Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Joel Robinson

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

Luxury apartment buyers have long prioritised design, space and finishes, but increasingly they're placing equal importance on something less tangible: how easily they can live without relying on a car.

At <a>Richmond Square</a>, <a href="https://www.apartments.com.au/developers/fortis">Fortis</a> believes that convenience begins beyond the apartment itself, with the mixed-use precinct earning a near-perfect Walk Score of 99.

The development has been planned around the idea that some of the most valuable amenities aren't contained within a building, they're the restaurants, cafés, parks, transport connections and daily conveniences that can all be reached on foot.

Located just behind Swan Street and Church Street, <a href="https://www.apartments.com.au/new-apartments/richmond-square-1-wiltshire-street-richmond-vic-3121">Richmond Square</a> places residents within one of Melbo​u​rne's most established lifestyle precincts while offering a quieter residential setting removed from the busiest thoroughfares. East Richmond Station is moments away, trams run along both Swan and Church Streets, and the MCG, Melb​​ourne Park, Yarra River trails and the CBD are all within walking distance. At the same time, the precinct itself will introduce a curated mix of dining, retail, hospitality and wellness offerings, creating a destination that extends well beyond its residential buildings.

[smartcode_project:default project_id=13181 project_image_fid=348530]

For Fortis, that combination of location and scale was what made the site unique.

"<a href="https://www.apartments.com.au/developments/richmond-vic-3121">Richmond</a> is one of Melb​o​urne's most established and distinctive inner-city neighbourhoods, with a rare combination of dining, culture, recreation, public transport and proximity to the CBD," the developer said.

"The opportunity at Wiltshire Street was particularly compelling because the site sits slightly removed from the activity of Swan and Church Streets while remaining only moments from everything that makes the area desirable."

Rather than developing a standalone apartment building, Fortis consolidated 15 individual properties to create one of the larger development parcels assembled on Mel​b​ourne's city fringe in recent years. That allowed the team to deliver a genuine mixed-use precinct comprising 107 residences across Wiltshire House and Carmine House, premium office space, hospitality venues, retail, wellness offerings and a future 57-room hotel.

"The scale of the site allowed Fortis to think beyond a standalone apartment building," the developer said.

"Richmond Square could be planned as a complete lifestyle precinct, bringing homes, workplaces, dining, retail, hospitality and wellness together around a series of activated public spaces. The aim was to create a destination that feels connected to Richmond rather than separate from it."

[smartcode_project:default project_id=13181 project_image_fid=348533]

The emphasis on walkability has also resonated with buyers.

Interest has been strongest from established owner-occupiers, particularly downsizers from Richmond and Melb​ourne's inner east who want to remain close to familiar restaurants, workplaces, family and social networks while moving into a more secure, lower-maintenance home. The project is also attracting Mornington Peninsula and interstate buyers seeking a Melb​ourne residence they can lock up and leave between visits.

Many are looking for generous living spaces, room to entertain, quality finishes and confidence in the project team, but location remains one of the biggest deciding factors.

"For many buyers, Richmond Square provides a way to simplify the practical side of home ownership without reducing the quality of their lifestyle," the sales team said.

"Location is also a major driver of interest. Buyers can remain connected to the CBD, major sporting events, the arts centres, local restaurants, cafes and bars and their family while living in a private and secure residence that is easy to lock up and leave for weekends or longer periods away."

[smartcode_project:default project_id=13181 project_image_fid=348549]

The residences themselves have been designed with that buyer in mind. Award-winning architecture practice SJB and interior designers Hecker Guthrie have created spacious two and three-bedroom apartments and penthouses that prioritise generous living areas, natural light, bespoke joinery and private terraces. Above, a rooftop sanctuary by Acre includes landscaped lawns, bookable dining rooms, barbecue facilities, wellness spaces and panoramic views across the CBD, the MCG and Port Phillip Bay.

Fortis believes Richmond Square reflects a broader evolution in apartment living, where the surrounding neighbourhood becomes just as important as the residence itself.

"Richmond Square introduces a different proposition: generously proportioned residences within a genuinely mixed-use, hospitality-led destination," the developer said.

"The project's location and Walk Score of 99 further support a lifestyle where residents can complete many everyday journeys without relying on a car."

Fortis has assembled an experienced team that includes <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, <a href="https://www.apartments.com.au/interior-designers/hecker-guthrie">Hecker Guthrie</a>, <a href="https://www.apartments.com.au/landscape-architect/acre">Acre</a> and builder <a href="https://www.apartments.com.au/builders/hacer-group">Hacer Group</a>, reflecting the developer's commitment to creating projects with enduring design quality and meaningful connections to the communities in which they sit.&nbsp;

Richmond Square is an expression of that philosophy, bringing together homes, workplaces, hospitality and wellness within one of Me​lb​ourne's most walkable neighbourhoods.&nbsp;

Construction is now almost complete, providing purchasers with growing confidence ahead of its expected September 2026 completion.

[smartcode_project_cta:default project_id=13181]

Walk Score of 99 places Richmond Square at the heart of Melbourne's most connected lifestyle

<h3 data-end="19" data-section-id="1dvgwoe" data-start="0">Summary</h3>

<ul data-end="634" data-start="21">
	<li data-end="170" data-section-id="1o77v31" data-start="21">Walker Corporation has lodged plans for a second major residential development in the Maroochydore City Centre, a 29-storey tower known as Celeste.</li>
	<li data-end="327" data-section-id="1lb0y6t" data-start="171">The Plus Studio-designed proposal at Lot 30 Sunshine Coast Parade would deliver 208 apartments, including four four-bedroom sub-penthouses and penthouses.</li>
	<li data-end="487" data-section-id="za720" data-start="328">The application comes as Walker doubles down on Maroochydore following the strong sales campaign at SOL by Walker, where the first tower is nearing sell-out.</li>
	<li data-end="634" data-section-id="5sovec" data-start="488">Walker is a key partner in the transformation of the Maroochydore City Centre, which is expected to ultimately deliver at least 4,000 new homes.</li>
</ul>

Walker Corporation is doubling down on Maroochydore following the successful sales campaign at its first residential project in the emerging CBD.

The national developer has filed plans for <a href="https://www.apartments.com.au/new-apartments/celeste-30-sunshine-coast-parade-maroochydore-qld-4558">Celeste</a>, a new 29-storey apartment tower at Lot 30 Sunshine Coast Parade, just metres from its under-construction SOL by Walker development.

The plans, prepared by Plus Studio, would see 208 apartments delivered across a 100-metre tower on the 2,376 sqm site, which fronts Sunshine Coast Parade, First Avenue and Future Way within the Maroochydore Priority Development Area.

<img alt="Walker" data-entity-type="file" data-entity-uuid="17038209-6fea-4ed2-855d-fd4df65b3d02" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-10%20at%2010.24.16%E2%80%AFAM.png?VersionId=iZD.oVXcQn.aLpUytDAW.CWjxP4puWMy" />

The proposed apartment mix comprises 36 one-bedroom apartments, 48 two-bedroom apartments, 72 two-bedroom apartments with an additional multipurpose space, and 48 three-bedroom apartments.

The upper levels would be capped by two four-bedroom sub-penthouses and two four-bedroom penthouses, taking the total apartment count to 208. The preliminary yield study also provides 262 car spaces, 114 resident bicycle spaces and storage for each apartment.

It represents Walker's next major residential move in the new Maroochydore CBD after the success of SOL by Walker, its $220 million two-tower project nearby.

SOL launched to market in early 2025 and has since seen strong demand, particularly from local owner-occupiers. By February this year, Walker said the first SOL tower was nearing sell-out, with a strong waitlist also emerging for its recently released penthouse collection.

Construction is already underway on SOL, with the first tower expected to be completed in late 2027 and the second to follow in early 2028.

[smartcode_project:default project_id=147777 project_image_fid=319846]

<h2 data-end="2518" data-section-id="1b2dyo5" data-start="2459">Celeste to rise 100 metres over Maroochydore City Centre</h2>

Celeste would take a different form to the twin 19-storey buildings at SOL.

Plus Studio has designed a single 100-metre tower above an activated podium, with the architecture responding to the site's prominent position and three street frontages.

The podium would incorporate commercial tenancies and public art, with sweeping façade elements wrapping the street edges. The scalloped concrete podium has been inspired by the patterns created in sand at low tide, while extensive landscaping would continue vertically through the tower.

The ground level plans show three commercial tenancies addressing Sunshine Coast Parade alongside the residential lobby and landscaped public realm. The podium would then accommodate several levels of car parking before the residential tower rises above.

<img alt="Celeste" data-entity-type="file" data-entity-uuid="121f77b1-71c5-46d7-9b36-0a7d474211ca" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-10%20at%2010.24.47%E2%80%AFAM.png?VersionId=MGrg9Hb7HgzLN0Lelq_xrXNAruVl77ia" />

Plus Studio said the tower had been designed to maximise views from each apartment, taking in the Maroochy River, Sunshine Coast hinterland, Cotton Tree and Maroochydore Beach and ocean.

Those views have also shaped one of the project's key features, with Walker proposing to put the primary resident amenity on Level 29 rather than lower within the building.

The rooftop would feature a 284.9 sqm pool area with an infinity edge, along with a cold pool, spa, sauna, 93.2 sqm gym, sunset lounge, BBQ and dining areas, pool deck and private dining space. Cabanas and day beds are also shown across the recreation level.

The two penthouses would extend across the upper levels and each feature private terraces and plunge pools.

<h2 data-end="4202" data-section-id="v5f4ix" data-start="4160">Walker's growing Maroochydore footprint</h2>

Celeste further reinforces Walker's commitment to the transformation of Maroochydore City Centre.

Walker is one of the key partners delivering the new CBD alongside Sunshine Coast Council and SunCentral Maroochydore, with the broader 62-hectare Priority Development Area occupying the former Horton Park Golf Course and surrounding land.

The precinct is ultimately expected to accommodate at least 4,000 new homes as Maroochydore evolves into the Sunshine Coast's principal commercial and residential centre.

When SOL secured approval in February 2025, Walker Managing Director and CEO David Gallant described it as the "first of many residential projects" the company planned for the Maroochydore City Centre.

Celeste now provides the clearest indication yet of what comes next.

The site sits immediately within the new CBD, with the design report identifying Sunshine Plaza and surrounding parkland within walking distance and Maroochydore Beach around a five-minute drive away.

For Walker, the timing of the application comes as its first residential bet on the new CBD appears to have been vindicated.

SOL has progressed from planning approval to construction while its first release has approached sell-out, giving Walker confidence to push ahead with another 208 apartments and take its residential pipeline in the Maroochydore City Centre to around 450 dwellings across the two projects.

Celeste remains subject to planning approval, with the architectural material describing the scheme as a preliminary yield study that may change through the assessment process.

Walker doubles down on Maroochydore with 29-storey Celeste apartment tower

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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Tim Lawless explains that last month we saw dwelling values fall by 1.2% according to the RP Data-Rismark Index, the second consecutive drop in capital city home values, after the index showed a 0.5% fall over April.
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tlawless-5VLUrbAk9s

RP Data's Tim Lawless discusses last month's 1.2% drop in dwelling values

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Mark Bouris caused a bit of a ripple this week <a target="_blank" href="https://petewargent.blogspot.com/2013/06/video-bouris-tips-capital-city">by suggesting that</a> the Australian property markets will represent for the next five years "the hottest asset class you can possibly think of".
Of course, just as a hairdresser is probably not the best person to ask if you need a haircut, so it is in this instance, but is Bouris likely to be right?
Some economists, such as David Bassanese of the AFR have made similar suggestions, implying that prices are likely to "pop higher" at this stage in the cycle.
Bouris bases his theory around past experience in Australia. Property downturns, such as the one we experienced through 2011 and the first half of 2012, can be followed by lower interest rates, significantly improved affordability (read: mortgage serviceability) and a surge in real estate prices.
Is this time any different?
Remember the classic old exam question: "does history repeat itself?". The textbook answer is, well, yes to some extent, but the specifics tend to shift. And there is much evidence to suggest that this cycle may be somewhat different from those we have seen in the past.
1 - Deposit growth
Firstly, there is an argument to say that there will be restrictions on credit growth in this cycle, as the prudential regulatory body APRA looks to cap the growth of credit in line with deposit growth.
One complicating factor is that from the middle of 2012, the Australian stock market boomed by around 25% in value increasing Australians' wealth. Of course, articles began to appear of "the best year for superannuation in ages" type, which naturally pre-empted a correction of close to 10%.
Nevertheless, stock valuations are up, can increase cash available for deposits, and superannuation balances are up too. Self-managed super funds can invest in property these days, but lenders to SMSFs tend to insist on substantial deposits, so most of that action will likely be in the lower-median sector of the market, particularly in apartments.
2 - Higher household debt
More significantly, Australia commenced this property cycle with higher household debt levels than it had previously. When interest rates fell around in the early 1990s, credit growth boomed. Consequently, it seems unlikely that another boom of such a magnitude could occur.
<img alt="wargentjune11one" height="328" width="374" src="/images/stories/2013/06/wargentjune11one.gif">
Future growth, therefore, is likely to be far more closely correlated to growth in household incomes.
And in fact, in Sydney, since the last boom period through to early 2004, household income growth has outperformed property prices for close to a decade.
3 - Access to credit
A third limiting factor is that in the period preceding the last surge in dwelling prices, there was a proliferation of 100% LVR loans available, which is not the case today.
Whether or not such a cavalier lending sentiment returns remains as yet unknown, but it seems to me that over the long term it would be better for everyone if an appropriate level of prudence was exercised in this regard.
Multi-speed recovery?
Plenty of commentators have focused on RP Data's Daily Home Value Index and noted that "house prices fell in May" and plenty of scorn has already been heaped on Bouris by bearish commentators in the last few days.
But those figures are retrospective; what for the future?
There may be something to draw from the May figures, but most other indicators such as lending finance figures from <a target="_blank" href="https://petewargent.blogspot.com/2013/06/mortgage-sales-surge-to-unprecedented">AFG</a> (reporting "unprecedented mortgage sales") and from the <a target="_blank" href="https://petewargent.blogspot.com/2013/05/housing-finance-takes-off">ABS</a>, suggest something of an uplift in market sentiment.
Other indicators seem to suggest improving sentiment too, although not across the country.
There is much evidence to suggest that property prices in Perth are considerably higher than they were 12 months ago and the market has not demonstrated many signs of slowing down just yet.
 
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Meanwhile auction clearance rates in Sydney, and to a lesser extent Melbourne have improved strongly. In Sydney's inner west, clearance rates are consistently clocking at around 85% or above, which is the sign of a hot market. Sydney's North Shore looks strong too.
However, it's not all good news for property owners and investors, for to date the recovery seems to have been largely investor-led. For this reason, I don't expect remote property markets and outer fringe suburbs to have much joy as this cycle progresses.
The RBA's chart packs show that households on average seem quite content to save 10% of  disposable income, which was not the case after interest rates fell from the early 1990s.
<img alt="wargentjune11two" height="353" width="400" src="/images/stories/2013/06/wargentjune11two.gif">
Not buying now?
I've never been a big fan of the "Don't Buy Now" rhetoric, for it implies that homebuyers can easily outsmart the market through using clever timing. It's possible to do, of course, but it's also by no means assured.
Those who took Steve Keen's advice to sell their homes in 2008, for example, must be mortified by the subsequent uplift in capital city prices over the last half decade.
Ideally, homebuyers should be putting their focus on a far longer time horizon than the next few years.
However, as noted by my Pommie pal <a target="_blank" href="https://catherinecashmore.wordpress.com/">Catherine Cashmore</a> of NPB, with people moving house more frequently than previous generations ever did, even homebuyers are now buying homes with an "investor mindset".
They want a  roof over their head and capital growth, and for this reason often look to steer away from the remote or new fringe suburbs where demand is low and new dwellings can show poor or non-existent growth.
As for investors in property, this cycle seems likely to produce lower growth on average that we have seen in times past.
For this reason the old strategy of simply 'buying in your own backyard' because that's what you know best may be a poor strategy.
The hot sectors of the market at this stage look to me to be certain suburbs of Perth and as noted Sydney's Inner West and North Shore, particularly in the sweet spot price range of $500,000 to somewhere just over $1 milllion.
Yield-focussed investors will of course continue to dispute the obvious evidence below that it is investors which are pumping up prices in inner- and middle-ring suburbs, but the RBA's chart pack clearly shows that regional market growth in most areas stalled years ago with few signs of life to date. My own money is on inner- and middle-ring Sydney.
DYOR.
<img alt="wargentjune11three" height="319" width="400" src="/images/stories/2013/06/wargentjune11three.gif">
Pete Wargent holds a range of finance and property qualifications and is the author of <a href="https://petewargent.blogspot.com.au/" target="_blank" rel="nofollow">Get a Financial Grip – a simple plan for financial freedom.</a>
 
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Will real estate be the strongest asset class over the next five years? Pete Wargent

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Looking at the historical growth cycle of capital city rents and value growth, it has been quite a rare occurrence for weekly rents to outpace dwelling values for growth.
In fact, since 1996 there have been only two periods where weekly rents significantly outpaced dwelling values. The first of these occasions was during the GFC when dwelling values fell by close to 5% and rents rose by almost 8%.  The second period was during the recent housing market correction which ran from late 2010 through to mid-2012.
Both cycles gave yields a chance to regain some of the lost ground that was eroded over the previous growth cycles.
The most significant erosion of rental yields took place between 1996 and 2004 when gross rental yields virtually halved. When you consider that dwelling values surged by 142% between the end of 1995 and the beginning of 2004 while rents rose by only 25%, it becomes quite clear what drove the destruction of high average rental yields in Australia.
The average gross yield across the combined capital cities moved from 7.8% in 1996 down to 4.0% by the beginning of 2004.  Gross yields reached a low of 3.6% towards the end of 2007 through to early 2008 as value growth continued to outperform rents.
<img src="/images/stories/2013/06/lawlessjune7onethumb.gif" alt="lawlessjune7onethumb" width="470" height="202">
More recently capital city dwelling values are up 2.9% over the past twelve months compared with a 3.1% rise in dwelling rents. From a longer perspective, over the past five years weekly rents have increased by 27% while dwelling values have increased by a much smaller 10%.
With rents rising at a faster pace than dwelling values the by-product is of course an improvement in rental yields.  Gross rental yields for houses are currently recorded at 4.2% (up from a low of 3.5%) and the average gross yield on a capital city unit is 5.0% (up from a low 4.4%).
Looking across the capital cities, the current yield scenario is quite different from city to city.  Darwin is continuing to record the highest gross yields of any capital city.  The Brisbane housing market has quickly moved through the ranks to record the third highest yield of any capital city for houses and the second highest for units.
<img src="/images/stories/2013/06/lawlessjune7twothumb.gif" alt="lawlessjune7twothumb" width="470" height="296">
At the bottom of the yield pile is Melbourne where houses are returning a gross yield of just 3.7% while units are providing a higher 4.6% gross yield.
As can be seen from the graph below, the gross rental yield was on a consistent downwards trend since the 90s, however Melbourne’s spectacular rate of capital gains during 2007 and 2009/10 together with relatively sedate rental growth has conspired to cause gross yields to move lower than any other capital city.
<img src="/images/stories/2013/06/lawlessjune7threethumb.gif" alt="lawlessjune7threethumb" width="470" height="202">
With vacancy rates remaining around the 2-3% mark across most capital cities, it is reasonable to expect further and potentially greater upwards pressure on weekly rents.  This is likely to be particularly the case in those cities where new dwelling supply has been short such as Brisbane, Perth and Sydney.
While I doubt we will see capital city yields return to the highs last recorded in the 90’s, it is reasonable to presume we will see ongoing improvements in the yield environment across the Australian housing market. This scenario implies a continuation of subdued capital gains with a consistent over performance from rents compared with values; not an unreasonable notion.
Anecdotally a lot more of the investors I have been speaking with are considering tweaking the balance of their investment strategy; looking to maximise their yield while buying in locations where they expect the asset to show potential for long term capital gains.
Previously many investors were buying purely for capital gain prospects without a great deal of focus on the yield potential.  While capital gains are going to be the main strategy for the majority of investors, I wouldn’t be surprised if we see an ongoing focus on the rental side of the equation.
Tim Lawless is national research director of <a href="https://www.myrp.com.au/" target="_blank" rel="nofollow">RP Data.</a><a href="https://www.myrp.com.au/" target="_blank" rel="nofollow" style="font-size: 14px;"> </a>
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The gradual rebound of residential rental yields: Tim Lawless

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I’m often asked about property: when to buy to buy, when to sell, what’s happening to the market, have we reached bottom yet?
The latest RP Data-Rismark Home Value Index reflects a mixed bag, showing capital city house prices fell by 1.2% in May – disappointing given the Reserve Bank’s rate reduction to the historically low 2.75% at the start of May.
Still, while monthly stats are informative, most of us need more perspective.
The May figures must be put beside the year-on-year house price index, which shows house prices rising in capital cities by 2.9% between May 2012 and May 2013.
A city-specific look illustrates this further. While Sydney saw a drop in house prices of 1.0% in May, it also experienced a rise of 3.9% over the previous year. Melbourne recorded a decline of 2.1% in May but saw a rise in house prices of 2.1% over the year.
Close followers of house prices are often investors who look for total return on their properties, which combines rental yield and capital appreciation. This can be a good test of overall property health.
RP Data has Sydney’s ‘total gross return’ on property at a solid 8.5%, and Melbourne at a respectable 6.0%.
These are not as high as most investors want (or as high as Perth 11.3%, Darwin 11.2% and Canberra 7.8%), but they are not low enough to dump property and move into stocks and bonds.
We also have to put house prices alongside the Bureau of Statistics’ housing approval numbers. April housing approvals were very small (0.4% growth) but the year to April saw 6.3% growth.
So, the picture for property – while divided by geography and seeming to be going backwards – is actually showing a slow recovery.
Moreover, I always urge people interested in property to take this market in five- to 10-year windows.
Take a look at RP Data’s longer series: the median dwelling price in the three months to May 2013 was $491,000.
If you compared this to the median price in 2010 - $507,446 – you’d think you’d gone backwards. But compare the current median price to May 2008 when it was $446,488. That’s a rise of $44,512, or just under 10% growth in five years – five years of global turmoil and financial crisis.
Property, in the end, is a medium/long term asset: one step back can be countered by three steps forward. But you have to be patient and strategic: your investment needs time. It can’t reach the peaks if you sell in the troughs.
So I suggest people act upon what’s under their control rather than becoming unnerved by property headlines.
This means looking at what affects you, and acting on what you can act upon. With the lowest interest rates I’ve ever seen, with unemployment low, and property prices recovering, this is a good time for smart buying.
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.
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When is the best time to buy property? Mark Bouris

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Australia’s construction sector notched up three years - 36 consecutive months - of contracting activity in May, according to the latest Australian Industry Group/HIA Australian Performance of Construction Index (Australian PCI). 
The benchmark index remained broadly unchanged in May at 35.3 - readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline.
The last time the sector expanded was in May 2010.
The weakest sub-sector over the month was detached house building, which weakened for a third consecutive month, with activity recording the sharpest rate of contraction in eight months.  
In contrast, commercial construction activity declined at a slower pace while rates of contraction in apartment building and engineering construction were unchanged on the previous month.
Construction activity by sector
<img src="/images/stories/april23tivoli/construction_index.jpg" width="470" height="363" alt="construction_index">
Source: AIG/HIA Performance of Construction Index.
Despite the sluggish conditions, input prices (73.4) and wages (55.9) continue to lift.
“A sharper decline in the house building sector, together with a flat result for apartments at a very low index reading, unfortunately confirms the on-going sluggish nature of residential construction activity,” commented HIA chief economist, Harley Dale. 
“Some leading indicators point to a very modest uplift in new home building activity, from a recessionary starting point. 
However, he says the latest indexresults highlight what should be a prominent concern for policy makers – "the lack of a large and sustainable recovery in residential construction at a time when the domestic economy sorely needs such an outcome". 
“The balance of risks points to a modest increase in building activity in 2012/13, followed by a subsequent pull-back next year," says Dale. 
“That’s hardly the desirable result for the tens of thousands of businesses and hundreds of thousands of people who rely on new home building for their livelihood, before one considers the flow-on negative impacts to the wider economy of continued under-performance from this key sector,” 
AIG director Peter Burn says the construction industry “continues to languish due mainly to historically low levels of building activity”.
“This is now being compounded by reductions in engineering activity related to mining-related investment which had been driving the industry (and indeed, the economy) until very recently.
“Successive cuts in interest rates by the Reserve Bank have been welcome, but so far they appear only to have steadied the decline in building activity,” he says.
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Detached housing construction sector sinks into steepest decline in eight months: AIG/HIA index

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Hello Margaret   
Long-time fan of yours!  Thank you for your insights.   
I am a single mum who has managed to grow (through some tough personal times), a small portfolio of three properties since 2004 in south-east Melbourne.   
I purchased a small development property during the GFC and have sat on this waiting for the “right time” to develop (it's a two-unit site). 
I am fast approaching retirement age (currently 53) and believe I should be developing now, but my “gut feel” says wait. 
How do I know “when is the right time”?   
I have contacted real estate agents to find out rental / sale values and research seems to show the area is devaluing slightly/stagnating as with a few areas of Melbourne. 
However the agents seem to talk up the amount of rent I could receive, as well as the amount I would get for them should I sell, once built. I don’t know who or what to believe. 
My current PPOR (beachside) also has potential for a 3-4 unit site.
Thanks.
 
The decision to develop any site must come after an extensive analysis of both the area, and the potential costs involved, before proceeding.  
It’s crucial that you first examine your capacity to meet budget blow outs and also the holding costs of waiting until this development is income producing.  Among the costs you will be required to meet will be:  
<ul>
<li>
Costs to obtain the DA, which can run to $40 - $50,000 and includes town planners fees and council contributions and fees
</li>
<li>
Costs to retain architects to draw up plans
</li>
<li>
The interest on progress payments as the build progresses
</li>
<li>
Stamp duties and other statutory charges
</li>
</ul>
Even if you are able to access a loan from a bank for the entire amount, you will need to meet the interest payments as you draw down, and you will not have any rental income to support this.  You must try to establish an overall loan amount, workout the interest payments and establish if this is within your capacity to afford.  Make sure you consider the worst case scenario – I have seen developments take years to complete and you will have holding costs right up until you can rent the properties or sell them.  
You also need to then add these holding costs to the overall project amount so that you can determine whether the final product is worth what you are paying to build it.  You would want to see at least a 20% profit margin to make this worthwhile, as there will be capital gains tax to consider.  In order to reduce that capital gains tax, you will need to ensure that you hold the properties for 12 months past the contract date to get the 50% discount, although if you are building with the intention to sell for profit, the tax office may treat you differently and you may not get the discount.  
There is so much more I could say about this, but I think you get my drift at this stage – developing is quite a risky venture and if you are a single mum who has worked hard to get where you are, you are about to add a level of risk to your investing which has the potential to undo all of your hard work.  
Your other option is to sell this development site to another developer and you might like to put in place the DA approval first, which can often make the property more saleable.  This still has costs attached though, which you will need to meet with no guarantees that you will recoup it via a gain to the value of the property.  
You should speak to a town planner to get a good idea of what you may be up for regarding costs, and then to a qualified valuer to see what potential value you might get out of building.  Then perhaps even talk to a builder about the costs of the build so that you can establish a ballpark project cost before making any decisions.
Margaret Lomas is a best-selling author and writes and hosts the popularProperty Success With Margaret Lomas and heads up the panel on Your 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>
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Ask Margaret: when is the right time to develop my investment properties?

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Steve Keen says he never expected house prices to fall in a huge leap – a point for which he has been figuratively flayed alive by the mainstream media – but does expect house prices to fall like a “slow bleed”.
In 2008, Keen said house prices would fall 40% once the financial crisis had "washed through the system".
In November 2009, he walked up Mount Kosciuszko wearing a T-shirt that said: "I was hopelessly wrong on house prices!" after losing a bet with Macquarie's Rory Robertson.
But he now contends the GFC has never ended and will continue - on and off - over the next two decades.
The volatility in the housing market certainly remains.
Dwelling values fell by a surprising 1.7% in the past two months despite a rate cut in May, according to RP Data-Rismark, while the ABS had capital city house prices up just 0.1% over the March quarter.
Of further concern, the most recent Real Estate Institute of Australia (REIA) Housing Affordability Report has recorded <a href="/news">plummeting mortgage approvals in the key first-home buyer market</a>, particularly in NSW and Queensland.
Keen had anticipated in 2008 when the GFC was in full swing a faster Australian price correction than what has happened in Japan, where house prices in Japan’s six largest cities rose around 175% from 1985 to 1992 and then fell back to their starting point between 1992 and 2000 – but slower than the dramatic GFC plunge in the US.
 <img src="/images/stories/april23tivoli/japanese_and_us_housing_bubbles.jpg" width="470" height="338" alt="japanese_and_us_housing_bubbles">
Source: Seattlebubble.com
Instead Australia underwent a modest house price correction as the latest RBA chart pack show, with five out of the six biggest capital cities now having property markets trending upwards, though at uneven rates of growth - but nothing like the corrections in the US and Japan.
<img src="/images/stories/april23tivoli/house_prices.gif" width="470" height="375" alt="house_prices">
“I got the magnitude wrong. But I?never had this idea of a huge drop?tomorrow,” Keen says in an interview with BRW magazine.
He has called the most recent modest rally in house prices (up 2.9% over the past 12 months according to RP Data) a “suckers rally” with price gains spurred on by government incentives, low interest rates and the resources boom.
Keen does admit that he got other forecasts wrong, including expectations that there would be a massive de-leveraging among households, something which has only occurred on a modest scale.
The most recent RBA chart pack graphs show household debt to income soared from the early 1990s to peak at around 150% to income in the mid-2000s.
<img src="/images/stories/april23tivoli/household_debt.gif" width="470" height="422" alt="household_debt">
It started to dip as the GFC hit around 2007, but government incentives like the doubling and tripling of first-home owner grant (under the boost scheme) encouraged people to borrow again.
Household debt now sits just under 150% - hardly the massive correction Keen anticipated and a mistake he is happy to acknowledge.
Keen says mortgage debt is rising because variable mortgage rates remain the preferred home loan product in Australia while fixed-rates dominate in the America.
This means that borrowers get an instant mortgage repayment benefit when the cash rate is cut.
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House prices will fall in a “slow bleed” fashion: Steve Keen

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One in four wealthy investors have a self-managed super fund though there lingers a strong preference for owning an investment property outside of super, a new survey has revealed.
Around one in two (54%) wealthy investors – those with at least $500,000 to invest – own an investment property, with a quarter (24%) maintaining a self-managed super fund, according to a Hall &amp; Partners Open Mind survey of 202 wealthy investors carried out for The Australian newspaper.
All those surveyed had $500,000 invested in various asset classes (excluding their own home) with almost half (45%) having more than $1 million to invest.
Interestingly, a much higher proportion - a third of the “higher-net-worth” investors (those with $1 million or more to invest) - had an SMSF compared with 18% of those that had only $500,000 to invest.
Two-thirds of these wealthy investors have no plans to set up a SMSF in the future with the difficulty and hassle in setting up a DIY fund and the belief that they could not do a better job managing their super than a professional fund manager the key reasons for this decision.
The other main reasons for not having an SMSF include a lack of interest and not understanding the benefits.
The benefits of having a self-managed super fund include, since 2007, being able to purchase property in super with debt using limited recourse borrowing rules, giving investors the twin benefits of leverage and concessional tax rates.
Another benefit of buying in super, says Ken Raiss, a  certified accountant and director of accounting firm Chan &amp; Naylor,<a title="Chan &amp; Naylor " href="https://www.chan-naylor.com.au/" rel="nofollow" target="_self"></a> is that at age 60 no tax is payable on either rental income or capital gains.
Raiss also highlights that last year the ATO clarified that a self-managed super fund (SMSF) can borrow money to fund a cosmetic renovation, e.g. kitchen, bathroom, flooring etc.
"[However], if the renovation is structural, e.g. if it moves internal walls, then the funds must come from internal SMSF cash, not borrowings," he explains.
Factors that may discourage wealthy investors from setting up an SMSF include the somewhat complex structures that must be in place for borrowing to be considered legal by the ATO.
As Margaret Lomas explains: "It is not a straight loan to the superannuation fund – there must be a trustee who buys the property on behalf of the fund, who becomes the legal owner, while the superannuation fund becomes the beneficial owner that is, the entity which benefits from the asset.
Furthermore, she points out because a loan to a SMSF is a non-recourse loan (meaning the capacity of the lender to recover the outstanding money is limited to what they can recover by selling the property) loan to valuation ratios are usually quite low, around 60%, to allow a suitable margin to pay costs and to account for any falls in the market value.
"This means that the super fund will need to have the remainder of the purchase price, plus costs available," says Lomas.
Benefits of investing through a SMSF, says Lomas, include that as it is a trust structure, assets within this fund can pass more easily to beneficiaries.
Furthermore, if you own your own business you can borrow to buy your business’ real property (but not operating assets) using the super fund.
According to the same Hall &amp; Partners survey, property remains high on wealthy investors’ investment radars.
Asked how they would invest $100 over the next 12 months, wealthy investors said they were prepared to spend $23.49 out of every $100 of investment capital in property – below shares ($33.03) – but higher than their allocation to a high interest earnings savings or fixed deposit account ($19.55),  Asian shares ($5.96) or government bonds ($3.09).
The less wealthy investors in the group also planned to invest more money in both equities and property.
The survey reveals that 70% of wealthy investors have a savings account and 59% hold shares directly (not part of a managed fund or super).
Investment property is third most popular asset (54%) followed closely by a savings account or fixed term deposit account (53%) and superannuation.
While less than a quarter (24%) of wealth investors have an SMSF, it does rank higher than a cash management trust (19%), annuities (8%), hybrids (6%) and corporate, retail and government bonds.
The Australian interpreted the results of the survey as not necessarily a vote against SMSF, but as a reminder that there are many different investment strategies.
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Property very high on the radars of high net worth investors, and increasingly through SMSFs

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When economic news from around the world gets all gloomy, one sector that always seems to get hit is Australia’s tourism industry.
But there are some travel changes in the wind that could be good for some property markets. And they are probably not the specific real estate markets you are thinking of.
What’s gone on over the last few years?  
The fact is since the GFC we have turned from a nation of spenders into a generation of savers.  
Today, Australians tend to be cautious with their disposable income, wondering whether the annual family holiday is such a good idea or whether it’s better to save those extra few pennies.  
Add to this the fact that the strong Aussie dollar has until recently bought us far more bang for bucks overseas, and those of us who had a desire to travel suddenly got itchy feet for the likes of Asia, the US and Europe.  
This meant that locals in our holiday towns have been doing it tough as they face rising unemployment due to a slowdown in the tourism sector.  
And many residents in our holiday locations have been struggling to cope with their mortgage commitment, with these areas recently recording some of the highest rates of repayment delinquencies in the country.  
But now things are changing…  
You’d have to be living under a rock not to have heard that over the last month the Australian dollar has plummeted from its previous highs, now making overseas holiday more expensive for locals and holidays in Australia more economical for foreigners.  
That’s the first bit of good news for our tourism industry, but there’s more.  
We could become the new playground for Asia  
The rapid urbanisation of China and India, two of the world's most populous countries, has created a new population of potential tourists at our doorstep.  
The rapidly expanding numbers of cashed-up Asians are choosing to spend their downtime (and disposable income) right here as China and India’s burgeoning middle class start to embrace holidays Down Under.  
Interestingly, almost as fast as we ship coal and iron ore to China’s steel mills, the number of inbound visitors to our shores from China is soaring.  
A surge in tourism  
In the past decade, the number of Chinese tourists visiting Australia has escalated by 13.4% annually, overtaking Japan and Britain.  
In fact, China is our biggest source of local tourism revenue, with Chinese holidaymakers spending more per person on average than Kiwis or Brits.  
In contrast, the number of inbound tourists from the financially flailing Britain has grown by a dismal 0.2% per annum, while the number of tourists from Japan and the United States has shrunk.  
With many analysts predicting a rapid expansion in China’s middle class, we will no doubt see this trend continue. In fact, some suggest that Chinese visitors will account for a third of the tourism export industry’s growth between now and 2020.  
Where do they want to spend their money?  
The big question then for Australia’s tourism operators is where and how do these new Asian jetsetters want to spend their time and money?  
In the 1980s, the priority was sun, sand and surf as Japanese holidaymakers flocked to the Gold Coast and far north Queensland.  
But the Chinese have different priorities, with a greater emphasis on the attractions offered by urban centres such as Melbourne, Sydney and Brisbane.  
While the traditional holiday hotspots in regional Australian towns struggle, capital city operators are adapting and, in turn, profiting.  
This is because the average Chinese tourist spends more than two-thirds of their entire trip in the nation's three biggest cities, but relatively little time in tropical Queensland.  
So what does this mean for property?  
Well, like anything, where there is economic viability and demand fed by a number of industries (as there is in our capital cities), there is prosperity to be had.  
Regional areas that rely heavily on tourism to sustain their local economies are unlikely to benefit strongly from overseas travellers. However, local tourism should eventually pick up as our cheaper Aussie dollar makes overseas holidays more expensive for locals.  
In the meantime, the economies of our three big capital cities are being strengthened by this new wave of tourism and this can only be good for their property markets.
Michael Yardney is a director of <a href="https://www.metropole.com.au/" rel="nofollow">Metropole Property Strategists</a>, who create wealth for their clients through independent, unbiased property advice and advocacy. Subscribe to his <a href="https://propertyupdate.com.au/category/property-investment/" rel="nofollow">Property Update</a> blog.
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New wave of tourism is good news for Australian property markets: Michael Yardney

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No surprises that with the property market on the upturn, the usual parties are back talking up investing in property in remote locations.
Earlier this year the <a href="https://smh.domain.com.au/real-estate-news/cairns-market-awakes-from-coma-20130602-2njjy" target="_blank">SMH reported that</a> Cairns might be about to "awaken from its coma". More than a dozen years ago now some 'positive cash flow commentators' were tipping buying off-the-plan in Cairns as a smart investment, ostensibly for the strong depreciation benefits and high yields (I think they were the only reasons given; I certainly can't think of any others).
<img alt="wargentjune6one" src="/images/stories/2013/06/wargentjune6one.jpg" width="470" height="261">
Source: Realestate.com.au
There may have been marginal capital growth in apartments over the years, but it's not the growth periods in these low-demand or speculative regions that worries me. It's when the downturns hit, and according to SMH dwelling <a href="https://smh.domain.com.au/real-estate-news/cairns-market-awakes-from-coma-20130602-2njjy" target="_blank">prices fell by 30%</a> or more in Cairns through the Global Financial Crisis (GFC), wiping out the previous gains. According to SQM Research <a href="https://www.sqmresearch.com.au/graph_median_weeks.php?postcode=4870&amp;t=1" target="_blank">asking prices</a> have continued to fall over the past four years. Parts of the Gold Coast suffered a similar fate through the GFC.
The opportunity cost of taking heed of this bad advice had you taken it would have been been nothing short of immense. In that time you could simply have invested in a few quality, well-located properties in Melbourne or Perth (or pretty much any capital city) and secured your financial future.
<img alt="wargentjune6two" src="/images/stories/2013/06/wargentjune6two.gif" width="400" height="319">
Undeterred, positive cash-flow investors then went on to promote serviced apartments in hotel complexes for strong rents (each to their own, but I'd file that under 'B' for 'Bad Advice' as well) or investing in all manner of tourism properties (refer GFC above) and other unusual locations (basically "any property" which produced a positive cashflow) located hours away from job centres and where most people prefer to live and to invest.
While many regional properties have been underpeforming investments for years now, today the hot sectors of the property market include certain parts of Perth, Sydney's inner west and Sydney's north shore. As noted, Melbourne has already experienced a phenomenal price boom from 2007. Brisbane has been in the doldrums for some time; but its time will surely come again.
As for Darwin, well prices keep on rocketing, and they may continue to do so. It's a crazy market up here in the Top End, with ultra-high prices these days for such a small city - generally, I don't like crazy markets, but good luck to you if it's your thing. A key factor in determining the return on any investment is the entry price, so in my opinion better value now lies elsewhere.
 
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Land appreciates
It's often said that land appreciates while buildings depreciate and require maintenance, and this is by and large true, so it is vital to invest where there is a massive and growing demand for a limited supply of land. It's pretty simple really, because every demographic statistic tells us that the capital cities are where these trends are playing out.
<a href="https://petewargent.blogspot.com/search?q=port+augusta" target="_blank">In this recent blog post</a> I noted how in Port Augusta, by way of an example, vacant land prices clocked in at only a few thousand dollars as recently as 2004. To all intents and purposes, from an economic perspective, the land had a value of approximately $nil - there were plenty of lots potentially available for release and there hasn't been much demand from the small population.
So how, then, have median house prices increased all the way up to $175,000? Because it costs more than that to construct and then sell a house for a worthwhile profit these days.
As new houses come on to the market in regional towns, the median price tends to increase. Unfortunately new builds often don't produce great capital growth as the initial buyer tends to suck up much of the developer's costs and profit margins. And this dynamic doesn't do much for the price of existing dwellings either, which become less popular as compared to the shiny new builds.
But hasn't regional property done OK?
Property investment was 'easy' in the 1970s and 1980s for those who were actually born and had access to capital, for inflation was raging and the value of debt was quickly inflated away. Plenty of regional properties did go up in price a fair amount between 1990 and 2007 too, but then, so did nearly all property prices in Australia, because interest rates fell dramatically and we went on an almighty borrowing binge.
However, long-term regional growth rates have still been relatively poor as you can see on the websites of data providers, which is reflected in low median prices today, and regional price growth has stalled for some years now as the first chart above clearly shows.
<img alt="wargentjune6three" src="/images/stories/2013/06/wargentjune6three.jpg" width="470" height="412">
The borrowing boom cannot and almost certainly will not be repeated, and certainly not in remote, owner-occupier regions where few elect to invest. House prices cannot continue to be inflated by ever-greater leverage and household debt. Material price growth in the future must surely only be sourced from real wages growth and investor activity, which largely occurs in some key sectors of our capital cities.
Someone will always be making money from real estate, but if you're an investor you'll have to be smarter than before, and do two things very well if you are to succeed:
(i) invest counter-cyclically; and
(ii) follow demographic trends
The average household persons per dwelling has plummeted over the past century, so medium-density dwellings such as two-bedroom properties may be a good bet, but only in quality locations in cities where the population is booming and where large plots of land cannot be released.
In my opinion, for most regional towns the best case scenario over the next decade is that property prices increase in line with inflation as construction costs increase. However, inflation is likely to remain relatively low so capital returns will also be stunted. The worst case is that prices slide backwards for a decade.
 
<hr class="system-pagebreak">
Construction costs
<img alt="wargentjune6four" src="/images/stories/2013/06/wargentjune6four.gif" width="374" height="362">
The RBA recently released this revealing chart, which shows that even in our major capital cities, in the fringe suburbs where demand is low, land is relatively cheap.
There isn't much demand for these plots from homebuyers or investors so greenfield sites in Brisbane and Perth are cheap. Melbourne's greenfield sites spiked in price during the previous first homebuyers' boost and then receded. Sydney's urban sprawl is constrained by the Pacific Ocean and National Parks on all sides, so greenfield sites as a general rule cost significantly more, especially with the city's notorious NIMBYism.
The chart demonstrates that where demand is low, dwelling price movements are predominantly related to construction costs, government levies, and service and finance. Price growth in low-demand locations consists less of the price of land, which remains a small component. Meanwhile in the prime city suburbs even barely inhabitable hovels can fetch hundreds of thousands and sometimes even millions of dollars due to the great demand for the land in these plots.
While prices could increase steadily in low-demand areas as construction becomes more expensive, I believe this to be a risky approach to investment and one which introduces a significant potential for capital loss.
Example
It's all too easy to generalise, so let's look at an example: the NSW south coast, which has been tipped by the cash-flow investors over the last few years. Unfortunately, no sooner did the region become nominated as a hotspot in 2010 than BlueScope Steel announced a major round of redundancies...with more following later. This is a salient risk of investing in regions dominated by few industries.
In the last decade, whereas a counter-cyclical capital city investor would have been looking to invest in a property which doubled (or more) in value in, say, Melbourne or Perth, prices in the Shoalhaven region appreciated by 12.5%. Even in Sydney which would have been absolutely the last city you'd have picked on a counter-cyclical basis after its preceding boom to Q1, 2004, you might easily have achieved 40% capital growth in a quality inner or middle ring suburb.
As I discussed <a href="https://petewargent.blogspot.com/2013/03/if-something-looks-too-good-to-be" target="_blank">in this post</a>, an investor in Melbourne could comfortably have achieved annual capital growth of a 9-10% compounding annual return since 2000 for well over 150% growth, which blows away equivalent returns from the vast majority of regional property investments.
As ever, don't take my word for this: speak to experienced, independent Buyers Agents (not regional estate agents) about where long-term capital growth has been and will be found, and they will answer this riddle for you. In theory, I suppose you could pick a regional hotspot, but as we've seen above even the positive cashflow commentators do it poorly, so your chances of long-term success in today's highly-leveraged environment are accordingly reduced.
<img alt="wargentjune6five" src="/images/stories/2013/06/wargentjune6five.jpg" width="355" height="288">
REA: Real Estate Reports
Different data providers give slightly different results. Realestate.com.au in their chart below shows median house price growth in regional 'hotspot' Nowra, for example, of 13% since 2004 (and unit price growth of, well...essentially nothing):
<img alt="wargentjune6six" src="/images/stories/2013/06/wargentjune6six.jpg" width="470" height="268">
Source: Realestate.com.au
The broad statistics don't quite tell the full South Coast story, for median prices in the region (sadly, because it's a beautiful part of the world) are being pumped up by extraordinarily ugly new housing estates. You might argue that there are better times ahead for the NSW South Coast. Maybe, but I remain sceptical. There may be a moderately increasing demand, but there has been much land potentially available for release, and worse, it is being released.
Meanwhile, BlueScope have <a href="https://www.smh.com.au/business/bluescope-starts-year-with-job-cuts-20130114-2co7y" target="_blank">announced further redundancies in 2013</a> which will hurt the region's prospects. Existing dwellings will therefore likely show relatively weak long-term growth. While capital cities have been undergoing an investor-led recovery over the past 12 months and recording non-trivial capital growth, median prices in the Shoalhaven region have slipped backwards into a downtrend.
<img alt="wargentjune6seven" src="/images/stories/2013/06/wargentjune6seven.jpg" width="359" height="285">
Source: REA Real Estate Reports
So why do the experts tip regional property. A few reasons:
(i) higher initial rental yields: more than 7% on the South Coast; or
(ii) kickbacks from developers in the regional towns they tip; or
(iii) they own investment property in the regions they recommend.
You might say that I'm also ramping regions where I invest around London and Sydney. Maybe, but the key difference is that the population of London is more than 8 million and that of Sydney is more than 4.6 million, so I don't think my blog will have much impact. This is not necessarily the case in some small regional towns where it's possible to undertake a 'pump and dump'.
Property investment is a long-term game, so keep it simple and invest in suburbs where the demand is continuous and growing. You'll do much better over the long haul.
 
<hr>
Pete Wargent is the co-founder of <a href="https://allenwargent.com/" rel="nofollow" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" rel="nofollow" target="_blank">blogger</a>. 
His new book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" rel="nofollow" target="_blank">Four Green Houses and a Red Hotel</a>' is released on 1 September 2013.
 
 
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