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

<html><body>
In October the rental market remained stable in Victoria in terms of the level of vacancies and rents charged.
The vacancy rate for Victoria was 1.9%, compared with 2% in September. In Melbourne the vacancy rate was also 1.9%, slightly lower than the 2% recorded in September. In regional Victoria it remained stable at 2%.
Within the metropolitan area inner Melbourne had the highest level of vacancies, with 2.6% recorded in those suburbs within four kilometres of the CBD. As you move further from the CBD the vacancy rate tightens, with 2% in the middle suburbs and 0.9% in the outer suburbs.
The median rent being asked in Melbourne was $370 per week for houses. This is lower than the $380 being asked in July and reflects an easing of conditions in the market.
In regional Victoria the tightest vacancy rate was found in Bendigo, where it was 0.7%, down from 0.9%. In Geelong the vacancy rate tightened from 3.5% to 2.8% and in Ballarat it eased from 1.3% to 1.5%.
Rents remained reasonably stable, with a weekly median rent of $300 per week for a house being recorded, compared with $295 in September.
For the first time the REIV is publishing a vacancy rate for the Mornington Peninsula. In October the vacancy rate was 1.6%, compared with 3.3% in September.
Enzo Raimondo is CEO of the <a rel="nofollow" target="_blank" href="https://www.reiv.com.au/">Real Estate Institute of Victoria</a>.
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enzoraimond-7fvRFHPR52

Victorian rental market stable in October

<html><body>
With the other major index providers now releasing their September quarter data, we can start to see a firm pattern of recovery emerging in Australia’s housing markets.  The <a href="https://abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6416.0Main+Features1Sep%202012?OpenDocument" target="_blank">ABS released its stratified median series</a> on the 6th of November showing a 0.3% rise in capital city house values over the September quarter, following a 0.6% increase in prices over the June quarter.   Similarly, APM showed a flat September quarter (0%) after reporting a 0.4% rise over the June quarter.  Closer to home, the <a href="https://www.rpdata.com/press_releases/Page-1" target="_blank">RP Data-Rismark results</a> showed house values were actually down over the June quarter by -1.4% and up 2.2% over the September quarter.
The flow of data brings to mind how, a few months ago, there was some commotion from a particular housing market commentator who presented a strongly worded case that the RP Data-Rismark Indices were unreliable and inaccurate.   It turns out, that was much kerfuffle about nothing.
Being the earliest reporter on housing market conditions (the RP Data-Rismark series are published one day in arrears, unlike the ABS, which took 37 days to publish its September results), it is easy to become a target when reporting on a change in market conditions.
At the time, of course, we vigorously defended our methodologies, pointed to our online white papers, highlighted the due diligence and independent auditing of our data and infrastructure and the peer review of the index construction.   We went into detail about our rate of data collection and attribute coverage.  We even put out an<a target="_blank" href="https://www.propertyobserver.com.au/residential/rp-data-rismarks-defence-of-the-daily-hedonic-home-value-index/2012070555447"> update onhis website</a> addressing some of the misconceptions.
Click to enlarge
<a title="Click to enlarge" href="/images/stories/2012/11/lawlessnov9.jpg" rel="shadowbox"><img src="/images/stories/2012/11/lawlessnov9thumb.jpg"></a>
An extract of the assertions from one of the media articles is below (taken from <a target="_blank" href="https://www.brokernews.com.au/article/sqm-rp-data-inaccurate-and-unreliable-141384.aspx">Australian Broker online</a>).
 
<hr class="system-pagebreak">
 
Moving on, it's worthwhile re-visiting the differences between the RP Data-Rismark home value measures compared with the ABS.  We have had some questions on why companies would purchase a subscription to our indices when the free ABS index reports a similar result without cost.
The graph below shows the two measure move virtually in sync over time with some smaller differences over shorter time frames.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2012/11/rpnov121.jpg"><img src="/images/stories/2012/11/rpnov121thumb.jpg"></a>
Without going into a lot of detail on the differences in methodology (we have documented the benefits of a hedonic measure over a stratified median in the past on this blog), some of the key points to highlight are:
<ul>
<li>The RP Data-Rismark measure is much timelier, being published just one day in arrears.  For those who need timely data to factor into their decision making, strategies and market communications, no other index is this early to market.</li>
<li>The RP Data-Rismark measure is much more specific to housing types, reporting on the performance of houses, units and combined ‘dwellings’.  The different product types show quite different trends and performances.</li>
<li>Granularity – the RP Data-Rismark indices are available across smaller geographical boundaries.  We publish the headline results at the capital city and combined capitals level, however the index is also calculated across statistical divisions and statistical subdivisions nationally.  The methodology can also be applied to customised boundaries where required.</li>
<li>Length of time series – the RP Data-Rismark hedonic measure extends back to 1995 for most capital cities.  Other indices within the RP Data-Rismark suite of index products (we produce everything from simple median prices and stratified medians, through to repeat sales indices) show an even longer time series.</li>
<li>Measures by price point – The index can also be reported across broad price segments; the RP Data-Rismark stratified hedonic index measures value changes across the most expensive, most affordable and middle priced capital city suburbs.</li>
<li>Authority and credibility – the RP Data-Rismark index is without doubt the most heavily relied upon index throughout the Government, banking, finance and economic sectors.</li>
<li>Transparency – the RP Data-Rismark Index methodology has been independently audited, as has the data collection and infrastructure the index is runs upon.  White papers on the index construction are available <a href="https://www.rpdata.com/research/rp_data-rismark_home_value_index_methodology" target="_blank">here</a>.</li>
<li>Portfolio tracking – the index was designed specifically to track the risk and return profile of a diversified property portfolio and enable financial markets to use the index as benchmark for trading.  You can view the daily index movements at the <a href="https://www.asx.com.au/asx/markets/propertyIndices.do" target="_blank">Australian Securities Exchange</a> and also at the <a href="https://www.rpdata.com/research/daily_indices" target="_blank">RP Data web site</a> as well as on Bloomberg and Reuters services.</li>
</ul>
For a complete overview on the RP Data-Rismark Home Value Index, I can recommend you have a look at <a href="https://blog.rpdata.com/2012/07/the-rp-data-rismark-home-value-index-corrections-and-qa/" target="_blank">this blog we provided a few months ago</a>.
Tim Lawless is national research director of <a href="https://www.myrp.com.au/" target="_blank">RP Data.</a>
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tlawless-5VLUrbAk9s

Firm pattern of recovery in Australia's housing markets, just as RP Data-Rismark data showed: Tim Lawless

<html><body>
Dixon Advisory will seek to raise up to $80 million from Australian investors to fund future acquisitions for its ASX-listed US Masters Residential Property Fund as it looks to take advantage of a recovering US housing market.
The fund has opened an offer to raise up to an additional $40 million, with the right to receive over-subscriptions for a further $40 million.
The minimum application amount is $2,000, with the offer closing on December 6 with an expected application price per share of around $1.57.
The fund's half-year results to June 30 showed it had cash reserves of $117 million after reporting a loss of $2.1 million.
The capital raising comes just a few days after managing director Alan Dixon estimated the repair bill for properties damaged by <a href="/news">Hurricane Sandy at US$430,000</a>, or 0.3% of the value of its net tangible assets.
The fund, which transferred to the ASX in July this year from the small-cap National Stock Exchange (NSX), is the first Australian property trust to invest directly in US residential property.
Since its IPO  in June last year the fund has secured a US$165.4 million portfolio of properties comprising 430 freestanding houses and 15 multi-dwelling apartment complexes through two joint ventures. The properties are located in the New York metropolitan area, particularly Hudson County, New Jersey, and Brooklyn and Harlem, New York.
Yields on free-standing sub-divided houses in Hudson County have ranged from <a href="https://www.propertyobserver.com.au/international/wide-ranging-residential-yields-in-dixon-advisorys-us-housing-fund-as-shares-debut-on-asx/2012072455700">around 5% to in excess of 12%.</a>
The fund’s previous capital raising was in January this year, when Dixon raised $1.27 million from 33 investors.
The January raising was third and final stage of a second round of capital raising, which raised total equity raised to $31.14 million from 929 investors, kicked off October  2011.
It raised almost $70 million from investors – mainly self-managed super find investors – ahead of its listing on the NSX at the end of June last year.
Alan Dixon says a combination of the US residential property market being “at an important turning point” and the strong Australian dollar convinced Dixon Advisory to launch the latest capital raising.
“Having recognised the opportunity presented by attractive property valuations, long-term returns, including long-term capital growth and attractive rental yields, and the strong Australian dollar, we are proud to have been an early mover in this market.
“And now with signs of a recovery in US housing prices, we’re in a leading position to take advantage of that recovery.
“When you hear reports that private equity giant Blackstone Group has spent more than US$1 billion this year alone on foreclosed homes, and there is also big demand from other big private equity firms, it’s confirmation that we’re presenting an exciting opportunity for Australian investors and that there’s plenty of scope to develop the Fund," says Dixon.
The fund intends to pay shareholders a $0.10 per unit minimum distribution for both calendar years ending December 31, 2012 and 2013.
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lschlesinger-FZcF9M3vE6

Dixon Advisory seeks up to $80 million from Australian investors for US fund

<html><body>
The smallest majority of economists tip the RBA to leave the cash rate unchanged on December 4, according to the latest Bloomberg survey.
Out of the 25 economists surveyed today, 13 tip the cash rate to remain at 3.25%, while 12 expect it to fall  3.00%.
The major banks are neatly divided, with ANZ and Westpac tipping a rate cut and Commonwealth Bank and NAB expecting the RBA to hold firm.
Westpac chief economist Bill Evans says it’s the bank’s view that “lower interest rates will be required to ensure that the non-mining sector plays its part in compensating for the more modest contribution from mining”.
“The decision for December seems to be very much live.
“It must be tempting for the board to increase the chances of the uplift in growth from non-mining by easing rates further,” says Evans.
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Economists and major banks divided on December rate cut: Bloomberg

<html><body>
Tropical storm Sandy has inflicted limited damage to the Hudson County and Brooklyn investment property portfolio of the ASX-listed US Masters Residential Property Fund.
Inspections carried out since the storm have found that only 21 out of the 277 freestanding family homes that comprise the majority of the fund’s portfolio sustained some form of water damage, with the repair bill estimated at US$430,000 before allowing for any insurance claim or US government relief typically provided when a major disaster is declared.
Alan Dixon, managing director of the Dixon Advisory-managed fund, says the impact of the repair bill will be half a US cent per share (US$0.005) or 0.3% of the fund’s net tangible assets.
The total portfolio is worth US$67 million (249 settled properties), with conditional acceptances on another 151 properties worth $US46 million.
Dixon alerted investors that the portfolio had suffered some damage as a result of the storm last week, but said he expected to have “no material impact” on the value of the portfolio.
The fund’s share price is currently trading at $1.56, slightly up from $1.55 a week ago.
Dixon says nine of the properties sustained “more extensive water damage with repair bills expected to be in excess of US$10,000 per property”.
Four of the properties are located in downtown Jersey City where the total expected repair bill is expected to be in excess of US$110,000 – the cost of repairing heater and water units and other aspects of the buildings.
Five are located in Bayonne – a relatively new investment location for the fund – which also suffered contamination from a nearby oil refinery spill in addition to “widespread water damage”.
“The fund expects that the cost of the oil clean-up and remediation will be entirely borne by the refinery and/or the federal government.
“These properties will likely require re-construction and the total estimated cost is approximately US$160,000," says Dixon.
The remaining 12 properties that sustained less extensive water damage are located in Hoboken, Jersey City and West Bergen, with a total estimated bill of US$70,000.
Other properties suffered minor wind-damage of around $90,000 in total with no single property exceeding US$10,000.
The ASX-listed fund bills itself as the first Australian fund to invest directly in US residential real estate, with many of the investors being self-managed super funds.
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Hurricane Sandy repair bill at US$430,000 for Dixon Advisory's US Masters fund 

<html><body>
Since the GFC excessive debt has been a source of volatility and constraint for various countries, notably the <country-region>US</country-region> and <place>Europe</place>. Initially the focus was on the private sector, more recently the public sector. <place><country-region>Australia</country-region></place> has relatively low public debt, but how does it stack up in terms of total debt? This is particularly relevant in assessing the vulnerability of <country-region>Australia</country-region> should something go wrong, e.g. if <place><country-region>China</country-region></place> collapses and our trends of trade plummeted.
Total debt outstanding
The next table shows total debt outstanding, i.e. public and private, as a percentage of GDP. Quite clearly <place><country-region>Australia</country-region></place> ranks a fair way down the list. As is well known, <place><country-region>Australia</country-region></place>’s level of public debt is very low. Where <country-region><place>Australia</place></country-region> is a bit more vulnerable is in terms of private debt, and this is largely due to a relatively high level of household debt.
Household debt in Australia rose strongly over the 20 years prior to the GFC as interest rates trended down, financial competition led to increased access to debt and relatively stable economic conditions and rising asset prices encouraged households to gear up.
<img src="/images/stories/2012/11/olivernov9.png" width="470">
Debt outstanding, % GDP
<table width="336" cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="top" width="81">
2012 data
</td>
<td valign="top" width="85">
Public
</td>
<td valign="top" width="85">
Private
</td>
<td valign="top" width="85">
Total
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Netherlands</country-region></place>
</td>
<td valign="top" width="85">
68
</td>
<td valign="top" width="85">
680
</td>
<td valign="top" width="85">
748
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Japan</country-region></place>
</td>
<td valign="top" width="85">
237
</td>
<td valign="top" width="85">
392
</td>
<td valign="top" width="85">
629
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Denmark</country-region></place>
</td>
<td valign="top" width="85">
47
</td>
<td valign="top" width="85">
551
</td>
<td valign="top" width="85">
598
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>UK</country-region></place>
</td>
<td valign="top" width="85">
89
</td>
<td valign="top" width="85">
460
</td>
<td valign="top" width="85">
549
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Belgium</country-region></place>
</td>
<td valign="top" width="85">
99
</td>
<td valign="top" width="85">
390
</td>
<td valign="top" width="85">
489
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>France</country-region></place>
</td>
<td valign="top" width="85">
90
</td>
<td valign="top" width="85">
396
</td>
<td valign="top" width="85">
486
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Spain</country-region></place>
</td>
<td valign="top" width="85">
91
</td>
<td valign="top" width="85">
390
</td>
<td valign="top" width="85">
481
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Sweden</country-region></place>
</td>
<td valign="top" width="85">
37
</td>
<td valign="top" width="85">
420
</td>
<td valign="top" width="85">
457
</td>
</tr>
<tr>
<td valign="top" width="81">
Euro zone
</td>
<td valign="top" width="85">
94
</td>
<td valign="top" width="85">
361
</td>
<td valign="top" width="85">
455
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Portugal</country-region></place>
</td>
<td valign="top" width="85">
119
</td>
<td valign="top" width="85">
294
</td>
<td valign="top" width="85">
413
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Norway</country-region></place>
</td>
<td valign="top" width="85">
50
</td>
<td valign="top" width="85">
341
</td>
<td valign="top" width="85">
391
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Korea</country-region></place>
</td>
<td valign="top" width="85">
34
</td>
<td valign="top" width="85">
354
</td>
<td valign="top" width="85">
388
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Italy</country-region></place>
</td>
<td valign="top" width="85">
126
</td>
<td valign="top" width="85">
258
</td>
<td valign="top" width="85">
384
</td>
</tr>
<tr>
<td valign="top" width="81">
US
</td>
<td valign="top" width="85">
100
</td>
<td valign="top" width="85">
240
</td>
<td valign="top" width="85">
340
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Australia</country-region></place>
</td>
<td valign="top" width="85">
30
</td>
<td valign="top" width="85">
291
</td>
<td valign="top" width="85">
321
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Hungary</country-region></place>
</td>
<td valign="top" width="85">
74
</td>
<td valign="top" width="85">
241
</td>
<td valign="top" width="85">
315
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Germany</country-region></place>
</td>
<td valign="top" width="85">
83
</td>
<td valign="top" width="85">
225
</td>
<td valign="top" width="85">
308
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Canada</country-region></place>
</td>
<td valign="top" width="85">
88
</td>
<td valign="top" width="85">
190
</td>
<td valign="top" width="85">
278
</td>
</tr>
<tr>
<td valign="top" width="81">
<place><country-region>Greece</country-region></place>
</td>
<td valign="top" width="85">
171
</td>
<td valign="top" width="85">
103
</td>
<td valign="top" width="85">
274
</td>
</tr>
</tbody></table>
Source: IMF, Haver Analytics, Ned Davis Research, AMP Capital
The GFC has brought a more cautious attitude to debt on the part of Australians thanks to weaker asset prices, worries that house prices might go the same way as those in the <country-region>US</country-region> and parts of <place>Europe</place> and increased job insecurity, and this has been accentuated by a tightening in lending standards. Nevertheless, debt levels have basically stabilised relative to income in contrast to other countries where they have fallen, although this in large part reflects defaults in the <country-region><place>US</place></country-region>. See the previous chart. What’s more, with soft share markets and house prices and rising incomes in recent years, Australian household balance sheets as measured by net wealth (assets less liabilities) relative to income have deteriorated.
<img src="/images/stories/2012/11/olivernov91.png" width="470">
Source: OECD, RBA, AMP Capital
Similarly, soft asset prices at a time of stable debt levels have seen gearing, as measured by debt to assets, rise.
<img src="/images/stories/2012/11/olivernov92.png" width="470">
Source: OECD, RBA, AMP Capital
Against this several things are worth noting. First, reflecting household caution the household saving rate is now very high in Australia at around 10%, compared with just 3 to 4% in the US. This has been mainly flowing into bank deposits.
<img src="/images/stories/2012/11/olivernov93.png" width="470">
Source: OECD, AMP Capital
 
<hr class="system-pagebreak">
 
Finally, the riskiness of Australian housing loans has been falling. Non-performing loans remain low. Low-doc loans are only around 5% of outstanding housing loans and less than 2% of new approvals. And around 50% of home borrowers are ahead on repayments. And all mortgages are full recourse, meaning Australians cannot simply walk away from their homes if they have negative equity. And there is plenty of scope for the RBA to cut interest rates further.
Foreign liabilities
One area where <place><country-region>Australia</country-region></place> clearly is more vulnerable is in foreign debt. Thanks to a chronic current account deficit ranging between 2% and 6% of GDP – even through the mining boom – <country-region><place>Australia</place></country-region> has remained reliant on foreign capital. As a result net foreign liabilities, which includes debt and equity and is labelled net international investment position in the next chart, is relatively high at 60% of GDP.
<img src="/images/stories/2012/11/olivernov94.png" width="470">
Source: IMF, ABS, AMP Capital
Quite clearly <country-region>Australia</country-region> would be vulnerable should foreign investors change their view of investing in <place><country-region>Australia</country-region></place>. Mind you, this has been a risk since the 1980s!
What’s the risk?
While <place><country-region>Australia</country-region></place>’s debt levels are not causing problems now, this is not to say they are not without risk. For example, just before the GFC Ireland’s public debt to GDP ratio was the same as <country-region><place>Australia</place></country-region>’s is now, but this changed when house prices collapsed and banks had to be recapitalised.
The main risk is that something happens that severely affects the ability of households to service their mortgages and results in foreign investors changing their attitudes towards investing in <country-region><place>Australia</place></country-region>. Obviously, the RBA is unlikely to trigger the former by raising interest rates too far as it seems very sensitive to household fragility.
The prime risk is that <country-region>China</country-region> has a hard landing causing a slump in <country-region><place>Australia</place></country-region>’s export earnings, a sharp rise in unemployment, defaults, bank problems necessitating recapitalisation by the Government and a loss of confidence on the part of foreign investors.<a name="_ftnref1" href="#_ftn1">[1]</a>
However, while this is clearly a risk several factors are worth noting: Firstly, the tolerance for a hard landing in China is very low in view of the social unrest it would trigger, and in any case recent Chinese economic indicators suggest that growth there may be bottoming around 7.5%.
Secondly, while house prices remain overvalued, the risk of a house price collapse remains low given undersupply, low loan to valuation ratios and full recourse loans in <place><country-region>Australia</country-region></place>.
Thirdly, if the economic environment for <country-region><place>Australia</place></country-region> sours significantly there is still plenty of scope for the RBA to cut interest rates. In fact 325 basis points worth, which would translate roughly into a fall in the standard variable mortgage rate to 4% if the banks’ continue to pass though 80% of RBA cuts. This would translate to an annual interest bill saving of around $6500 for someone with a $300,000 mortgage.
Fourthly, unlike the situation in countries like Japan or peripheral countries in Europe, Australia’s currency acts as a countercyclical buffer and would likely collapse if there were a big collapse in Australia’s export prices (they haven’t really fallen so much so far, so the fact that the $A is around $US1.04 is not surprising). This could cause the $A to easily fall back towards $US0.60 delivering a massive boost to industries such as manufacturing, tourism and higher education that have struggled through the mining boom.
Finally, pent-up demand exists in big parts of the Australian economy, in part due to measures to make way for the mining boom. Housing construction and retailing have been running well below capacity. This can be unleashed as mining slows and lower interest rates, and possibly a lower $A would be part of the mechanism to achieve this.
Concluding comments
<place><country-region>Australia</country-region></place> is not without its risks on the debt front and to be safe needs to continue to head back towards a budget surplus (to cap public debt) and for households to continue to run relatively high savings in order to boost their net wealth and cap household debt. However, the probability of a major debt crisis occurring is likely low as China is unlikely to have a hard landing, there is still plenty of scope to cut interest rates and the Australian dollar is likely to fulfil its role as a shock absorber in the event of a big loss to national income.
<div>
 <hr width="33%" size="1" align="left">
<div>
<a name="_ftn1" href="#_ftnref1">[1]</a> See “<place>Australia</place> – the going gets tough for the lucky country,” Oliver’s Insights, September 2012, which discussed this scenario.
</div>
</div>
Dr Shane Oliver is head of investment strategy and chief economist at <a href="https://www.ampcapital.com.au/" target="_blank">AMP Capital</a>
</body></html>

soliver-smf6LQXgW9

Australian economy vulnerable due to relatively high levels of household debt: Shane Oliver

<html><body>
Macquarie Bank, the new mortgage funding partner of Mark Bouris’s Yellow Brick Road franchise business, has more than doubled its investor loan book over the first nine months of the year, Property Observer analysis of APRA banking figures shows.
Macquarie Bank’s investor loan book has soared from $846 million at the end of 2011 to almost $2 billion – nine month growth of 119%.
In June Property Observer reported that Macquarie’s investor home loan book <a href="/news">was up 33%</a> on the first four months of the year, with a spokesperson saying the bank had been ramping up its lending since returning to the mortgage market in 2010.
Macquarie Bank, the financial services arm of Macquarie Group, is now competing strongly with the major banks for new investor loans, with NAB (the smallest of the major banks in terms of new investor mortgage lending) originating $1.26 billion in new investor loans over the first nine months of the year, compared with Macquarie Bank’s $1.04 billion.
<a href="/news">Macquarie </a>is currently offering a one-year discount of 100 basis points on all its variable rate home loans, with a competitive rate of 5.65%.
It also offers a self-managed super fund loan tailored at property investors who are investing by borrowing against their DIY super funds at a rate of 6.65%.
The figures also show strong growth among the customer-owned mutual institutions with the ME Bank’s investor loan book up 33% over the first nine months of the year to $1.6 billion and Heritage Bank growing its investor loan by 14% to $1.4 billion.
In absolute terms, Westpac is the bank of choice for property investors, originating more than $6 billion in new loans over the first nine months of the year, well ahead of the Commonwealth Bank/Bankwest with $4.4 billion in new mortgages.
Investor lending for the first nine months of 2012 (Jan - Sept)
<table width="360" cellpadding="0" cellspacing="0" border="0"><tbody>
<tr>
<td valign="bottom" nowrap width="114">
Lender
</td>
<td valign="bottom" nowrap width="85">
Loan book Sept 12($m)
</td>
<td valign="bottom" nowrap width="76">
Loan book Dec 11 ($m)
</td>
<td valign="bottom" nowrap width="85">
Investor loans growth %
</td>
</tr>
<tr>
<td nowrap width="114">
Macquarie Bank Limited
</td>
<td nowrap width="85">
1,916
</td>
<td valign="bottom" nowrap width="76">
876
</td>
<td valign="bottom" nowrap width="85">
118.72
</td>
</tr>
<tr>
<td nowrap width="114">
Members Equity Bank Pty Limited
</td>
<td nowrap width="85">
1,556
</td>
<td valign="bottom" nowrap width="76">
1,168
</td>
<td valign="bottom" nowrap width="85">
33.16
</td>
</tr>
<tr>
<td nowrap width="114">
Heritage Bank Limited
</td>
<td nowrap width="85">
1,356
</td>
<td valign="bottom" nowrap width="76">
1,187
</td>
<td valign="bottom" nowrap width="85">
14.25
</td>
</tr>
<tr>
<td nowrap width="114">
Bendigo and Adelaide Bank Limited
</td>
<td nowrap width="85">
9,434
</td>
<td valign="bottom" nowrap width="76">
8,553
</td>
<td valign="bottom" nowrap width="85">
10.29
</td>
</tr>
<tr>
<td nowrap width="114">
Citigroup Pty Limited
</td>
<td nowrap width="85">
2,638
</td>
<td valign="bottom" nowrap width="76">
2,401
</td>
<td valign="bottom" nowrap width="85">
9.89
</td>
</tr>
<tr>
<td nowrap width="114">
Bank of Western Australia Ltd
</td>
<td nowrap width="85">
10,897
</td>
<td valign="bottom" nowrap width="76">
9,943
</td>
<td valign="bottom" nowrap width="85">
9.59
</td>
</tr>
<tr>
<td nowrap width="114">
Suncorp-Metway Limited
</td>
<td nowrap width="85">
8,901
</td>
<td valign="bottom" nowrap width="76">
8,179
</td>
<td valign="bottom" nowrap width="85">
8.83
</td>
</tr>
<tr>
<td nowrap width="114">
Bank of Queensland Limited
</td>
<td nowrap width="85">
10,355
</td>
<td valign="bottom" nowrap width="76">
9,672
</td>
<td valign="bottom" nowrap width="85">
7.06
</td>
</tr>
<tr>
<td nowrap width="114">
Australia and New Zealand Banking Group Limited
</td>
<td nowrap width="85">
47,104
</td>
<td valign="bottom" nowrap width="76">
44,549
</td>
<td valign="bottom" nowrap width="85">
5.74
</td>
</tr>
<tr>
<td nowrap width="114">
Westpac
</td>
<td nowrap width="85">
124,548
</td>
<td valign="bottom" nowrap width="76">
118,380
</td>
<td valign="bottom" nowrap width="85">
5.21
</td>
</tr>
<tr>
<td nowrap width="114">
Commonwealth Bank of Australia
</td>
<td nowrap width="85">
83,377
</td>
<td valign="bottom" nowrap width="76">
79,926
</td>
<td valign="bottom" nowrap width="85">
4.32
</td>
</tr>
<tr>
<td nowrap width="114">
HSBC Bank Australia Limited
</td>
<td nowrap width="85">
3,970
</td>
<td valign="bottom" nowrap width="76">
3,843
</td>
<td valign="bottom" nowrap width="85">
3.29
</td>
</tr>
<tr>
<td nowrap width="114">
NAB
</td>
<td nowrap width="85">
52,969
</td>
<td valign="bottom" nowrap width="76">
51,710
</td>
<td valign="bottom" nowrap width="85">
2.44
</td>
</tr>
<tr>
<td nowrap width="114">
ING Bank (Australia)
</td>
<td nowrap width="85">
9,624
</td>
<td valign="bottom" nowrap width="76">
9,469
</td>
<td valign="bottom" nowrap width="85">
1.64
</td>
</tr>
</tbody></table>
 
Source: APRA
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Macquarie Bank doubles loans to investors in first nine months of 2012: APRA figures

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ANZ has left its standard variable rate unchanged at 6.6% per annum following its November interest rate review.
The decision follows the RBA leaving the cash rate unchanged at 3.25% on Melbourne Cup Day (November 6).
Since January, the bank has being carrying out monthly independent interest rate review on the second Friday of every month on the basis that "bank funding costs are now largely unrelated to movements in the Reserve Bank’s official cash rate. 
It's the seventh month in a row that the bank has not adjusted its variable mortgage rates independently of an RBA announcement since moving out of the step with the RBA in January.
On April 13 the bank lifted variable mortgage rates by 0.06 percentage points after the RBA left rates unchanged at its April 4 meeting.
“Despite intense competition for business deposits” the bank says its variable small business lending rates will also remain unchanged.
</body></html>

ANZ leaves variable mortgage rates unchanged in independent review

<html><body>
RP Data’s Rent vs Buy report flew into my email box this week, and already bold claims are being made across the internet and in print media that it’s currently cheaper to buy in 388 suburbs for those servicing a principal plus interest home loan using a variable rate.
Hurray! I hear you all cry – with the joyous voices marginally overpowered by the stampede of renters’ feet as they rush into their local real estate agency, chequebook in hand.
RP Data claims to be “Australia’s leading property data and analytics company”, and for the most part, I enjoy their market insights, updates, and media releases – all of which provide a valuable service for those of us not privy to direct data collecting software.
However, once in a while, I dearly wish RP Data would spend a little time thinking about the headlines it is creating before jumping in with the bold claims made on this report.
Median values – while a good barometer of the price point the predominant buyer demographic in any one suburb is purchasing – should always be used with caution when assessing if an area is “affordable”. The median price is only the middle number of all properties sold within a single period and therefore not helpful when it comes to assessing individual property prices.
RP Data stratifies its median prices between units and houses – and when producing detailed reports, usually breaks this data down listing other relevant information such as the number of bedrooms and so forth.
However, for the purpose of this report, the median values are simply divided between the two major property types – unit and house – therefore median “unit” value could mean a one-bedroom apartment or semi-detached three-bedroom townhouse. There is no distinction.
In its last report, <a href="/news">RP Data pinpointed 238 suburbs or towns</a> where “the mortgage repayment is lower than the median rent, based on a principal and interest loan on a variable mortgage rate”. Obviously the list expands two-fold when assessing interest-only loans, and there are hefty disclaimers explaining how the research is pinned together. In the latest report, due to lower rates and flattening prices, more suburbs fall into the bracket they use for assessment.
The resulting calculations are derived from the “median” unit price (or house price depending on suburb) and median “weekly advertised rental price”, with the “buyer” purchasing on a 90% loan-to-value ratio at an initial 5.9% variable 30-year loan. (Other examples are calculated on terms of interest only; however the above example is most applicable to the classic first-home buyer profile). The results, however, assume a great deal – to take median values and use them as a barometer of affordability against a median rental price has significant flaws. For example, in Victoria’s list, you will find the popular suburb of Abbotsford – located a hop and a skip from Melbourne’s CBD.
Abbotsford is a favoured area for home buyers looking north of the city, so it may surprise readers that the median value is listed as $360,868. There is currently only a small handful of properties listed for sale online in <a href="/news">Abbotsford</a> that you could comfortably purchase for the RP Data median value (or less) of $360,868. One of the listings is a small one-bedroom flat (roughly 40 square metres) situated on a main road.
There is nothing wrong with the unit – it would suit a first-home buyer – however probably not on a 90% LVR variable home loan (the formula used by RP Data.) Due to its internal size the lender of choice would probably require a larger deposit – however, we’ll put this to one side and assume otherwise.
The median rent in Abbotsford according to RP Data’s Rent vs Buy report is $475 per week – yet in reality, this is the price you’d expect to pay for a small house in “original condition” – not a one-bedroom apartment!
If you’re a renter currently paying $475 per week for a one-bedroom flat, of course it’s cheaper to buy! Yet for the one-bedder that I used as an example, the rent would be roughly $270 per week – cheaper to buy? Not on your Nelly is it cheaper to buy – in fact it’s far cheaper to rent in Abbotsford than it is to buy.
 
<hr class="system-pagebreak">
 
Let’s take another example –<a href="/news">Docklands </a>– Melbourne’s favourite underperforming high-rise metropolis. The median value is listed as $493,185 – the price will buy a standard two-bedroom apartment most likely servicing high owner’s corporation fees due to the high-density construction.
Furthermore, borrowing for high-rise accommodation would likely present problems for a first-home buyer who may encounter lending restrictions for this type of accommodation – especially if borrowing on a 90% LVR. However, once again for the sake of the analysis on this report, we’ll put this to one side.
The median weekly rent is listed as $963 per week – if any renter is paying over $900 per week for a two-bedroom apartment in Docklands I’d suggest they seek help. For roughly $900 per week, it’s possible to rent a fully furnished three-bedroom penthouse with views of the city and beyond! Is it cheaper to rent than buy? No! It’s not!
It may be advantageous for some in the industry to spread the rumours spruiked in the report and encourage buyers to make the move and go see a mortgage broker. Hopefully even those who don’t follow the market closely will be a tad more educated when assessing the analysis.
Rental prices in Australia have risen over 49% over the past five years, and the number of renters is up from 27.2% to 28.7%. Along with this outright ownership is down from 32.6% to 31% and of those figures, 34.5% of 30- to 39-year-olds now live in rented accommodation and clearly struggle to save a deposit while servicing rising rental costs.
Families with children in particular are suffering, recording a decrease in their ownership rates from 79.5% to 77.2%. If it were cheaper to buy than rent, these figures from the ABS census data would be – at best – questionable.
Although Australia may still possess a good proportion of owner-occupiers to renters – enabling some in the industry to close their eyes to distress calls coming from the increasing numbers locked out altogether – both state and federal governments would be foolhardy to ignore the downward trend in ownership and the reducing pool of first-home buyers. Meanwhile, any myth that it’s cheaper to buy rather than rent in some of our most desirable inner-city locations needs to be taken with a degree of mistrust until data can be analysed at a deeper level.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
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catherinecashmore-6LXia3pPQj

Is buying really cheaper than renting? Not so fast

<html><body>
Previous cash rate cuts are starting to work their way through the economy and having "some of the expected effect" including stimulating a tentative recovery in the residential building sector, says the RBA in its November statement on Monetary Policy.
The RBA makes the point that “interest rates for borrowers are clearly below their medium-term averages" with the suggestion that global factors and commodity prices will play a key role in future cash rate decisions.
It goes on to say that while the impact of these lower rates take “some time to work through the economy, there are signs that easier conditions have been having some of the expected effects, and further effects can be expected over time”.
“At the November meeting, with the more recent positive news on the international economy and with inflation a little higher than expected, though still likely to be consistent with target over the year ahead, the Board judged that the stance of monetary policy remained appropriate, for the time being.”
The lengthy statement revealed that the sharp fall in spot prices of bulk commodities, which led to a change in the spending plans of firms in the resource sector and indicated that the peak in investment in the resource sector is likely to occur a “bit earlier and at a lower level than had previously been expected” was key reason (along with a weaker outlook for growth) for cutting the cash rate in October.
A month on and the RBA notes a number of positive developments relating to the housing sector.
“While household dwelling investment continued to decline over the first half of the year, there have been signs in recent months of a prospective improvement, partly in response to reductions in interest rates.
“Private residential building approvals, dwelling prices and auction clearance rates have all increased.
The RBA says approvals for detached houses have increased by less than total building approvals, but says "typically it can take several quarters for falls in interest rates to spur recovery in this market".
"In addition, uncertainties in Western Australia associated with the introduction of a new building approvals process are yet to be fully resolved."
Households deleveraging is also seen as a positive with the RBA noting that while “overall demand for housing finance has been broadly stable over the course of the year and many home owners are taking advantage of lower borrowing rates to pay off their loans more quickly”.
The impact of lower interest rates is recurring theme in the statement:
“Lower interest rates, rising rental yields and an improvement in conditions in the established housing market are expected to support rising dwelling investment.”
However, the RBA also notes the challenges facing the weaker parts of the two-speed economy.
“On the domestic front, the outlook for growth is sensitive to prospects for mining investment and the timing and extent of the anticipated recovery in both dwelling and business investment outside of the resource sector.
It says that investment intentions outside of the mining industry remain relatively subdued.
“The elevated level of the exchange rate, and weak housing market activity, are still weighing on the outlook for some sectors. In particular, the construction industry has shed labour as the boost from spending on government-funded projects unwinds, and activity in private building construction remains weak
“Leading indicators do, however, provide tentative signs of a recovery in residential building.”
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