Apartment buyers in New South Wales are set to gain a decade of insurance-backed protection against major building defects, after the NSW Parliament passed the Fair Trading and Building Legislation Amendment Bill 2026.&nbsp;

The Bill establishes decennial defect insurance, known in the market as Latent Defects Insurance (LDI), as an alternative to the existing two-year strata building bond. It cleared the Legislative Council with amendments on Tuesday evening (August 4, 2026), with the Legislative Assembly agreeing to those amendments shortly after.

Under the reform, eligible developers can satisfy their statutory bond obligation by taking out an approved decennial-style policy that gives owners 10 years of cover for major structural defects from completion, claimable directly, without first having to pursue developers or builders through costly legal action.&nbsp;

The change forms the final tranche of amendments arising from the 2021 statutory review of the Strata Schemes Management Act 2015 and related legislation.

Resilience Insurance, which originated the cover in Australia and has delivered it in NSW since 2022, welcomed the passage and credited the NSW Government for delivering it.

“This is protection apartment buyers have needed for a long time, and the credit for delivering it belongs to the NSW Government,”&nbsp;said Corey Nugent, CEO of Resilience Insurance.

“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into. Reform like this is what good, evidence-based regulation looks like.”

Resilience has delivered LDI in NSW since 2022, protecting thousands of apartments, giving the State, and now the country, real-world evidence of how decade-long, no-fault protection works in practice.

The reform also places NSW within a wider national shift.

NSW is the third jurisdiction to put decennial cover into law. The ACT legislated for it in 2024, with the scheme taking effect in late 2025, and Victoria passed its own framework on 17 June. Between them, the three cover the majority of Australia's apartment market.

The reform commences once the legislation is proclaimed, which is expected in the coming weeks. From that point, developers of Class 2 residential apartment buildings can meet their statutory obligation with an approved decennial policy in place of the bond.

Buyers who purchased into projects that took out the cover early are among the first in the country to take keys to apartments carrying decade-long structural protection.

“With the legislation passed, the focus now turns to making it work for buyers,”&nbsp;Nugent said.

“There are already thousands of apartments in NSW covered by this insurance, bought by developers who moved early. The question every buyer should be asking in a display suite is a simple one: does this building come with 10-year defect cover, and who stands behind it?&nbsp;

“We look forward to working with the Government and the Building Commission in coming weeks as the framework moves to implementation, and to sharing what we have learned over the past four years so the protection reaches owners as smoothly and quickly as possible.”

Other states are working through their own reform programs. Western Australia has indicated that decennial cover is within consideration a later stage of its reform sequence, and Queensland has been examining the settings as it looks at the development pipeline ahead of the 2032 Olympics.

Resilience Insurance acknowledges the NSW Government’s continued focus on strengthening consumer protection while supporting housing delivery across the State.

Fast Facts: What the reform means

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Proven at scale:&nbsp;Decennial cover has operated in NSW since 2022, protecting thousand of apartments.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">10 years of cover:&nbsp;Protection for major structural defects runs for a decade from completion, claimable directly and with no legal action required.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">An alternative to the bond:&nbsp;Eligible developers can meet their statutory obligation with an approved decennial-style policy in place of the 2% strata building bond.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Part of a national shift:&nbsp;The ACT has had decennial provisions in force since 2025 and Victoria passed its framework in June. NSW now joins them.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">No-fault, first resort:&nbsp;Owners corporations claim directly from the insurer without first having to establish who is liable for the defect.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost-competitive:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the 2% bond while offering broader, longer protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market position:&nbsp;Resilience originated LDI in Australia and has delivered it in NSW since 2022.</li>
</ul>

Fast Facts: What is Resilience LDI?

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Resilience Latent Defects Insurance (LDI):&nbsp;Covers major structural defects for 10 years from completion.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Consumer-first:&nbsp;Direct claim access, no need for lengthy legal action.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost advantage:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market leader:&nbsp;&nbsp;Resilience Insurance originated LDI in Australia and is the national market leader.</li>
</ul>

Joel Robinson

NSW parliament passes 10-year defect insurance laws for new apartment buyers

Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

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?

When buying an apartment, most people compare the big-ticket items first. Floorplans. Kitchens. Balcony size. Natural light. The view.

But there's one everyday consideration that often doesn't come up until after moving in: how parcels are delivered.

As online shopping has become part of everyday life, parcel deliveries have shifted from an occasional event to a regular occurrence. Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally.

For apartment residents, that can present a challenge.

If nobody is home to accept a delivery, parcels may be redirected to a nearby Post Office, left in a building lobby or common area, or require building management to step in. In higher-density buildings, where dozens or even hundreds of residents may receive deliveries each day, parcel management has become an increasingly important part of everyday living.

That can create a range of frustrations. A missed delivery often means making time to collect a parcel elsewhere, while packages left unattended in foyers or mail areas can create clutter and increase the risk of theft. What seems like a minor inconvenience can quickly become a recurring issue for residents who shop online regularly.

It's one of those details that rarely features in a display suite but can have a noticeable impact once residents move in.

As a result, buyers are beginning to look beyond traditional apartment features and consider how a building supports day-to-day convenience, including whether there are secure options for receiving deliveries.

Australia Post's Parcel Lockers provide one solution.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/CkF2oKmlACg?si=C50sDaoUUn2nuLmq" title="YouTube video player" width="560"></iframe>

Rather than having a parcel delivered directly to an apartment, eligible deliveries can be sent to a nominated Parcel Locker. Once the parcel arrives, residents receive a notification through the AusPost app or SMS and can collect it using a QR code or one-time PIN at a time that suits them.

The Parcel Locker network now includes more than 1,500 locations nationwide, with installations at Post Offices, shopping centres, transport hubs and an increasing number of residential developments. By providing a secure collection point, Parcel Lockers help reduce missed deliveries and avoid parcels being left unattended in common areas.

For developers, parcel infrastructure is becoming another way to improve the resident experience. Rather than relying on concierge staff or leaving parcels in communal spaces, secure collection points help streamline deliveries while preserving the presentation and functionality of shared areas.

For buyers, it's a reminder that the best apartment features aren't always the most obvious.

A generous floorplan or quality finishes might help narrow the shortlist, but the conveniences that simplify everyday life, whether that's EV charging, secure bike storage or reliable parcel delivery, often become the features residents appreciate most once they're living there.

The apartment feature many buyers don't think about, until their first missed delivery

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A former 89-hectare turf farm in Burbank, Queensland is being converted into eight separate six-hectare blocks of land aimed at prestige buyers called Araluen Estates.
<img src="/images/stories/araluen1.jpg">
The lots will be $2.5 million each, and they are set to go on sale before next Friday. There has already been significant pre-registration interest from buyers seeking absolute privacy, peace and quiet.
<img src="/images/stories/araluen2.jpg">
“The quality of life here is exceptional,” says owner Robert Greasley, who has lived on and managed the turf farm for the past 24 years.
“You are a million miles from mediocrity and just 20 kilometres from Brisbane CBD. The furthest house lot, within the estate, is over a kilometre from Ford Road. That makes for a private and very quiet environment with an abundance of wildlife.”
<img src="/images/stories/araluen3.jpg">
The turf farm produced the specialist Wintergreen Couch grass, which is used for golf courses, for 30 years, and Araluen Estates has the gently rolling topography of quality golf courses.
<img src="/images/stories/araluen4.jpg">
The majority of Araluen Estates will comprise natural environment, with multiple lakes, parklands and bush. It is in the Priest Gully wildlife corridor.
<img src="/images/stories/araluen5.jpg">
“The quality lifestyle within the development is magnificent. The lakes are within the body corporate and contain Australian bass and silver perch. There are also bush trails around the lakes, Priest Gully and through the nature reserves,” says Greasley.
<img src="/images/stories/araluen6.jpg">
The building envelopes for each estate are 5,000 square metres, and there are no building covenants.
<img src="/images/stories/araluen7.jpg">
Despite the seclusion, Araluen Estates is three kilometres from the outer-Brisbane suburb of Rochedale, which is growing rapidly and has amenities such as shops, schools and medical centres.
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Brisbane fringe turf farm transforming into prestige housing community

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Affordability, not spaciousness, is the drawcard for apartments even in Double Bay. Oceania Property is hoping third time lucky – and the one-bedder home buyers’ market – will generate sales for its boutique development at 18 Bay Street, Double Bay.
After failing to secure any luxury buyers during the marketing for planned project Montre, the developer has gone back to the drawing board and has released a plan with a new mix of units, new prices – and even a new name.
Montre was the second attempt for the development site, as in 2009 registrations of interest were being sought through Colliers by the developer, Thaung Investments.
<img src="/images/stories/bayresidences.jpg">
Oceania bought the site for $20.5 million in January 2011, with the site having previously traded at $15 million in 2007.
Montre was to feature just eight apartments, with prices starting from $3.25 million for the three two-bedroom offerings.
“Montre is our benchmark development,” Nico Wijarto Tjen, a director of Oceania Property, said in October last year. “What we are offering is grand, easy-care apartments for those who appreciate the finer things in life.”
But Sydneysiders didn’t seem to want grand, easy-care apartments with multimillion-dollar price tags, and the new incarnation of the plans has been rechristened The Bay Residences and is set to comprise 21 smaller, less expensive offerings. The exterior, designed by Kann Finch architects, remains substantially the same.
<img src="/images/stories/bayresidences2.jpg">
The 15 one-bedroom apartments start from $825,000. Two-bedroom apartments start from $1.75 million, three-bedrooms offerings from $2.25 million and the penthouses from $3.99 million. There are set to be two of each of these larger configurations. In Montre, the penthouses were set to start from $5.56 million.
<img src="/images/stories/bayresidences3.jpg">
The new tack seems to be working, with two apartments sold and a few others in discussions about a month after they came onto the market, according to Wijarto Tjen.
Ben Stewart, a director of CBRE residential project marketing, which is marketing The Bay Residences, says the previous incarnation appealed to the wrong demographic for the current market.
“I know of exquisite three-bedroom apartments in Double Bay that are still unsold 18 months after they were completed,” he says.
“There is absolutely nothing wrong with the apartments; it’s just that empty-nesters are remaining in their family homes because they don’t feel as financially secure as they once did.
“Currently in Sydney the majority of buyers are young singles and couples fed up with paying rent. They still want to live in a convenient, vibrant location, but have limited budgets. That’s why one-bedroom apartments always sell first in Sydney developments these days.”
<img src="/images/stories/bayresidences4.jpg">
The developer has lodged a section 96 request with Woollahra Council to modify the plans for the Bay Street block. The application is currently pending, but as plans for the exterior have not changed, the developer expects it will receive council approval soon. Woollahra Council is thought to favour blocks with more, smaller units over fewer, larger ones.
“The councillors and council staff I’ve spoken to are very supportive of the changes because it will mean more residents will now be able to live in Double Bay,” says Wijarto Tjen, “and the new apartment mix will also mean younger residents.”
Oceania Property is set to begin demolition work on the existing building on the site next month, and it hopes that Woollahra will have approved its section 96 modification shortly thereafter so it can begin construction. The Bay Residences have a tentative completion date of August 2013.
 
 
 
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Oceania Property swaps luxury and space for affordable one-bedders in third incarnation of Double Bay site

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CUA, the customer-owned financial institution, will cut its variable home loan to 6.47% from Wednesday, May 9.
It represents a cut of just 25 basis points from its 6.72% rate, but is still a 50 basis point discount to the current average of the major banks after two of the big four (<a target="_blank" href="https://www.propertyobserver.com.au/overseas/nab-first-of-big-four-banks-to-cut-rates-with-032-percentage-point-cut/2012050254522">NAB </a>and <a target="_blank" href="/news">Commonwealth Bank</a>) have made their announcements, CUA notes. 
The CUA claim will need to be adjusted after tomorrow's <a target="_blank" href="/news">Westpac announcement</a> and then again after ANZ makes its move next Friday.
CUA also announced it will cut its three-year fixed rate to 5.89%.
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CUA drops rates by 25 basis points but still much cheaper than the big banks

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The site of popular Fitzroy bar The Night Cat on Johnston Street has been listed for May 24 auction with $3.2 million plus expectations.
The bar has occupied the 670-square-metre building on the 842-square-metre Young Street corner location for nearly two decades.
Now the site is being marketed for its redevelopment potential.
<img src="/images/stories/nightcat1.jpg">
The Night Cat pays annual rent of $195,000, with a fixed 4% increase due February 2013 taking the passing rental to $202,772.48 per year net.
The lease expires January 2014, with no further options.
<img src="/images/stories/nightcat2.jpg">
Before opening as a bar in the early 1990s, The Night Cat site was a Greek reception room.
The receiver and manager PKF has appointed Colliers International's Jeremy Gruzewski and Andrew Ryan in conjunction with CBRE's Mark Wizel and Scott Callow.
<img src="/images/stories/nightcat3.jpg">
The receivership relates to an internal Deutsch family dispute. Their company bought the property in 1987 for $520,000.
Gruzewski says the Night Cat proprietor has indicated strong intentions to continue trading at the premises and is keen to talk directly with any interested buying party.
 
 
 
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Sun could be setting on Fitzroy bar The Night Cat as premises listed for auction  

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Hysterical housing doomsayers got very excited by the delay of Genworth Australia’s IPO on the back of a modest first-quarter loss. It was said by some that this might be the “canary in the coalmine” and presage deep gloom for Australia’s much-maligned housing market.
To compound matters, Moody’s Australia, which has occasionally expressed reservations about local housing valuations, promptly placed the company on “ratings watch negative”.
Unfortunately for those salivating at the prospect of an Aussie housing blow up, Genworth’s first-quarter results merely reveal a company prudently building internal reserves and cleaning up a backlog of claims. They show that the share of Genworth’s bad loans actually declined between December 2011 and March 2012. I will say that again: delinquencies fel l— they did not rise — after a spike following the first quarter east coast floods (and a double-hike in lending rates at the end of the preceding year).
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may3.gif"><img src="/images/stories/may3thumb.gif"></a>
The results highlight that this is an Australian business with virtually no debt and significant capital above and beyond that which is required by its regulator, APRA. In recognition of this, Standard &amp; Poor’s yesterday announced that it was actually “affirming our financial strength and issuer credit ratings on Genworth Australia at 'AA-'” with a “stable” outlook.
Moody’s move nevertheless has broader ramifications for Australia’s financial system. As Sydney University’s Dr Elvis Jarnecic explained in a thoughtful column earlier in the week, the two duopoly lenders mortgage loss insurers (LMIs) in Australia, QBE LMI and Genworth Australia, are, relatively speaking, better capitalized than the major banks. They have stand-alone S&amp;P ratings of “AA-“ in comparison to the majors’ single “A” stand-alone ratings, and possess arguably significantly lower catastrophic risk. (Recall that the four majors alone amongst all banks get a “two notch” ratings upgrade to “AA-“ because S&amp;P assume they will get a taxpayer bailout in a crisis.) And in contrast to the majors, they have one business, focused on one relatively easy-to-understand industry: housing.
More importantly in the case of Genworth Australia, it effectively has no leverage, with incredibly low circa 4% gearing that has been mostly generated by APRA requirements that Genworth Australia issue bonds. In a recent report, S&amp;P assessed that Genworth Australia had about $3.3 billion of total capital excluding its bonds, and tier one capital well in excess of what is mandated by APRA. The only real link to Genworth Australia’s struggling parent is through reinsurance contracts that cover excess losses. However, in giving Genworth its coveted AA- rating, S&amp;P assumes the parent’s reinsurance is of zero value. And the parent only provides a minority of Genworth Australia’s reinsurance with at least 13 other reinsurers used. After reviewing the March quarter results, S&amp;P concluded:
“As at March 31, 2012, the company's A$2 billion of total shareholders’ equity translated to a very strong risk-based Standard &amp; Poor's capital model score at the 'AA' category level, and a regulatory multiple of 1.53x. We expect low credit growth in the Australian mortgage market to allow the company to build up excess capital over the year to maintain its very strong capital metrics and increase capacity to issue dividends to shareholders.”
Now contrast this with a major bank. The banks are typically geared 15 to 20 times their shareholders’ equity. They face the risk of retail depositors withdrawing their money via a “bank run”. They deal with the periodic hazard of wholesale funders not “rolling over” their institutional bonds.
So they confront two tremendous funding risks that are simply not problems for the Aussie LMIs. Yet to make the banks’ business models even more precarious, they run large “asset-liability mismatches”, which basically means that the average life of their funding (i.e., retail deposits and wholesale bonds) is significantly less than the average life of the loans they make (e.g., home loans). Unless they can guarantee access to future liquidity, they risk trading insolvent. This is exactly why the RBA lends to the banks, and has developed a generous “committed liquidity facility” to assist them comply with the new global banking regulations known as “BASEL III”.
Beyond these structural funding vulnerabilities, the major banks also take on a much more diverse (yet correlated) array of credit risks. Whereas the LMIs only supply insurance for the purposes of protecting defaults against secured, full recourse home loans, the major banks also lend to unsecured individuals, small businesses, corporate borrowers, and commercial real estate owners. These four categories of credit have historically had much higher default rates than fully secured, residential home loans, as the banks themselves have been keen to point out.
Some argue that this gives a bank the benefit of more “diversified” earnings. This is true during the “good times”. But the only reason diversification is regarded as being valuable from a risk perspective is because it is assumed to afford protection during the “bad times”.
Contextualised against Australia’s two LMIs, the major banks’ exposures to personal, corporate, and commercial property credits have historically generated much more pro-cyclical and volatile earnings, and amplified the risk of catastrophic loss.
This assessment was clearly borne out during the 1991 recession and the more recent GFC where the vast bulk of major bank losses crystallized in their non-housing credit portfolios.
So what did Genworth Australia’s first-quarter financial results actually reveal? Was it a harbinger of housing Armageddon? As it turned out, the 90-day default rate across its 1.4 million insured home loans actually declined slightly from an already low 0.55% to 0.54% between the December and March quarters. This compares to the Australia-wide 90 day default rate of 0.6% documented by the RBA at the end of December 2011.
As a general observation, Genworth Australia’s lower-than-industry-average default rate is somewhat surprising giving LMI is normally only applied to borrowers with loan-to-value ratios greater than 80%. Having said that, Genworth Australia’s average LVR is only around 63%, in part because one of its main insurance activities is covering entire loan portfolios that comprise many lower LVR borrowers.
The modest first-quarter loss of -$21 million was primarily driven by a very conservative increase in reserves (+$53 million) in anticipation of faster foreclosures by banks cleaning up a backlog of aged arrears. This was reflected by a doubling in paid claims in Q1 to $69 million from $32 million in Q4 despite the fact that delinquencies declined over this period. S&amp;P comments:
“Genworth Australia reported a loss ratio of 154% for the first quarter of 2012--significantly exceeding the prior quarter's loss ratio of 46%...The company cited reserve strengthening...for the spike in the loss ratio, driven by actions by lenders--in partnership with Genworth Australia--accelerating claims to address aged arrears in late 2011. This resulted in an above-average volume of claims processed in the first quarter of 2012, which was compounded by continued pressure from regions and sub-segments of the book that we previously highlighted as weaknesses. Many of the aged arrears were concentrated in tourism-reliant parts of Queensland…that have been negatively affected by the strong Australian dollar. In addition, Genworth Australia cited ongoing stress from sub-segments of the 2007 and 2008 books--small business owners and self-employed borrowers--which were written at the peak of the origination and property cycles. The impact of the significant reserve strengthening on bottom line results was largely offset by strong investment earnings.”
Looking ahead, we believe this should be a cyclically favourable environment for the two Australian LMIs: stabilising house prices, a large decline in interest rates and, therefore, material improvements in affordability, historically low unemployment, and (likely) declining default rates.
On this note, a blogger for the Sydney Morning Herald dismissed the RBA’s recent report of a 0.1% decline in Australia’s 90 day default rate in the final quarter of 2011, which, incidentally, was also confirmed by Genworth’s data. He seemed confused by the seemingly small 0.1% number. In isolation, this self-evidently sounds tiny. But relative to the previous level of 0.7%, this actually represents a 14% decline in delinquencies.
We believe housing conditions will continue to improve as the year passes, and 2012 will be another very profitable one for Australia’s LMIs. Moody’s may downgrade Genworth, but if it does so one would think it will also be downgrading QBE LMI and the major banks.
 
Christopher Joye is a leading financial economist and a director of <a target="_blank" href="https://www.ybr.com.au/savings/index.cfm">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
 
 
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Genworth no canary in the coalmine despite $21 million first-quarter loss: Christopher Joye

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Rental increases on one-bedroom Sydney apartments – long considered the Cinderella of property investment – are now often exceeding rental growth increases on two-bedroom units.
And the one-bedroom units are no  longer confined to Sydney’s inner-city suburbs, with new developments in middle-ring council areas like Canterbury and Rockdale highlighting the trend, according to PRDnationwide research analyst Oded Reuveni-Etzioni.
Investors with one bedders are yielding strong gains in the median rental price, the study found.
Canterbury Council median one-bedroom rent increases have averaged 11.8% per annum over the five years to December 2011, according to PRDnationwide research analysis of government rental data across Sydney, the Hunter and Illawarra regions.
Strong gains in the median rent price of one-bedroom units were also recorded in the Rockdale municipality, along with the local government areas of Parramatta, Ashfield and Ryde.
The one-bedroom rental increases in Canterbury, Rockdale, Parramatta, Ashfield and Ryde easily exceeded the rental growth achieved with two-bedroom units over the past five years.
<img src="/images/stories/prdmay31.gif">
Source: PRDnationwide
Campbelltown was the strongest-performing local government area for two-bedroom units, with the median rent for a two-bedroom unit increasing by 12.6% per annum since December 2006.
<img src="/images/stories/prdmay32.gif">
Source: PRDnationwide
Fairfield, Liverpool and Canterbury also yielded strong rental rises during the period.
The City of Sydney recorded the highest rent price for both one- and two-bedroom units, with a median rent of $500 and $670 per week respectively.
Sydney City represented the largest unit rental market in NSW, with 30,139 government rental bonds held as of December 2011.
Sydney was closely followed by the Waverley local government area, with a weekly rent of $488 (one-bedroom unit) and $630 (two-bedroom unit).
Other municipalities to appear in top 10 highest rent price lists were Woollahra, Canada Bay and North Sydney, which represents the third largest unit rental market in the state, with 11,359 government-held bonds.
Maitland was the strongest performer outside of Sydney with 10% annual increases over the past five years for its two bedroom units.
PRD suggests the growth stemmed from large infrastructure projects that drew a transient population of construction workers, and from mining employees relocating to the Hunter and choosing to rent in the short term.
The highest regional rent price was paid in the Newcastle district, where a two-bedroom apartment recorded a median rent of $320 per week.
The City of Wollongong made up the largest rental market outside the metropolitan area, with 7,244 bonds held at December 2011.
“Savvy investors are attuned to the changing preferences of renters and recognise the growing rental markets in the middle and outer suburbs of the metropolitan area,” Reuveni-Etzioni says.
“Investment opportunities also exist in areas outside the metropolitan area, where strong demand and limited supply of units maintains the pressure on rent prices.”
Images courtesy of <a href="https://www.flickr.com/" target="_blank">Flickr</a>.
Apartment photo by<a href="https://www.allshotsimaging.com.au/" target="_blank"> Allshots Imaging</a>.
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One-bedroom apartments no longer property investment Cinderellas as rental growth spikes in NSW: PRDnationwide

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Westpac chief executive Gail Kelly says she will announce the bank's response to Tuesday's surprise supersized RBA rate cut tomorrow. And <a target="_blank" href="https://www.propertyobserver.com.au/news/interest-rates-to-fall-to-3.25-over-2012-shock-prediction-from-westpac-economist-bill-evans/2012050154508">backing her senior economist Bill Evans</a>, the Westpac boss says she believes there is room for another 50-basis-point cut by RBA in the future.
Australia’s second-biggest bank today reported a 25% fall in net profit to $2.967 billion for the first half of fiscal 2012, given tax consolidation from its St George acquisition had boosted last year's profits. Its net income matched analysts’ estimates.
Cash earnings in the six months ended March 31 gained 1% to $3.2 billion.
 
 
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Gail Kelly says Westpac interest rate decision coming tomorrow after RBA rate cut

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The Commonwealth Bank Group will reduce interest rates by 0.4 percentage points per annum from May 11. The bank’s new standard variable rate is 7.01%.
“In making this decision, the group has continued to balance the interests of its 1.8 million home loan borrowers with those of its 11 million depositors, and those of its shareholders, who include 800,000 Australians who own its shares directly, and millions more Australians who own shares through pension funds,” the bank advised.
<a href="https://www.propertyobserver.com.au/overseas/nab-first-of-big-four-banks-to-cut-rates-with-032-percentage-point-cut/2012050254522" target="_blank">NAB cut its rate by 0.35 percentage points to 6.99% yesterday, with the cut to take effect May 4.</a>
 
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Commonwealth Bank to cut rates by 40 basis points after RBA rate cut

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Can you use a green builder and still have a cost-effective result?
In our experience the answer is yes. We found that using an eco-friendly builder not only added to our client’s bottom line and benefited their tenants, it also gave peace of mind that they were doing their bit for the environment.
When it came to finding a builder for our granny flats, at first I had one thing in mind: cost effectiveness, because this development strategy was all about creating the highest yield possible. We asked our regular brick and tile builders to price a two-bedroom 60-square-metre flat by using their traditional slab/brick/roof tile construction, but their price was coming in too high.
Thus our search began for a cheaper way to build the flats without compromising on quality. We researched caravan park-style cabins that could be trucked to site but found this method was about the same price as our brick builders. We even looked at converted shipping container boxes, but they were not up to our standards.  Then we found our eco-friendly builder.
I’ll quickly explain what is involved with this development strategy.  First we locate a house in a strong rental area, one with “good bones”. By that I mean a large house with at least three to four bedrooms and one that doesn’t need too much renovation. The property needs to tick a number of boxes but in particular be complying so we can use our private certifier to fast track the complying development application to build the granny flat.   We bring the house up to the standard where we could maximise the rent, there is an income during the build phase and on completion the flat is rented, usually to a separate tenant than the house. The result is a 9% gross yield.
So back to our eco builder. I was impressed to see his company is certified as a climate-friendly business, encompassing not only its corporate operations but every granny flat and house it builds.  The company undertook extensive assessment and calculations to estimate emissions associated with the construction of each home.  On completion, clients are supplied with a certificate from <a target="_blank" href="https://www.climatefriendly.com/">Climate Friendly</a>, certifying that during the construction process emissions of greenhouse gasses were minimised and then offset. This reduces the adverse affects on the planet throughout the stages of design, construction and completion.
This company’s process includes using alternative building materials and construction methods. By using sustainable and lightweight building products and cost-efficient design principles it achieves energy efficiency. The company has even won lots of awards and is considered an innovator in the field.
Transporting products to building sites usually results in the use of large quantities of both fuel and other resources. This builder has put in place a system to greatly reduce the amount of transport required and therefore reduce the amount of greenhouse gasses being emitted during the construction process. One of the key facets of this is the ability to produce our granny flats to lock-up stage in the factory, enabling a single delivery of the flats and all components needed to complete lock-up stage onsite.  The construction process takes approximately 50% of the time required for a typical slab/brick/tile house.
As well as the faster completion time and environmental benefits there are other positives as well. Electricity bills are reduced, water bills are minimised, and our clever granny flat design reduce the need for heating and cooling. Use of natural air movement for cooling, solar or gas heating and appropriate positioning of the flat on-site is all part of the process. Research has shown that heating and cooling account for an average of approximately 40% of household energy costs across Australia. Homes designed to suit the climate of their location result in a significant reduction in the amount of energy required to heat and cool the home.
So we found a winner with our eco-friendly builder. His tender came in 15% lower than the other builders, our flats are completed in half the time, tenants will save on their bills and we have a carbon neutral result. To me that’s a win-win-win!
Jo Chivers is director of <a target="_blank" title="Property Bloom" href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
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An eco-friendly builder pays off with a smart granny flat

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The Tasmanian housing market continues to struggle, with house prices falling throughout most of the Apple Isle.
While Hobart showed a modest increase of 1.6% in sales in the year to March 2012, its median house price was down 2.3% to $353,000, according to figures released by the Real Estate Institute of Tasmania (REIT).
Across Tasmania house prices dropped by 3.2% on the same time last year to a median of $300,000, the report says.
The figures reveal that people are not in trading mode as the number of sales has fallen dramatically. Only 1,252 houses sold in the 12 months to March this year – down 12.3% on the previous year.
Click to enlarge
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It is not just the mums and dads that are staying home. Millionaires are avoiding residential deals, with a luxury $2.45 million Battery Point penthouse overlooking Hobart’s beautiful harbour languishing on the market for close to 200 days. It had been bought in 2006 for $1.8 million.
Battery Point has the highest median house price of $925,000 from eight sales, showing a rise of 17.8% in the year to March. Bridgewater, about 20 kilometers from Hobart in the state’s south east, was Tasmania’s least expensive spot, with a median price of $175,000 from eight sales, showing an increase of 2.9%.
<a target="_blank" href="https://reit.com.au/">According to the REIT report</a> it takes an average of 79 days to sell a Tasmanian house.
“The report wasn’t all doom and gloom though, with 11 municipalities reporting an increase in their median house price for the quarter, with six currently holding a higher median house price than the statewide figure. These included Clarence, Glamorgan/Spring Bay, Hobart, Kingborough, Sorell and the West Tamar,” says REIT president Adrian Kelly.
The rental vacancy rate also continued to increase in the March quarter, up 0.8% to 3.9%.
 
 
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