The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" dir="auto">
<section data-scroll-anchor="false" data-testid="conversation-turn-2" data-turn="assistant" data-turn-id="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" data-turn-id-container="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" dir="auto">
The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.

NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB changed its call following the August monthly inflation figures that were released at the end of September, showing it had dropped to 2.7 per cent.

"The risk has been skewed to a first cut earlier in 2025, and today’s change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," NAB noted in its latest update.

They added that the cadence of the cuts may be faster than its central profile.

"Domestic inflation pressures are cooling, but only gradually, and we continue to expect the conditions for a cut will not be in place this year.

NAB believes the easing cycle will end at 3.1 per cent by early 2026, which is five cuts from the current 4.35 per cent cash rate.&nbsp;

CBA also thinks 3.1 per cent will mark the end of the cutting cycle, while Westpac is forecasting 3.35 per cent, and ANZ is the most pessimistic at 3.6 per cent, which would be just three interest rate cuts.

<h2>What would a rate cut in February look like for borrowers?</h2>

According to&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2vK2ujS77CHs9VRvSSXzLC" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG" target="_blank">Canstar</a>, if there is a cut in February, a borrower with a $600,000 loan today and 25 years remaining would see their monthly repayments drop by $92.&nbsp;

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			Impact of 0.25% pt cut in February 2025
			</td>
		</tr>
		<tr>
			<td>
			Current loan size
			</td>
			<td>
			Drop in monthly repayment
			</td>
			<td>
			New monthly repayment
			</td>
		</tr>
		<tr>
			<td>
			$600,000
			</td>
			<td>
			-$92
			</td>
			<td>
			$3,907
			</td>
		</tr>
		<tr>
			<td>
			$750,000
			</td>
			<td>
			-$114
			</td>
			<td>
			$4,884
			</td>
		</tr>
		<tr>
			<td>
			$1M
			</td>
			<td>
			-$153
			</td>
			<td>
			$6,512
			</td>
		</tr>
		<tr>
			<td colspan="3">
			Source:&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2qVnp6oqATgqDUi2Frm22q" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL" target="_blank">www.canstar.com.au</a>. Starting rate is the RBA existing average owner-occupier variable rate of 6.36%. Assumes banks pass the cash rate cut on in full the month after the meeting.
			</td>
		</tr>
	</tbody>
</table>

Canstar Data Insights Director, Sally Tindall, says if core inflation continues to track in the right direction, or unemployment starts to accelerate significantly, we could well see a cash rate cut as early as February of next year.

“All four big banks now believe the RBA will be ready to cut the cash rate in just over four months’ time, if not before, in the case of CBA.

“However, the outlook for both inflation and unemployment is still highly uncertain. A couple of wobbly sets of inflation data could see the RBA holding for longer, particularly if unemployment remains relatively steady."

&nbsp;

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB bring forward first RBA cut to February 2025

<html><body>
It’s two words that are continually circling around the property sphere: negative gearing. We’re yet to hear the Liberal government mouth them and so far there have been no announcement on what it plans on doing.
It’s a friend to property investors but a foe to first home buyers, with <a target="_blank" href="https://www.propertyobserver.com.au/news/home-ownership-rates-among-young-dips/2013102265889">Matt Cowgill tweeting</a> that the home ownership rate among 25 to 34 year olds has dipped below half.
According to a <a target="_blank" href="https://www.propertyobserver.com.au/australian-capital-territory/government-policies-favour-wealthy-property-owners/2013102065823">report by the Grattan Institute</a>, negative gearing and the capital gains discount provide residential property investors with nearly $7 billion a year, or $4,500 on average for each property investor.
The report suggests that the current government welfare and tax policies benefit wealthy homeowners, leaving young renters and first home buyers disadvantaged.
Catherine Cashmore has <a target="_blank" href="/news">emphasised</a> that to be against negative gearing as a policy incentive is not a stance against investment into the housing market.
Property Observer has asked property institutions and experts active in the property space to weigh in on the debate.
They were asked: Should negative gearing be change? Why or why not?
 
 
 
 
Shane Oliver – Head of investment strategy and chief economist, <a href="https://www.ampcapital.com.au/?" target="_blank">AMP Capital</a> <img width="125" height="150" src="/images/stories/2013/10/25/shane-oliver-profile.jpg" alt="shane-oliver-profile" style="float: right;">
THE REAL PROBLEM IS LACK OF SUPPLY, NOT NEGATIVE GEARING
It seems every time the Australian residential property market takes off, calls appear for negative gearing on investment property to be restricted or abolished. But is it really the reason Australian housing is so expensive? Yes, it does seem investors have a bit of an advantage over first home buyers and yes, first home buyers seem to be missing in action right now.
But negative gearing is not the real problem. Australia is not alone in providing some form of tax assistance to home owners as most comparable countries do. American’s can even deduct interest on the family home from their taxable income, and yet our house price to income ratios are much higher.
Removing or curtailing negative gearing could even make the situation worse by reducing the supply of rental accommodation at a time when rental yields are hardly attractive for investors and could cause other distortions in the economy because negative gearing would still be available on other investments.
The real problem is a lack of supply. In a well-functioning market when demand goes up, prices rise and this eventually is met with increased supply. This has not been happening in the Australian housing market. We have had a world beating surge in house prices relative to incomes since the mid-1990s and yet building approvals are in the same range they have been in since 1990.
According to the National Housing Supply Council the cumulative supply shortfall since 2001 thanks to gross underbuilding relative to growth in underlying demographic demand for homes is 228,000 dwellings. What we really need to do is reform the supply of housing – release land for development faster, relax (within reason) development controls and develop a long term plan to decentralise away from our major cities.
This would be the best way to help first home buyers and cool speculative interest in housing. Negative gearing is a furphy.
 
Steve Keen – Professor of economics and finance, <a href="https://www.uws.edu.au/?" target="_blank">University of Western Sydney</a> <img width="125" height="150" src="/images/stories/2013/10/25/Steve-keen-profile.jpg" alt="Steve-keen-profile" style="float: right;">
IT NEEDS TO BE GRANDFATHERED OUT OF EXISTENCE
Negative gearing should be grandfathered out of existence: those who've already bought an investment property would continue to be eligible, but it should not be available in future.
The simplest reason is that it has failed in its one supposed policy objective: to enhance the supply of rental properties. What it has instead done is encourage individuals to speculate on the prices of existing properties. It has thus driven up house prices above what they would be if the government wasn't meddling in the property market, while doing precious little to increase the availability of rental properties by stimulating new construction. Borrowing by investors for building construction has fallen from 60% of investor loans to below 10% over the last three decades - a clear sign of a failed policy.
So why is it maintained? Because the policy has created a class of speculators whom neither party has the courage to anger by abolishing a failed and socially damaging policy. The continued existence of negative gearing is a measure of the cowardice of Australia's political elite.
Next page: Terry Ryder and Peter Bushby have their say
 
<hr class="system-pagebreak">
Terry Ryder – Founder of <a href="https://www.hotspotting.com.au" target="_blank">hotspotting.com.au</a> <img width="125" height="150" src="/images/stories/2013/10/25/Terry-Ryder-for-profile.jpg" alt="Terry-Ryder-for-profile" style="float: right;">
THERE’S NO REASON FOR IT TO BE CHANGED
I would say categorically, no and I’m absolutely 100% certain that they won’t be. It’s an issue that just keeps getting brought up but no politician with his head screwed on is going to make that change to negative gearing.
There’s no reason for it to be changed, it’s a system in place for clear reasons, for valid reasons and it works. The one and only time that a government in Australia decided to scrap it precipitated a disaster in the rental market and they had to bring it back very quickly. That happened in the era that Bob Hawke was prime minister and Paul Keating was treasurer.
Particularly in our capital cities, negative gearing is necessary for the viability of people buying investment properties. Without it, there would be a sharp reduction in the number of people who a buying properties in the capital cities because it’s very, very hard in our major cities to buy an investment property that’s positive cash flow. The vast majority are cash flow negative and without the tax benefit, it’s not a viable investment, therefore the pool of rental properties that are needed for those who rent, would dry up very quickly.
I’m not arguing from the viewpoint of vested interest, I don’t buy negatively geared property, I always buy positively geared. From my personal viewpoint, I don’t care whether it exists or not because I’m not affected but I think it would be a disaster for the property market for people who need to rent if it were removed. As it happened previously when Paul Keating removed it briefly before bringing it back.
 
Peter Bushby – President of the <a href="https://www.reia.com.au/?" target="_blank">Real Estate Insitute of Australia</a> (REIA).<img width="125" height="167" src="/images/stories/2013/10/25/bushby-profile.png" alt="bushby-profile" style="float: right;">
NEGATIVE GEARING NEEDS TO BE RETAINED, STAMP DUTY NEEDS TO BE ELIMINATED
We [REIA] strongly agree with the report’s [Grattan Institute Renovating Housing Policy] recommendations to eliminate stamp duties, however it’s essential negative gearing be retained in its current form for the purpose of property investment.
REIA has always supported negative gearing because it helps in the provision of rental accommodation. Negative gearing for property investment is complementary to the goals of the Government’s Housing Affordability Fund (HAF) in addressing the supply of rental accommodation.
To remove it would show that we haven’t learnt anything from history. When negative gearing was abolished in 1985 it had disastrous consequences for the property market and for people trying to rent. Rents rose 37% across Australia and by 57% in Sydney. Thankfully, negative gearing was reinstated in 1987.
It is far too short sighted to link investor interest in housing to negative gearing alone. Negative gearing is only one of a range of factors that contribute to the level of investment in property. Other factors include interest rates, availability and accessibility of finance, share market performance, the unemployment rate, housing supply and consumer confidence.
The myth that negative gearing is a plaything of the wealthy also needs to dispelled. The majority of taxpayers with a negatively geared property earn less than $80,000 a year. With the new government, expectations that industry will be involved in finding workable solutions to these old issues are high.
 
The debate is quite prominent in the twittersphere, with Catherine Cashmore and Oliver raising their concerns.
<blockquote class="twitter-tweet">
<a target="_blank" href="https://twitter.com/CCASHMORE_BUYER">@CCASHMORE_BUYER</a> ..I seem to recall in late 80s NG was curtailed only to be returned after its removal reduced the supply of rental accom
— Shane Oliver (@ShaneOliverAMP) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/ShaneOliverAMP/statuses/392622101128966144">October 22, 2013</a>
</blockquote>
If you would like someone’s opinion added to the list, please email ntrotman@propertyobserver.com.au and we’ll consider getting their viewpoint.
</body></html>

ntrotman-Et3xWpamVh

Should negative gearing be changed? The experts have their say

<html><body>
It’s hard to believe we need to consistently go over the impact a concentration of investment into established housing has on affordability to the detriment of low-income workers and renters.
I’ve written extensively on it in the past, and many papers have been produced to outline the consequences in detail. However, over the past week, I received a string of emails from interested readers and journalists asking for my comments on negative gearing. Therefore, I hope you will forgive me for reiterating a few basic points.
To be against negative gearing as a policy incentive is not a stance against investment into the housing market.
Indeed we need a steady provision of rental accommodation because there will always be a proportion of the population unable or unwilling to purchase, or in need of a transitional period of tenancy due to job changes.
Albeit, a drop in ownership rates from families with children from 79.5%-77.2% over the last census interim - our biggest demographic of home buyers - coupled with yields outpacing both wage growth and inflation over the corresponding period and beyond, highlights a growing and somewhat concerning trend.
Leading up to the peak of 2010, Australia had an unparalleled property boom which not only heralded us top of the “Annual Demographia International Housing Affordability Survey” for subsequent years, but placed household debt to income ratios at around 150% which can hardly be called healthy.
I’m sure many have grown tired of being lectured on the many viable reasons why we’ve seen prices and subsequently household debt increase (ease of lending, lower borrowing rates, and wage growth to name but a few). However, whilst you can argue over the details contained in housing affordability reports as many have done in the past – or fall back on previous statements made by the RBA which conclude:
<a href="https://www.rba.gov.au/publications/bulletin/2012/dec/pdf/bu-1212-2.pdf">“Australia is now broadly in line with other comparable countries, having risen relative to other countries since 1980 when it was at the lower end..”</a>
It’s rather embarrassing that these comparable countries - including the UK, New Zealand, Denmark, the Netherlands, and Canada, and all international terrains which having been through somewhat harder lessons than our own - also battle to induce first home buyers out from underneath their rental blankets as high prices and shortages of stock herald arguments similar to those voiced here.
Yes - Australia has a shortage of accommodation in areas most want to live, work, play and importantly purchase. As I argued last week, this pattern of behaviour has predominantly been driven by years of poor planning for population growth, leading many to conclude, they have little option but to situate close to centralised job districts rather than incur the inflated cost and time of commuting on already over-crowded arterials.
However, all of he above has also been exacerbated by our tax policy of negative gearing.
As the Henry Tax review pointed out, Australia has a system that taxes income from work and savings at a higher rate than other forms of investment (including borrowing and speculating), which are taxed at a lower rate.
In other countries such as the USA, investors of geared properties can only claim tax deductions for interest on borrowings against the income generated by the property until sold.  However, the Australian system allows heavily geared investors to deduct against wages thereby reducing their overall tax bill, which, when combined with various other incentives such as depreciation, makes it a very attractive policy for high income earners to the disadvantage of lower wage individuals, unable to bridge the gap between the income the property generates and the outgoing expenses.
The success of negative gearing relies solely on the growth of the asset.  Without good capital appreciation, negative gearing doesn’t work.  Therefore, investors taking advantage of the incentives are for want of a better word ‘speculators’ who have concentrated their attention on the established market principally in the inner and middle ring suburbs – areas that attract the highest levels of concentrated buyer activity.
Consequently, 92% of residential investors borrow to purchase second hand dwellings, leaving the new housing market without enough investment to induce an adequate provision of supply or infrastructure. This inflates the cost of established stock, leaving a widening gap between price and yield – leading investors even more reliant on the band-aid of negative gearing to fund their activities.
With 1.2 million negatively geared investors (speculators) relying on appreciation, predicting movements in the market place is a national past time.  You’ll hear it trotted out frequently that we’re at ‘such and such’ stage of the ‘property clock’ or ‘property cycle’.  Second-guessing rises or falls in the RBA rate has become a popular sport on Twitter and various other media outlets.
The RBA noted as early as 2003, when advocating a moderation of demand in the property market amongst investors, by way of tightening of the current negative gearing rules - the rises in Australia’s established market have been inflated principally from a growth in investor demand aimed overwhelmingly at the second hand dwellings.
The RBA described the demand as unprecedented with the concentration overwhelmingly on properties around the median price point (currently circa $500,000) where overall demand from home buyers is also at its highest.
On the surface it may seem somewhat contradictory that a policy benefitting investors could negatively impact renters.  Albeit, rather than having the spruiked desired effect of aiding rental affordability and rental supply, the results speak for themselves.
Over the previous five years, Australia’s rental yields have risen 49.2%, outpacing growth in housing loan repayments for the same period. Furthermore, long-term vacancy rates sitting firmly below 5% and in established areas they hover closer to 2%. Does this alone not ring bells that negative gearing as it stands, is doing little to solve rental shortages and consequently a growing affordability crisis?
Some put forward the debate that property investment should be viewed no differently from any other small business such as dog washing and so forth.  However, property is not only a wealth generating asset, but as essential requirement for all - on a par with good medical care and food. Governments have a responsibility to provide policies that balance the market for investor, renter and most importantly the homebuyer alike. Not an easy task – but certainly not impossible.
Then there are those who take you back to the Hawke/Keating era during which negative gearing was to some extent quarantined.  The result was marginal at best, there was a dampening of investor enthusiasm and a small increase in rental yields in two main markets (Sydney and Perth) both of which were already experiencing vacancy rates below 1% and therefore had other factors weighing into the statistic. However, in other states there was no such rise and in some, such as Melbourne, rental growth actually slowed.
Additionally, the change in policy didn’t stay around long enough to take us through this transitional period and enable effective assessment of the results. Stringent lobbying by the real estate fraternity and property investors ensured at first opportunity the policy was re-introduced.
This is because real estate industry professionals love investors.  The transaction process is generally smoother with less emotional content involved and the selling agency benefits from the rental management once the purchaser has settled.  This helps cement a lasting relationship with their client’ as well as an ongoing potential income stream.  Hence why the majority would rarely voice opposition.
I have no doubt if the policy were removed, or even scaled down, there would be less demand for established stock and a subsequent dampening in prices.  I agree that a sudden and complete retraction of negative gearing in its current form would be foolish - favouring a slow wind-down whilst other policies are implemented such as strategies to aid development and increase supply. However, the notion that touching the golden egg of negatively geared property assets in a way which may dissuade buyers from banking on the established market to fund their retirement - seems to be one that’s culturally ingrained in the real estate fraternity.
You only have to turn on the TV to be bombarded with programs from The Living Room to The Block, which make everyone feel like a rookie renovator able to tap into the wealth of their property investments with a quick makeover, or fuel the perception that you can pick up a good property as some magically suggest- below its intrinsic value and add value to create profit - to know obsession with property investment goes above and beyond negative gearing alone.
Indeed, if someone could prove to me that any of our current modes of investment have led to:
1)      An improvement in housing affordability and supply;
2)      An increase in vacancy rates;
3)      A substantial boost to new housing and consequently infrastructure in ‘growth’ suburbs; or
4)      Lower rents for the most venerable in our society
I would be the first one campaigning on the streets in in favour of the plan.  However all of the above, negative gearing has failed to do.
I can’t help thinking back to a talk I attended at a previous REIV conference where a Victorian state minister was lecturing on the state of our economy (I won’t mention names).  During the course of his speech, he revealed he had ownership of nine investment properties – the majority of which are negatively geared. Therefore, you have to wonder who our leaders are protecting when opposing changes to the current status quo – it’s certainly not the low-income earner or renter.
In other words, negative gearing has been more to do with promoting property inflation growth at any cost, rather than aiding society. However, for those who want more detail on the consequential impact, I suggest reading the latest research paper from the Grattan Institute which can be downloaded <a href="https://grattan.edu.au/publications/reports/post/renovating-housing-policy/?utm_source=Grattan+Email+Subscription&amp;utm_campaign=65061545b6-Housing_Policy_Report_Launch10_18_2013_Email&amp;utm_medium=email&amp;utm_term=0_27c1671191-65061545b6-251463634">here.</a>
<hr>
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
</body></html>

catherinecashmore-6LXia3pPQj

Negative gearing - A boon for investors, not so great for renters: Catherine Cashmore

<html><body>
The Reserve Bank of Australia has toned down concerns about borrowing conditions in the minutes for its rate hold on October 1.
It says the effects of its latest rut cut in August still has further to run.
“House prices and turnover had increased and leading indicators pointed to a pick-up in dwelling investment over the period ahead,” the minutes say.
“While credit growth remained moderate, there were signs of an increased appetite for borrowing, most notably among investors.”
The Bank says policy stimulus had had sufficient influence on the economy though it wouldn’t rule out another rate cut.
“Members agreed that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,” it says.
“The Board would continue to examine the data over the months ahead to assess whether monetary policy was appropriately configured.”
The Bank says household interest payments continued to decline over the June quarter and conditions in the established housing market had strengthened over 2013.
“House prices increased by around 2.5% over the September quarter and by 5.5% over the year. However, the value of the dwelling stock relative to household income remained below the levels that had prevailed for most of the past decade,” the Bank says.
“Auction clearance rates remained well above average and turnover had picked up over recent months. Loan approvals for established dwellings for both owner-occupiers and investors had increased strongly over the past year. While the growth of housing credit remained moderate, it was edging higher, with stronger growth in investor credit.
“Dwelling investment had declined a little in the June quarter following a soft patch in building approvals earlier in the year, but dwelling construction remained higher than a year earlier and forward-looking indicators pointed to a further recovery in the second half of 2013.”
In September the Bank made note banks should maintain prudent lending standards.
Commonwealth Bank analyst Gareth Aird says the bank is maintaining an easing bias.
"The comment, 'that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them' was identical to the August and September Board minutes.  To us, these comments suggest that further changes to the cash rate are data and AUD dependent.  And they indicate that the Bank retains a mild easing bias," Aird says.
He predicts the there will be a rate hold in November depending on further job information.
"In our view, the things that the RBA will most closely be monitoring for future policy direction are (i) labour market conditions; (ii) inflation; and (iii) the AUD," he says.
"Last week’s labour force data showed that conditions in the jobs market remain soft.  The headline unemployment rate fell, but only because of a drop in the participation rate.  We expect softness to continue over the near?term, as does the RBA. 
"On the inflation front, the QIII CPI prints next week.  Another weak reading may see the probability of a November rate cut increase.  At this stage the market expects rates to stay on hold in November.  And we agree that the cash rate will be left unchanged on Melbourne Cup day.  The near?term path of the AUD will be impacted by what happens in the US and in particular with regards to the US debt ceiling issue and Fed asset purchases.
"We continue to think that the current 2.5% cash rate is the low point for this cycle."
</body></html>

awalsh-7Ub9EypybQ

RBA open to rate cuts over coming months

<html><body>
The low interest rate environment has been good for home buyers and those wanting to refinance, while not being so good for those who live on their savings. Another group of people displeased with the falling cash rate has been those who fixed their home loans around two years ago.
Back then – in 2011, when the cash rate was 4.75% – banks were offering three-year fixed rate mortgages around 6.3%, and many borrowers did better than that.
Who was to know the Reserve Bank would get to the end of 2011 and almost half the cash rate over the next two years?
People with three-year fixed rate mortgages taken in 2011 are still paying 6.3% to be fixed, while variable rate mortgages are around 4.8%.
On a 350,000 home loan, that’s a monthly repayment difference of more than $300.
Even the lucky ones who got in on the 5.99% fixed rates are now paying a full 1% over the variable rate.
So should people with eight or 10 months left to run on their fixed-rate mortgages bail out and take a variable rate instead?
In the financial services industry, we call this a ‘break’.
Banks tie their fixed rates to the bond and ‘swap’ markets. And these markets are run on terms of debt: 30-day, 90-day, one year, three years etc.
If you want to stop paying your fixed rate mortgage before your three-year term is up, someone has to pay for that ‘break’, and it won’t be the bank.
Fixed rate mortgages include a page dedicated to the ‘break fee’. This is a number formulated on the size of the fixed loan, the term left on the loan and the profit the lender loses having to close-out your loan and accept lower rates in the market.
Your first job is to have the bank give you this number.
Then you must calculate the size of the break fee versus what you can save by moving to a variable interest rate.
There are a couple of tips I can give: firstly, always negotiate with the lender when thinking about breaking a fixed loan. All lenders are different and some will give you concessions on the break fee if you’re rolling over into a loan at the same institution.
Secondly, most lenders will allow you to roll your break fee into your refinanced loan, so long as you have the equity. This might suit you for short-term cash-flow reasons but remember that if you do this you’ll be paying interest on your break cost for years to come! So, this leads to my third point: if you do break and go to a lower cost loan, think about keeping your repayments the same. It’s a great way to speed your repayment of the loan and wipe that break fee.
As with everything financial, ensure you have accurate market and technical information. An expert adviser such as a mortgage broker could be a good place to start.

<hr>
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
You can contact Mark on <a rel="nofollow" href="https://twitter.com/markbouris" target="_blank">Twitter</a>.
</body></html>

mbouris-tauSvXGAM2

Switching from a fixed rate to a variable rate: Mark Bouris

<html><body>
The tax law contains exemptions from capital gains tax (CGT) for a person's principal or main residence. But, as always, it's not as simple as it sounds. The rules can be tricky to understand.
The Administrative Appeals Tribunal (AAT) recently upheld the Tax Commissioner's decision denying a man's claim for the CGT main residence exemption in relation to a disposal of a property he claimed was his home.
The issues revolved around whether the house became the man's main residence as soon as practicable after the completion of its construction, and whether the house continued to be his main residence for at least three months after that (as the law requires in order to get the CGT exemption).
The man submitted that he had purchased land in July 2002 for $174,000 with his then de facto partner. The construction of the house commenced in April 2004; however, his relationship with his then partner ended in September 2004. In approximately May or June 2005, he and his then ex-partner moved into the house "to enable us to meet the requirements to sell the property 'without' being subject to CGT". In the first week of September 2005, the man moved out of the house and went to live with his sister in Queensland, and in November 2005, the house was sold for $703,000. On December 23, 2005, the man told the AAT that he left Australia “with a three week open (return) ticket, met [his] (now wife) and resettled in the UK”.
A net capital gain of $114,675 on the sale of the property was included as income in the man's tax assessment for the 2006 income year. He disputed the inclusion of the capital gain in his income for the 2006 year on the basis that he was entitled to the CGT main residence exemption. Before the hearing, the man provided the Commissioner with documentary evidence of certain construction, holding and sale costs, which the Commissioner accepted – this reduced the net capital gain to $66,271.
The AAT held the evidence before it failed to establish that the house became the man's main residence as soon as practicable after the completion of its construction and that the house continued to be the taxpayer's main residence for at least three months after that, as required by the relevant tax law.
The Tribunal noted an email the taxpayer had sent to the ATO which indicated that he had moved out of the house in the first week of September 2005, which left open the possibility that he lived in the house for a period of less than three months (i.e. from the second week in June 2005 to the first week of September 2005). The Tribunal also noted the taxpayer had not provided evidence (such as a Certificate of Occupancy, the date that final building inspection approval was granted or any “hand-over” documents from the builder) that the house became his main residence "as soon as practicable" after the completion of the house. Further, it noted there was no evidence of any gas or electricity accounts for the house in the taxpayer's name.
Although the man claimed he moved his personal belongings into the house when he moved into it in about May or June 2005, the Tribunal said the evidence indicated his main residence was at his sister's home in Queensland (and not the house in question) from at least the time of his separation from his ex-partner in September 2004. Other factors noted by the Tribunal included:
<ul>
<li>
from 2002 to September 2005, the man worked as a mine worker on a fly-in fly-out basis which involved working two weeks on and one week off;
</li>
<li>
in October 2004, the man redirected his mail to the Queensland address;
</li>
<li>
in December 2004, the man obtained a Queensland driver's licence (which nominated the Queensland address as his residential address); and
</li>
<li>
in the man's 2004-05 tax return, he nominated the Queensland address as his home address.
</li>
</ul>
Accordingly, the AAT held that the man had failed to discharge the burden of proof that the assessment should not have been made or should have been made differently.
In this particular case, the tax laws surrounding the CGT main residence exemption were relatively straightforward, but the individual in the case simply could not prove to the satisfaction of the AAT that the Tax Commissioner was wrong and that he qualified for the exemption.
For those wanting to know more about how CGT works, including the main residence exemption, the forthcoming Thomson Reuters CGT Guide for SME Practitioners is a very helpful guide. Among other things, it explains how CGT rules are applied to transaction-based issues, and contains useful tips, warnings and checklists. For details, see the <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/cgt-guide-for-sme-practitioners-checkpoint/productdetail/120523" rel="nofollow">Thomson Reuters website</a>.
 
<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a rel="nofollow" href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a rel="nofollow" target="_parent" href="https://www.smartcompany.com.au/">SmartCompany</a>.
 
</body></html>

thayes-XhNcNKLNWa

Get your house in order, what you need to know about capital gains tax: Terry Hayes

<html><body>
There seems to be an awful lot of confusion about the role of interest rates in Australia, in particular from the house price crash cheerleading squad. On the one hand, they say that there will be a huge spike in unemployment in 2014, which will lead to a sharp property downturn - which may or may not be true. On the other hand, they say that higher interest rates will also return in 2014, resulting in the same impact.
Either one or the other of these statements might be true, but it's not likely to be both.
For the reasons I discussed <a target="_blank" href="https://petewargent.blogspot.com.au/2013/01/what-does-australias-unemployment-rate">here</a>, the prospects for our economy are ultimately dependent on the strength of the labour force, and it seems unlikely that we will get higher interest rates until there is sustained evidence of an improvement in the employment data.
ABS labour force figures are notoriously volatile month on month (variously due to relatively small samples, rotation of surveys and the non-response rate) and thus the Central Bank will want to see successive stronger releases before pulling the trigger on monetary policy tightening. A great start would be an increase in employment (+15,000 jobs) in Thursday's data for the month of September arresting the upward trend in the unemployment rate at 5.8%.
<img style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;" width="156" src="https://www.abs.gov.au/AUSSTATS/abs@.nsf/95553f4ed9b60a374a2568030012e707/f756c48f25016833ca25753e00135fd9/Body/0.2DD6!OpenElement&amp;FieldElemFormat=gif" height="200" alt="Graph: Unemployment Rate">
Source: ABS
Unfortunately, with mining investment set to decline through 2014, at this stage, futures markets don't yet imply the Reserve Bank being in a position to implement an interest rate hike for quite some time to come yet - perhaps not even until early 2015.
<a style="text-decoration: none; color: #7f7f7f; margin-left: 1em; margin-right: 1em;" imageanchor="1" href="https://1.bp.blogspot.com/-J3PkZug7kJk/Uk8sOswWF4I/AAAAAAAAKbM/HP__hG7pC0s/s1600/asx.jpg"><img style="border: 1px solid #ebebeb; position: relative; padding: 5px; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;" width="400" src="https://1.bp.blogspot.com/-J3PkZug7kJk/Uk8sOswWF4I/AAAAAAAAKbM/HP__hG7pC0s/s400/asx.jpg" height="261" border="0"></a>
Source: ASX
The impact of higher interest rates
Given the apparent level of confusion around, it might be worth having a quick re-cap of the likely impact of higher interest rates should they eventuate earlier than forecast.
Firstly, and perhaps most obviously, there would be higher variable rate monthly mortgage repayments for home buyers, mopping up more of their available household income and reducing the dollars which they have available to spend elsewhere. 
Whatever anyone tries to argue 'in theory', the housing market is an interest rate sensitive sector and a hike (plus any associated expectations of mean reversion in the official cash rate) would almost certainly begin to apply some sort of a handbrake to speculative activity.
As I see it, a hike in interest rates - and the associated expectation of further increases - would be likely to kill off material dwelling price growth in markets which have failed to build any momentum.
Everyone has their own opinion on dwelling prices. Mine is that a hike in interest rates could make for ongoing weak dwelling price performance in Hobart, Adelaide and certain regional markets. Canberra also faces challenges of a slightly different (although not unrelated) nature, which are tied back to a likely shrinking of its labour force.
<img style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; display: block; margin-left: auto; margin-right: auto;" src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6bl-dwelpri-small.gif?accessed=2013-10-05-07-03-30" alt="Dwelling Prices graph">
On the other hand, a speculative beast has been unleashed in the Sydney housing market which may take more than a solitary interest rate hike to tame. In fact, based on what I've seen at auction, any market intervention at all is unlikely to stand in the way of the seemingly unstoppable momentum.
Note that as a Sydneysider I have a clear vested interest in this market, and therefore it makes far more sense to pay heed to what <a target="_blank" href="https://www.news.com.au/realestate/news/sydney-property-prices-will-increase-by-up-to-20-per-cent-next-year-report-predicts/story-fnd91nhy-1226721103566">others forecast</a> for our markets. That said, anyone who is based in Sydney will know exactly what I'm referring to - auction bidding frenzies, a proliferation of investors (with funds flowing from Sydney, inter-state and from overseas) and well-located properties in many cases selling for large margins above reserve.
Secondly, higher interest rates would result in higher borrowing costs for industry. Correspondingly, higher interest rate charges will impact bottom line profits and potentially discourage companies from proceeding with marginal projects.
Similarly, other borrowing costs for individuals would increase for personal loans and credit cards, which eventually should impact consumer spending adversely (although the correlation may not immediately be as strong as it ought to be).
Due to lower corporate profits there may also be a fall in the value of ordinary shares, although the share market is clearly slightly more complex than that and momentum will as ever play a key role here too. In particular, value-orientated investors (as opposed to technical traders and speculators) are likely to weigh up the relative merits and yields of other available investments.
On the plus side, higher interest rates see stronger returns for savers and increase the returns that investors should typically expect to see on their money. This would be a relief for many pensioners who often prefer lower risk assets such as certain types of term deposit.
What else?
Well, all other matters being equal, higher interest rates could see a return to the strengthening of our currency - the Aussie dollar - as overseas investors acquire assets to take advantage of higher returns. The price of bonds would also fall unless (a) the market and investors only see rising interest rates as temporary or (b) the interest rate rises have already been fully priced in.
The most compelling reason why individual investors tend to look to property - apart from sticking to what they know - is the double-edged sword of greater available leverage.
Diverse economy
The blue collar press tends to report higher interest rates from the perspective of the individual homeowner: "Higher living costs." The white collar press often favours analysing the impact of interest rates on mortgage lending in general. Meanwhile, the business press tends to take a look at the broader impact of monetary policy and thus the impacts of interest rate decisions ripple throughout the pages of the paper in question.
Interest rates are a blunt tool
Lest anyone need reminding, Australia is a massive and diverse country. London is significantly closer to Moscow than my place in Pyrmont is to Port Hedland. Up in the Pilbara iron ore exports are expanding at a rate that is - almost literally - unbelievable (up 46% year on year), resulting in an intense scrutiny of ongoing demand in China and the outlook for the commodity price. Yet elsewhere copper prices are languishing from the glory days of yesteryear and marginal projects have been shelved.
<img style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; line-height: 18px; display: block; margin-left: auto; margin-right: auto;" width="320" src="https://www.kitconet.com/charts/metals/base/spot-copper-5y-Large.gif" height="203">
Of such a nature are the multi-faceted challenges facing the Reserve Bank. We have a manufacturing industry which has been slow, but a housing market in recovery. The RBA wants to stimulate dwelling construction yet keep a lid of speculative housing market activity. Business confidence has been shaky and the absolute level of mining investment looks likely to fade soon. And at this juncture, the unemployment rate still appears to be heading north. Let's hope that trend reverses soon.

<hr>
Pete Wargent is the co-founder of <a rel="nofollow" target="_blank" href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a rel="nofollow" target="_blank" href="https://petewargent.blogspot.com/">blogger</a>.
His new book '<a rel="nofollow" target="_blank" href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>' was released on 1 September 2013.
</body></html>

pwargent-M4siyDbqQY

The impact of higher interest rates: Pete Wargent

<html><body>
The Reserve Bank kept official rates on hold this week, which means we have another month at the historically low rate of 2.50%.
However, commentary from economists suggests an imminent rise in official rates. So how do you take advantage of interest rates on home loans, while they’re still low? Think about some of these steps:
Know where you are: don’t get in a panic about interest rates without accurate information. Develop a picture of exactly how much your debt is costing you – if you can’t readily find the information, get it in writing from your lender. If you’re going to reduce your costs you have to know your starting point.
Know the market: how does your current loan compare to your neighbours’? Start on the comparison sites and see the state of the market.
Here’s a tip: when it comes to variable rate mortgages only use sites that allow you to rank the ‘comparison rate’, because this is the rate formulated by law with all the variables included and amortised. Many borrowers take mortgages that start at a low rate designed to catch their attention, only to find that the loan reverts to a higher rate after a year. Start with accurate market knowledge.
Know what works for you: getting your home loan costs down can include basic things like paying fortnightly rather than monthly, or paying extra amounts into the account. These methods typically accelerate paying-out the loan which means you pay less in the long run. But you’ll only do this if you have the right account – so find out.
Know your limitations: if you don’t have a well-informed view on where the economy and interest rates are going, you could look at fixed rate mortgages which allow you to lock-in the low rates for a period of time.
There are many lenders with three-year fixed home loans well below 5% which represents low-cost certainty for many Australians. Fixed rate mortgages can also be a good way for property investors to plan their costs. Be aware that banks rarely have fixed rates that allow borrowers to ‘beat’ the market, but don’t forget that you can also split a mortgage – half fixed, half variable – if you’re still unsure. 
Action: if you’re going to take advantage of the current low rates, you’ll need to take some action. You either get a better deal from your current lender or you go to a lender who has a better offer. And people do, over one million customers have left their financial institutions in the last year.
Either way, you’ll have to do something. In my experience, most lenders are prepared to find a better deal for the customers who are informed and business-like in their approach. If you can’t get a better deal from them, then you must be prepared to switch and when you this, you must have accurate information and realistic expectations.
Finally, the cost of money fluctuates in our economic system. Your job is simple: to reduce your costs by never paying too much.
Good luck.

<hr>
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" rel="nofollow" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance. 
You can contact Mark on <a target="_blank" href="https://twitter.com/markbouris" rel="nofollow">Twitter</a>.
</body></html>

How to take advantage of low interest rates on your home loan: Mark Bouris

<html><body>
Hi Margaret,
I have recently bought an investment property, and wish to maximise depreciation.  In the market there are so many quantity surveyors, how do I go about finding the best one? Are they all the same?
Many thanks, Daniel
 
Hi Daniel, 
Maximising depreciation on a property is really important, as it adds to the cash flows and can turn a previously negatively geared property into a positive cash flow one.  Even in a low interest rate environment, the possibility of achieving a positively geared result in your property investing (where raw rent exceeds raw expenses, and you pay tax) is limited to those areas with unusually high rental yields – these are usually areas based on one industry and with a greater risk to the investor. 
Where you have purchased in an area with more normal yields in the 5 – 6% range, on paper deductions, which are items which do not add to the expense ledger, can result in extra tax back.  This extra tax can plug up that shortfall between what comes in and what goes out and help you to stay in the market longer, as your holding costs are more well covered.  
Finding a quantity surveyor who is going to maximise these deductions is an important part of the investing process.  Understanding how they perform their calculations can help you to narrow down the good ones.  
The depreciation allowances themselves do not change from company to company – there is a prescribed amount which can be claimed on plant, equipment and buildings and the period of time over which they can be  claimed is  also prescribed, in the main, by the tax office.  It is the way that a quantity surveyor does their estimating that creates the difference in two different reports from two different companies.  
A quantity surveyor must, in effect first look into the past to establish what the original construction costs may have been for your property.  Then, they must estimate the value of the items within the property such as carpets, curtains and light fittings.  The first part is easier as there are tables which outline construction costs according to the years in which they were effected, but estimating a second hand value on an item for which you do not know the original purchase price is where the skill comes in.  
I’d suggest that first of all you ensure that the company you choose employs only duly qualified people and has a fairly long history in the business.  I like to choose companies which do a lot of the larger work too – the ones who do the big commercial and industrial estimating, as this is harder and requires a greater level of skill.  Next ask for a copy of a sample report, and then compare them across a couple of companies – these sample reports often contain similar sample properties so you can see how they differ.  
Lastly nothing is as good as a testimonial from satisfied clients.  Ask if they have happy clients who are willing to talk on their behalf, and whether it’s OK for you to contact them or be contacted by them.   If they can provide people who use them over and over again, this kind of testimonial can tell you much more than you can ever know from asking the company itself if they think they are good.  If they cannot provide this type of testimonial, there could be a good reason why!
Regards,
Margaret

<hr>
Margaret Lomas is a best-selling author and writes and hosts the popular Property Success With Margaret Lomas and heads up the panel onYour Money, Your Call, both on Sky News.
She is the founder of <a href="https://destiny.com.au/dotnetnuke/en-au/home.aspx" target="_blank" rel="nofollow">Destiny</a>.
Have a property question? <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
 
</body></html>

mlomas-KC9MUPZ6Ca

I wish to maximise depreciation; how do I find the best quantity surveyor? Ask Margaret

<html><body>
If you are worried about all this talk about a housing 'bubble' and have delayed buying a property or put off other decisions as a result, then you have fallen into a well laid trap, or perhaps you are following a path that the RBA (Reserve Bank of Australia) and others are trying to steer you down.  
Don't believe me? Here's why  
This country's monetary policy in recent decades has been set and controlled solely by the RBA (this wasn't always the case). Fiscal policy is set down by the government of the day with the assistance of Treasury and the competing interests of other departments and that government's policy agenda (meaning it can get messy &amp; complicated).
As the name suggests, monetary policy relates to the supply and cost of money.
Interest rates are the price (cost) of money and, whilst they can also have an effect on supply, the RBA's legislative ability to regulate supply and cost has largely evaporated over the past  40 years or so with deregulation as they moved away from or eased legislated controls such as LGS and SRD ratios, abolition of interest rate ceilings, exchange controls and the like to a liability management model. You can read all about it <a target="_parent" href="https://www.rba.gov.au/publications/rdp/1989/pdf/rdp8904.pdf">here</a> in a research paper written by Ric Battelino and others of the RBA.
So, with the removal of that legislative ability to impose controls the RBA has come, through necessity, to rely more on setting interest rates but even then their ability to impose those changes in getting the banks to follow suit has been found wanting as we have seen in recent years with banks often choosing their own path. Even when banks do agree to change their lending rate on mortgages, especially when the change relates to a reduction, their internal policies often leave the client's monthly payments unchanged.
The big problem for the RBA in this deregulated globalised environment now that we have a floating dollar is the effect of interest rate changes on the rate of exchange for that dollar. Make no mistake  - the RBA is poised on a knife's edge in balancing it's interest rate policy lever. Here's why.  
The effect of the GFC
 
It's very nearly six years now since our markets started to head south. It was five years ago last month that Lehman Brothers collapsed and we were engulfed by the GFC, the biggest financial mal event since the great depression. No other financial event has received such widespread media coverage at a time when media reaches us at all times of the day and in every place we visit - like it or not.
Furthermore, financial news has never been so prominent and widespread.
Here in Australia we escaped the worst of the GFC yet it scared the pants off most investors, home owners, business people and those who need to be employed. As a result countless plans have been delayed, decisions put off, retirements avoided, expansion plans placed on the back burner etc, etc. All this has led to massive pent up demand, especially for housing as our population continues to rapidly increase.
With Australia's economy in good shape compared to most other western economies these past few years and the strength of investment in the mining boom our currency has been very strong which has hurt many sectors of the economy, (even mining), to the point where a lot are at, or near, breaking point. With mining entering a new phase it has now become very important and urgent to assist and stimulate those sectors through creating the conditions for a lower aussie dollar. For the RBA that means low interest rates.
To their frustration the low rates to date have not translated to people spending money. Retail prices are still low; profits patchy and minimal. The dent in confidence was deep. Conservative consumer habits developed during the GFC are proving hard to shake. Three years of a hung parliament with all the negativity it brought did not help, just exacerbated things. Yet all this time our population continued to grow. Pent up housing demand was growing, yet confidence and job security was still weak.
 
Change isn't just coming - it's here!
 
That's right and there is more to come. Confidence is returning and we've got a new government. People are back out looking to buy houses and it has got the RBA scared. They are scared because we not only have a major under supply of housing but also labour and resources required to build more.
The laws of supply and demand then dictate that this puts upward pressure on existing housing stock which does nothing to stimulate the economy and is counter productive to what the RBA wants. Pent up demand is so great that if left unchecked it may lead to a bubble. Then again it may not. But wasn't that a bubble in US housing prices that caused the GFC? Maybe  - in very simplistic terms. It's a good scary story though.
So in this deregulated environment what does the RBA do? Increase interest rates (and by so doing the aussie dollar) to pour ice on the housing market at the expense of every other sector such as manufacturing, retail, farm, tourism etc, etc? It's a dilemma.  
RBA's new power tool
 
A few years back, having lost most of their statutory controls the RBA discovered another powerful tool to harness. It's called publicity and use of the media. They noticed how the media hang on every nuance of the RBA Governor's utterance.
They need to keep interest rates down and they also need badly to stimulate the economy at large to fill a sizeable hole left by falling mining investment. Any uncontrolled surge in prices of existing houses is just not productive except for assisting a few real estate agents.
So what better idea than to flag in the media the possibility and then call it "likelihood" of a housing bubble? Try and scare the punters away before it ever happens. They've even enlisted the likes of APRA and other spokespeople to join in the cause.
This story has been getting a good feed and continues to do so. Insurance and fund management industry spokespeople even blamed self funded retiree's with their SMSF's as the main 'housing bubble' protagonists locking the poor (still scared) first home buyers out in the cold.
Of course they have a major axe to grind as they have witnessed the SMSF sector take charge of their own money management instead of entrusting it to them, depleting the pie that the fund managers controlled for many years by many billions of dollars, with more than $500 million dollars going into SMSF's each and every week according to the Institute of Public Accountants.
Fund managers don't like it and you can bet that they will be lobbying the new government for some changes  - just what I am unsure. For their part the government will also be eyeing that SMSF pie too because there's a huge stash of cash there. Oh how to make use of it?  
So what about the bubble? Evidence please  
Truth is there is no bubble. Sydney prices have been buoyant and auction clearances above 80%. According to RP Data Sydney prices were up 8.4% last 12 months whereas the previous 12 it was only 1.2% and the year before that they were down 2.4%. Prices elsewhere in the country have told a similar story in a general sense over the same period, though not as buoyantly as Sydney - yet.
Sydney always leads and we all follow.
Brisbane according to RP Data has only risen 1.8% these past 12 months after some decreases and a flat market following the extensive flooding experienced all over Queensland these past two ears. So follow we will, but is it a bubble?
The answer is an emphatic no. Have another look at those graphs that I featured in my <a target="_blank" href="https://www.embarkpropertyinvestment.com.au/blog/housing-bubble/">blog</a>, "Where to after the election", it's all there in black and white and easy to see. We are simply now in the early stages of upswing in the investment cycle. Remember how back in April and May we studied the property cycle in quite some detail? You can go back and read it again here if you missed it.
The fact is that the RBA does not want to increase rates or have plans to do so anytime soon. They do want to encourage broad activity however across most sectors of our economy, even new home building, but price inflation of existing housing stock is not a preferred outcome so they are attempting to scare people a little to slow things down avoiding use of their interest rate lever.

<hr>
Adrian Stagg<a title="This external link will open in a new window" target="_blank" href="https://www.linkedin.com/profile/view?id=81214303&amp;trk=tab_pro" rel="nofollow"></a> is a director of <a href="https://www.embarkpropertyinvestment.com.au/" target="_blank" rel="nofollow">Embark Intelligent Property Investment</a> and has been actively involved in the property industry since the 1970’s.
You can connect with Adrian via LinkedIn.
You can also read Property Observer's exclusive article with several of the countries top economists and commentators in the property space, who shared their thoughts on <a target="_blank" href="https://www.propertyobserver.com.au/economy/is-there-a-property-bubble-the-experts-have-their-say/2013100365490">is there is a property bubble?</a>
 
</body></html>

astagg-KQPCLn8z2y

Don't believe the RBA's 'bubble' scare tactics; and here's why: Adrian Stagg

<html><body>
The Reserve Bank’s decision yesterday to keep the official cash rate on hold at 2.5% has been greeted as largely unsurprising, but the bigger question remains – have the rate cuts reached their end?
Rates have now been on hold for two consecutive months at the <a href="https://www.smartcompany.com.au/economy/057785-breaking-news-rba-keeps-interest-rate-unchanged-at-2-5">record-low level of 2.5%.</a>
The announcement came yesterday as positive economic news was also received in the form of retail sales numbers, manufacturing data and property prices.
For the first time since June 2011, the Australian Industry Group’s Performance of Manufacturing Index rose above the contraction marker of 50 points to 51.7, indicating growth in the sector.
Retail sales rose 0.4% during August, new home sales rose by 3.4%, and home prices also increased by 1.6% across the country.
These economic indicators are positive, but JP Morgan chief economist Stephen Walters says it’s not time to celebrate yet.
“The latest run of data has been good, but let’s see what the employment figures are,” he says.
“If unemployment increases as expected, this could temper the confidence of business and consumers a bit.”
Walters says the chances of the RBA cutting rates are reduced; however his original forecast of another cut before the end of the year remains the same.
“The recovery from the end of the mining boom is still not going well and you’re going to get a low inflation number on the 23rd of this month,” he says.
“If we get into next year and there are signs of house prices and construction still going up, then they may not move at all. So if there’s a cut, it will be near term rather than next year.”
HIA chief economist Harley Dale also said not to rule out the possibility of another cut.
“We’ve been in this situation before, where it looks as though the Reserve Bank has finished cutting, but that hasn’t turned out to be the case,” he says.
“It’s always been economic outcomes which drive the situation and we’re still looking at a domestic economy where we may not see the necessary rebalancing in the fallout from the mining boom.”
Dale says regardless of whether or not rates are cut, a rise in the interest rate is unlikely until 2015.
“There is some chatter starting to build in some quarters about the rate being on hold for the next six to nine months, but on the balance of what we know at the moment, there is sub-trend economic growth, residential recovery is still well short of where it needs to be and commercial construction won’t fill the void of resources-related projects,” he says.
“It’s hard to see what would warrant a return to higher interest rates next year and I think this would be a dangerous outcome.”
Reserve Bank governor Glenn Stevens said yesterday in a statement global financial conditions remain accommodative.
“The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values. The effects of these decisions are still coming through and will be for a while yet,” he says.
“The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households.”

<hr>
This article first appeared on <a target="_blank" href="https://www.smartcompany.com.au">SmartCompany</a>.
 
</body></html>

Latest Finance Insights

NAB bring forward first RBA cut to February 2025

Editor's Picks

Developments

New apartments

New townhouses

News

Latest Finance Insights

NAB bring forward first RBA cut to February 2025

Editor's Picks

Receive the latest news stories to your inbox

Developments

New apartments

New townhouses

News