dividing the median house price by the annual median pre-tax wage. This places Sydney’s ‘median multiple’ at 8.3 and Melbourne’s ‘median multiple’ at 7.5
I’m not a fan of the methodology – comparative ‘medians’ are a poor way to analyse effective cost.  However the result of the survey speaks volumes for a growing demographic of first-home buyers wanting more than a dead duck of a property in outer suburbia, or a boxed-sized room in the clouds.  As far as this demographic is concerned, Australia’s real estate – at least the options worth buying – is ‘severely unaffordable.’
It doesn’t have to be this way – there are many things both government and planning authorities can do to increase the supply of both affordable and quality accommodation. For example, if you dig down deeper into one of the previous International Housing Affordability surveys, there is an interesting picture painted comparing Sydney and Melbourne with Dallas-Fort Worth and Atlanta in America.
In 1981 both cities in the USA were a similar size to our biggest capitals with similar rates of projected population growth, however, unlike Melbourne and Sydney, authorities in Dallas and Atlanta ensured cheap land was made available on the outskirts of their cities and more importantly, Dallas and Atlanta expanded their train lines into the new suburbs as part of the plan.
Consequently, neither city suffered the same level of price inflation we’ve experienced in Melbourne and Sydney, and Dallas now boasts the largest light rail system in the United States, with further plans to expand into the outer-suburban locations as part of its 2030 plan.
But let’s face it. The property market in its current capacity has little interest in the ethics of providing shelter or affordable accommodation – it’s a money-making vehicle, and as long as someone out there is willing to pay in excess of a $500,000 for a modest one-bedroom apartment with the mindset that it will be worth a lot more when they sell – regardless of their means to fund the purchase – the debate over whether our market is ‘unaffordable’ will fall on deaf ears within both the property industry itself and the political domain.
As such, the addiction to ‘building wealth the property way’ will continue to the determent of increasing numbers of individuals who will struggle to rent, let alone buy.  Looks like we’ll need to hurl straight into the iceberg ahead in order to learn a ‘better way.’
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
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Australia's housing prices remain far too high for first-home buyers: Catherine Cashmore

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ASX-listed property investor and funder manager Trinity Group has blamed the poorly performing Victorian coastal leisure market for a $3.1 million write-down in the value of its investment in the Cumberland Lorne Resort on the Great Ocean Road.
The group, which has been selling assets in its $95 million property investment portfolio to reduce debt levels in order to secure a debt facility extension with NAB, said the <a href="/news">Lorne </a>resort write-down was the “primary driver” for a steep earnings downgrade to interim results to December 31.
Trinity Group is forecasting an interim net loss of between $3.6 million and $3.9 million, having earlier advised shareholders of a $700,000 net profit.
“The primary driver of the group’s 2013 half year loss result and decrease in net tangible assets per security is a $3.1 million write-down in the value of the group’s property investment at the Cumberland Lorne Resort in Lorne, Victoria.
“This write-down reflects the poor market conditions, and the resulting impact on property values, that is being experienced by the coastal leisure property sector.
“The write-down has also been influenced by the result of the recent marketing campaign that has occurred for the Cumberland Lorne Resort,” said Trinity Group in a statement.
Trinity acquired 51 freehold apartments, the conference centre and the management rights to the Cumberland Lorne Resort in 2009 for around $20 million.
The 2012 annual report values the investment as being worth $17.7 million.
Lorne is a seaside town and popular holiday destination along the Great Ocean Road, a two-hour drive south of Melbourne.
The Cumberland Lorne Resort is situated on Lorne’s main street at 150 Mountjoy Parade and has 102 one, two-bedroom and penthouse self-catering apartments with private balconies offering ocean views.
It currently offers a two-night package special of $386 per room.
The resort was put up for sale in September last year after Trinity undertook a $500,000 “soft” refurbishment of the conference centre and apartments.
The resort is being sold along with the 5,900 square metre Compark Circuit business park in Mulgrave, which is listed as having a book value of $15 million.
An expression of interest campaign closed on December 19 for both properties, with Trinity in discussions with potential buyers.
The 2012 annual report notes that Trinity undertook 2011-12 summer sales campaign to sell the apartments at the Cumberland Lorne Resort “during difficult market conditions in Victoria”.
“As a result of the campaign, one apartment was sold with the sale price exceeding book value. Another apartment settled during the year as a result of the previous summer’s sales campaign.
The annual results record the sales generated revenue of $960,000.
As of June 30, Trinity Group owned 40 apartments, the conference centre, management rights and a manager’s apartment at the resort.
A recent survey by Roy Morgan lists the Great Ocean Road as the fifth most popular tourist destination for young Australians aged under 30 with 12% of 22,000 people surveyed saying they planned to take a holiday along the famous stretch of Victorian coast over the next two years.
Trinity Group reported an after tax profit of $18.7 million for the year ending June 30.
The report discloses that during the financial year, Trinity Group reduced its debt facilities with National Australia Bank (NAB) from $69.9 million to $46.1 million following the sale of an investment property at Richlands, Queensland, together with the disposal of the remaining 50% investment in the Trinity Funds Management business and the disposal of units in Trinity Property Trust.
These sales allowed it to reduce its debt by $23.8 million and reduce its loan to value ratio of 47.6% with NAB provided Trinity Group with an extension of its debt facilities by 14 months to October 31 2014.
A covenant of the debt arrangement with NAB requires that Trinity’s loan to value ratio not exceed 50%.
Trinity’s prized asset is The Chambers, a heritage-listed office building at 308 Queens Street in the Brisbane CBD, valued at $33.1 million.
Trinity Group shares are currently trading at 28¢.
Half-year results will be released at the end of February.
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Cumberland Lorne Resort $3.1 million resort write-down blamed on Victorian coastal market woes

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At the beginning of the new year it’s customary for commentators to give forecasts for what’s ahead. 
Today I'm going to share 10 reasons I'm feeling positive about 2013, but first let me give you my obligatory forecast, which is: Most forecasters will be wrong this year.
 
Why do I say this?  
<ul>
<li>You just have to remember all the things we worried about last year that didn’t happen:</li>
<li>The European Union didn’t break up and its woes didn’t break the banking system; </li>
<li>America muddled its way through its challenges and its economy is picking up; </li>
<li>China’s economy slowed down, but didn’t tank like many predicted; </li>
<li>The mining boom didn’t end, it just moved on to its next phase; </li>
<li>The Mayan prediction of the world coming to an end was wrong; and </li>
<li>All those who predicted our property markets would crash were also wrong.</li>
</ul>
 
OK – now I’ll stick my neck out and make a prediction... 
The year 2013 will be an average year. 
Now don’t get me wrong – I’m looking forward to this year. In fact, I’m about to give you 10 reasons to look forward to it to. 
Why I’m calling it an average year is that I expect it to be a better year than last year, but not as good a year as 2014 will be.
 
Here are 10 reasons for optimism for 2013 and beyond
 
1. The bad news around the world is subsiding 
<ul>
<li>While the world’s problems haven’t gone away, many of the fears that plagued us last year are subsiding: </li>
<li>China's economy is resuming its rapid expansion, with its manufacturing output growing at its fastest rate in 19 months. </li>
<li>The US economy is picking up and didn’t fall off its fiscal cliff of sharp tax rises and spending cuts. </li>
<li>Europe will remain a basket case for years, but the European Central Bank seems to have stabilised the situation compared with the crisis 12 months ago.</li>
</ul>
 
2. Australia’s economy is in good shape 
Whether we have a budget surplus or not this year, our economy, which has gone 22 years without a recession, is the envy of most developed nations. 
We withstood the deepest global recession since the Great Depression and we are likely to keep growing at around 3% this year.
 
3. Unemployment is low 
Sure some jobs have disappeared, but around 400,000 new jobs have been created in Australia since the GFC and unemployment levels remain comfortable around 5.6%. 
When people feel comfortable about their jobs, their more positive outlook is good for confidence, good for consumption and good for investment.
 
4. Australia's inflation rate is low 
 
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Our low inflation rate gives the Reserve Bank room to keep interest rates low or contemplate reducing them further.
 
5. Interest rates are low and likely to remain so for a while 
Our low interest rates are allowing home owners to pay off their mortgages quicker and giving some who overcommitted some extra breathing space.
 
6. Household finances are in sound shape 
Despite all the global economic worries over the last few years, recently released ABS figures show that Australian household wealth climbed 18.4% in the past year to $69,422 per person. This makes us the wealthiest we've been in five years. 
Rather than spending, Australians have been stashing their cash. Many have reduced their credit card debts, while others have been saving and yet others have taken advantage of low interest rates to pay off the principal on their home mortgage. 
There has also been a strong wealth effect for households from rising stock prices on the ASX. 
Their robust balance sheets will allow many Australians to ramp up borrowings and get into the property market this year.
 
7. Housing affordability is high 
The HIA-CBA Housing Affordability index shows that national affordability in the September quarter 2012 is just shy of the highest level in a decade. It is likely the next round of data (December quarter out around the middle of February) will show housing is even more affordable due to higher wages and lower interest rates.
 
8. Consumer confidence is picking up 
Consumer sentiment (the big missing ingredient over the last few years) has been rising over the last six months, and following the disappointing post-December rate cut 4.1% sentiment decline, this month’s report showed sentiment up slightly (0.6%) placing the level of sentiment at its long-term average.
 
9. Last year the Australian stock market recorded its biggest gains since 2009 
Typically the stock market starts to pick up a year or two before the economy, and the big money seems to think our future looks rosy.
 
10. Our property markets will pick up 
Having bottomed in the middle of last year, house prices are slowly rising – a trend forecast to continue this year. 
Of course there is no single property market and some areas will still languish, but a mixture of low interest rates, strong population growth, job stability, affordability and rising rentals will make more people get involved in property this year.
Some will just renovate or improve their homes. Others will take the next step and upgrade to new or bigger homes. More first home buyers will get a foot on the property ladder pushed by higher rents and lower interest rates. 
And investors looking to get set for the next stage of the property cycle will take advantage of the opportunities the property market is offering them.
 
In summary 
Australians, and particularly Australian investors, have a lot to be optimistic about in 2013. 
We still love property, our tax system favours investors and our banking system is underpinned by housing. 
While there will always be an argument for keeping house prices low and more affordable, with 70% of Australians owning their own or paying off their homes, our major political parties cannot afford to disenfranchise the majority of our population. 
Affordability, low unemployment and interest rates, and pent-up demand in some regions point to a good year for property.
 
One last forecast for the year… 
The property pessimists will be out there again and will no doubt pick more holes in my arguments than in a block of Swiss cheese. 
I know some will say “this time it’s different” but I suspect it won’t be.
 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Strategists</a>, which creates wealth for clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://propertyupdate.com.au/category/property-investment/">Property Update</a> blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment.
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Why 2013 will be average but 2014 will be better for Australian property markets: Michael Yardney

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I met an interesting chap today.  He has developed property before and is experienced but was looking to fast track his property portfolio this year.  He also owns and runs a large business and doesn’t have the time needed to focus on property developing. Although he loves it, finding suitable sites was time-consuming. He needed some help because he understands too well the rewards developing can reap and how time equals money.
I’m happy to say that our meeting today may have made him $110,000 and we haven’t even located a site for him yet!  I’ll explain how.
He is currently holding two development approved dual-occupancy sites, and one of the questions he asked me was “Jo, should I build my approved duplexes or sell the land DA approved? Which will make me the most?”
A good question to ask.  His strategy was to accumulate property quickly and hold for the long term, but what was most important for him was to create equity. So, what scenario would be more profitable?
To build or not to build, that was the question.
I thought I’d nut it out for you today so you can see how I answered him.
OK, firstly you need to know that the approved site he was thinking of selling is part of a prior development. He had purchased a large block of land with an existing, yet run-down house. He gained approval to build a duplex behind the house and subdivide, essentially cutting the block in two. He has already completed this part of the development. Then he gained a second approval to demolish the old house and build another duplex on the newly created lot at the front.
He wanted to know if he should sell the front lot off with approval or build the duplex and keep them or sell them.
There are several considerations:
<ul>
<li>Capital gains tax if selling the villas</li>
<li>GST if selling the new villas</li>
<li>Selling costs if selling the approved land or the villas</li>
<li>Costs to get it to development application approval and almost construction certificate approval</li>
<li>Maximum equity that can be created</li>
<li>Yield if he held all four villas</li>
</ul>
Remember he had developed the block originally and the old house was renting for $180 per week, which helped cover holding costs so he could easily sit and land bank if he wanted to.
He paid $200,000 for the land with original dilapidated house; it was on a large block with separate access at the back.
The cost to build the duplex at the rear of the house was $350,000, including subdivision costs.
The two villas he built were valued at $300,000 each.
So on this part of the development, his cost was $200,000 (land) + $350,000 (build) = $550,000.
Remember the two villas are valued at $300,000 each. So he’s made $600,000 less costs of $550,000.
His equity is only $50,000 so far, but he still holds half the land with the old house on it.
 
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If he wants to sell this DA-approved land, he needs to consider how much the next person will make. You can’t just pluck a figure out of air and sell the land at this price. It’s important to work backwards so that there is something in the deal for the next person otherwise you won’t sell.
I estimated that he would need to sell the land around $170,000 for the purchaser to build the duplex ($350,000) and to make a profit.  $170,000 + $350,000 = $520,000.  The value of two villas is $600,000, so there is $80,000 in it. That’s not enough for everyone to be happy, but if a builder buys it he may be able to construct for less.
Note, I haven’t included other costs such as stamp duty and holding costs, so we are looking at very rough round figures. Based on this, his gross profit at this point (roughly) is $50,000 in equity after building the back duplex plus the $170,000 land sale. So $220,000.
But, if he held the land and built the duplex he would be much further ahead.
Original land cost: $200,000
Build back duplex and subdivide: $350,000
Build front duplex $320,000
Total cost $870,000
Total end value if each villa (four) is worth $300,000 each: $1.2 million
$1.2 million to $970,000 cost = $330,000 in equity.
So he’s creating around $330,000 in equity vs. $220,000 if he sold
(Less costs on both sides, so again I stress these are rough figures).
He can create an additional $110,000 or so if he builds and holds.
He told me that the three-bedroom villas are renting at the back for $320 per week (which is actually low in this market and should be at $350 each). With four villas returning $320 per week, that equals $66,560 per year. The total cost of the project if building the four villas is $900,000. This means the gross yield 7.4%.
So he could achieve a 7.4% gross yield plus make $110,000 if he holds.
I won’t go into the sell scenario as there are too many costs to include. It’s very important that if you develop to sell that you work closely with your accountant to consider costs such as capital gains tax and GST when selling. Anyway, this chap’s strategy was to hold if he builds. So the yield and equity creation was more important to him.
I hope this makes sense. The numbers can be hard to follow and obviously need to be much more refined than what I’ve used above but this may give you a gist of how you can make good money from developing if you make the right decisions.
Jo Chivers is director of <a target="_blank" href="https://www.propertybloom.com.au/" title="Property Bloom">Property Bloom</a>, which manages property development.
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