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

<html><body>
Consumers in WA are being warned about free property investment seminars being offered by east coast “property investment spruikers” a day after ASIC banned a Melbourne-based property investment adviser, also calling him a “spruiker”.
With the ominous heading of “Beware property investment spruikers”, WA’s department of consumer protection is urging potential investors “who may be lured into attending so-called ‘free’ property investment and wealth creation seminars to carefully consider what’s being offered before signing any contracts”.
It follows officers from consumer protection attending a number of these seminars to gauge the content and message being presented to potential investors.
WA commissioner for consumer protection Anne Driscoll said seminar attendees were subject to “high pressure sales tactics that promote coaching and mentoring programs costing between three and ten thousand dollars".
East coast property investment spruikers most likely see WA, with its cashed-up beneficiaries of the money boom, as easy targets for their investment programs.
The WA warning comes a day after ASIC banned<a href="https://www.propertyobserver.com.au/industry-news/property-investment-smsf-spruiker-matthew-george-director-of-money-choice-banned-by-asic-for-multiple-compliance-failures/2013051561378?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news" target="_blank"> Melbourne-based property investment adviser Matthew George, director of Money Choice</a> and labelled him a “spruiker” as part of its crackdown on advice in relation to self-managed super fund property investments.
Last month a letter obtained by the Australian Financial Review revealed that <a href="/news">four Melbourne businesses running seminars on investing in real estate through self-managed super fund</a>s are being investigated by ASIC over the potentially misleading nature of flyers, advertisements and online ads promoting these seminars.
Consumer protection officers have attended three separate seminars recently and report that all followed a similar formula:
<ul>
<li>The seminars were free to attend but were mainly a forum to sell expensive mentoring and coaching programs</li>
<li>Downplay the risks and costs involved in property investment</li>
<li>Claim to offer the secrets to financial success</li>
<li>Offer hints or teasers at the seminars, but participants had to pay for programs to get any further information</li>
<li>“Special” rates for the programs were offered if attendees signed up on the day</li>
</ul>
“The advertising of these seminars give the impression that those who attend simply receive free information about how to secure their financial future but, in fact, they are subjected to high pressure sales tactics that promote coaching and mentoring programs costing between three and ten thousand dollars ,” says Driscoll.
“The presentations highlighted the benefits of investing while downgrading the risks involved in securing the financial future of participants. They also appear to exaggerate the potential gains from property and other investments by following the promoter’s programs.
“The seminars appear to be just a clever sales tactic to get people into a room for many hours with the hope that they will sign up to expensive training courses, but very little information is offered for free. The question to ask is what would be the benefit to a promoter of holding a ‘free’ seminar if they didn’t sell something at the event.
“We believe some of the courses and programs on offer are just the next stage to get investors to make large financial investments that will be of benefit to the promoter, or simply a way to sell their coaching and mentoring packages.”
“I am concerned that the practice of offering special discounts to sign up on the day is designed to prevent the participants from having time to think carefully about their decisions and getting some independent professional advice,” the Commissioner said.
“We warn attendees to resist the pressure to sign any contracts or pay any fees when attending these events, without first getting proper independent advice from financial advisers and property investment professionals. Consumers should be wary about any ‘get rich quick’ claims being made.
“Consumer Protection has reviewed advertising material and seminar content and is preparing to issue substantiation notices to ensure promoters are able to justify the claims and representations that they make to members of the public.
“Promoters will be asked to justify their claims including the financial resources investors need to buy a property, the potential profit they could make within short periods of time and the substance of the course content.
“In certain instances, people may have rights to a 10 day cooling off period if they signed up for something they were not aware would be offered to them when agreeing to attend the seminar. If people believe they have been pressured into buying something under those circumstances, they can contact Consumer Protection to have their cases reviewed and to ascertain their rights.”
WA consumers with inquiries, concerns or complaints about property investment seminars can contact Consumer Protection on 1300 30 40 54 or email: <a href="mailto:consumer@commerce.wa.gov.au">consumer@commerce.wa.gov.au</a>.
</body></html>

lschlesinger-FZcF9M3vE6

WA government warns consumers about east coast “property investment spruikers"

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The national residential vacancy rate lifted from 1.9% to 2% in April with all capital cities except for Darwin recording a rise in their vacancy rates, the latest SQM Research figures show. 
SQM Research managing director Louis Christopher says this is the first time that national vacancies have reached the 2% mark excluding seasonal months (December) since September 2009, “suggesting that the rental crisis is truly beginning to ease”. 
“While the rental market is unlikely to blow out to an oversupply situation in this cycle, we do believe an easing of what has been an extended period of tight conditions for tenants, will now come into existence. 
“It means rent rises which have been running at above inflation for the past five years now, will now slowdown to be more in line with CPI and indeed this is already occurring according to our newly released weekly rents index," he says. 
SQM Research records there were 56,973 properties available for rent across the eight capital cities in April compared with 52,931 in March and 50,884 in April last year. 
The vacancy rate lifted by 0.2 percentage points in Sydney from 1.5% to 1.7% with 9,631 rental properties available over April while Melbourne remains the most favourable capital city market for tenants with its vacancy rate rising from 2.6% to 2.7% with 11,609 properties for rent.
Click to enlarge
<a href="/images/stories/2013/05/sqmmay16one.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/05/sqmmay16onethumb.gif"></a>
Key points:
<ul>
<li>Darwin has recorded the tightest vacancy rate of the capital cities, revealing a vacancy rate of 1.1% and a total of 272 vacancies.</li>
<li>Canberra has recorded the highest yearly increase in vacancies. Climbing 0.7% to 1.5% since the corresponding period of the previous year (April 2012) and coming to a total of 753 vacancies.</li>
<li>Hobart has recorded the largest yearly decrease in vacancies, falling by 0.3% to 2.5% since the corresponding period of the previous year (April 2012) and coming to a total of 699 vacancies.</li>
<li>Hobart has however, recorded the highest monthly increase in vacancies, rising by 0.5% during April 2013.</li>
</ul>
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties.  
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Rental crisis easing as national residential vacancy rate rises to 2%: SQM

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The federal government has called on state governments to introduce stamp duty concessions for seniors to help encourage them to downsize.
Federal ministers Jenny Macklin and Mark Butler released a joint statement announcing the <a target="_blank" href="https://www.propertyobserver.com.au/demographics/federal-budget-s-trial-program-encouraging-downsizing-to-smaller-homes-without-affecting-aged-pensions/2013051461357?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=latestnews">$112 million pilot scheme</a> to encourage seniors to downsize and calling for stamp duty concessions to make it work.
“We would also like to see state governments move to assist seniors who wish to downsize by introducing or improving concessions on stamp duty, and therefore removing a further impediment to downsizing,” they said.
The federal budget announcement on Tuesday included a scheme to make it easier for pensioners to downsize their family home by excluding any profits from means-testing for the pension.
Those eligible will be able to invest up to 80% of the net gain from downsizing, up to a limit of $200,000, in a special account which is excluded from means testing for 10 years.
The scheme has been cautiously welcomed by representative bodies but they say that stamp duty remains the biggest impediment to downsizing for seniors.
Groups say stamp duty costs are prohibitively expensive and make downsizing an expensive choice even with this scheme.
The REIA’s Peter Bushby says the scheme is a positive move but it doesn’t go far enough.
“It is most unfortunate that stamp duties as an impediment to downsizing have again been ignored,” Bushby said.
“The Budget has called on the jurisdictions to reform inefficient state taxes including stamp duty. This pays lip service to the need for reform and ignores the leadership role that the Commonwealth should be taking.”
<a target="_blank" href="https://www.propertyobserver.com.au/economy/act-to-lead-federal-budget-downsizing-seniors-home-scheme-given-stamp-duty-concession-availability/2013051561368">ACT is the principal leader in stamp duty concessions for seniors</a>.
Groups are also <a target="_blank" href="https://www.propertyobserver.com.au/demographics/seniors-group-say-swan-s-seniors-house-downsizing-pilot-unlikely-to-work/2013051461362">criticising the stringent restrictions on the budget</a>.
The scheme is only available to people who have owned their home for 25 years or longer.
Mary Wood, executive director of the Retirement Living Council, says “25 years is overly onerous and don’t reflect the needs and circumstances of most aged pensioners”.
Michael O’Neill, chief executive of Nation Seniors Australia, says the special account is restrictive and means pensioners won’t be able to use the money for daily expenses.
The three year trial will commence on July 1, 2014 where senior Australian homeowners who downsize when buying another home will have <big>an option to invest</big> at least 80 per cent of surplus funds remaining (up to a cap of $200,000) <big>in a special account</big>. The funds invested in the account would be exempt from the age pension means test for up to 10 years. The scheme would only be available to Australians over age pension age who have owned their home for at least 25 years.
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Federal government calls for state government stamp duty concessions for downsizing seniors

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Fast-expanding serviced apartment group Quest has listed its Sydney Olympic Park apartment hotel for sale seeking around $39 million.
The group is looking to free up cash to fund the development of more than a dozen new serviced apartment projects and tap into growing investor demand for Australian hotels and serviced apartments, particurlarly from Asian investors.
Total hotel sale activity for 2012 was in excess of $1.25 billion, an increase of 30% on the total value for 2011 and the strongest since 2007, according to Colliers International.
Asian-based funds accounted for more than 70% of all sales, with investors from Malaysia, Hong Kong and Singapore the most prevalent.
The largest hotel transaction to occur so far in 2013 is the sale of the 4.5 star Holiday Inn on Flinders in Melbourne, which sold to New Zealand based Priscilla David Ltd for $50 million. Going against the recent trend,  the hotel was sold by an Asian investor, Singapore-listed Lasseters International Holdings. 
Last year, the largest single hotel property sale was the purchase of the <a href="https://www.propertyobserver.com.au/leisure/sydney-shangri-la-hotel-sells-to-hong-kong-shangri-la-asia-group-for-record-%24352-million/2012062555249">Shangri-La Hotel in Sydney for $330 million </a>by Hong Kong based Shangri-La from the Government of Singapore Investment Corporation.
Should the sale of the Sydney Olympic Park hotel prove successful, Quest will look to sell a further $170 million worth of apartment hotels to fund $220 million of new Quest projects.
In February, Quest announced plans to build <a href="https://www.propertyobserver.com.au/commercial/quest-to-build-10-new-serviced-apartments-buildings-in-nsw-over-next-two-years/2013020659191">ten new apartment buildings in NSW by 2014</a> in addition to three new properties that will open in Queensland, one in outer Melbourne, one in regional Victoria and another in the Adelaide CBD this year.
The group currently has over 150 serviced apartment properties in Australia, New Zealand and Fiji, located in CBDs suburban and regional areas.
The Sydney Olympic Park property, featuring 140 studio, one, two and three-bedroom apartments, each with kitchen and laundry facilities as well as a café, gym, conference room and basement car park.
It is being sold by Mark Durran and Peter Harper of Jones Lang LaSalle.
It opened in October last year, built at a cost of $30 million with the aim of tapping into the growing Olympic Park business hub, which attracts around 10,000 employees a day.
The newness of the building means it is being offered “with substantial depreciation benefits”.
Meriton paid a <a target="_blank" href="https://www.meriton.com.au/blog/meriton-buys-olympic-park-site/">reported $22 million plus to buy a 15,000 square metre</a> site with plans for 300 apartments in Sydney’s Olympic Park in February this year.
Quest at Sydney Olympic Park is the only serviced apartment in the area.
Quest has a long-term lease over the property.
Earlier this month, Quest said it would target the growing number of extended-stay business travellers in Queensland, with five new properties across the state to open in the next 12 months.
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Quest lists Sydney Olympic Park serviced apartments as appetite for Australian hotels rises

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GPT looks to have found a buyer for its half share in the Erina Fair shopping centre on the Central Coast.
National Pension Service of South Korea has been named by both The Australian and Australian Financial Review as the likely buyer, though this has not yet been confirmed by ASX-listed GPT.
The shopping centre and commercial property landlord and manager was seek around $400 million for its half share in the 113,700-square-metre centre, which was valued at $392.9 million as of June last year and is the largest mall on the Central Coast.
The cash injection might help fund a higher offer for Australand – with negotiations between <a target="_blank" href="/news">Australand and GPT set to resume</a>.
GPT co-owns the mall with Lend Lease’s Australian Prime Property Fund Retail (APPRF). Lend Lease is the manager of the mall.
The sale is being handled by Simon Rooney of Jones Lang LaSalle.
It paid in excess of $80 million to acquire its half share of the mall in June 1992 from the Capita Statutory Fund and has been refurbished twice – in 2003 and 2009.
It reportedly put up its half-share for sale in February, though it has not publicly stated its intention to sell the mall.
However, in June last year, GPT revealed plans to “reweight the retail portfolio to 50% and increase the weighting in office and logistics &amp; business parks to 35% and 15% respectively".
GPT sold stakes in two Brisbane Homemaker centres – bulky good stores – at Jindalee and Aspley in January for $91.7 million and has also sold half-stakes in malls in Canberra and Darwin.
The Korean pension fund investment is part of a wave Asian institutions buying up Australian malls, hotels and office spaces, including <a target="_blank" href="https://www.propertyobserver.com.au/new-south-wales/singapore-s-bright-ruby-seeks-out-more-sydney-office-acquistions/2013022059457">Singapore-based investment house Bright Ruby</a> and Chinese conglomerate HNA Group, which paid $117 million for 1 York Street from Colonial First State in 2011 in the Sydney CBD.
Recent smaller deals include a Gold Coast-based Singaporean investor buying the Harbour Town shopping centre at Biggera Waters for $10.3m in a deal negotiated by Colliers International.
In its latest retail market update, Jones Lang LaSalle’s head of retail Tony Doherty painted a mixed picture for the sector.
“While there has been a modest recovery in underlying retail spending, and some reasonably positive signs for the short term outlook, market rents continue to remain under downward pressure,” he said.
He also highlighted a growing trend of capital partnering to unlock funds for future development following Coles and property superannuation fund ISPT announced a joint venture transaction, involving the sale of a 75%t interest in an initial portfolio of 19 Coles-owned shopping centres across Australia valued at $532 million, delivering proceeds to Wesfarmers of approximately $400 million.
The portfolio included 18 neighbourhood shopping centres and one sub-regional.
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South Korean pension fund set to acquire GPT's half of Erina Fair mall for $400 million

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Today I’d like to talk about asset bubbles, but first a little about collectors’ items.
Back in 1986, a company called Pannini released an amazingly popular sticker collection book by the name of Football ’86.  
The idea was that for a few pence (ahh, inflation) youngsters could buy a packet of stickers bearing the photos of soccer players from all the major British teams and the respective trophies for which they competed. The goal, of course, was to fill the entire book and show off proudly to your mates.
Cleverly, Pannini often gave away the actual books for free in order that eager kids then felt compelled to buy the stickers. It worked a treat!
Whether or not it was true, there were always rumours that Pannini printed fewer stickers of certain players, and these elusive few became hugely sought after.  A few stickers were made in a special silver colour, such as the ‘FA Cup’, and these also became must-have stickers.
After a while the craze passed, strangely to be replaced by ‘spinners’, which was how the ever-creative Coca-Cola company cleverly re-branded one of the simplest of all toys, the yo-yo.
If you still own a completed Football 86 book in mint condition it would retain some value (£40) as a collectors item, but the market today has once again become relatively small.  
Tulip mania
The search for Pannini FA Cup stickers paled into insignificance when compared to what was perhaps the first ever great economic bubble, the Dutch tulip mania.
The tulip mania peaked in 1637, when the price of a single tulip had become as expensive as ten times an annual skilled salary!
While it may seem ridiculous in retrospect, at the time landowners were prepared to offer many acres of land in exchange for the in-demand item: the humble tulip. Such manias tend to be characterised by wild price volatility and hugely irrational exuberance.  
Bitcoin bubble
The latest craze of the last four years or so has been the ‘bitcoin’, a virtual currency which owners can store in electronic ‘wallets’. Confusing? Yes, it is a little, although this article has a game stab at explaining the concept. Back in February, bitcoins were trading for only $20, but since then…
<img width="470" src="https://1.bp.blogspot.com/-CVqRg-kqfNQ/UWjfdXx3rGI/AAAAAAAAJC8/ATcA-TyD4_c/s1600/bitcoin.jpg">
Since this chart was produced, over the last weeks, bitcoin prices have been all over the place. From a peak of well over US $200, the price quickly swung to a low of just $105, yet by Wednesday the price had rebounded to $175 before plummeting again to $120 on Thursday.
The extreme volatility caused one major exchange to call a 12 hour halt to trading and has caused skeptics to question whether an item with such wild swings in prices can even be referred to as a “currency” at all.
The total supply of bitcoins in circulation today is said to be worth around $1.3 billion. Where that figure will be in 6-12 months time is anybody’s guess.  
The end of the gold standard
The problem with a virtual currency is that its value only holds up while those trading it hold a faith in its enduring value.
One of the greatest challenges facing us as individuals today is that our actual currency – our dollars and cents – are in a similarly precarious position. Since money is no longer backed by the gold standard, over time there is a risk that the value of cash diminishes materially.
History has shown us that over time, our currency becomes severely devalued as its worth is destroyed by the ‘silent thief’ inflation.
This is no accident, for the <a href="https://rba.gov.au/" target="_blank">RBA</a> in Australia has a targeted range of inflation of 2-3%: it is actually the policy to devalue our currency over time.
Confusingly, this presents us with a dilemma, and Ben Bernanke in the US highlighted how we often spend more time thinking of where to put our money (to avoid its value being inflated away) than we do thinking of how to put our money to productive use.  
What to do? Assets of enduring value
With the gold price having been hammered by 23% since September 2011 and the great gold price bubble of the last 12 years finally appearing ready to deflate, investors are finding a need to look elsewhere.
The reason holding shares in the industrials index can be a smart idea is that profitable companies will always have value.
Every day people will up and eat their cornflakes, and as an owner of shares in all of Australia’s major food companies, you can breathe a great sigh of relief.
Others turn to <a href="https://propertyupdate.com.au/" target="_blank">residential property</a> as another example of a ‘tangible asset’ in which to store their wealth. It is certainly a proven investment strategy, but I’ll add one caveat: real estate, just like bitcoins and tulips, is only worth what someone else is prepared to pay for it. Therefore, you should only own property where there is a huge demand and a growing population.
In recent years, some groups have tried to organise a “homebuyers strike” in protest against house prices being expensive in the major capital cities (at least, I assume they refer to those capital cities, because elsewhere in Australia, property prices can often be reasonably cheap).  
The logic is flawed…
One might as well try to organise a strike on breathing.
People will always need somewhere to live close to employment and city centres, and as the population booms, so does the demand for quality property.
Surely the future for Australia’s housing affordability should be focussed on transport and infrastructure so that we can use the vast size of the country more effectively as the population looks set to increase from 23 million to a staggering 40 million by 2050.
But while we continue to obsess over how we can shoehorn millions more of us into a handful of popular beachside and inner-city suburbs, prices will continue only to move in one direction.
Pete Wargent holds a range of finance and property qualifications and is the author of <a target="_blank" href="https://petewargent.blogspot.com.au/" rel="nofollow">Get a Financial Grip – a simple plan for financial fr</a><a target="_blank" href="https://petewargent.blogspot.com.au/" rel="nofollow">eedom.</a>
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Real estate is only worth what someone else will pay for it: Pete Wargent

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It’s amazing how a significant national decision or event can bring investor decision-making to a dead stop.
My experience of seven years with a property investment website is that any interest rate decision, whether up or down, causes a temporary shutdown of normal business.
A federal budget has the same effect. So too does an election.
So there was a perceptible pause when last week’s interest rate change was following a week later by Wayne Swan’s budget.  
None of these things should have that impact but experience shows that they do – not because the reaction is realistic but because the perception exists and perceptions matter.  
When Julia Gillard gave unprecedented warning earlier this year of the impending federal election – a case of dead woman walking if ever I’ve seen it – the speculation began instantly about how it would cause the recovery in property markets to stall.  
So the Hotspotting team did some digging and asked a range of people who do real research, rather than indulge kneejerk speculation, what they had found.  
Professor Jakob Madsen of Monash University said he had “searched for evidence that elections affect the housing market but found nothing”. Michael Matusik of Matusik Property Insights said there was no historical evidence that election campaigns impacted on housing markets. And Louis Christopher of SQM Research said: "The only quantifiable impact of a federal election occurs on the actual day of the election."
Yet economists and other attention seekers continue to babble about markets slowing down because an election is looming.  
Any change in interest rates, whether up or down, makes consumers stop to reconsider their plans while they ponder what’s behind the change.  
Changes in interest rates should be irrelevant to property investors. In the past 20 years we’ve had 52 changes in the official cash rate, including 25 reductions and 27 increases. We can be sure that the next 20 years will have a similar pattern, with many changes in concert with movements in the economy, inflation and world events.  
Yet people contemplating a mortgage that will span the next 20 to 30 years delay decisions to await the next Reserve Bank meeting.  
What these kinds of reactions tell us is that very few people have anything resembling a long-term plan. No one should approach property investment without goals and strategies for achieving them but, in my experience with investors, very few have a coherent game plan.  
The sensible minority who have their plan of attack sorted are unlikely to be swayed by RBA meetings or political shenanigans or speeches by the federal treasurer.  
Anyone with a strategy, a belief in the future of Australia and a devotion to research would be just getting on with business.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank" rel="nofollow">hotspotting.com.au</a>
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terryryder-YECXbqmri2

Sensible investors are unlikely to be swayed by RBA meetings or political shenanigans: Terry Ryder

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Melbourne was the only capital city in RP Data's combined five capitals index to see a rise in home values in the week to May 12.
Melbourne also leads the index with a 3.1% year-to-date rise, although Sydney and Perth lead the index in terms of annual change, with 5.5% and 5% rises respectively. 
<img alt="rpdatavaluesmay13one" height="258" width="470" src="/images/stories/2013/05/rpdatavaluesmay13one.gif">
<img alt="rpdatavaluesmay13two" height="187" width="470" src="/images/stories/2013/05/rpdatavaluesmay13two.gif">
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Melbourne moves mildly ahead as capital city home values tread water in early May: RP Data

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The Melbourne CBD's last remaining heritage horse stables property has been sold to a Melbourne-based property developer for $8.5 million with plans for a $100 million apartment project.
The narrow 36-40 LaTrobe Street site, measuring 569 square metres, is the former premises of the Burton Livery and Bait Stables built in 1890, but more recently modified as offices, though still retaining its Victorian-era facade.
The site has a permit for an Elenberg Fraser-designed 35-level tower featuring 243 apartments (pictured below).
<img src="/images/stories/2013/05/latrobemay16one.jpg" width="400" height="828" alt="latrobemay16one">
The sale was negotiated by Fitzroys agents Charles Emmett and Rob Harrington in conjunction with Daniel Wolman and Matt Stagg from Colliers International.
The sale price reflected a sales rate of $8,500 per square metre.
The sale continues a recent trend of strong East End sale prices over the past month such as the former Cancer Council site (circa $16m) and Glass headquarters at 50 LaTrobe St (circa $4.6m).
A further three prime development sites in the Melbourne CBD have been listed for sale as part of a $76 million portfolio divestment by Melbourne private investor Jimmy Goh through Colliers International’s John Marasco and Matthew Stagg, in conjunction with CBRE’s Mark Wizel and Josh Rutman.
The prized asset is expected to be the 3,197 square metre LaTrobe Street site comprising a 689-bay 10 storey commercial car park operated by Wilson Parking directly opposite Melbourne Central, the CBD’s largest shopping centre.
There are two ground floor retail tenancies fronting LaTrobe Street and three fronting Little LaTrobe Street, with a combined net lettable area of 852 square metres.
It is expected to sell for in excess of $40 million.
“This property has substantial development upside. It has the potential to accommodate several major high-rise buildings as well as providing enormous scope for multi-level retail tenancies.  It will provide the successful buyer with an opportunity to create the Melbourne CBD’s next landmark building,” says Wizel.
“The East End of the CBD has proven to be a very popular precinct with residential apartment developers such as Chip Eng Seng who have recently sold out at 33M and PDG Corporation who are close to completing Abode,” said co-selling agent Daniel Wolman.
Recent sales in Melbourne’s ‘East End’ include the former Cancer Council site (circa $16m) and Glass headquarters at 50 LaTrobe Street (circa $4.6m).
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Heritage Melbourne office property and former CBD horse stables sells to local developer for $8.5 million

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The 2013 federal budget has seen a big shift in government policy away from a focus on returning the budget to surplus to send “a strong message of confidence” (quote from last year’s budget) to focussing on “a strong economy”.
The surplus projection is still there, but thanks to a huge revenue shortfall it’s been pushed out three years to 2015-16 and progress towards it will stall for the year ahead.
While there will no doubt be lots of interest in the individual budget measures, the surplus - or its lack - is the key issue.
Key measures 
As is well known, thanks largely to a circa $16 billion revenue shortfall and a spending blowout, last year’s budget projection for a $1.5 billion surplus this financial year has not been achieved with the government now projecting it will be in deficit to the tune of $19 billion.
And with the revenue shortfall affecting the starting point for future years the government now expects that a surplus won’t be achieved till 2015-16. However, to achieve this it has still had to announce savings, albeit they don’t kick in till 2014-15.
<img alt="olivermay15one1" height="305" width="470" src="/images/stories/2013/05/olivermay15one1.jpg">
The revenue shortfall mainly reflects lower company tax collections reflecting the combination of lower commodity prices, the strong $A and apparently various corporate tax loopholes. To plug the gap and push the budget back into surplus in the next few years the government has announced net savings of $28 billion over five years, but not commencing till 2014-15. Some of the savings were pre announced or well flagged and include:
<ul>
<li>
Various measures to tighten corporate tax loopholes.
</li>
<li>
The cancellation of a rise in family benefit payments and replacement of the baby bonus.
</li>
<li>
Postponing personal tax cuts that were due in 2015 as the carbon price assumption has been lowered.
</li>
<li>
An extension of monthly income tax instalments to large taxpayers.
</li>
<li>
An increase in the Medicare levy to fund DisabilityCare.
</li>
<li>
Superannuation changes as already announced.
</li>
<li>
Cuts to higher education funding.
</li>
<li>
Cuts to planned foreign aid.
</li>
</ul>
These measures were partly offset by welcome spending on roads and rail, the move towards the full start up of DisabilityCare in 2018-19 and increased funding for schools.
The budget deficit - the good &amp; bad 
Given the coverage around the continuing budget deficit it is worth putting it into context. First, some background. Just as with a household, a government’s budget deficit is the difference between the amount it spends (on social welfare, defence, infrastructure, health, etc) and the amount it gets in revenue (from taxes, investment earnings, etc). It has to be financed by borrowing and to do this a government issues government bonds (to investors such as super funds, insurance companies and foreign investors) and the cumulative sum of all such borrowing is its public debt.
While the $19bn deficit for this financial year is a lot of money it needs to be compared to the size of the economy ($1.5 trillion) to put it into context. This puts it at 1.3% of GDP and as can be seen in the first chart is a big fall from 2.9% of GDP last financial year when the deficit was $43bn. This is in fact the biggest reduction in a deficit in modern history. So despite the failure to hit the surplus target (which was always a stretch to achieve anyway) the budget deficit is still going in the right direction.
What’s more, Australia’s budget deficit is tiny compared to other advanced countries. At around 2% of GDP across all levels of government it compares to around 3% of GDP in the Eurozone, 6% in the US and 10% in Japan.
<img alt="olivermay15two" height="304" width="470" src="/images/stories/2013/05/olivermay15two.jpg">  
Similarly, Australia’s gross level of public debt at around 28% of GDP is very small compared to around 95% in the Eurozone, 108% in the US and 245% in Japan. However, comparing ourselves to a bad bunch is not necessarily wise. First, our level of net public debt (ie gross public debt less what the government is owed) is about where Ireland’s was in 2006 before a severe property crash necessitated the Irish government bailing out its banks which saw public debt skyrocket. This is unlikely in Australia, but the Irish experience highlights just how quickly good times can turn sour. Second, after the biggest resources boom in our history, public finances should be in far better shape. Norway is a good example in this regard. Realising that its North Sea oil reserves would not last forever it has been running big budget surpluses (around 10 to 18% of GDP) and putting the money into a sovereign wealth fund for use when their boom is over. As a result Norway’s net public debt is negative, ie it is owed way more than it owes.
<img alt="olivermay15three" height="291" width="470" src="/images/stories/2013/05/olivermay15three.jpg">
<country-region>Australia </country-region>is now projected to run budget deficits for 7 years in a row totalling 16% of GDP, which is almost identical the 7 years of budget deficits in the 1990s that totalled 17% of GDP. The problem is that the 1990s episode could be excused on the grounds that it encompassed a deep recession whereas the current episode has seen no recession and the biggest resources boom in our history!
While the fiscal stimulus around the time of the GFC was justified, Australia ideally should have built up a bigger investment in sovereign wealth funds like the Future Fund in the years before the GFC and then cut back the GFC stimulus much faster. Clearly the revenue shortfall has played a role, but spending should also have been cut back more aggressively through 2010 and 2011 after it surged to around early 1990s highs in relation to GDP. See next chart.
<img alt="olivermay15four" height="293" width="470" src="/images/stories/2013/05/olivermay15four.jpg">
Implications for interest rates
While there is a fiscal tightening in the Budget, it is actually zero this year and doesn’t kick in till 2014-15 at 0.4% of GDP before rising to 0.7% of GDP in 2015-16. This makes it somewhat academic (as it may not even occur) given past experience and is unlikely to have any impact on the RBA’s immediate thinking regarding interest rates. That said, our assessment remains that the RBA will cut interest rates again taking the cash rate at least down to 2.5%, with the main drivers being the peaking of mining investment at a time when the rest of the economy remains subdued and inflation remains low.
Against this background and assuming that rates are cut further, the Government’s growth forecast for 2013-14 of 2.75% is reasonable and in line with our own view. However, its nominal GDP growth forecast of 5% may be a little optimistic and we see unemployment pushing up to 6% as against the Government’s 5.75% forecast. Inflation is likely to remain low at around 2.25% as the Government predicts.
Implications for Australian assets
It’s hard to see a major impact on Australian assets.
Cash and term deposits – can’t see much impact here at all. The RBA is likely to cut rates further which is likely to put more downwards pressure on term deposit rates. Expect term deposit rates to fall below 4% in the months ahead.
Bonds – the delay in the return to surplus is probably not enough to threaten Australia’s AAA sovereign rating and continuing low interest rates should ensure bond yields remain low. But, the problem remains that with five year bond yields at 2.8% it’s hard to see great returns from Australian sovereign bonds over the next few years.
Shares – while increased spending on roads and rail may help construction and building material stocks, the impact is likely to be minimal. Its hard to see much impact on the share market overall, where we see the broad trend remaining up thanks to reasonable valuations, easy monetary conditions and prospects for stronger profits.
Property – property prices are likely to continue gaining at a modest pace on the back of low interest rates and as domestic growth starts to pick up.
The $A – while the initial response to the Budget saw the $A fall 0.5%, the announcements in the Budget alone are not radical enough to have much of an impact on the $A. In the very short term the $A was oversold after last weeks sharp fall. However, with the commodity price boom fading, the interest rate differential in favour of Australia falling and the $A overvalued on a purchasing power parity basis, the trend in the $A is now likely to be down.
Concluding comments
The good news is that the government has found ways to fund its commendable Gonski education reforms and DisabilityCare and superannuation has been left alone beyond what was already announced.
But it would have been desirable to have a least some of the budget savings kick in this year to provide more confidence that a surplus will eventually be achieved. As it turns out we are now looking at a budget deficit blowout of virtually the same size as that seen in the 1990s despite having a much stronger economy than back then.
To be sure, Australia’s public finances are in good shape compared to other advanced countries. But having seen the biggest resources boom in our history we should have been able to put more aside for the inevitable rainy day.
Dr Shane Oliver is the head of investment strategy and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a>.
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