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.

Joel Robinson

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

For most Australians, buying an apartment is one of the biggest financial decisions they'll ever make

The location, floorplan and price are often the first considerations, but in recent years another question has become increasingly important: who is actually delivering the project?

A series of high-profile builder collapses, construction delays and defect concerns have fundamentally changed how many Victorians approach buying off the plan. The collapse of Porter Davis in 2023, which reportedly left around 1,700 homes unfinished, became one of the most visible examples of the risks that can emerge when a construction company fails. <a href="https://www.equifax.com.au/sites/default/files/lpassets/pdf/Final-Business-Market-Pulse-June-Sector-Deep-Dive-Report-2.pdf">Similar challenges across the broader construction sector</a> have left buyers asking more questions before signing a contract.

As Victoria continues encouraging higher-density housing to address supply shortages, transparency is becoming just as important as location or price.

One tool increasingly entering the conversation is the <a href="https://icirt.com/">Independent Construction Industry Rating Tool (iCIRT)</a>, an independent assessment framework designed to help buyers better understand the developer or builder behind a project. Originally developed by Equifax in consultation with government and industry as part of NSW's Construct NSW reforms, the system has since expanded nationally.

<h2 data-end="1519" data-section-id="7nmx3" data-start="1492">What is an iCIRT rating?</h2>

Most Australians are familiar with independent ratings in everyday life.

We compare ANCAP safety ratings before buying a car. We look at Health Star Ratings in supermarkets. Banks rely on credit assessments when lending money.

Until recently, however, there has been very little independent information available to help apartment buyers assess the business responsible for delivering a residential project.

That gap is what iCIRT was designed to address.

Builders, developers and other construction professionals with an iCIRT rating have demonstrated high-trust characteristics through an independent, evidence-based assessment across six criteria: Character, Capability, Conduct, Capacity, Capital and Counterparties. This involves a rigorous review of financial health, past project track record, and ethical conduct. Crucially, an iCIRT rating could help provide property buyers with confidence that they are working with a professional who has demonstrated the capability, capacity, and willingness to return and rectify issues.

Importantly, iCIRT is not a recommendation to purchase a particular property, nor is it a traditional credit rating. It is an independent assessment framework designed to provide objective information about a construction business using a <a href="https://icirt.com/sites/default/files/2025-08/iCIRT-Methodology-Issue1-May-2021.pdf">published methodology</a>.

The system has been widely adopted in New South Wales, where more than one-third of medium and large residential builders and developers now hold an iCIRT rating, representing over two-thirds of the state's residential building market by value as of 2025/26.

<h2 data-end="3126" data-section-id="h6ohtj" data-start="3084">Why buyers are doing more due diligence</h2>

For many buyers, particularly those purchasing off the plan, the biggest risk isn't whether they'll like the kitchen finishes.

It's whether the project will be delivered on time, to the expected quality, and by a company capable of completing the development.

<a href="https://icirt.com/sites/default/files/2026-07/iCIRT%202025%20Consumer%20Survey%20Report%20v05.pdf">Consumer research commissioned by iCIRT</a> found more than half of respondents believed current protections do not adequately safeguard buyers from builder insolvencies or defective projects. Other research found 88 per cent of prospective buyers would seek independent ratings or due diligence before purchasing, while 90 per cent said trust in construction professionals is essential.

That doesn't mean buyers should rely on a single rating alone.

Independent legal advice, understanding the contract, and seeking financial advice all remain important parts of the due diligence process.

However, an independent assessment can provide another source of information alongside those traditional checks.

<h2 data-end="4138" data-section-id="pquzxc" data-start="4094">Trust is becoming a competitive advantage</h2>

The conversation isn't only changing for buyers.

Developers are also recognising that trust has become an increasingly important part of the sales process.

Five years ago, purchasers typically asked about floorplans, finishes and settlement dates.

Today, sales teams are increasingly being asked about the developer's experience, financial stability, previous projects and construction partners.

For companies with strong governance and established delivery records, an independent iCIRT rating provides another way to demonstrate those credentials before buyers even visit a display suite.

According to Equifax, the assessment can also help businesses drive sales and <a href="https://icirt.com/resources-for-business/icirt-rating-helps-scion-secure-high-value-projects">secure high-value projects</a>, as well as identify operational improvements and <a href="https://icirt.com/resources-for-business/mirvac-reinforces-brand-trust-and-quality-independent-icirt-rating">attract top talent</a>.

<h2 data-end="4962" data-section-id="1j54ng5" data-start="4912">Beyond buyers: lenders are paying attention too</h2>

The influence of independent construction ratings is also extending beyond consumers.

According to Stamford Capital's Real Estate Debt Capital Markets Survey, an increasing number of lenders now incorporate iCIRT ratings into their due diligence processes when assessing residential development finance applications.

The survey found lender adoption has continued to rise, with many respondents saying independent assessments provide additional insight into governance, counterparties and delivery capability beyond traditional financial analysis. Some lenders also reported declining funding applications where businesses had poor or no ratings.

As construction costs remain elevated and access to development finance becomes more selective, demonstrating credibility is becoming increasingly valuable.

<h2 data-end="5801" data-section-id="1qazuxs" data-start="5772">What it means for Victoria</h2>

Victoria's apartment market is entering a new phase.

The state is seeking to accelerate higher-density housing while simultaneously introducing reforms aimed at improving confidence in residential construction.

For buyers, that means there are more tools available than ever before to research the businesses behind a project.

For developers, it signals that transparency is becoming another point of differentiation in an increasingly competitive market.

Buyers are asking more questions than ever before and increasingly expecting independent information, not just marketing material, before making one of the biggest financial commitments of their lives.

Find out how to get iCIRT rated <a href="https://www.icirt.com/sites/default/files/2025-08/iCIRT-Infographic-Assessment-Process-Final.pdf">here</a>.

<hr data-end="6469" data-start="6466" />
The information contained in this article is general in nature and does not constitute personal, financial, legal or tax advice. It does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it and, where appropriate, seek independent professional advice.

This article contains links to third-party websites. These links are provided for convenience only. Equifax Australia does not control and is not responsible for the content, accuracy or privacy practices of external sites.

Copyright © 2026 Equifax Australia Information Services and Solutions Pty Ltd. All rights reserved.

Buying off-the-plan in Melbourne? How independent iCIRT ratings are set to change Victorian property

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>
NSW and Perth offer the best prospects in what remains a soft residential market, says Lend Lease CEO and managing director Steve McCann. 
Speaking as Lend Lease’s interim results briefing today, McCann said there was an expectation of increase residential activity in 2013, but it would be “some time” until there was a recovery in the sector. 
“The residential market remains soft,” said McCann. 
McCann said NSW and the Perth market are the strongest residential markets with Queensland also showing “small signs” of recovery at particular price points. 
But he said other markets remain soft.
McCann added that the Australian economy was still strong “on a relative basis”. 
Lend Lease has a backlog of 57,585 zoned residential land lots and just under 12,000 apartments – of which 11,510 are zoned. 
The number of Lend Lease residential projects decreased from 39 to 37 over the six month period following the sale of the remaining units at Jackson’s Landing on Sydney Harbour, Forde in the ACT and Caroline Springs in Melbourne, but with the addition of the Coolbellup residential community in Perth.
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Residential market remains soft but strength in NSW and Perth: Lend Lease CEO Steve McCann

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The property market has started 2013 <a target="_blank" href="https://www.smartcompany.com.au/property/053104-residential-land-market-to-pick-up-in-2013-as-property-recovers-bis-shrapnel-report-predicts">on a good note</a>, with experts saying strong clearance rates are a good sign the market is beginning to respond to last year's series of interest rate cuts.
Strengthened property sales also serves as another reason to believe the Australian economy is improving, with economists also pointing to strong corporate retail results, steady employment, rising consumer sentiment and the highest sharemarket results in years.
"I think we're all a little seduced into expecting an instant reaction from the market from interest rate falls," says Australian Property Monitors chief economist Andrew Wilson.
"But what we're seeing right now is perhaps the real impact of those historically low interest rates."
"Jet-fuelled low interest rates kicking in?" <a target="_blank" href="https://twitter.com/DocAndrewWilson">Dr Wilson tweeted on the weekend</a>.
Last weekend was the second reporting weekend for the property year so far, and it's already shaping up to be a strong one.
According to the Real Estate Institute of Victoria, Melbourne – the city where most auctions are held – recorded a 70% clearance rate compared to 67% last weekend, and 64% during this same weekend in 2012.
"The reported lift in consumer confidence last week will be a positive influence on the residential market over the remainder of summer and autumn," chief executive Enzo Raimondo said in a statement.
"The improved confidence is also evident in this weekend's results, which are an improvement on last year's trend."
The city recorded 437 auctions, with 306 sold. Next week is where the selling really begins, however, with the city expecting a massive 950 auctions to go ahead.
Results were similarly positive in Sydney, with the city recording a clearance rate of 71% from 204 reported auctions, compared to last year's result of just 54.5%
Property analysts have been waiting to see whether lower interest rates would actually flow through to the residential property market, as the spring selling season in 2012 finished with a huge boost to sales.
But now, Wilson says, the number of auction sales is actually quite surprising.
"Sales are tracking ahead of the same time last year in Sydney and Melbourne, and listings numbers are quite sharply increasing over the next few weeks."
"That's a sign things are becoming much more confident in the market – one of the things that characterised the market last year was that the number of listings was low."
Wilson says the rising listings figure is a good sign sellers are becoming more confident, which should give the market a good boost before the colder weather sets in during May and June.
"It's still early in the season and we'll need higher numbers to fully get the picture, but based on the evidence so far the market looks like it's lifted off fairly early."
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.
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pmcstafford-pr9eMARWoN

Jet-fuelled low interest rates seemingly kicking in: APM's Dr Andrew Wilson on strong auction clearances

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The former owner of ABC Learning Centres, Eddy Groves, is homeless, bankrupt and reportedly owes creditors more than $31 million.
The remarkable decline of Groves has been well publicised, but the full extent of his situation is only just coming to light.
He was declared bankrupt on January 29 this year in the Adelaide Federal Magistrate's Court, but ABC Learning Centres were <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">placed in receivership</a> in November 2008, effectively sealing the fate of the once BRW Rich List regular.
The Australian reported today Groves has <a target="_blank" rel="nofollow" href="https://www.theaustralian.com.au/news/former-childcare-mogul-eddie-groves-claims-to-have-3879-in-the-bank-after-being-bankrupted/story-e6frg6n6-1226578261275">debts of $31 million</a> and has only $38.79 to his name, as indicated by a statement of his financial affairs provided to Insolvency Trustee Services Australia.
The once high-flying executive used to be known for driving Ferraris, and owning multimillion dollar properties on the Gold Coast and basketball team the Brisbane Bullets.
Today, Groves is reported to be in a backpackers' hotel, but he's optimistic he'll be out of there in the next two weeks.
"Still to find a permanent address but expect to in the next two weeks," Groves said in the statement.
The bankruptcy proceedings were launched by the Commonwealth Bank, which had pursued Groves over a private debt of $5 million on a loan he took out to purchase the Adelaide Dome basketball stadium.
Following the bankruptcy, PPB Advisory partner Mark Robinson said in a statement issued on January 29 it would be conducting "urgent inquiries" into Groves' financial position.
"PPB Advisory will be making urgent inquiries with Mr Groves and other persons of interest to determine possible assets which may be available to pay unsecured creditors.
"Another key focus of the trustee will be to examine related party transactions which may have taken place prior to our appointment," Robinson said.
Fairfax reported today Groves <a target="_blank" rel="nofollow" href="https://www.theage.com.au/business/homeless-groves-lists-debts-of-216m-20130214-2efx7#ixzz2KvLrCFJX">owes the Westpac bank $209,000</a> on four credit cards and owes his family and friends, including his wife Viryan Collins Rubie, more than $1.5 million. He also says he owes company Iconic Properties, of which he was a director until late 2009, $8.7 million.
Among his few assets which still remain is $10,000 worth of sporting memorabilia, currently in the possession of his ex-wife Le Neve, along with life insurance and trauma policies worth $18 million issued by ANZ subsidiary OnePath.
His self-managed Butterfly superannuation fund also holds $213,916.
Gone alongside his multimillion dollar properties are his four Harley Davidsons and a Honda CRV.
ABC Learning Centres was first listed in March 2001 and by mid-December 2006 the company was valued at $3.4 million after its share price hit its peak of $8.62, putting his personal fortune at around $300 million.
Groves was quoted as saying in 2008 the pressure for a company to grow was immense.
"There is an enormous amount of pressure that the public market can put on a company to continue to grow.
"Even though you tell yourself not to fall into that trap, it's very difficult not to, because the share price continues to grow, the returns were continuing to grow, and people want you to maintain that pace," he said.
The reasons for the company's downfall were numerous, including aggressive expansion, poor financial account management and a lack of thorough management.
Take a look back at <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">what small businesses can learn</a> from Groves.
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.</body></html>

yredrup-o4Anfe78KF

Eddy Groves left homeless, bankrupt and owing millions

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Lend Lease has reported a steep drop in demand for apartments in its Victoria Harbour precinct in Melbourne’s <a target="_blank" href="/news">Docklands</a>, with interim results boosted by its largest project, the $6 billion Barangaroo South project.
The property developer and infrastructure developer announced interim after tax profits up 38.3% to $302.3 million to December 31.
Lend Lease explained that the increase in profit was “largely due to the recognition of the profit on the first two commercial towers at its major project, Barangaroo South in Sydney".
However, it noted that its development business had been partially offset by “reduced residential activity in the period”.
The outlook for its residential business is mixed, with Lend Lease noting that consumer sentiment towards the housing market "improved slightly in the period, with mortgage affordability increasing due to lower interest rates, steadier house prices and rising income" but at the same time "low consumer confidence and uncertainty in the labour market has lessened the impact on sales".
Off-the-plan apartments sales fell 29% from 710 sales in the December 2011 half year to 502 for the six months to December 2012.
Lend Lease recorded 10 apartment settlements totalling $10.4 million over the six-month period – representing an average price of $1.04 million, compared with 17 sales totalling $33 million (average price of $1.94 million)  in the previous corresponding period.
Lend Lease says the fall of 47% "reflect[s] the change in the product mix from premium apartments to smaller, more affordable apartments in response to changes in market demand".
The previous period included settlement of a higher number of high value apartments.
Residential lot sales fell 10% from 1,625 to 1,460, with the average price per residential lot decreasing by 17% from $243,850 to $201,500, "reflecting a change in the product mix".
Lend Lease has 37 residential projects at various stages of development with a pipeline of 69,000 units.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/2013/02/lendleasefeb18.gif"><img src="/images/stories/2013/02/lendleasefeb18thumb.gif"></a>
Lend Lease also reported off-the-plan sales of 121 out of 203 apartments released in its Studio Nine development in Richmond (pictured below), which will feature 505 apartments and townhouses when completed on the heritage site that was once the Heinz canning factory, and then a broadcast studio.
<img src="/images/stories/2013/02/studio91.jpg" width="470" height="358" alt="studio91">
Lend Lease had offered very high <a href="https://www.propertyobserver.com.au/developments/studio-9-richmond-offering-buyers-a-10-annual-return-on-deposits-while-awaiting-construction/2012080955948" target="_parent">10% interest rate on deposits paid for apartments in Studio Nine</a>, with apartments priced from  about $455,000 to $1.85 million
Construction commenced on Wertheim Square apartments in Stage 1 of Studio Nine in November.
 
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Victoria Harbour is Lend Lease’s second biggest project by value, with an end value of $4.5 billion.
Victoria Harbour is a 30-hectare precinct connected to the CBD via Collins Street and is primarily a commercial precinct with office buildings completed for ANZ, NAB, Ericsson and Myer.
Completed residential projects in Victoria Harbour include Convesso, the first part of the twin project Convesso Concavo and Serrata, a joint-venture project with Japanese developer Sekisui House.
Construction of Concavo is due to start this year, with a sky bridge connecting it with Convesso at level seven.
In its full year results last year, Lend Lease reported that 15 units remained available for purchase in Convesso, which features 220 one-, two- and three-bedroom units.
Other major Lend Lease projects that feature residential include the $1 billion Waterbank urban regeneration project in Perth and the $2.5 billion RNA Showgrounds project in Brisbane, where off the plan marketing has begun for its first residential apartment development, The Green.
Across all its businesses, revenue rose 8% to $6.25 billion with two the majority of this attributed to its Australian business, where revenue rose 5.2% from $3.8 billion to $4 billion.
Over the six-month period to December Lend Lease launched Lend Lease International Towers Sydney Trust with funding for the first two commercial towers, as well reached agreement with James Packer’s Crown Limited group to build an international hotel and casino on the site.
Lend Lease also secured pre-commitments from Westpac and KPMG to take up 71% of the commercial floor space for the first two towers.
The value of Lend Lease’s investment property portfolio have increased by $219.2 million to $3.63 billion primarily due to the acquisition of two retirement villages, Little Bay, in Sydney’s eastern suburbs and Martha’s Point on the Mornington Peninsula and capital expenditure and revaluations on senior living and other development properties. These increases were offset by the sale of the Glen Woodley retirement village in Adelaide.
In December Lend Lease was selected as preferred bidder by the NSW Government to deliver the $1 billion Sydney International Convention, Exhibition and Entertainment Precinct project, as part of the Destination Sydney consortium consisting of Lend Lease, HOSTPLUS, Capella Capital, AEG Ogden and Spotless.
Lend Lease will pay investors an unfranked dividend of 22 ¢ per share on March 27.
 
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Lend Lease profits up 38% but steep drop in Docklands apartment sales 

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For those interested in the Australian residential property market, below are a collection of figures illustrating long-term trends. Housing prices and land values are compared to a basket of fundamental metrics. Australians are fortunate because much data on real estate and financial markets are publicly available, going into depth not seen in other countries.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb151.gif" alt="soosfeb151">
Comparing housing prices to inflation is one of the more common indicators in property market analysis. If the trend is fairly even over time, then there is no indication that people are favouring housing relative to other goods and services. On the other hand, if there is a wide divergence between housing prices and inflation, this tells us that people are considering housing to be relatively more important. Interestingly, every rise in real prices has led to a downturn, with the one exception of 1961-1964. <img height="252" width="470" src="/images/stories/2013/02/soosfeb152.gif" alt="soosfeb152">
Another popular method of determining property valuation is comparing housing prices to rents. In a fairly efficient market, the costs of buying and renting should closely match each other, though due to factors such as taxes, risks, and interest rates, it is unlikely that costs will equal. Since the post-World War II boom, the ratio has unevenly decreased. Upswings in the ratio suggest the presence of a bubble: the mid-70s, early 80s, late 80s, and today.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb153.gif" alt="soosfeb153">
As with inflation and rents, housing prices have also outstripped incomes as well. Unfortunately, the ABS does not provide a long-term median household disposable income (HDI) series, so the denominator is derived by dividing aggregate real gross household income by the number of occupied households on an annual basis. This results in an unusually high HDI as averages are typically greater than medians, and is further amplified as the HDI is stacked with artefacts like superannuation which cannot be drawn upon to finance debt repayments. While the outcome is a rather low ratio, it keeps in line with that developed in Stapledon’s 2012 housing paper and shows a substantial increase from 1996 onwards. A more realistic median measure would result in a higher ratio, and the latest Demographia report shows it to be so.
<img height="253" width="470" src="/images/stories/2013/02/soosfeb154.gif" alt="soosfeb154">
It is easy to see the major cause of the Great Depression: a deflating land bubble, centred in the commercial property market. Every major rise in the ratio has resulted in a downturn, correlating with, and arguably, causing the economic recessions of the mid-70s, early 80s, and early 90s. The ratio has doubled from the trough in 1996 through to the peak in 2010. The substantial rise in the ratio during the late 1970s was likely due to an anomaly in splicing multiple land value series together, though part of the rise is justifiable because of a residential bubble. <img height="252" width="470" src="/images/stories/2013/02/soosfeb155.gif" alt="soosfeb155">
The same story emerges when land values are compared with GDP per capita, which is arguably a better fundamental metric than GDP itself. As with the previous figure, the ratio has doubled during the same time period.
 
<hr class="system-pagebreak">
 
<img height="252" width="470" src="/images/stories/2013/02/soosfeb156.gif" alt="soosfeb156">
The Kavanagh-Putland Index measures the ratio of property sales to GDP. This metric is considered useful because in times of speculative fervour, investors flip properties to one another, increasing the total value of sales on an annual basis. When real estate markets tank, sales inevitably fall as potential buyers stand by the wayside waiting for further price falls. The ratio peaked in 2004 after housing prices jumped in the years previous.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb157.gif" alt="soosfeb157">
The value of housing stock to GDP has likewise moved in the same direction as house prices to inflation and land values to GDP. It is the land component rather than the dwellings that has increased in value over GDP.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb158.gif" alt="soosfeb158">
The primary determinant of the boom bust cycle in the land market is availability of credit/debt used to speculate on rising capital values of real estate. While data on private debt goes back to 1861, aggregate land values only begin in 1910. Debt peaked in 1893, driving a colossal commercial land bubble that burst, causing the worst depression in Australia’s recorded history. Again the same occurred during the 1920s, with the same result. It took until the 1970s for the debt cycle to assert itself once again, with one boom and bust after another. Debt reached the highest peak on record in 2008, driving the largest land boom on record. <img height="253" width="470" src="/images/stories/2013/02/soosfeb159.gif" alt="soosfeb159">
Unsurprisingly, the cause for the massive rise in housing prices and land values, along with net rental income losses, is the colossal increase in household debt, primarily composed of mortgage debt. It has more than quadrupled since 1988, rapidly accelerating during the 90s and 2000s. The ratio peaked in 2010 as did housing prices, which is clearly no coincidence. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1510.gif" alt="soosfeb1510">
As household debt has climbed, so too has debt as a percentage of household assets. The ratio will rise as housing prices continue to soften. It has tripled from 1990 through to 2008 before the GFC, falling and then resuming its upward climb. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1511.gif" alt="soosfeb1511">
The same has occurred with housing debt to disposable income, tripling over the same time period.
 
<hr class="system-pagebreak">
 
<img height="253" width="470" src="/images/stories/2013/02/soosfeb1512.gif" alt="soosfeb1512">
Despite very high interest rates during the early 1990s, the ratio peaked in 2008 due to the staggering debt load of households, even at lower interest rates. It is no surprise that this ratio closely matches the net income losses experienced by property investors as shown in the next figure. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1513.gif" alt="soosfeb1513">
Perhaps the most telling of all data are investors’ ability to finance the debt and routine expenses on their residential properties. In the midst of the late 1980s commercial land bubble, an element of residential speculation caused real housing prices to increase, most notably in Sydney and Perth. Speculators suffered income losses from 1988-89 to 1991-92 while seeking capital gains. The market later stabilised before making the largest net income losses from 2000 onwards, signifying a zero net yield and massive residential bubble.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1514.gif" alt="soosfeb1514">
The obvious cause of these losses is due to the rise in interest repayments rather than running expenses, which have remained stable at around 50% of gross rental income. Interest repayments peaked in 2008, driven by higher interest rates before the GFC hit.
<img height="254" width="470" src="/images/stories/2013/02/soosfeb1515.gif" alt="soosfeb1515">
Not only is investment properties overvalued, the entire residential stock is. The vast majority of properties are owner-occupied, at almost 70%. Since 2004, all owners on aggregate have been running net income losses, which do not bode well for them once capital values stop increasing. <img height="253" width="470" src="/images/stories/2013/02/soosfeb1516.gif" alt="soosfeb1516">
Once again, it is interest repayments that are the cause of the income losses. A slight uptick in expenses during the 2000s surely didn’t help, but has since then fallen back to its long-run average.
<img height="252" width="470" src="/images/stories/2013/02/soosfeb1517.gif" alt="soosfeb1517">
Despite the best efforts of the National Housing Supply Council (NHSC) and the FIRE sector to spruik a housing shortage, the long-term trends show dwelling growth has consistently outpaced population growth since WW2. From 2008 to 2009, the trend reversed temporarily. <img height="251" width="470" src="/images/stories/2013/02/soosfeb1518.gif" alt="soosfeb1518">
Perhaps the only positive factor is the government’s relatively low position of gross debt to GDP. The fashionable idea often repeated these days is that rising public debt poses a risk to the economy has little substance in reality. Compared to the pre-WW2 era, the governments of today are a picture of fiscal responsibility and prudence, with the rise in taxation revenue helping to offset the need for using debt. In the event of a substantial and prolonged downturn in the economy, the federal and state governments are well-placed to debt-spend.
<img height="251" width="470" src="/images/stories/2013/02/soosfeb1519.gif" alt="soosfeb1519">
A better measure of government debt is net rather than gross debt, and even better is the net rather than gross interest repayment burden, expressed as a percentage of GDP. What matters for countries that have high levels of government debt is how great the net interest repayment burden is. This is what separates the US and Japan – countries with a relatively high level of government debt – with the basket-case PIIGS nations (Portugal, Italy, Ireland, Greece and Spain). Australia is currently situated in an excellent position, and even if the government debt to GDP ratio were to rise, this does not necessarily translate into higher net interest repayments if the RBA further cut interest rates from already historical lows and purchases government bonds. <img height="252" width="470" src="/images/stories/2013/02/soosfeb1520.gif" alt="soosfeb1520">
Increases in the government debt to GDP ratio are typically due to two occurrences: World Wars (1914 – 1918 and 1939 – 1945) and responses to economic downturns caused by private debt-financed speculation: the 1890s, 1930s, mid-1970s, early 1980s, early 1990s and the GFC in 2008. The rise in the ratio before the 1890s was due to colonial government mass construction of public infrastructure. It is obvious to see which type of debt today presents an overwhelming macro risk to the economy. Government debt will inevitably rise to counter private debt-deleveraging but it is very unlikely that political parties will engage in the necessary and timely expansion needed to ward off the adverse effects of debt-deflation.
<img height="195" width="470" src="/images/stories/2013/02/soosfeb1521.gif" alt="soosfeb1521">
In conclusion, the data presented should provide more than enough evidence to suggest that Australia’s residential property market (specifically land market) is vastly overvalued, driven by debt-financed speculation and the relative non-taxation of land rent. While land bubbles have been a continual feature of the Australian economy, what separates this cycle is the relative enormity of the boom in both land values and private debt. A smaller private debt to GDP ratio during the 1880s and 1920s was enough to produce two devastating depressions, including a number of recessions during the mid-1970s, early 1980s and early 1990s.
The question is often asked why housing prices are so high. Instead, the real question is to ask why prices are so low. The banking and financial system is ready to lend absurd amounts of debt to the willing army of “greater fools,” and has constructed an elaborate chain from mortgage brokers’ offices through to the business development managers (BDMs) at the banks in order to commit extensive fraud by manipulating loan application forms. This is the “six degrees of separation” Denise Brailey has uncovered. Consequently, the only determinant that prevents the banks from lending more credit is debtors’ ability to finance repayments out of current income. Only when it becomes difficult to finance repayments will the housing and land markets finally capitulate.
It is often claimed “this time is different”. It certainly is, but not for the reasons usually given: Australia has not experienced a land bubble of this magnitude in its history. 70% of adults own property, solvency of the FIRE sector is dependent upon ever-increasing capital values and the governments’ addiction to housing-related tax revenue and votes, it is none too surprising bubble deniers have been out in full force, asserting housing prices are based upon fundamental valuations. Also unsurprising is that all bubble deniers have conflicts of interest, and in an age of the secular equivalent of religious fanaticism and greed, facts and history are conveniently dispensed down the memory hole.
The only option left to policymakers is to continually kick the can down the road, hoping the bust does not occur on their watch. The result, as seen with the Rudd government’s additional first-home owner’s boost, was precisely that. This intervention restarted the debt machine, re-inflating housing and land prices to a new, higher peak in 2010. The overarching private debt bubble, which began in 1964, will likely come to an end once and for all when the government runs out of fuel to throw on the fire.
Philip Soos is a researcher at the School of International and Political Studies at <a target="_blank" rel="nofollow" href="https://www.deakin.edu.au/">Deakin University.</a>
This article originally appeared on <a target="_blank" href="https://www.macrobusiness.com.au/">Macrobusiness</a>.
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psoos-uR5EGb6SbQ

How 150 years of Australian housing prices shows that the bubble will likely come to an end: Philip Soos

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One of the remarkable developments over the past year is that investors and analysts can now track home prices on a daily basis just like the sharemarket, interest rates, currencies or commodities. And just like the other markets, prices can rally a long way in a short space of time.
But that generally means that a period of correction or consolidation has to follow.
As we discuss in the last paragraph on page two, the sharemarket has jumped out of the blocks in 2013. But it started 2012 in a similarly positive fashion, only to face periods of correction over the year.
Certainly, Australian home prices also started 2013 positively. In fact, Sydney home prices lifted 2% in the first 28 days, putting the market on track for gains of around 26% over the year. But prices have indeed consolidated through to mid-February.
Currently Sydney home prices have lifted 1.9% over 2013, outpacing a 1.2% lift in Perth home prices, 0.7% rise in Brisbane-Gold Coast and a 0.4% increase in Adelaide.
Melbourne prices have eased 0.2% this year, dragging the five-city index down to a 0.9% gain.
If home prices grow at the same rate over the year, home prices would lift around 16% in Sydney and 10% in Adelaide with the five-city index up 7.5%.
But the current annual growth rates are probably more instructive, showing gains of around 0-3% over the year.
Indeed, we think it is reasonable for home buyers and investors to price in gains of around 2-3%, still way short of the long-term average growth rate of around 7-8%.
The week ahead
On the domestic front, the main interest is the semi-annual testimony from the Reserve Bank governor on Friday. And in terms of economic data, figures on wages dominate, together with a spattering of other indicators such as car sales and imports.
In the US, housing and inflation data will be the highlight. And in a raft of countries including the US and Europe, "flash" readings on manufacturing conditions are issued.
In Australia, the week kicks off with data today on new vehicle sales. Industry data has already been issued by Australian Federal Chamber of Automotive Industries via its VFACTS report. And on Monday the Bureau of Statistics (ABS) will recast the data in seasonally adjusted and trend terms. In original terms sales totalled 85,430 vehicles in January, up 11.3% on a year ago showing that the new car market is exceedingly healthy.
On Tuesday the Reserve Bank releases the minutes from the February board meeting, while the ABS issues January data on merchandise imports (in other words, imports of goods). Apart from car sales, there are few indications of sales or production activity in January so far, so the import data should prove instructive.
On Wednesday the ABS releases the wage price index, the main gauge of wage pressures in the economy. We are tipping growth in wages of 1% in the December quarter and 3.7% for the year. But the risk is that our forecasts prove to be a touch too high.
The Reserve Bank noted in its quarterly statement:
"Business surveys suggest that wage pressures eased further in the December quarter. Liaison with firms also indicates that there has been a pick-up in the share of firms expecting no growth in average wages over the year ahead, and that skills shortages and wage pressures in the resources sector have eased."
On Thursday there is another ABS publication on wages, but the main use of the "Average Weekly Earnings" publication is to provide dollar estimates on wages rather than to gauge wage pressures in the economy.
And on Friday the Reserve Bank governor delivers his semi-annual testimony to the House of Representatives Economics Committee. With any luck the focus will be on economics rather than activities at the note printing subsidiary. Getting some sense on what cash rate could be considered "normal" would be helpful.
In the US, the week begins with the Presidents' Day holiday on Monday with financial markets and government offices closed. And on Tuesday the National Association of Home Builders will issue the activity index for February.
On Wednesday the usual weekly data on mortgage activity and chain store sales is issued alongside figures on housing starts and producer prices. Housing starts soared by 12.1% in December so economists understandably expect some retracement, with the median decline tipped being around 3%. There will be less interest in producer prices (business inflation) with inflationary pressures benign at present.
On Thursday the regular US weekly data on new claims for unemployment insurance (jobless claims) is issued alongside data on consumer prices, existing home sales, the leading index and Philadelphia Federal Reserve index. The main highlight is home sales with a modest 0.2% increase expected in January after the 1% decline in December.
Also on Thursday, survey group Markit will issue "flash" manufacturing readings for the US and a number of European nations. While it is possibly overdoing it to have two readings on manufacturing each month, financial markets are still showing interest in the data.
Sharemarket, interest rates, currencies and commodities
In the coming week the Australian profit-reporting (earnings season) gets into full swing. On Monday amongst the companies that are expected to report are Amcor, Bendigo Bank, BlueScope Steel, Lend Lease and Pacific Brands.
On Tuesday, results include those from Asciano, Coca Cola Amatil, Fantastic, Sonic Healthcare, Mt Gibson Iron and Commonwealth Office Property Fund.
On Wednesday earnings results are expected from BHP Billiton, Fortescue, GWA Group, Ramsay HealthCare, SEEK Limited, Super Retail Group, Suncorp, Tassal, The Reject Shop and Woodside Petroleum.
On Thursday, AMP, APN News &amp; Media, ASX Limited, Brambles, Centro Retail, Fairfax Media, IAG, Origin Energy, Qantas and Toll Holdings are included in a packed schedule of earnings results. And on Friday, Billabong, Crown, Investra, Santos, Telecom NZ, and Transpacific Industries are listed to report earnings.
In the first 30 days of 2013 the Australian sharemarket has lifted almost 7% with the All Ordinaries up 6.9% and the ASX 200 up 6.8%. If the gains were to be replicated over the entire year the indices would post gains of around 60%.
However, it is instructive to turn back the clock 12 months. In the first 30 days of 2012 the key Australian share gauges were up around 5% – not as good as 2013 but still on track to gains of 44%. In the end, the All Ords rose by 13.5% over 2012 with the ASX 200 up 14.6%.
In short, we shouldn't get too carried away. A period of consolidation will inevitably arrive.
Craig James is chief economist at CommSec.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.</body></html>

cjames-5S2v74qSNK

Residential growth still short of long-term trend: CommSec

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Investor activity has dominated the Australian property market over the last 12 months, which is no surprise; banks are “bidding” for buyers in a highly competitive market, reducing interest rates principally on fixed-term loans outside of the RBA’s cash rate cycle, and if the right property is sourced, current rental yields are also offering attractive returns.
However, first-home buyers have seen their savings eroded, and as the latest ABS finance data outlines, intermittent first-home buyer “cash injections” or the oft-quoted myth that rising yields are pushing greater numbers into the market are having scant effect. Saving a deposit and sourcing a suitably affordable property is no easy task.
It’s not being sensationalist to emphasise that despite all our statements regarding improved housing ‘affordability,’ and half-hearted attempts from both state and federal governments to inflate the market with incentives that fail to offer long-term solutions, the results for initial buyers are overwhelmingly clear and will consequently bear an effect on the future of both our real estate market and economy as a whole.
The latest figures from the ABS show the number of first-home buyer loans in December 2012 fell to 14.9%. It’s the fourth consecutive month that this segment of the market has been in decline.  Further information from RP Data’s latest media release indicates housing finance activity by first time buyers is 17% below the average figures recorded over the previous 11 years leading to 2012.
A further drop in variable rates currently being offered by a proportion of lenders may inspire a bit of latent activity – however they are all short-term fixes, and you have to wonder what effect will result when rates eventually rise – especially if wage growth doesn’t match pace.
According the RP Data’s calculation of annual price changes (which is based on six months of statistics) – house prices are already rising “faster than wages and disposable household income growth”. Any help first-home buyers get on the borrowing side they’ll inevitably lose on the other.
We’re losing a valuable demographic of property buyer, which will have a flow-on effect across the property chain as a whole. As the changes push through the generation gap, increasing numbers will retire while still factoring as short-term renters.
In lieu of first-home buyer participation, the predominant activity in the inner-city affordable sector of the apartment market is being fed by investors.
Certainly most off-the-plan and new unit developments are sidelined for this demographic (usually via offshore funding); however, investors also dominate the established apartment market, which would otherwise be favoured by first-home.
The percentage of investor-owned apartments in both Darwin and Brisbane falls close to 70% – and in the other capitals, it comes in between 60 and 70%.
As we’re all aware, property to some extent connects together like a flowchart. Supply is fed in from the bottom to allow those upgrading (and then downsizing) a ready market to sell into in order to make the move.
However, when investors predominantly negatively gear into the asset class most favoured by first-home buyers – which results in inflated property values – and the state government fails to come to the party with feasible affordable alternatives, our property wheel of upgrading and downsizing becomes somewhat stagnated.
Investors tend to hold property for extended periods of time in order to build equity – many choose to invest as part of their self-managed super funds and subsequently do not sell until retirement. Therefore the ready supply which would usually come from initial home buyers selling and upgrading inevitably starts to slow.
It’s clear from the 2011 census data that greater numbers of first-home buyers are being forced onto the rental ladder and subsequently getting stuck in the yoyo of rising yields and a lack of affordable inner-city options until they either meet someone with whom to combine wages or gain access to the “mum and dad” equity pot.
Proportionally we’re growing older as a nation – census data tells us the number of 20- to 44-year-olds has expanded on average by 4.6% per year in the five-year period leading up to the last census – however by 2020 it’s expected to slow to 1.2% per annum (a trend clearly demonstrated by the United Nations World Population pyramid, which extrapolates the data out to 2050).
<img src="/images/stories/2013/02/cashmorefeb15.jpg" width="438" height="448" alt="cashmorefeb15">
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Considering the predominant home buying activity takes place within the ages of 22-44, it seems reasonable to assume that there’ll eventually be proportionally greater demand from those downsizing as we progress through these buyer type changes.
However, if the flow-on home buyer effect doesn’t follow through, the mismatch of household size comparable to property type will continue to stagnate our property buying and selling terrain and further tie down supply in the areas most want and need to reside – areas within easy commutable distance to city suburbs, jobs and essential amenities (schools, hospitals, doctors, public transport systems and so forth).
Our census data already demonstrates that most lone person households are tottering around in accommodation that’s far too big for their requirements. Building an abundance of one bedroom apartments won’t suffice – only 14% of the total single person households (of all ages) opt for one-bedroom units. We therefore need a wider diversity of options (something I’ll expand upon in another column).
If we were building homes that were viable for first home buyers to gain a foothold that would not only maintain consistent market demand in order to build equity for those wanting to upgrade after seven or so years, but also provide feasible accommodation for this demographic to settle for an adequate period of time – then having an investor-dominated inner-city terrain could perhaps be balanced somewhat so as not to affect the flow of our home buyer property chain.
However, as we all know, the new home options are either limited to outer-suburban estates lacking in infrastructure, which every Joe on the street recognises is an essential component needed at the start of each project if we’re to lure home buyers outwards, or alternatively, <a target="_blank" href="https://www.propertyobserver.com.au/residential/why-high-rise-accommodation-will-not-solve-our-housing-shortage-catherine-cashmore/2013021059249?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=observers">inner-city high-rise ‘rabbit hutches</a>.
The lack of feasible and affordable new alternatives and the consequential property stagnation is all producing a ripple effect of unfortunate consequences.
The financial burden of fostering a rental nation in terms of tightening vacancy rates and competitive rising yields is obviously unwise in terms of our national wellbeing; however, there is no one golden answer to solving the home buyer property crisis.
A number options should be considered – including reserving a proportion of high-quality new inner-city accommodation for our home buyer demographic alone, reducing the heat in the investment sector by way of tightening negative gearing incentives on multiple purchases, and considering changes to stamp duty as outlined in the Henry Review.
One thing we should not do is ignore the problem, or try and solve it by way of easy inflationary credit.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
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Why investor activity is causing our property markets to stagnate

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With demand for office space in the Melbourne CBD set to plateau over the next two years according to consultants Charter Keck Cramer and vacancy rates rising in other capital cities, office landlords will need to be increasingly creative to secure tenants.
One possibility is to consider turning unused office space into a co-working community space, as pioneered by the HUB Melbourne project at the bottom of Bourke Street in the Melbourne CBD.
Co-working communities are an open-plan office spaces which offer membership to mainly entrepreneurs and small businesses and provide not just the necessary business technology, but also a shared community to exchange ideas and innovations and work together where appropriate and mutually beneficial.
The community aspect is the principle difference between a co-working community space and renting a serviced office.
HUB Melbourne has the second highest membership in the world of any co-working community after San Francisco with a second HUB building under development on William Street on the Sydney CBD fringe and set to open in May.
HUB Melbourne was developed in 2011 and opened with 120 members. It now has over 700 members, all of whom are connected to a global community of 5,000 co-working HUB members on six continents.
It can be found on the top floor of Donkey Wheel House at 673 Bourke Street, a striking heritage-listed building dating from 1890.
<img alt="HubMelbourne_DiannaSnape_03" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_03.jpg" width="460" height="307">
The building was once the headquarters for the Melbourne Tramway and Omnibus Company with HUB Melbourne occupying the third-floor space, once a ballroom.
This includes the developing of tables, chairs and partitions placed on wheels to allow flexible configurations of space, lights constructed from recycled bicycle spokes wrapped in cardboard and extension cords bound in crochet. The space also incorporates velvet theatre curtains to section off work zones and absorb sound.
On any given day up to 60 people work at hub, some sitting at desks, others on couches and some in deck chairs as if they were at the beach.
There are no leases, no rental contracts and membership includes super-fast Wi-Fi, printing, tea and coffee, meeting rooms and a mailing address.
Individual monthly membership fees range from $200 per week for one day a week use to $600 for unlimited use.  One day casual passes can be purchases for $50.
Team of up to five can buy memberships ranging from $300 for one day a week membership to $2,000 for unlimited use.
Users of the space include fashion designers, architects and consultants.
<img alt="HubMelbourne_DiannaSnape_01" src="/images/stories/2013/02/feb20hub/HubMelbourne_DiannaSnape_01.jpg" width="460" height="307">
The space was a designed by architects HASSELL in collaboration with HUB founder and CEO Brad Krauskopf.
HUB will also collaborate with Hassell on the fit out of the 500 square metre Sydney co-working space.
According to Steve Coster, principal at architects HASSELL who lead the team that designed the HUB Melbourne space, the concept of a workplace shared by a community of independent users or organisations that leverage social capital to create innovation and business opportunities.
“More than just a shared space or serviced office, co-working communities are focused on creating a network of mutually supportive relationships, connections and entrepreneurial opportunities among members,” he says.
He tells Property Observer, the growth of HUB Melbourne has been spurred on by an increasing prevalence of independent workers following the large-scale redundancies following the GFC.
As a result, there are many contractors or entrepreneurs, whose only other option is to work from home.
“Working at the HUB creates opportunities for referrals and collaboration with others,” he says.
In addition, he says the big corporates are also keen on the concept as a way for smart, innovative people to work in a space which promotes fringe ideas and allows the setting up of start-ups, and growing these businesses.
“For freelancer workers and small start-up organisations, co-working communities provide a community of like-minded individuals and relief from isolation. For large organisations, they provide an opportunity to access more dynamic, short-term, project based skills and capabilities,” says Coster.
According to Coster, the success of the community at HUB Melbourne is achieved through a range of mechanisms.
“Spaces must be authentic, welcoming, comfortable and meaningful for their members because they can only exist if people choose to pay to use them. With remote work on the steady increase, the value of desirable, meaningful places will only become more critical.
“The space has been designed to ensure a deep and genuine sense of ownership by users. It has also been designed to be easily reconfigured, as fast as the speed of business. Technological support is also crucial, provided through a ‘bring-your-own-device’ model, where network access and high-cost elements form a basic framework for rapidly changing technology platforms provided by the users themselves,” he adds.
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Co-working office spaces food for thought for investors as vacancies rise

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There were 1,076 sales in Perth this week, up 64% from 656 the same week last year, according to the Real Estate Institute of Western Australia. 
The most actively traded suburb was Perth CBD, with 26 sales.
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Perth sales up 64% on same week last year: REIWA

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As mainstream opinion would have it, Australia’s housing prices are solidly based upon fundamental valuations or intrinsic value. This position was repeated yet again by Terry Ryder, in an <a href="https://www.propertyobserver.com.au/residential/glenn-stevens-is-right-%E2%80%93-there-will-not-be-an-australian-property-crash-as-there-is-no-bubble-terry-ryder/2013011458757?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=residential" target="_blank">article</a> on Property Observer, claiming “current prices are at sensible levels”. This view is the stance of the Australian government, central bank, Treasury, the FIRE (finance, insurance and real estate) sector, much of academia, and a legion of commentators, economists and analysts.
Ryder cites RBA governor Glenn Stevens, who is on the record saying the residential property market is not experiencing a bubble. For anyone who has followed the global property market over recent years, it is difficult not to notice that central bankers are possibly the least reliable and most incompetent of all economists when it comes to identifying asset bubbles. Their record is truly terrible, for not only completely missing trillion-dollar bubbles that formed in their own backyard but they have continually put effort into denying these bubbles exist.
Although Ryder believes Australia is different from the US in regards to the relative economic conditions and property markets (more on this below), in one aspect Australia is similar: central bankers at the RBA and Federal Reserve have gone on the record to deny that a housing bubble exists in their countries. In the US, concerns were continually raised before 2006 about the risk of a property bubble. Unfortunately, such concerns were dismissed as nonsense, with these dismissals emanating from all quarters.
This reached truly ludicrous proportions in the US with its two leading economists and central bankers, Ben Bernanke and Alan Greenspan. In October 2005, Bernanke, then chairman of the President’s Council of Economic Advisers, <a href="https://georgewbush-whitehouse.archives.gov/cea/econ-outlook20051020" target="_blank">testified before</a> the Congressional Joint Economic Committee, claiming “price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.”
A few months before Bernanke’s testimony, Alan Greenspan, the then chairman of the Fed, testified before the same Congressional committee, <a href="https://www.federalreserve.gov/boarddocs/testimony/2005/200506092/default.htm" target="_blank">detailing a similar analysis</a> to Bernanke. In his testimony, Greenspan noted “Although a ‘bubble’ in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels. … Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications.”
As with the dot-com bubble, the vast majority of economists missed and/or denied the existence of a bubble on the stock market, and did it again with the housing bubble. Just <a href="https://www.nytimes.com/2008/11/02/magazine/02wwln-Q4-t?_r=0" target="_blank">12 out of 15,000 professional economists</a> in the US publicly warned of this $8 trillion-dollar Ponzi scheme. This was noted by Dirk Bezemer, a Dutch economist at the University of Groningen, identifing twelve economists who picked both the collapse of the housing bubble and GFC, in a <a href="https://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf" target="_blank">study</a> that is well worth reading (disappointingly, economist John Talbott who wrote two books in 2003 and 2006 predicting the eminent collapse of the bubble was explicitly not included).
Central bankers cannot identify these epic asset bubbles for two primary reasons: lousy economic theory and an unwillingness to take responsibility. The former revolves around a non-empirical form of economics that is taught in universities and practiced in government and industry. This is called “equilibrium economics” and is associated with the neoclassical school of economic thought. It teaches, using many unrealistic assumptions, that markets operate in equilibrium – a state in which economic resources are put to their most efficient use.
Many of these assumptions are patently absurd: all firms are the size of lemonade stands, people can see into the infinite future, know all information about all markets, firms borrow at the same rate of interest, that money, credit and debt does not exist, and so on. It is similar to an astronomer who constructs a model of the solar system without a sun, moons and gravity. If NASA were to attempt another moon landing using such a deficient model, the space shuttle would never leave the planet.
This worldview assumes, because markets operate efficiently, assets are almost always priced correctly – so bubbles cannot occur. Neoclassical theories of equilibrium price statics, rational expectations, efficient markets hypothesis, capital assets pricing model, utility, and so on are doctrines with slim to non-existent empirical backing.
This economic theory does not reflect reality, as has been accurately detailed by economist Steve Keen’s book Debunking Economics and numerous other sources. If it did, why are so many countries generating the largest asset bubbles in their respective histories after undergoing reforms of privatisation and deregulation?
The latter reason is simple: if a central bank warned about a housing bubble as it was forming, the market would react by changing its attitude from greed to panic, typical of the pathology of boom bust mania. Economists in the central bank are considered the foremost authority on the economy, so when they speak, everyone listens. This institution’s most powerful influence upon the economy is not the ability to print money or adjust the interest rate, but its loudspeaker.
For instance, if the Fed had warned about a bubble forming in the housing market in 2002, and put time and effort into ensuring that everyone heard the message, the market would have collapsed then as property investors would act to protect themselves by selling assets (ensuring a collapse in capital values) and refusing to take up more debt (thus hurting bank profitability). This would have plunged the economy into a recession, though not of the severity the US is currently experiencing after letting the bubble run the course through to its peak in 2006.
Central bankers would have copped the blame for the financial and economic fallout, which would not endear them to political and economic elites, or the general population. Economists in the central bank are not going to put their substantial six-figure salaries and secure job placements on the line, including being subject to an immense amount of flak from the FIRE sector, for correctly stating the perfectly obvious that anyone with a modicum of knowledge of the financial and real estate markets would realise.
The majority of economists, especially those prominently placed in institutions like the RBA, Treasury, universities, the banking, financial and real estate industries, reject the notion that a bubble exists in the residential property market. This is unsurprising, given the poor track record of establishment economists in identifying asset bubbles and crises.
The Dot-Com bubble that formed in the stock market during the late 1990s and the GFC of 2008 are but two examples where the vast majority of economists missed the obvious, even though some did accurately predict these events and attempted to warn the public of impending danger. Thus, the analysis and commentary of mainstream economists, especially those within leading policy-making positions, tell us little about the future of the housing market and general economy, and their unwavering optimism should be greeted with a great deal of scepticism.
Ryder goes on to claim the US housing market was sunk by “a recessed economy, high unemployment, a major oversupply of dwellings and an unregulated lending sector (pretty much the opposite of Australia on every count).” The first two reasons are back to front. The bursting of the $8 trillion-dollar bubble caused the ‘Great Recession’ and subsequent high unemployment.
A collapse in demand from a formally strong private sector (including an external account deficit) and combined with the US government’s attempted austerity, pushed the US economy into recession. It is the bursting of asset bubbles that cause recessions and high rates of unemployment, not the other way round.
That the US had a major oversupply of dwellings was obvious to the mainstream only after the bubble had burst. Meanwhile vested interests constantly claimed there was a considerable shortage of dwellings. The shortage argument, however, is not new. Every country that has suffered through a housing boom and crash in recent years had so-called ‘experts’ claiming prices were based upon fundamental valuations due to dwelling shortages.
Take the US as a case study. Leading institutions such as the Federal Reserve, National Association of Realtors, California Building Industry Association and Harvard University’s Joint Center for Housing Studies produced sophisticated studies to show that the housing boom was caused, in part, by dwelling shortages. These studies were authored by professors, PhDs, and businesspeople, all with extensive knowledge and experience but with conflicts of interest that could fill a small book.
Their expertise was as illusory as the shortage when the housing market crashed. In this way, Australia is not different because there is <a href="https://theconversation.edu.au/beware-the-rent-seeking-organisation-dont-be-dudded-by-housing-data-8112" target="_blank">no housing shortage</a> here. High housing prices are not set by the forces of supply and demand but by banks’ willingness to lend, which leads to the next issue.
 
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The leading cause of the US housing bubble was a privatised and deregulated financial system lending absurd amounts of credit to every Tom, Dick and Harry that would take it, regardless of their financial standing. This gave rise to the term ‘ninja’ loan, borrowers with no income, no job and no assets.
Loose credit was used to speculate on the property market, generating easy profits until the bubble peaked and then collapsed the financial sector in 2008. As early as 2004, the FBI testified before Congress that there was a significant amount of fraud taking place around the banks’ lending to borrowers. These concerns were dismissed by the Bush administration.
Similar to the US, Australia has a deregulated and liberalised financial sector, having undergone numerous reforms during the 1980s and 1990s, ending the government’s heavy involvement in ownership and management during the social democratic period of the 1950s to 1970s. Unsurprisingly, the amount of credit the banking sector extended to all parts of the private sector has increased dramatically. Mortgage debt has more than quadrupled from 19% of GDP in 1990 to 84% in 2012 to a <a href="https://www.businessspectator.com.au/bs.nsf/Article/Australian-property-2013-house-prices-mortgage-deb-pd20121217-32QMN?opendocument&amp;src=rss" target="_blank">higher level</a> that of the US at its peak.
According to Denise Brailey, the president of the Banking &amp; Finance Consumers Support Association, an organisation dedicated to protecting the public against predatory financiers, there is some evidence to suggest <a href="https://theconversation.edu.au/there-are-predators-in-our-own-backyard-but-where-are-our-financial-watchdogs-8871" target="_blank">mortgage fraud</a> is far more widespread than previously thought. Having worked in this field for the last 20 years, criminologist Brailey has seen first-hand the financial and social wreckage wrought by a multitude of scams and predatory lending.
Brailey provided testimony before the Senate Economics References Committee alleging wide-scale fraud from banks to brokers. While her testimony, which covers the period of 2008 to the present, was largely about low- and no-doc loans, her claims extend into the mainstream of full-doc mortgages.
Certainly, the public would know more if the ATO, ASIC and APRA bothered to look into these cases of fraud, but just like the US, regulators have been captured by the finance industry, unwilling to upset bankers and their allies in political office. Only time will reveal the extent of fraud that has taken place.
Ryder quotes Stevens about the apparent stability of the house price to income ratio for around a decade. I personally took an interest in the statistics used to construct this ratio, but my data request was refused by the RBA on the grounds of commercial confidentiality. Eventually, I managed to extract the household income part of the equation (denominator) through a Freedom of Information Act, as this had been constructed using ABS data (the numerator was constructed using data from APM).
It was easy to see why Stevens believed the ratio had not changed for 10 years: the RBA measure of household income was severely inflated, to the point that the median household was ‘earning’ $97,000 in early 2010 (the last year that data was provided). This unrealistically high level of household income deflated the ratio.
ABS survey data <a href="https://www.macrobusiness.com.au/2011/08/how-the-rba-undervalued-housing/" target="_blank">estimates</a> household income to be no higher than $74,000, a significant difference. Economists Leith van Onselen and Cameron Murray carefully backtracked through the National Accounts data to reveal the extra artifacts that the RBA had inserted into the household income figure to inflate it.
In summary, Australia does share some uncanny similarities with the US in the period before its housing market collapsed. Central bankers denied there was a bubble, the economy was apparently strong, there were never-ending reports of a dwelling shortage, bank lending is at historical levels, housing prices were also historically high, regulators were asleep at the wheel and reports of lending fraud surfaced. A weak economy and high unemployment only occurs after the housing market sinks.
Probably the only aspect of Ryder’s article that is accurate is when the question is asked of why a comparison between Australia is the US is considered legitimate. Ultimately, the most accurate assessment is based upon Australia’s current internal economic conditions. The second-best comparison is between Australia’s current and historical trends. Comparisons with other countries comprise an interesting academic exercise that can tell a useful story, but this is not needed to assess the health of Australia’s property markets.
Philip Soos is a researcher at the School of International and Political Studies at <a href="https://www.deakin.edu.au/" target="_blank">Deakin University.</a>
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