Eddy Haddad's <a href="https://www.apartments.com.au/developers/level-33">Level 33</a> is levelling up its approved Wollongong development, as the coastal city south of Sydney continues to prove popular in the high-density development space.

Level 33, a longtime developer in the Wollongong area, has gone through the NSW Government's Housing Delivery Authority to upsize its approved two-tower development on the corner of Crown Street and Gladstone Avenue, just 100 metres from Wollongong Station.

The developer currently has approval for 252 apartments across two buildings rising to 19 storeys. It is now seeking approval for 33 and 38-storey towers that would deliver 467 apartments, including 67 affordable homes.

Designed by <a href="https://www.apartments.com.au/architects/bka-architecture">BKA Architecture</a>, the development would comprise apartments above a three-level podium with around 1,100 sqm of retail space, along with basement parking for 448 vehicles.

According to the Urban Design Report by BKA, the proposal has the capacity to "reinforce the precinct's identity by strengthening links between health, education, and transport services, while also contributing to Wollongong's ongoing evolution as a key regional centre."

Wollongong is somewhat in vogue. Between Level 33 and Urban Property Group, the two developers have several thousand apartments planned across the city.

Level 33 is currently delivering Easterly Wollongong, one of its most boutique projects to date with just 21 high-end apartments, as well as Atchison &amp; Kenny, a 329-apartment development due for completion later this year. The developer also plans to redevelop the 13,088 sqm WIN Grand megasite into a new $500 million precinct with nearly 600 apartments and has more than 900 apartments planned for the former Bunnings Warehouse site at the intersection of Gipps and Flinders streets.

Urban Property Group is also playing a major role in the city's transformation. Its five-tower Keira Place precinct will deliver more than 800 homes, and it has recently lodged plans for a further 300 apartments near Wollongong Station.

Joel Robinson

First look: Level 33 upsizes Wollongong apartment towers

Just a week after filing plans for the final stage of its major Keira Place masterplan, <a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has unveiled another significant housing proposal in Wollongong, this time targeting a prominent site opposite North Wollongong Station.

The developer has lodged a State Significant Development Application for a 38-storey mixed-use tower at <a href="https://www.apartments.com.au/new-apartments/4-4a-flinders-street-north-wollongong-nsw-2500">4-4A Flinders Street</a>, around one kilometre north of the <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place precinct</a> currently taking shape on the edge of the CBD.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="2b6428f1-6405-4038-8476-897de440e90d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium.png?VersionId=QLqEvK0OuCEwRC47oHNftrw2B1YqaHF8" />

Designed by Studio.SC, the proposal comprises a 38-storey mixed-use development containing 303 apartments, including 45 affordable housing units, alongside 174 co-living residences. The scheme also includes ground-floor retail space, extensive landscaping and public domain improvements.

Studio.SC noted in the proposal it "outlines a vision for a landmark transit-oriented mixed-use development centred around North Wollongong Station, designed to support the city’s future growth while responding to the NSW Government’s housing and planning reforms."

The architecture firm said the proposal responds to the opportunities and constraints shaping future growth within the 400-metre catchment of the station and represents "a coordinated and future-focused approach to urban intensification, contributing to the long-term evolution of North Wollongong as a connected, walkable and high-density station precinct."

The site occupies a strategic corner bounded by Flinders Street, Station Street, Stafford Street and the Princes Highway, directly opposite North Wollongong Station.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="7863adad-1f71-4022-b850-f44b252738fd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium%20a.png?VersionId=WsU7av0g8_8R2tGHWxgHeFSlhu7yeY1V" />

The proposal follows Urban Property Group's recent submission for the second and final stage of Keira Place, which would deliver a further three buildings comprising 657 homes opposite Beaton Park. It builds on the first stage, which features 150 apartments across two towers and recently commenced construction.

Urban Property Group CEO Patrick Elias said breaking ground on the first stage marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/urban-property-group-unveils-trio-of-towers-for-next-stage-of-new-wollongong-precinct-keira-place">Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place</a>

First look: Urban Property Group plans next major Wollongong tower

<a href="https://www.apartments.com.au/developers/arada">Arada</a> has wasted little time expanding its ambitions in Campsie, lodging plans for a second major project in the rapidly transforming town centre just months after unveiling its three-tower One Campsie proposal on Beamish Street.

The UAE-backed developer has now taken aim at one of the suburb’s most strategically positioned sites, filing a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/10-north-parade-campsie-nsw-2194">33-storey mixed-use tower</a> at 10 London Street and 43 North Parade, directly opposite the future Campsie Metro Station. The proposal is currently on public exhibition and represents another significant vote of confidence in Campsie's emergence as one of Sydney’s key transit-oriented growth centres.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the development would deliver 156 apartments above a podium containing retail and commercial space, creating a new residential and commercial gateway to the town centre. The scheme also includes a four-level above-ground parking podium and a dedicated residential amenity floor featuring wellness and recreation facilities. At least 10 per cent of the apartments would be allocated as affordable housing for a period of 10 years.

The proposal occupies a 1,631 sqm site bounded by London Street, North Parade and Dispensary Lane, immediately adjoining the future Metro station precinct and just metres from Beamish Street’s retail and dining strip. According to the Urban Design Report, the project seeks to deliver "a great place that prioritises human-scaled experience and provides spatial improvements to the area."

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="175a8324-015b-4856-abe3-ce6f23199fa7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium%20campsie.png?VersionId=742UGwXFhFBX4GEl6wX4PYIWREAgn6il" />

Woods Bagot describes the tower as a key marker within Campsie's next phase of growth.

"Located directly opposite the new Campsie Metro Station on North Parade, 10 London Street is a thoughtfully composed 33-storey mixed-use tower that contributes to the ongoing transformation of the town centre," the Architectural Design Report states. The report says the project is intended to provide "high-quality homes within a vibrant, connected urban environment, while helping define Campsie's future skyline."

A strong emphasis has been placed on the public realm. The ground floor incorporates over 500 sqm of retail space and active frontages along both London Street and North Parade, while the podium is wrapped by extensive landscaped planting intended to soften the building's scale and strengthen the pedestrian experience. The development would also widen surrounding footpaths and improve connections between the Metro station and the broader town centre.

Above the podium, residents would have access to more than 1,400 sqm of communal amenities, including a pool, gym and landscaped recreation spaces. A distinctive green-wall treatment extending across four podium levels forms a major architectural feature, helping differentiate the project within the emerging high-density precinct.

The tower's design is closely tied to the broader Campsie Town Centre Master Plan and the arrival of Sydney Metro. The Urban Design Report notes the proposal "directly supports the Campsie Town Centre Master Plan by delivering new homes in a location explicitly identified for growth, improved accessibility, and high-quality urban renewal." It adds that the project contributes to the master plan's vision for a strengthened town centre supported by thousands of new homes around the future Metro station.

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="bfd17654-253e-489a-bade-6278d63db412" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/base%20campsie.png?VersionId=3roJPMQGs36dazpkhvpvbDDP73Ld.Ica" />

The application follows Arada's recently lodged One Campsie project at 124–142 Beamish Street and 16–18 Ninth Avenue, where the developer is seeking approval for 346 apartments across three towers rising 24, 32 and 39 storeys. Together, the two proposals would cement Arada as one of the most influential developers shaping Campsie's future urban form.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-arada-files-for-trio-of-apartment-towers-in-campsie-town-centre">First Look: Arada files for trio of apartment towers in Campsie town centre</a>

Arada entered the Australian market in 2024 and has rapidly assembled a significant development pipeline across Sydney. Alongside its Campsie holdings, the developer is soon to launch <a href="https://www.apartments.com.au/new-apartments/wattle-green-2-fishburn-crescent-castle-hill-nsw-2154">Wattle Green</a> in Castle Hill, and has expanded its local operations following its acquisition of construction firm Roberts &amp; Co.

Located around 14 kilometres south-west of the Sydney CBD, the site sits at the centre of one of Sydney's fastest-changing middle-ring precincts. The Metro conversion of Campsie Station, combined with Canterbury-Bankstown Council's master planning framework, is driving significant residential intensification around Beamish Street and North Parade, with thousands of new homes expected over coming decades.

First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans

For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans

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>

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Ellen Walker

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

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EXPERT OBSERVER
In the past week, a sharp decline in sentiment has been seen amongst Australian consumers and business. In the US, President Trump and the market remain optimistic on the ability of their economy to rebound quickly from this crisis, but data to hand is increasingly challenging this view.
Beginning with our business sector, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/April/er20200414BullAustralianbusinessconditionsMarch.pdf">the NAB business survey</a> reported a dramatic decline in confidence, the index declining from -2pts in February to -66pts in March as severe restrictions over trading and social gatherings were implemented. The March level of the index compares to a reading of around -30 at the depths of the GFC, and -24 in the 1990’s recession.
Conditions also fell sharply this month, from 0pts to -21pts. This outcome is worse than the GFC (-17pts), but not as bad as the 1990’s recession (-39pts). All the components of conditions were weak in March, and the experience of businesses across the states was uniform. Unsurprisingly, business is reticent to invest in this climate, the capex expectations index falling to -23, below the GFC low of -20. Fiscal measures introduced to accelerate business investment are then set to struggle.
Turning to the Australian consumer, in April our <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/April/er20200415BullConsumerSentiment.pdf">Westpac-MI consumer sentiment survey</a> registered the single biggest monthly decline in the 47 year history of the survey, taking the Index beyond its GFC lows to 75.6, levels only seen during the deep recessions of the early 1990s (64.6) and early 1980s (75.5). As detailed by Chief Economist Bill Evans, it is “pertinent to note that the lows in previous recessions were reached after one to two years of continuous deterioration compared to the one month collapse we have seen here”.
Consumers’ view of the ‘economy, next 12 months’ recorded its biggest monthly fall on record, a 31% drop to 53.7, in line with GFC lows. Households are however still optimistic that this is only a temporary shock, with the ‘economy next 5yrs’ sub-index only down 3.8% to 87 – still above this cycle’s lows of 85.5 averaged during the second half of 2014.
Views on family finances were also hit in April, though the cost was much less severe than for immediate expectations of the economy (down 14.8% for ‘finances, versus a year ago’, and 6.6% for ‘finances in the year ahead’). While households are hopeful regarding their financial position, very clearly they are taking preventative measures when it comes to spending, ‘time to buy a major household item’ plunging 31.6% in the month – also its largest ever shock. As detailed in the survey release, health concerns and social distancing requirements are likely on the minds of consumers, in addition to their finances. 
A similar argument can be posited for housing, with sentiment around the sector having collapsed in April. ‘Time to buy a dwelling’ fell 26.6%, and house price expectations declined by over half (-50.8%). These outcomes are discussed in more detail by <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42983">Chief Economist Bill Evans</a> in our weekly video update, along with the responses to a number of special questions on the experience of consumers in this outbreak – <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/April/er20200415BullConsumerSentiment.pdf">also highlighted in the bulletin</a>. 
Turning to the labour market, while <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42990">the unemployment rate</a> was little changed in March at 5.2%, Westpac-MI unemployment expectations continued to rise, another 8% increase seen in April. Helpfully, the current level for the index of 130 is well below that seen in the GFC and the 1990’s recession, circa 180 and 170 respectively. Presumably, the Government’s JobKeeper package has given households some confidence in the labour market. It is also likely that households view the threat of job loss as temporary because it is being caused by a virus. On this point, while Westpac expect the unemployment rate to peak around 9% mid-2020, by the end of 2020, it should be back near 7%.
The significance of the JobKeeper program to Australia’s economic outlook was a key topic discussed by Chief Economist Bill Evans in our inaugural <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42984">Market Outlook in conversation podcast</a>. In this edition, Bill was joined by our Head of Financial Market Strategy Robert Rennie who covered off on key financial market developments, particularly with respect to the Australian and US dollar.
Turning to the US, the economic situation they face as a result of COVID-19 is becoming more and more severe. In just four weeks, around 22 million US citizens have now filed for unemployment benefits after losing their jobs. This loss will see the unemployment rate rise from 4.4% at March to around 15% in April. Further job loss has to be expected, and so the peak for the employment rate will be closer to 20% come mid-2020. Despite the benefit of precautionary buying in March, retail sales have already been hit hard, falling 8.7% in March, the worst outcome on record. Another, likely larger, decline will be seen in April, with durable goods and discretionary services expected to be the hardest hit.
While a sharp reduction in consumption is the prime shock coming to the US as a result of this crisis, investment in housing and the business sector has also been hit hard, and will remain weak for some time. Both Westpac and the IMF expect a contraction in US GDP of around 6.0% in 2020. While the IMF forecast a V-shaped recovery, circa 5.0% growth in 2021, we are much more circumspect, instead anticipating year-average growth around 1.0%. Hot spots such as New York City look to be coming under control, but the virus has now spread across the US, making it difficult to trace and contain. This will delay a return to normal conditions, with wide-ranging economic consequence. 
ELLIOT CLARKE is a <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42750" target="_blank">senior economist at Westpac</a> 
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j.ballantyne1990-6AQqhLzZaK

COVID-19’s terrible toll: Elliot Clarke

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GUEST OBSERVATION
It’s hard to forget the thick smoke plumes <a href="https://theconversation.com/bushfire-smoke-is-everywhere-in-our-cities-heres-exactly-what-you-are-inhaling-129772">blanketing</a> Australia’s cities and towns during the black summer. But consecutive days of smoke haze can also come from planned burns to <a href="https://www.mssanz.org.au/modsim2013/A3/meyer2.pdf">reduce fuel loads</a>, and <a href="https://theconversation.com/logging-burns-conceal-industrial-pollution-in-the-name-of-community-safety-96712">fires set after logging</a>.
Expanding planned burning is often touted as a way to mitigate the risk of bushfires rising with climate change. But the autumn burn-off season is bad news for the COVID-19 pandemic, as smoke exposure can make us more vulnerable to respiratory illnesses.
In fact, <a href="https://www.theage.com.au/national/victoria/months-of-haze-doctors-demand-smoke-pollution-check-as-pandemic-raises-burn-off-fear-20200407-p54hy4">doctors in the Yarra Valley</a>, Victoria, are campaigning for better air quality monitors. They argue burn-offs are a serious health risk during this pandemic, particularly with asthma inhaler stocks in <a href="https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/interview-with-deborah-knight-on-2gb-about-covid-19">limited supply</a>.
Yes, planned burns can be useful, but they offer limited protection from bushfires and, right now, they pose an immediate health risk. It’s a reasonable bet that planned burning will do us more harm than good in 2020.
The same can be said of <a href="https://soe.environment.gov.au/theme/ambient-air-quality/topic/2016/fine-particulate-matter-pm25">other sources of smoke</a>, including from logging regeneration burns, wood heaters, backyard burn-offs and burning fossil fuels.
How does smoke from bushfires hurt our lungs?
Smoke pollution from the black summer <a href="https://onlinelibrary.wiley.com/doi/full/10.5694/mja2.50545">may have killed</a> more than 400 people, and sent 4,000 people to the hospital.
Bushfire smoke includes fine particles – less than 2.5 micrometers in size (one micrometre is a ten-thousanth of a centimetre) – that can reach to the ends of our lungs and enter the bloodstream. They <a href="https://www.mua.org.au/sites/mua.org.au/files/uploads/201912%20-%20CAR%20factsheet%20-%20Bushfire%20Smoke%20and%20Health.pdf">compromise our immune system</a>, weakening our <a href="https://www.researchgate.net/publication/340343851_Environmental_pollutants_modulate_RNA_and_DNA_virus-activated_miRNA-155_expression_and_innate_immune_system_responses_Insights_into_new_immunomodulative_mechanisms">antiviral defences</a>.
Smoke also has a toxic mix of metals and organic chemicals that include <a href="https://www.sciencedirect.com/science/article/pii/S0048969719347874">known carcinogens</a>. Even short term exposure increases hospital admissions and ambulance call-outs in Australia for chronic obstructive pulmonary disease, asthma, cardiovascular attacks and <a href="https://theconversation.com/how-does-poor-air-quality-from-bushfire-smoke-affect-our-health-126835">other health effects</a>.
It’s not just humans – health impacts from smoke <a href="https://ca.audubon.org/news/birds-suffer-air-pollution-just-we-do">extends to wildlife</a>, with smoke reducing their ability to mount an immune response and <a href="https://iopscience.iop.org/article/10.1088/1748-9326/aa8051/meta">increasing their stress</a>.
The <a href="https://www.nature.com/articles/s41598-018-25847-1">ecological effects</a> of smoke can also compromise animal survival, including making it harder for them to <a href="https://iopscience.iop.org/article/10.1088/1748-9326/aa87ed/meta">forage</a>.
Exacerbating COVID-19
Smoke exposure causes inflammation in the lungs, as does coronavirus infection. But it’s a not a simple equation; they likely act in a synergistic way with complex interactions.
Recent studies have linked worse outcomes of COVID-19 infections with <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7083240/">long-term cigarette smoking</a> and <a href="https://www.sciencedirect.com/science/article/pii/S0269749120320601?via%3Dihub#bib6">air pollution</a>, both of which have similar chemical components to <a href="https://pubs.acs.org/doi/abs/10.1021/es981277q">wood smoke</a>.
New research from the USA shows average air pollution with one extra microgram of fine particles per cubic metre is associated with a 15% higher death rate from <a href="https://projects.iq.harvard.edu/files/covid-pm/files/pm_and_covid_mortality.pdf">COVID-19</a>.
In other words, if COVID-19 has a base death rate of about <a href="https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(20)30244-9/fulltext">1 in 100</a>, and fine particles in air pollution span from near one microgram/litre to higher than 12 in major <a href="https://projects.iq.harvard.edu/files/covid-pm/files/pm_and_covid_mortality.pdf">urban centres</a>, then the death rate could more than double to 2.65 per 100 infections.
Research into other viral infections shows just two hours of exposure to smoke can make people <a href="https://www.atsjournals.org/doi/full/10.1164/rccm.201807-1287OC">more susceptible</a> to respiratory infections. But what we’re uncertain about is if short term exposure to smoke would illicit the same dire consequences – dramatically higher death rates – as there appears to be with long-term exposure to air pollutants.
What’s more, men could be more at risk than women. Men find it harder to fight off the flu than women, and prior exposure to wood smoke can make flu symptoms <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6467314/">worse in men</a>.
Planned burning is under pressure
The amount and pattern of planned burning is under pressure to change. Some <a href="https://theconversation.com/theres-only-one-way-to-make-bushfires-less-powerful-take-out-the-stuff-that-burns-129323">commentators</a> are campaigning for increased planned burning, but others are <a href="https://theconversation.com/percentage-targets-for-planned-burning-are-blunt-tools-that-dont-work-39254">asking for less</a>, and the <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-01-07/fuel-reduction-burn-debate-rubbish-says-vic-fire-chief/11849522">Victorian firefighter chief has said</a> it’s no silver bullet.
While planned burns aim to reduce wildfire, it’s <a href="https://ro.uow.edu.au/cgi/viewcontent.cgi?article=5330&amp;context=smhpapers">not yet clear</a> whether this will ultimately alter the amount of smoke over communities.
On the one hand, planned burns could pump more smoke into the atmosphere than wildfires because <a href="https://ro.uow.edu.au/cgi/viewcontent.cgi?article=5330&amp;context=smhpapers">larger areas need to be burned</a>, smoke can build up and <a href="https://www.mssanz.org.au/modsim2013/A3/meyer2.pdf">hang around for longer</a>, and planned burns could produce <a href="https://ro.uow.edu.au/cgi/viewcontent.cgi?article=5330&amp;context=smhpapers">more toxic smoke by burning wetter fuels</a>.
On the other hand, planned burns have lower severity and are <a href="https://www.publish.csiro.au/WF/WF16167">more patchy</a> than wildfires, so burn less of the vegetation in a given area, potentially producing less smoke.
What about protection? Planned burns can make <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/CIB/cib0203/03Cib08">firefighting easier for a few years after fire</a>. But current rates of planned burning give little protection for houses when wildfires are driven by <a href="https://theconversation.com/a-surprising-answer-to-a-hot-question-controlled-burns-often-fail-to-slow-a-bushfire-127022">extreme weather</a>.
Planned burns within a few hundred metres of houses <a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0029212">can give protection</a> but must occur frequently, such as less than every <a href="https://www.publish.csiro.au/WF/WF18128">five years</a>. We shouldn’t expect towns to endure local smoke pollution this often.
A matter of timing
In the context of COVID-19, the seasonal timing of fires is also important.
Flu risk is lowest in the <a href="https://www.healthdirect.gov.au/flu-trends-in-australia">summer months</a>, and COVID-19 might <a href="https://newsroom.unsw.edu.au/news/health/dreaded-duo-australia-will-likely-hit-peak-coronavirus-cases-around-flu-season">peak in late winter</a>. This means smoke from wildfires in summer may have less impact than smoke from planned burns in autumn and spring.
 
The coming summer is unlikely to bring a repeat of last summer’s fires because so much forest is already burnt.
So, even if COVID-19 spills over into 2021, the compounding smoke risk from wildfires is likely to be lower than smoke from planned burns in autumn and spring.
Not worth it
All things considered, it’s not worth the health risk to conduct planned burns, logging regeneration burns or other burning this year while the pandemic continues to sweep through the country, particularly in areas close to towns such as the Yarra Valley.
Still, whether or not planned burns will change our total exposure to smoke from bushfires, the effects of climate change are <a href="https://agupubs.onlinelibrary.wiley.com/doi/abs/10.1029/2019GL083699">definitely bringing more fire</a> and with it more smoke.
This means we can expect to have to deal with interactions between virus risks and smoke risks more often in the future.<img src="https://counter.theconversation.com/content/136230/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/don-driscoll-17432">Don Driscoll</a>, Professor in Terrestrial Ecology, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a>; <a href="https://theconversation.com/profiles/brian-oliver-113740">Brian Oliver</a>, Research Leader in Respiratory cellular and molecular biology at the Woolcock Institute of Medical Research and Professor, Faculty of Science, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a>; <a href="https://theconversation.com/profiles/courtney-alice-waugh-1032568">Courtney Alice Waugh</a>, Associate Professor in Immunology and Disease, <a href="https://theconversation.com/institutions/nord-university-3607">Nord University</a>; <a href="https://theconversation.com/profiles/marcel-klaassen-425221">Marcel Klaassen</a>, Alfred Deakin Professor and Chair in Ecology, <a href="https://theconversation.com/institutions/deakin-university-757">Deakin University</a>, and <a href="https://theconversation.com/profiles/veerle-l-b-jaspers-1032459">Veerle L. B. Jaspers</a>, Professor, <a href="https://theconversation.com/institutions/norwegian-university-of-science-and-technology-715">Norwegian University of Science and Technology</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/the-smoke-from-autumn-burn-offs-could-make-coronavirus-symptoms-worse-its-not-worth-the-risk-136230">original article</a>.
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The smoke from autumn burn-offs could make coronavirus symptoms worse

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GUEST OBSERVATION
The university sector faces cumulative losses of up to A$19 billion over the next three years due to lost international student revenue.
Modelling from the <a href="http://www.mitchellinstitute.org.au/higher-education-funding-report-final-april-2020/">Mitchell Institute</a> shows the next big hit will come mid-year when $2 billion in annual tuition fees is wiped from the sector as international students are unable to travel to Australia to start their courses for second semester.
Such losses are not just a university problem. <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5368.0.55.0032017-18?OpenDocument">ABS data show</a> for every $1 lost in university tuition fees, there is another $1.15 lost in the broader economy due to international student spending.
This means the Australian economy could lose more than $40 billion by 2023 because of reduced numbers of higher education international students.
We estimate each six-monthly intake missed due to closed borders will deliver an annual economic blow comparable to when Australia’s <a href="https://www.pc.gov.au/inquiries/completed/automotive/report">auto manufacturing industry shut down</a> (worth around $5 billion), or the loss of Australia’s $4.1 billion <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/7503.0">annual vegetable crop</a>.
Our modelling shows there will be no quick return to pre-coronavirus normality either, or “<a href="https://www.afr.com/politics/federal/why-morrison-dropped-the-snap-back-strategy-20200408-p54i3t">snapback</a>” as Prime Minister Scott Morrison described it.
Missed intakes disrupt the pipeline of international students – who usually study for two to three years – so lost revenue continues to impact budgets for several years.
Forecasts tell a disturbing story
We looked at <a href="https://www.education.gov.au/finance-publication">university finance data</a> and <a href="https://internationaleducation.gov.au/research/International-Student-Data/Pages/default_annual.aspx">enrolment trends</a>. We modelled two scenarios: one with a relatively quick recovery of international student enrolments beginning in 2021, and the other with an extended travel ban that meant no new international students until 2022.
Both scenarios were disastrous for the higher education sector.
The first showed the university sector losing about $10 billion, though international student revenue would largely return to normal by 2023.
But the second scenario, incorporating extended travel bans, had a longer-lasting effect. With the government announcing the borders are likely to remain closed for “<a href="https://www.news.com.au/travel/travel-updates/health-safety/australians-may-not-be-able-to-travel-overseas-until-2021-due-to-coronavirus/news-story/5b29c380cef922d256fec79b85b261ab">quite some time to come</a>” the worst-case scenario seems more likely.
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<a href="https://images.theconversation.com/files/328319/original/file-20200416-192762-ts99nc.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/328319/original/file-20200416-192762-ts99nc.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a>
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Over the Easter weekend, the government <a href="https://www.dese.gov.au/covid-19/higher-education/higher-education-faq">announced a package</a> that guarantees funding for the estimated enrolments of domestic students in 2020, despite whether the actual enrolments are fewer than estimated. The package includes about <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2020-04-12/government-announces-coronavirus-higher-education-relief-package/12142752">$100 million</a> in waived regulatory fees and funding for an additional 20,000 short online courses in national priority areas such as nursing and IT.
This will fall well short of plugging the gap international students will leave behind.
Based on historical funding rates per student, the government would need to fund another 1.9 million short courses, and universities find the same number of students to enrol, to make up for the projected losses in international student revenue.
Financial position of universities
This modelling was part of the Mitchell Institute’s more in-depth <a href="http://www.mitchellinstitute.org.au/higher-education-funding-report-final-april-2020/">investigation into higher education funding</a>. Our analysis shows total university revenue from international students grew by 137% over the past decade. More than 40% of the sector’s annual student revenue now comes from international students.
International students delivered almost $9 billion in annual revenue to universities in 2018, accounting for around 58% of student revenue at two of Australia’s most prestigious universities, the University of Melbourne and the University of Sydney.
Despite the revenue windfall, growth has been uneven. Group of Eight universities experienced the biggest growth in international students, tripling their international student revenue over the past decade. For other universities, particularly smaller and regional universities, revenue grew at a much slower rate.
Even though some balance sheets are healthy, there is limited ability to weather a protracted downturn. University surpluses were only A$1.5 billion across the whole sector in 2018. The sudden and steep decline in international student enrolments is a significant economic challenge for universities.
The outlook for universities
Australia’s universities have <a href="https://meanjin.com.au/essays/the-australian-idea-of-a-university">relied on international students</a> as a source of growth for a long time. While the amount the universities receive per domestic student has been virtually flat in real terms over the past decade, fees each international student pays have increased by over 50%.
With this revenue stream suddenly threatened, the education experience of domestic students will suffer. Universities will need to make <a href="https://www.theguardian.com/australia-news/2020/apr/12/australian-universities-warn-covid-19-relief-package-not-enough-to-stop-21000-jobs-losses">deep cuts to staff</a> and courses without further assistance.
This will come at a time when Australia will need its higher education sector as part of any COVID-19 recovery. It is likely demand from domestic students for university places will rise because of workers looking to re-skill and up-skill.
University enrolments from domestic students have increased <a href="https://andrewnorton.net.au/2020/03/25/predicting-student-numbers-during-the-covid-19-recession-2021-could-be-an-unexpected-peak-year/">during previous recessions</a> and the federal education minister has encouraged those who are out of work to undertake study.
Also, one quarter of school leavers usually take a gap year to work or travel. With those plans looking unlikely, there may be an increase in school leavers wanting to study.
But despite the extra funding for 20,000 short courses, universities are unable to respond fully to <a href="https://theconversation.com/demand-driven-funding-for-universities-is-frozen-what-does-this-mean-and-should-the-policy-be-restored-116060">any changes in demand</a>. Caps introduced in 2017 still remain that effectively limit the number of places universities can offer.
Increasing capacity in the tertiary sector by removing the caps on university places would assist universities to deal with the coronavirus crisis.
Universities play an important role in our society, and they will bring future revenue into the economy when international student numbers eventually recover. Australia will need to make further decisions about how much we want to support our universities during this crisis.<img src="https://counter.theconversation.com/content/136251/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/peter-hurley-342847">Peter Hurley</a>, Policy Fellow, Mitchell Institute, <a href="https://theconversation.com/institutions/victoria-university-1175">Victoria University</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australian-universities-could-lose-19-billion-in-the-next-3-years-our-economy-will-suffer-with-them-136251">original article</a>.
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Australian universities could lose $19 billion in the next 3 years.

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Melbourne saw lower clearance rates across all nine sub-regions when compared to the December quarter, according to CoreLogic's Quarterly Auction Market report. 
However, all 9 sub-regions have recorded higher quarterly clearance rates and auction volumes than they did over the March 2019 quarter. 
The Outer East recorded the highest clearance rate this quarter, with 67.3 per cent of the 766 auctions returning a successful result, followed by the Inner South. 
Melbourne’s Inner region had the highest volume of scheduled auctions over the last three months (1,681), followed by the Inner South (1,347).
Overall Melbourne’s clearance rate was recorded at 63.8 per cent across 8,882 auctions over the quarter, compared to 72.8 per cent across 12,870 auctions over the previous quarter and 51.8 per cent across 6,375 auctions over the March 2019 quarter.
<a href="https://www.propertyobserver.com.au/images/2020/4/14/4_Melbourne.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/4/14/4_Melbourne.jpg" alt="">
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Melbourne's Outer East recorded the highest clearance rate in Melbourne this quarter: CoreLogic

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Australian residential developer Crown Group has taken the next steps in its first move into the US market, where it plans to develop a US$500 million mixed-use high-rise condominium and hotel tower. 
Crown Group is progressing entitlements with Los Angeles City Hall for the proposed tower, which is earmarked for the southeast corner of South Hill and 11th streets at the convergence of Downtown’s financial, fashion and South Park districts.
Crown Group has formed a joint venture with a Singapore based company called Magnus Property Pte Ltd and one of Indonesia’s biggest property developers, ASRI.
The joint venture group settled on the Downtown site in November 2019.
The 43-storey tower has been designed by renowned Koichi Takada Architects and the project at 1111 Hill Street is expected to be completed in 2024.
The high-rise sections of the building will comprise 319 condominiums with an exclusive residents’ retreat over the top two floors and a façade design that references California’s gigantic ancient redwood trees.
Crown Group’s LA office is also in discussions to perhaps incorporate a 160-key hotel in the low rise of the building.
Crown Group CEO Iwan Sunito said the flourishing Downtown district of LA had experienced a significant transformation over the past decade. This is evidenced by LA Live’s expansion, Warner Music and Spotify establishing offices, headline retailers such as Apple, Vans and Paul Smith launching flagship stores, a bevy of iconic restaurants opening venues and numerous residential, hotel and commercial developments underway.
Crown Group Head of US Development Patrick Caruso said the development would offer an appealing point of difference for buyers in Downtown LA and bring a new version of condominium living to the district.
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Crown Group secures land for its first USA project

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GUEST OBSERVATION 
Last week the Australian Prudential Regulation Authority (APRA) sent an <a href="https://www.apra.gov.au/capital-management">extraordinary letter</a> to Australia’s banks and insurers, essentially telling them to cut their dividend payments to shareholders in light of the coronavirus crisis.
It said it expected banks and insurers to “seriously consider deferring decisions on the appropriate level of dividends”.
<a href="https://images.theconversation.com/files/326728/original/file-20200409-188923-1pxiqkj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/326728/original/file-20200409-188923-1pxiqkj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a>
Read the full <a class="source" href="https://www.apra.gov.au/sites/default/files/2020-04/Capital%20management.pdf" target="_blank">APRA letter to financial institutions, April 7, 2020</a>.
Where a board was confident that it could approve a dividend on the basis of robust stress testing that had been discussed with APRA, it should “nevertheless be at a materially reduced level”.
Where dividends were paid those payments should be “offset to the extent possible through the use of dividend reinvestment plans and other capital management initiatives”.
With Australia’s big four banks potentially suffering big losses due to mortgage defaults among other things, their capital bases are at risk.
Equity research analysts at <a href="https://www.nytimes.com/reuters/2020/04/08/world/asia/08reuters-health-coronavirus-australia-banks">Macquarie</a> outline a scenario under which bank losses reach A$25-27 billion per bank, and their capacity to pay dividends (without raising equity) materially diminishes
Why did APRA do it?
The letter isn’t a “ban” on dividends, and APRA wasn’t telling the banks anything they don’t already know. So why did it bother?
The answer lies in the economics of how investors react to firms that don’t pay the dividends expected.
Seen through that lens, APRA was very clever indeed.
In a classic 1985 paper <a href="https://onlinelibrary.wiley.com/doi/epdf/10.1111/j.1540-6261.1985.tb02362.x">Merton Miller and Kevin Rock</a> provided a theoretical answer to the puzzle of why paying dividends seems to signal good news to investors, and why cutting dividends seems to signal bad news, and cuts the share price.
In the Miller-Rock model, the managers of a firm have better information about its future prospects than outside investors.
To keep it simple, imagine there are two “types” of firms: good and bad.
Good firms have high future cashflows, bad ones have low ones.
Only the managers know which is which.
Because both types of firm can earn something from investing in the business, it is in the interest of both (more so the good firm) to invest rather than pay out dividends.
Miller and Rock wondered whether what each type of firm did provided clues to investors about whether the managers thought it was good or bad.
Surprisingly, they found that usually good firms will pay high dividend and bad firms no dividends.
It is surprising because good firms are sacrificing more by paying dividends.
Their logic was that the bad firms were the least able to afford good dividends and that good firms knew this and paid high dividends to signal they could afford to.
It has a striking implication with <a href="https://www.nber.org/papers/w4244">strong empirical support</a>.
If a firm gets a temporary negative shock to its cashflow or investment prospects it won’t want to cut its dividend lest investors think it has turned “bad”.
It will borrow or even do short-term damage to its prospects in order to maintain investor confidence and hence a high stock price.
Get out of jail free
Notice that the signalling theory of dividends implies that the managers of firms would like to cut dividends in tough financial times, and probably should, but they worry about sending a bad signal to investors.
<img src="https://images.theconversation.com/files/328304/original/file-20200416-192698-pj1hzp.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="">
An announcement like APRA’s provides them with cover – an excuse.
And it does more. It is what economists refer to as a “coordination device”.
If the big four banks got together and agreed cut their dividends by the same amount, say in half (which would be illegal) investors would get no differential signal and no new information about which bank was “good” and which was “bad”.
APRA’s message opens up the possibility of all four coordinating without talking – merely by following advice.
As 2005 Nobel laureate Thomas Schelling put it in his book, <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674840317&amp;content=reviews">The Strategy of Conflict</a>,
"People can often concert their intentions or expectations with others if each knows that the other is trying to do the same."
And they’ve an interest in coordinating. If one bank falls over during this crisis and needs to be bailed out that’s bad for all of them. All of their stock prices will tank, it will be hard for them to raise the capital they need to fund their operations.
Australia’s banks compete, but they are “frenemies”, right now more friends than enemies.
We will have to wait and see if they pick up the get-out-of-jail card APRA has handed them and cut dividends together.
APRA could have taken a tougher stance. It could have banned dividends. But that would have sent a bad signal to domestic and international capital markets about the solvency of our banks.
I have been critical of some of APRA’s moves in recent years. But this one is brilliant. Let’s hope the banks can see a life raft when they’re offered one.<img src="https://counter.theconversation.com/content/136407/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/richard-holden-118107">Richard Holden</a>, Professor of Economics, <a href="https://theconversation.com/institutions/unsw-1414">UNSW</a>
This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-apras-extraordinary-gift-to-banks-under-pressure-to-pay-dividends-136407">original article</a>.
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rh-YsoTT2xMuQ

APRA's extraordinary gift to banks under pressure to pay dividends

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<h2>OPINION:</h2>

Recently due to the global pandemic caused by COVID-19, journalists and economists are flooding in with their own opinions about how the <a href="/expert-insights/buying/how-will-the-coronavirus-impact-australia-s-property-market">property market</a> will fall to a certain degree. 

Martin North from Digital Finance Analytics even went to the extreme in claiming that house prices will suffer between 20-30% in <a href="/developments/sydney-nsw">Sydney</a> and <a href="/developments/melbourne-vic">Melbourne</a>. 

There is still so much noise in the property market at the moment and our confidence may be shaken, despite the fact that Melbourne’s house price has just surged to the record-high values in February 2020 exemplifying a huge turnaround in a relatively short period of time.

I would like to reiterate on why I am remaining highly confident in Australia’s property market, especially on the residential market. To me, investing in property is still one of the best investments that any Australian who has the ability to do so, can make in their lifetime to secure a better off financial future. <a href="https://www.businessinsider.com.au/how-people-get-rich-paths-to-wealth-2019-9">According to Thomas Corley</a>, who has spent 5 years analysing how wealthy people accumulate wealth, he found that there are generally 4 paths to wealth which are saver-investor, top corporate senior executive, virtuoso and dreamer-entrepreneur. Among the 4 paths, saver-investor is a path that more than 80% of people can take as Australia has the world’s highest minimum wage. Saver-investor requires enormous financial discipline and long-term commitment as you need to consistently save 20% or more of your income to invest.

Personally, I have known so many people who have become financially independent through investing in property. According to the BRW Rich 200 list, which is published each year, <a href="https://www.smartcompany.com.au/industries/property/four-property-lessons-australias-richest-people/">property has consistently been the major source of wealth for Australia’s multimillionaires</a> and it’s the same all over the world. Property investment is unlike investing in any other products like shares or funds, you need to work on borrowing from banks, manage the property (or find someone to do it) after you settle, and it may requires you to manage your cash flow very well. 

However, over the long term it pays off as you will get more experienced and you will find the process of building an investment property portfolio a fun act. 

Here are the reasons that keep me confident in Australia’s property market in this unprecedented time:

<h2>1. Continuous Population Growth
</h2>

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/4reasons-1.jpg" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="281" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/4reasons-1.jpg?itok=OngVU_bD" width="580"></a>

<figcaption> </figcaption></figure>Australia has a high proportion of migrants. Our major capital cities like Melbourne, <a href="/developments/sydney-nsw">Sydney</a> and Adelaide are consistently ranked in the top 10 most liveable cities in the world. Therefore, Australia is very appealing for people around the world to consider migrating over. In the year 2018, the total net overseas migration was 237,224 people. Population growth is the most fundamental element in the property market as it is always about supply and demand when it comes to capital growth. Continuous population growth will ensure there is always demand for housing. After all, all of us need a place to stay. This will lead me to my second point which is supply.

Source: abr.gov.au

<h2>2. Sharp fall in number of dwellings
</h2>

In July 2017, the Australian government imposed a very strict and tight policy in Australia’s property market. The lending policy has been tightened so drastically in order to prevent the property market becoming bubbles like how the American did years ago. Besides that, the state government started to impose foreign stamp duty tax on all foreign investors. The government has also removed the benefits of stamp duty incentive for off-the plan properties. These changes had hit the property market very hard. New housing developments struggle to sell and get finance for construction. Many developers have put aside their projects as the foreign investors cooled off their interest to invest. Therefore the supply would be very limited in the coming years.

Source: Reserve Bank of Australia; ABS Building Approvals

<h2>3. 70% of residential market is owner occupiers
</h2>

According to ATO figures in April 2017, 91.53% of Australians do not invest in property. It has been estimated by Peter Waxman from the Department of Land Economics at Sydney’s University of Technology that the total value of all residential dwellings in Australia is about $2.5 trillion. However the owner occupiers own about 70% of these properties. Think about it, the rest of 30% of residential properties are owned by 8.47% of Australians and foreign investors. This means that the 70% home ownership is a huge advantage when things turn sour in the market. People will not simply sell their own house as it is a roof over their heads. They might sell shares, funds, but they will do whatever they can to protect their own home. The property price will not fluctuate easily like the share market does.

<h2>4. The government and banks are in this together
</h2>

No one will know the exact impact of what the COVID-19 pandemic will cause to our economy. Unemployment rates will soar, economic growth will halt, but the government will look to the housing market as an early driver of revitalising economies as we have seen that during GFC and back even in the 1980-81 recession where Bob Hawke introduced the <a href="/guides/how-to-navigate-australias-first-home-buyer-grants">first home buyer grant</a>. Unlike all previous financial crises that we have witnessed, this time the government has put in so much economic stimulus to help people and businesses to get through the tough time together. Even the banks are standing by together by allowing people to defer mortgage repayment by 6 months. This has greatly prevented many people from panic selling mode. It certainly helps people with financial hardship to be able to hold on to their property. 

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/4reasons-2.jpg" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="411" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/4reasons-2.jpg?itok=a3hVWNmZ" width="580"></a>

<figcaption> </figcaption></figure>At this point in time it is hard to imagine the potential outcomes of this global event. However it is worth remembering that investing in property is a long term approach. The fundamentals are still there to strongly support the property market. With the support from the government through various stimulus packages, the casualties can be expected to be kept at a low level. When the pandemic is over and the economy is back up and running, it will be business as usual and the market will reward those who have kept their faith.
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Melvie

4 Reasons To Have Faith in Australia’s Property Market for the long run

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In comparison to other outbreaks, for example, SARS in 2003, based on the swiftness of Government, The Reserve Bank of Australia (RBA) and the Bank’s responses; Australia and the world are in a better place to ride out COVID 19.

The <a href="/news/covid-19-how-the-world-previously-recovered-from-sars-and-whether-or-not-we-can-do-the-same-this-time-round">previous SARS</a> event caused a short term slowing in <a href="/guides/how-to-navigate-buying-property-during-the-covid-19-crisis">our property market</a>. China’s output slowed down for a few months. Its market bounced back up once the outbreak was under control and the introduction of economic stimulus.

Below is an extract from “<a href="https://repository.upenn.edu/real-estate_papers/64/">Has SARS infected the property market? Evidence from Hong Kong</a>” by Grace Wong Journal of Urban Economics 63 (2008) 74–95 (complete paper attached appendix 1)

“Several noteworthy results emerge from this analysis. A Hong Kong-wide price decrease of 1.6 percent above the preceding trend is identified after the start of the epidemic for all housing estates, as well as an additional decrease of less than 3 percent for the average SARS-affected estate, i.e., those that were publicly known to have had SARS cases or were mentioned in the newspapers  in relation  to  SARS.  The implied economic value of life, from $121,000 to just over $1 million, falls towards the lower end of the range based on studies of less extreme risks. Although the nature of the SARS risk limits the extent to which this value of life estimate can be generalized, it helps put the SARS-related price decline in perspective. Given the low implied values of life, I conclude there is no evidence for price overreaction.”

In Hong Kong during SARS, the average price decline was 1-3%  in SARS-affected estates and 1.6% for all other estates. The Australian property market had a slowing in transaction numbers. However, prices continued to increase (albeit at a slower pace) well into 2005. 
Our property prices didn’t suffer significant setbacks during the Swine Flu outbreak in 2009/2010. It stabilised, and there was little growth. However, the swine flu occurred between the Global Financial Crisis in 2008/2009 and the mining downturn 2011/2012. Other economic downturns that impacted, such as unemployment and housing activity.

With COVID 19, we are not even waiting a few months for the release of economic stimulus, and the Government is already taking action. COVID-19 may feel more ‘extreme’ due to the swiftness of the virus’s infected cases in Australia, the lockdown of many countries, requests of <a href="/guides/covid-19-how-apartment-dwellers-can-keep-themselves-safe-during-self-isolation">self-isolation</a> and cancellation of many significant events and restrictions on business operations (particularly small businesses). However, at the same time, there is an economic stimulus swiftly introduced to assist during these trying times, and there have been massive advancements in technology (compared to 2003 and 2009), that will allow many businesses to innovate their ways to do business.

The previous breakout of SARS caused a decrease of 1.6% to the Hong Kong property market, and this did not have the current Australian initiatives and factors to minimise any short-term consequences:

a.     Interest rates in Australia are low. 
b.     The current exchange rate of the Australian currency is low. 
c.     There was Immediate Government intervention with both short-term controls and $320.0 Billion of incentives. 
d.    One of Australia’s major exports is resources which continue (volumes have not been affected by demand or production) to show price increases across the board, other than lithium.

<h2>The trend of COVID 19</h2>

In the last nine days, the rate of COVID 19 infection as of the 9th April 2020 across Australia (refer graph below) has dropped across Australia and Victoria. There is a clear trend in comparison to the previous direction from early March.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/graph-1.png" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="338" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/graph-1.png?itok=rlN5sJGG" width="580"></a>

<figcaption> </figcaption></figure>     Australian new COVID 19 cases of infection as at 1/4/2020 across Australia sourced Australian Government

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/graph-2.png" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="143" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/graph-2.png?itok=xHNabjK_" width="580"></a></figure>     The ABC (Australian Broadcast Corporation) website

The previous graphs show a compelling trend that the rate of infection is dropping and most likely will continue to decline.

We have not seen the end of the COVID 19 infection rate, but the end is in sight.

In an article in the Australian Financial Review on the 7th of April, the Australian Prime Minister has already started to discuss the staged relaxation of the COVID 19 measures that they introduced.

<h2>Pent up demand, China’s recovery</h2>

China is further advanced in this COVID 19 recovery cycle. Last week there was a 5% increase in prices and activity in the top 30 tier-one cities in China. Pent up demand has been the nominated factor.

Rising land prices have the potential to drive up home prices in a market under close scrutiny by the country’s policymakers. In March, new home prices were up 4.2%, 12.2% and 11.4% year-on-year in 70 of China’s first-, second- and third-tier cities respectively, <a href="http://www.stats.gov.cn/tjsj/sjjd/201904/t20190416_1659685">according to data released</a> (link in Mandarin) by the National Bureau of Statistics (NBS) in mid-April.
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Opinion: Is the impact of COVID-19 a repeat of SARS for the property market?

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Along with massive fiscal stimulus globally to deal with the impact of coronavirus shutdowns on the economy, the last month or so has also seen massive monetary easing – with the latest being the US Federal Reserve expanding its emergency lending program to $US2.3 trillion.
The economic shutdowns are necessary to slow the spread of coronavirus to take pressure off the medical system in order to minimise deaths. And because this will lead to a huge detraction in economic activity - we expect Australia and other developed countries to see a 10 to 15% fall in GDP centred on the current quarter - businesses, jobs and incomes need to be protected as far as possible through a period of hibernation so the economy can return to “normal” as quickly as possible once the shutdown ends.
Hence government measures to support businesses, jobs and incomes via wage subsidies, payments to businesses, tax relief, rent relief etc. Such measures add to more than 4% of global GDP and are still rising.  In Australia, fiscal stimulus is now up to around 10.5% of GDP and in the US it’s around 7% with more on the way.
However, monetary stimulus is also necessary to take pressure off indebted households and businesses and to ensure the flow of money and credit through the economy.
Initially some of the focus was on rate cuts, but rates were already low or around zero, and so increasingly we are seeing quantitative easing (QE) or money printing. But surely this is unnatural – money doesn’t just grow on trees? Some fret this can only lead to hyperinflation.
This note looks at what QE is and how it entails printing money, why it's being used and what the risks are.
Summary of recent moves by major central banks?
 But first here is a quick summary of recent major monetary policy easing measures since February
The Fed has cut the Fed Funds rate by 1.5% to a range of zero-0.25%, announced unlimited buying of Treasury bonds and mortgage backed securities and announced a total of $US2.3trn in lending facilities that leverages up $US454bn in risk capital (which will take losses if needed) provided by the US Government. The latter will be used to lend to small and medium enterprises (through banks) and to state and local governments and for the purchase of investment grade and some high yield bonds, collateralised loan obligations and commercial mortgage backed securities. 
The European Central Bank has reinstated quantitative easing totalling €870bn by year end with flexibility over the assets it can buy which will aid countries like Greece and Italy and expanded its low-cost bank funding program. • The Bank of England cut rates by 0.65% to 0.1% &amp; started a new £200bn bond buying program with more bank funding. 
The RBA has cut the cash rate by 0.5% to 0.25%, set a target for the 3 year bond yield of 0.25% to be supported by buying Government bonds and announced low cost funding for banks (called a Term Funding Facility) amounting to at least $90bn at just 0.25% interest for three years. These all involve quantitative easing and hence money printing.
What is quantitative easing?
Quantitative easing involves a central bank printing money and using that money to buy government and private sector securities or to lend directly or via banks to pump cash into the economy. So this covers the Fed’s bond buying program and its lending facilities and in Australia it covers the RBA’s buying of Australian Government bonds and its low-cost funding of banks.
It all shows up as an expansion in central banks’ balance sheets which shows their assets and liabilities.
The printed money or cash increases the “liability” side of the balance sheet and the increased holding of bonds, private securities, direct loans or funding of banks shows up on the “asset” side.
Rough estimates are that the moves announced over the last month or so will see the Fed’s balance sheet more than double to around $US11 trillion by year end or 50% of US GDP and the RBA’s balance sheet nearly double to around $340bn by year end or 17% of GDP. Of course, the Bank of Japan’s balance sheet dwarfs that of the Fed, ECB and RBA reflecting its massive quantitative easing program since 2012.
So why do quantitative easing? Normally central banks implement monetary policy by changing interest rates. But when interest rates have already fallen to zero, in order to support the economy central banks have been turning to boosting the quantity of money in the economy. Hence quantitative easing.
 The current expansion in quantitative easing (and its adoption in Australia) reflects: 
A need to ensure that short term money markets continue to function – as lenders became reluctant to lend into money markets last month the Fed, RBA and other central banks injected short term funds into the markets. This should be temporary and will reverse as markets settle down. 
A desire to ensure that sound businesses continue to receive funding. This has seen the Fed adopt a range of lending programs and the ECB and RBA provide low cost funding for banks so they can continue to lend to their customers. 
A desire to ensure that the cost of funding remains low. A month ago Government bond yields started to rise (as fund managers were selling their liquid winning assets to meet redemptions), corporate borrowing rates surged as investors feared defaults and Europe was seeing a blow out in the gap between bond yields of fiscally weaker countries like Italy versus Germany.
So, the Fed has been pumping money into the US bond and credit markets to push yields back down. The ECB has done something similar in Europe by buying Italian bonds. And the RBA announced a target of 0.25% for the 3-year bond yield and started buying bonds to support that target.
Keeping bond yields down means lower fixed rate borrowing rates on business loans and mortgages. 
To the extent bond buying keeps bond yields down it makes it easier for governments to fund their rising budget deficits. 
Finally, a lesson from the 1930s is that it’s very important to stop the money supply from shrinking. The 1930s saw multiple bank failures which accentuated the economic depression as people lost their savings and as a result the money supply collapsed.
Printing money and expanding cash in the system helps make sure this does not occur. But isn’t this helicopter money? What about MMT? Not quite. As currently practiced central bank bond buying involves the central bank using printed money to buy already existing government bonds in the secondary market (eg from banks, super funds and foreign investors).
So, it’s not directly providing the money to the government and those bonds must (at least in theory) still be paid back when they mature. So, it’s not really “helicopter money” – which would see a central bank directly give money to the government to spend.
Modern Monetary Theory (MMT) argues that if a country borrows in its own currency (which Australia does - so there is no risk of a currency crisis) and there is more risk of deflation than inflation then there is nothing wrong with using money printing to finance government spending which can be allocated in an equitable way.
I must admit I have some sympathy for this. The trouble is that politicians would be at risk of becoming addicted to the flow of central bank money resulting in wasteful government spending and pork barrelling and eventually hyperinflation.
So central banks &amp; governments are very wary of doing this. At least for now - as this resolve may fade the longer inflation remains very low. But of course, QE is aiding the government’s stimulus program by helping to keep bond yields down. And unlike in the period of quantitative easing seen in the US and Europe last decade which was accompanied by fiscal austerity, exploding budget deficits today provide a vehicle for quantitative easing to add to spending in the economy (once the shutdowns relax) so QE today is likely to be far more potent than it was last decade.
 How will central banks get their balance sheets down?
There is no magical right or wrong level for a central bank’s balance sheet - as can be seen in the chart above they vary as a share of GDP from country to country.
So, it’s not necessarily the case that central banks will need to shrink them (beyond the shrinkage that may occur when their lending and low cost bank funding programs end) – they could just remain at a permanently higher level with central banks just rolling their bond holdings over as bonds mature meaning effectively that governments may never need to pay a portion of their debt back. And in the process the interest governments pay on such debt could come back to them as a “dividend” payment from the central bank!
Won’t it just cause hyperinflation?
The biggest risk in this whole strategy is that the expansion of the money supply results in a surge in inflation. Early last decade when QE became popular there was much talk of hyperinflation and the US becoming the next Zimbabwe, but it didn’t because while narrow measures of money (cash and bank reserves) surged, broader money supply measures like credit growth remained subdued and at the same time spare capacity in the economy remained high.
The same will likely apply now in the short term – until economic activity recovers to more normal levels such that spare capacity is used up (with unemployment falling and factories operating at full capacity) and lending growth picks up substantially it’s hard to see inflation picking up. If anything, inflation looks likely to fall – just look at the plunge in oil and petrol prices, the slump in demand for discretionary retail products and all the talk of falling wages.
Once economic activity has recovered there is a bigger risk of inflation and central banks may have to reverse easy money. But that’s an issue for some time away. We still have to end the shutdowns, and all go back to work and spending first. What does it all mean for investors? There are several implications in all this for investors.
First, because the coronavirus shutdown has created such a big hit to economic activity which will take a while to fully recover from, low interest rates and easy monetary policy will likely be with us for a long time to come and once the growth outlook improves this is a positive for growth assets like shares.
Second, the country that expands its balance sheet and by implication its money supply the fastest seems likely to see a decline in its currency. Based on our balance sheet calculations the Fed looks to be leading the charge here – which could be negative for the US dollar. This may ultimately support commodity prices and the $A once the shutdowns end.
Third, ultimately ultra-easy money, huge budget deficits and public debt and an ongoing retreat from globalisation will add to the risk of an eventual pick-up in inflation which would be negative for bonds – but that’s still several years away.
SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital
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QE & money printing, what is their place in the COVID-19 economic rescue? Shane Oliver

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Expert Observation
Despite the current gains recorded for the March quarter being on track with our base case forecasts, given current events, there is only a single scenario that is still feasible and that is Scenario 4 – a scenario we outlined in our top 4 scenarios for 2020. 
One where the RBA would bring the cash rate to zero and start quantitative easing. It was based on a possibility the tentative trade war truce between the U.S and China would collapse and a ‘take no prisoners’ trade war would break out between the two countries, turning into a global trade war.
The outlook for housing in this scenario was one where the market would eventually stall and start to record price decreases from mid-year onwards. That the rate cuts and money printing would not be able to offset job losses and subsequently, forced sales activity.
Yes, the RBA has now had to introduce quantitative easing. Yes, the cash rate is now just 0.25 per cent. But what we now face economically is a tsunami that dwarfs even a global trade war.
To get a sense of the economic carnage that is underway, check out this gif of U.S jobless claims.
The scale of what we are facing right now on the economic front is something never truly encountered since The Great Depression. And if we don’t manage it well then a depression (a contract in in GDP of greater than 10 per cent) is what we will have – something which I am far more frightened of than catching Covid-19. And believe me, I do not want to catch this virus.
Click <a href="https://www.propertyobserver.com.au/images/2020/4/16/SQM%20chart.JPG" target="_blank">here</a> to enlarge.
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So, with that in mind, I want to now give a general outlook on what I think are two main scenarios that are really in play this year.
A V-shaped recovery
Let’s be clear, despite the positive Corelogic numbers (dwelling prices rose 2.8 per cent for the quarter) and indeed our asking price indexes, I think housing price expectations have already corrected by five per cent to ten per cent from their very highs. That may not show up in the official numbers as the highs were only briefly obtained during the later stages of February. It is anecdotal only, through my discussions with real estate agents and the sharp fall in clearance rates, which were already occurring prior to the auction ban starting from the 25th of March.
The best case scenario from here for property owners and investors is one where we get to zero new Covid-19 cases before April is over with. And on that front the numbers have been looking promising. I believe it is now a 50 per cent chance that our three major states will record a zero new Covid-19 cases day before the month is over. If we get to that point, the next question begs how long will restrictions be kept? Potentially some restrictions could be lifted in May. And my bet is that when restrictions are eventually lifted, they will be lifted in the reverse order that they were placed on to begin with. As the ban on auctions occurred as one of the last stages (25 March), it is quite feasible that lifting that ban could come sooner than expected.
If we are able to get back to close to normal business by end of May (I certainly don’t think all restrictions will be lifted by that time), then I think confidence in the housing market is going to return. Assisted with all the stimulus announced and the economic damage relatively limited, it would mean a fall in housing prices recorded for the June quarter but a bounce back in the September and December quarters. The net result for the year may come in at our Scenario 4 range or slightly better.
It should not be underestimated how much expenditure has been announced (including RBA money printing via quantitative easing) and how low lending rates are now. 
A borrower with a good credit rating can now expect a variable owner occupier lending rate somewhere between 2.5 per cent to 2.8 per cent. Average capital city gross rental yields are running at about 2.9 per cent for houses and 3.9 per cent for units.
That means property owners on a purely interest expenses verses rental payments scenario could do better owning. And of course it also means that investors may find more cashflow positive properties in our major cities.
That said though, we think there is trouble ahead for the rental market. We will come to that point later.
<h2>The worse-case scenario</h2>
The worse-case scenario is we have a second wave in new virus case counts and it occurs shortly after some restrictions are lifted. Or that new case numbers flatten at current levels but never quite manage to get to zero cases or stay at zero cases. This appears to be the plight of South Korea at the moment.
If this second wave were to occur, we think the housing market will have a much deeper correction.
A second wave of new Covid-19 cases is a great risk. Note, a second wave of Spanish Flue hit Australia in mid-1919 and this occurred just after restrictions were lifted after the first wave, noting hospital numbers (which is the available data we have for time) never actually got to zero on the lull.
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Such a scenario would mean current restrictions would stay with us for longer. Probably more than six months. Or worse, more restrictions added. A second wave of infections may be more deadly as it would potentially occur over the course of the Southern Hemisphere winter. A sharp rise in deaths may result in more panic at the shops and most certainly a new low in confidence.
Damage to the economy would be deeper and longer lasting. Many businesses, including those that are currently on life-support, would not last the distance and will be liquidated.
You see, even with the generous measures announced for small business, it won’t be enough to keep much of the sector alive for half a year. When there is little to zero revenues coming in, month after month, PAYG relief is not enough. Being subsidised to cover employee wages at $1,500 a fortnight is not enough. Neither is a $10,000 cash grant for most. And forget about asking small business to go into debt. Most of them, particularly in retail, hospitality and tourism, will refuse to do so. And so job creation would occur at a far slower rate when a recovery would eventually return.
With the surging and sustained unemployment rate, the banks could start to get nervous on mortgages. Potentially, after the six-month hiatus, banks may be backed into a corner where they are forced to repossession on defaulted housing loans. Now I believe the RBA and/or the Federal Government would come to the rescue to enable banks to avoid a mass repossession event. Let’s keep in mind that in 2008, the banks could have pulled the trigger on the commercial property sector. Many owners at the time were in breach of lending covenants. The banks, by and large, chose not to pull that trigger. Mainly for their own self-preservation, as doing so would have created a cascading affect that would have smashed their balance sheets.
So I am not convinced we will see a lot of forced sales activity, even in this bleaker scenario. All the same, there will be many property owners who will want to sell out if this crisis goes on for six months or more. They will see the falls in dwelling prices over the course of the June quarter. And they will be very protective of what is left of their net wealth.
The buy side of the property equation would be hit very hard as it is being hit hard now. But far worse than what we had in 2018 or indeed 2008.
You see it’s not just the loss of employees representing many first home buyers, but, as mentioned above it is also the potential wipe out of many thousands of small business owners, who themselves employ nearly 50 per cent of the total workforce. Small business owners actually represent a very large component of the home buyer market. As at the 2016 Census there were over two million small businesses.
So this is very much a buy side issue in my view. Anyone that is worried they will lose their job or their business, won’t be seriously thinking of taking out a home loan to buy into the property market.
Let’s also remind ourselves that our international border is closed to most except for permanent residents, citizens and some temporary visa holders. And I believe it will remain closed for many months to come. So underlying demand for housing, which has been predominantly driven by net overseas migration has now stalled for this year. This will be a different experience to the Spanish Flu of 1919, whereby population growth still expanded at a very strong rate (1.9 per cent for 2019) due to our soldiers returning home as well as the settling of European refuges.
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Up to a 30 per cent peak to trough price decline cannot be ruled out.
In this more bleaker scenario, a 30 per cent decline in dwelling prices would be on the cards. Note, I have not modelled this out, other than taking elements such as previous work on the relationship between unemployment and the housing market. Modelling in this environment is almost impossible. It is simply based on my experience and study. The most overvalued cities would be hit the hardest, that being Sydney and Melbourne. Other cities should do better than a 30 per cent correction given their relative fair value. Now some of you will note that during The Great Depression, the Australian housing market did not correct by this magnitude. Nor, during the Spanish plague of 1919 did the Australian housing market record such a correction. However, those two markets were not laden with the debt burden our current housing market has. Not even close. The only market that comes close in Australia was the massive boom/bust of the 1890s.
Of course, it should be noted that period was also laden by a very dodgy and nearly entirely unregulated banking sector.
Either way, the rental market is in trouble.
Overall, a stalling in underlying demand for accommodation driven by near zero migration, combined with a reduction in existing tenancy demand (as a result of job losses) plus a very likely increase in supply from empty AirBNB accommodation will likely mean we can now expect a rise in rental vacancies over this year. Previously the forecast was for a gentle reduction in vacancies in 2020 as dwelling completions were (and still are) due to fall.
On our estimates and other estimates, there are some 120,000+ properties nationwide at any point in time being used for short term accommodation via websites such as airbnb. And on our latest numbers for February,there were some 68,000 vacant rental properties available for normal leasing.
I can’t tell you how many property owners are going to switch back to longer term leasing but there will be a number, especially if this plays out for longer. This is not a scenario here. This is our view. Our view is that rental vacancy rates are going to rise sharply over the short term. I think we can expect the rate to rise from the current 2.0 per cent to north of 2.5 per cent and perhaps north of 3.0 per cent. That may not sound like much to you but if we do hit 3.0 per cent that would be a record high on our index which goes back to 2005. Rents would fall as a result. Perhaps our weekly asking rents index is already revealing some weakness with national asking rents for houses down by 0.9 per cent for the month and 0.3 per cent down for units.
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The weakness in the rental market will probably put off many would-be property investors over 2020 creating more issues on the buy side of the market.
So what is it going to be? - Scenario 1, Scenario 2 or another scenario?
The next 30 days will likely tell the story. It is very hard to judge it. Like everyone else I am watching the new case numbers closely.
Let me tell you. I don’t want Scenario 2 to play out. A depression would create massive economic misery. Suicides will rise, so will crime.
There is also the possibility we muddle through somewhere between the two scenarios. A world where daily new virus cases don’t quite get to zero but there isn’t a second wave. Restrictions lifted very gradually over many months. Eventually, a vaccine is produced and distributed in 2021. We would need to see what is lifted and at what point in time to work out the impact on the housing market. Regardless, rents will still be hit for simply the fact that the international border will still remain closed.
LOUIS CHRISTOPHER is the CEO of SQM Research
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