Apartment buyers in New South Wales are set to gain a decade of insurance-backed protection against major building defects, after the NSW Parliament passed the Fair Trading and Building Legislation Amendment Bill 2026.&nbsp;

The Bill establishes decennial defect insurance, known in the market as Latent Defects Insurance (LDI), as an alternative to the existing two-year strata building bond. It cleared the Legislative Council with amendments on Tuesday evening (August 4, 2026), with the Legislative Assembly agreeing to those amendments shortly after.

Under the reform, eligible developers can satisfy their statutory bond obligation by taking out an approved decennial-style policy that gives owners 10 years of cover for major structural defects from completion, claimable directly, without first having to pursue developers or builders through costly legal action.&nbsp;

The change forms the final tranche of amendments arising from the 2021 statutory review of the Strata Schemes Management Act 2015 and related legislation.

Resilience Insurance, which originated the cover in Australia and has delivered it in NSW since 2022, welcomed the passage and credited the NSW Government for delivering it.

“This is protection apartment buyers have needed for a long time, and the credit for delivering it belongs to the NSW Government,”&nbsp;said Corey Nugent, CEO of Resilience Insurance.

“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into. Reform like this is what good, evidence-based regulation looks like.”

Resilience has delivered LDI in NSW since 2022, protecting thousands of apartments, giving the State, and now the country, real-world evidence of how decade-long, no-fault protection works in practice.

The reform also places NSW within a wider national shift.

NSW is the third jurisdiction to put decennial cover into law. The ACT legislated for it in 2024, with the scheme taking effect in late 2025, and Victoria passed its own framework on 17 June. Between them, the three cover the majority of Australia's apartment market.

The reform commences once the legislation is proclaimed, which is expected in the coming weeks. From that point, developers of Class 2 residential apartment buildings can meet their statutory obligation with an approved decennial policy in place of the bond.

Buyers who purchased into projects that took out the cover early are among the first in the country to take keys to apartments carrying decade-long structural protection.

“With the legislation passed, the focus now turns to making it work for buyers,”&nbsp;Nugent said.

“There are already thousands of apartments in NSW covered by this insurance, bought by developers who moved early. The question every buyer should be asking in a display suite is a simple one: does this building come with 10-year defect cover, and who stands behind it?&nbsp;

“We look forward to working with the Government and the Building Commission in coming weeks as the framework moves to implementation, and to sharing what we have learned over the past four years so the protection reaches owners as smoothly and quickly as possible.”

Other states are working through their own reform programs. Western Australia has indicated that decennial cover is within consideration a later stage of its reform sequence, and Queensland has been examining the settings as it looks at the development pipeline ahead of the 2032 Olympics.

Resilience Insurance acknowledges the NSW Government’s continued focus on strengthening consumer protection while supporting housing delivery across the State.

Fast Facts: What the reform means

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Proven at scale:&nbsp;Decennial cover has operated in NSW since 2022, protecting thousand of apartments.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">10 years of cover:&nbsp;Protection for major structural defects runs for a decade from completion, claimable directly and with no legal action required.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">An alternative to the bond:&nbsp;Eligible developers can meet their statutory obligation with an approved decennial-style policy in place of the 2% strata building bond.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Part of a national shift:&nbsp;The ACT has had decennial provisions in force since 2025 and Victoria passed its framework in June. NSW now joins them.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">No-fault, first resort:&nbsp;Owners corporations claim directly from the insurer without first having to establish who is liable for the defect.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost-competitive:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the 2% bond while offering broader, longer protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market position:&nbsp;Resilience originated LDI in Australia and has delivered it in NSW since 2022.</li>
</ul>

Fast Facts: What is Resilience LDI?

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Resilience Latent Defects Insurance (LDI):&nbsp;Covers major structural defects for 10 years from completion.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Consumer-first:&nbsp;Direct claim access, no need for lengthy legal action.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost advantage:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market leader:&nbsp;&nbsp;Resilience Insurance originated LDI in Australia and is the national market leader.</li>
</ul>

Joel Robinson

NSW parliament passes 10-year defect insurance laws for new apartment buyers

Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

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>
An August rate cut was always going to be improbable, barring a rogue core inflation number (something equal to or less than 0.3%) or a “surprisingly” negative shock out of Europe, which takes some effort these days. The RBA has for a long time been banking on heightened global economic volatility, so the day-to-day ructions rumbling out of Europe should not change its already very stimulatory stance.
How do I assess the impact of today's inflation data? The policy-making decision should be clear. Firstly, the most credible information we have on economic growth ­–the first quarter National Accounts – surprised the RBA (and dovish economists) significantly on the upside. Over the 12 months to March, GDP was at trend or higher – certainly nothing that ostensibly warrants 125 basis points worth of cash rate cuts (or punishment for prudent savers).
Secondly, as the Governor revealed yesterday – and I had argued here for some time – the unemployment rate has remained stubbornly below the RBA's current forecast of around 5.5%. That's not to say it will not get there in due course. But, as the Treasury's David Gruen has shown, the geographic dispersion in unemployment has also declined over time, rather than an increase one might expect with an economy undergoing structural adjustment. So the labour market, which is a key variable the RBA uses to forecast future inflation, has also surprised the Bank on the positive side.
Thirdly, rightly or wrongly, the RBA's board decided to cut the cash rate on four separate occasions since the start of November last year, which has pushed variable mortgage rates a chunky 50 basis points below their inflation-targeting average. If we stretch our time horizon back further – say to 1980 – current housing finance rates look even more accommodating. While the RBA was likely disconcerted by the weakening in house prices in April and May on purely financial stability grounds, it would have been equally comforted by the striking rebound in prices over June and July (see chart below). I expect APM's index results for the June quarter to be similarly benign.
<img height="284" width="469" src="/images/stories/2012/CJ_graph.jpg" alt="CJ_graph">
The bottom line is that the bulk of the RBA's rate cuts since November were rationalised on the basis it needed to furnish Australians with "insurance" against adverse future contingencies (specifically, the December, May and June cuts). The good news is that these catastrophes have yet to materialise, notwithstanding the efforts of some in the popular media to convince us otherwise.
The point that some analysts appear to miss is that the RBA's research indicates that a cash rate change today takes two years to have its full affect on inflation. Accordingly, we have not come remotely close to yet understanding the practical influence of the RBA's repeated (and seemingly reflexive) spate of cuts.
What we have seen in the producer and import price data is that the absence of currency appreciation has translated almost immediately into elevated (import) price pressures. With core inflation apparently troughing at the bottom of the RBA's deliberately “wide” 2% to 3% band (note most central banks consider inflation of 2% per annum quite normal), and much economic stimulation yet to be fully transmitted through the system, the RBA is understandably keen to watch and wait.
This is why I expect most of the remaining economists predicting a rate cut in August to discard their calls. As I previously showed here, a total of 10 economists had dropped their August cuts over the last month. I suspect most (although not all) of the holdouts will quickly follow. To be clear, a cut is still a possibility, albeit a low probability.
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chrisjoye-JYhJsTrNRC

Watch economists run from rate cut calls: Christopher Joye

<html><body>
The Consumer Price Index (CPI) rose 0.5% in the June quarter 2012, compared with a rise of 0.1% in the March quarter 2012.
This reading was just below forecasts of a 0.6% quarterly rise, according to a poll of 24 economists by Bloomberg last week.
The CPI rose 1.2% through the year to the June quarter 2012, compared with a rise of 1.6% through the year to the March quarter 2012, well within the RBA's target 2% to 3% per annum inflation band, leaving room for the RBA to cut rates later in the year, should it need to.
Annualised CPI is now at its lowest rate in 13 years, CommSec points out. The most significant price rises in the June quarter 2012 were for medical and hospital services (+2.8%), rents (+1.1%), vegetables (+5.2%) and furniture (+4.5%).
The most significant offsetting price falls were for domestic holiday travel and accommodation (–4.0%), audio, visual and computing equipment (–3.8%) and cakes and biscuits (–2.8%).
CommSec expected underlying inflation to come in at 0.6% for the June quarter and 1.9% for the year and said this should “make the Reserve Bank even more comfortable that over the mid-term inflation remains well contained” providing scope for a rate cut over the next couple of months.
JP Morgan economist Ben Jarman says today's CPI figures won't surprise the RBA "in any meaningful way".
The Commonwealth Bank is now forecasting the next rate cut in November, having previously forecast one on August 7.
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Inflation up 0.5% in June quarter, slightly below expectations, leaving room for future rate cuts

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I hate being stuck in traffic and, if you’re like most Australians, so do you.
So if you’re a Sydneysider it’s unlikely to surprise you that a recent NSW Department of Transport survey reports that except for New York City, Sydney now has the <a href="https://www.bts.nsw.gov.au/ArticleDocuments/112/BR2012_04_transport_facts.pdf.aspx">longest reported commute time in the world</a>.
In fact, the average Sydney commuter spends nearly an hour longer travelling to work each week than the average Los Angeles commuter, as Sydney's average work trip travel time have blown out to 34.3 minutes one-way.
Even longer commutes ahead 
And as if that isn’t bad enough, Sydney's densification planning policies seem likely to lengthen commute times even more in the future.
It is therefore not surprising that more and more people are swapping their backyards for balconies and choosing to live in Sydney’s inner suburbs, with demand coming not only from young people but families wanting to live closer to the city.
The result is a shortage of established apartments that is pushing up property values and rents.
Residex <a href="https://www.residex.com.au">www.residex.com.au</a> reports that Sydney apartment rents increased almost 10% over the last 12 months and, in certain areas, such as pockets of the inner-west, the rate of increase has been significantly higher than this.
The Sydney market is segmented
 While the overall Sydney property market has been reported as flat over the last few years, it is in fact segmented. Apartments in the inner west and eastern suburbs have performed strongly, with double-digit growth not uncommon in a number of suburbs.
On the other hand, at the upper end of the market, luxury house prices have faltered, as have home values in the outer suburbs.
However, with the undersupply of good near-city apartments pushing up rentals, first home buyers are coming back to the market. At the same time, savvy property investors are getting ready for the next stage of the cycle.
The good news is the Sydney property market is moving out of the doldrums, but it doesn’t mean the next boom is upon us.
Typically, the next stage of the property cycle is the stabilisation phase. Buyers come back and slowly more sellers, including some who couldn’t move their properties over the last few years, are going to put their properties back on the market and we’ll have a period of unspectacular growth.
What smart property investors are doing 
Over the next year strategic property investors are going to set themselves up for the next Sydney property boom by buying the right type of property at the right price.
They will have learnt from the last few years and rather than speculating, they will buy a property with an element of scarcity that will be in continual strong demand by owner occupiers (because these are the ones who push up property values) and tenants.
Others who sit on the sidelines will look back in a few years time and say, “I wish I’d bought in 2012”.
I’ll be sharing my thoughts on the Sydney property markets at my upcoming National Property Market and Economic Updates around Australia. <a href="https://propertymarketupdate.com.au/">Click here</a> for further details.
 
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What will Sydney's long and lengthening commute times do to property? 

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The upbeat assessment of the Australian economy by RBA governor Glenn Stevens in his <a href="https://www.rba.gov.au/speeches/2012/sp-gov-240712">“Lucky Country” speech in Sydney yesterday</a> has further dimmed chances of rates being cut in August, according to both Commsec and ANZ.
Commsec chief economist Craig James says the governor’s speech was designed to “outline the facts rather than fallacies about Australia’s economic performance and the potential to handle future shocks”.
“The Reserve Bank governor reportedly noted that policy settings are about right. While that doesn’t preclude a rate cut in August, the factors would need to present, such as further instability in Europe and a low domestic inflation result."
“CommSec is still pencilling in a rate cut over the next few months,” James says.
A similar assessment of the tone of the speech was made by ANZ Research in its latest economic update.
“RBA governor Glenn Stevens today delivered a fairly upbeat assessment of the Australian economy in his speech entitled ‘The Lucky Country’,” says Craig Michaels and Dylan Eades of ANZ Research.
Michaels and Eades note Stevens' argument that Australia has made its own luck in delivering a “remarkably good” performance against a very turbulent international background, Stevens' contention that concerns underlying weaknesses in the Australian economy are overstated; and that even if downside risks do materialise, Australia is well placed to manage them.
“Importantly, the tone of the speech suggests that the hurdle for significant interest rate cuts is much higher than markets are currently pricing,” they say.
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August rate cut hopes dim further following upbeat Glenn Stevens "Lucky Country" speech: Commsec, ANZ

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Twitter was unusually abuzz with positivity following Glenn Stevens' speech today about Australia’s status as “The Lucky Country”.
Clearly delighted with the tone and content of Steven’s address, Rismark and Yellow Brick Road’s Christopher Joye (<a href="https://twitter.com/cjoye">@cjoye</a>) tweeted:
<img src="/images/stories/2012/chrisjoye.jpg" alt="chrisjoye" height="77" width="487">
Joye was joined in his praise of the RBA governor by his frequent Twitter sparring partner, Stephen "The Kouk" Koukoulas (<a href="https://twitter.com/TheKouk">@TheKouk</a>) – former Gillard economic adviser and soon-to-be economic scribe for Alan Kohler’s Business Spectator website, who used an unusual adjective (perhaps tongue-in-cheek) to describe his appreciation of the speech:
<img src="/images/stories/2012/stephenkouk.jpg" alt="stephenkouk" height="79" width="495"><a target="_blank" href="https://t.co/BQNKcxsk"></a>
Self-interested Federal Treasurer Wayne Swan (<a href="https://twitter.com/SwannyDPM">@SwannyDPM</a>) was so excited about the Stevens' speech, he tweeted not once, but twice to his 20,687 followers, beginning with an attack on the “doomsayers":
<img src="/images/stories/2012/wayneswan1.jpg" alt="wayneswan1" height="111" width="497">
Followed by:
<img src="/images/stories/2012/wayneswan2.jpg" alt="wayneswan2" height="96" width="501">
It was left to The Age’s Chris Zappone (<a href="https://twitter.com/chrizap">@chrizap</a>) to restore some bearish balance to the debate. Not surprisingly perhaps, given Melbourne has been the last (and most recent) city to experience the house price downturn, he tweeted:
<img src="/images/stories/2012/chriszappone.jpg" alt="chriszappone" height="93" width="491"><a href="https://twitter.com/search/%23in"></a>
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Tweet of the day: Glenn Stevens' “lovely” speech gets thumbs up

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The US housing market is now an “outlier” when it comes to making international comparisons, says RBA governor Glenn Stevens, who appears to be questioning whether we should compare ourselves with the US when considering the likelihood of possible future housing corrections.
Stevens says that simply comparing the two markets – Australian and the US – it would be “hard to avoid the impression that gravity will inevitably exert its influence on Australian dwelling prices”
But when you compare Australia with other international housing markets, Stevens says, “the picture is much less clear”.
“To the extent that we can make any meaningful statements about international relativities, the main conclusion would be that Australian dwelling prices, relative to income, are in the pack of comparable countries. In this comparison, the United States seems the outlier,” <a href="https://www.rba.gov.au/speeches/2012/sp-gov-240712#f">he said in a speech to the Anika Foundation Luncheon in Sydney today</a>. 
Stevens presented two charts to show how Australian housing affordability has diverged from the US since 1986, but performed in line with many other comparable countries.
The first of these charts just compares Australia to the US on the basis of dwelling prices to income ratios and shows that the two countries were last on a comparable footing in 1986 – but since then have diverged marketedly.
<img alt="dwelling1" height="380" width="470" src="/images/stories/2012/dwelling1.gif">
Between now and 2011 Australian house prices have trended up from a ratio of 2:1 to 4.1 – with slight correction around the GFC while US house prices relative to income have remained below a ratio of 2:1, having accelerated towards a ratio of 3:1 from around 1996 until the GFC brought about a dramatic fall in prices.
Comparing Australia with a host of other international housing markets on the same ratio measure, Stevens presented a difficult to read spaghetti-like chart (below).
It does however show that countries like New Zealand, the Netherlands and the UK have housing markets performing in the realm of the Australian market, while Japan is now more closely linked to the US.
<img alt="dwelling2" height="400" width="470" src="/images/stories/2012/dwelling2.gif">
Explaining the international shifts in housing affordability, Steven said that as everyone knows, “dwelling prices rose a great deal over the decade or more from 1995, and not just in Australia”.
“This occurred globally. The fact that it was a widespread phenomenon is a hint that we should be wary of explanations that are solely domestic in their focus. It suggests that the global dwelling price dynamic had a lot to do with financial factors – and there is little doubt that finance for housing became more readily available.
“In various countries prices have subsequently fallen. In the United States, for example, prices are down by about 30% from their peak, though they look like they have now reached bottom.
“In the United Kingdom the fall was smaller – at about 15%–20%.
“In Australia, the decline since the peak has been about 5% to 10%, depending on the region. There are of course prominent examples of particular localities or even individual dwellings where price falls have been much larger,” he says.
Explaining the international shifts in housing affordability, Steven said that as everyone knows, “dwelling prices rose a great deal over the decade or more from 1995, and not just in Australia”.
“This occurred globally. The fact that it was a widespread phenomenon is a hint that we should be wary of explanations that are solely domestic in their focus. It suggests that the global dwelling price dynamic had a lot to do with financial factors – and there is little doubt that finance for housing became more readily available."
“In various countries prices have subsequently fallen. In the United States, for example, prices are down by about 30% from their peak, though they look like they have now reached bottom."
“In the United Kingdom the fall was smaller – at about 15%–20%. In Australia, the decline since the peak has been about 5% to 10%, depending on the region. There are of course prominent examples of particular localities or even individual dwellings where price falls have been much larger,” he says.
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Australia has its own place in the world when it comes to housing affordablility: RBA’s Glenn Stevens

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While everyone seems to agree that the residential market is currently moving sideways, investors often find it difficult to gauge how direct investment into commercial property is really travelling.
Perhaps the best gauge is to take a look at what the sharemarket thinks about A-REITs (Australian Real Estate Investment Trusts).
Generally, these yields tend to operate at about 1.5% to 2% below direct investment into property. Nonetheless, they can be a great indicator of where the present trend is heading.
With debt now under control, the A-REITs have put in a solid performance over the 12 months to June this year.
As you can see from the charts, this trend has been consistently upwards when compared to:
<ul>
<li>10-year bonds</li>
<li>The RBA cash rate</li>
<li>Most other types of equities</li>
</ul>
In fact, since January 2011, A-REITs have returned 11.2% in total, as opposed to equities at -9.3%.
 
Looking forward
With consolidations, the number of A-REITs has dropped from 24 to 19. And investors also have the comfort of knowing they are buying at a discount to current asset backing.
Those A-REITs focusing primarily upon office and industrial property would appear to be performing the best. That is consistent with what we're currently seeing with direct investment into commercial property.
The bottom line
As you're probably aware, the sharemarket tends to price in forward trends, generally giving you a six-month lead-time on what is likely to occur.
As such, you now have yet another source confirming the underlying strength of the commercial property market. This should give you some added comfort to secure a property now, in your own right.
Chris Lang is an advisor to commercial property investors and gives keynote speeches and regular seminars on the best way to invest in commercial property. He maintains a blog, <a href="https://bitly.com/IFf40C">his-best.biz</a>, which he updates regularly about the best way to get the most out of your commercial property investment.
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Why commercial property is trending up

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A second influential economic think tank believes the mining boom will start to fade in the medium-term, replaced by growth in other parts of the economy. including investment in new residential property.
Coming on the back of the <a href="https://www.propertyobserver.com.au/hotspots/tourism-helps-broken-hill-shed-its-one-horse-mining-town-investment-status-as-deloitte-s-questions-mining-boom-longevity/2012072255635">Deloitte Access Economics business outlook report</a>, which says the mining boom may be over in just two years, BIS Shrapnel expects mining investment to continue to grow over the next two years, but at a moderate pace.
In its Long Term Forecasts 2012-2027 report BIS Shrapnel expects the mining investment slack to be taken up by non-mining sectors of the economy, including a pick-up in investment in the residential property sector.
“Residential investment, triggered by recent interest rate falls, should start growing from late this year, driven by the dwellings shortage that has developed,” says Tim Hampton, senior economist at BIS Shrapnel.
“And non-mining business investment, currently below levels required to underwrite even moderate demand, will recover as interest rate reductions over the past year support demand and capacity constraints emerge." 
According to BIS Shrapnel, solid population growth underwritten by a rebound in immigration, combined with around average employment and wages growth, will continue to support growth in household expenditure.
However, due to persistently high household debt, BIS Shrapnel believes that expenditure growth will “not approach the giddy heights that it did during the debt-fuelled spending spree of the early-to-mid-2000s”.
BIS Shrapnel expects GDP growth to remain around its current rate of just above 3% for the next five years.
It warns that the biggest risks to the Australian economy – and a likley rebound for housing and non-mining sectors – remains the potential for the European economic crisis to have a larger-than-forecast negative impact on Australia
“We expect the European situation will get worse before it gets better, and will drag on for many years,” says Hampton.
“Irrespective of how their significant issues are resolved (eg. Euro break-up, further debt write-offs), the main channels of influence for Australia will be through reduced consumer and business confidence, lower commodity prices and tighter funding conditions."
“This would likely further delay the recovery in dwelling and non-mining business investment.”
The report identifies a marked slowdown in mining investment over the next two years.
It says that new private engineering construction, which after increasing by 50% over the past year, is expected to grow by 16% over the next year and just 8% the following year.
“At the same time, public sector investment – having been boosted by post-GFC stimulus packages – is now falling sharply as those packages wind down and all levels of government try to get their finances in order,” says BIS Shrapnel.
Hampton expects the recovery in residential property, combined with a revival in the non-mining sectors of the economy, to be strong enough to prevent the economy from stalling as it transitions to a more broadly-stronger footing.
Currently, Hampton says the economic picture is one “out of balance, undergoing significant structural change, with offsetting cycles averaging to a moderate outcome” driven by the high Australian dollar, which is impacting on competitiveness, thereby creating enormous pressure and resulting in job losses in trade-exposed industries like manufacturing, tourism, education and business services.
“Meanwhile, around 60% to 75% of the economy is sheltered from the impact of the high dollar. Those with economic power are doing well – the banks, the major supermarkets, utilities,” says Hampton.
“But SME businesses with little economic power and those that rely on servicing non-mining investment are largely languishing, with weak growth and profitability, particularly those whose gearing makes them vulnerable. Hence the continuing threat of insolvencies.”
These sheltered industries are the ones that will benefit most from lower interest rates and the forecast increase in non-mining private investment.
However, the outlook for non-mining trade-exposed industries remains poor, which BIS Shrapnel says will continue to suffer under the weight of the high Australian dollar and an uncertain global economy.
A more enduring risk, Hampton warns, is that the significant under-investment in the non-mining industries and infrastructure gradually erodes the medium-term growth potential of the economy, and leaves the Australian economy increasingly sensitive to large fluctuations in world commodity prices. Businesses will also need to make further gains in terms of energy efficiency, with energy prices expected to continue to rise strongly for the foreseeable future.
Finally, there is a risk of a collapse in minerals prices and investment as the cycle turns down. In that regard, BIS Shrapnel believes that increased supply, rather than lack of demand, poses the greatest downside risk to world commodity prices. However, a fall in world demand would initiate a much larger shock.
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New housing investment to pick up this year as mining influence expected to fade over next two years: BIS Shrapnel 

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Buyers are most keen on low-rise development close to capital city CBDs, according to the June NAB Residential Property Survey.
This was the only sector of the property market where demand was "good" (as opposed to "fair") in June.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2012/07/nabjuly126.gif" title="Click to enlarge"><img src="/images/stories/2012/07/nabjuly126thumb.gif"></a>
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Buyer demand strongest for low-rise inner-city apartments: NAB Residential Property Survey

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"Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital." – Aaron Levenstein, associate professor emeritus of business, Baruch College.
Statistics – don’t you love them? Or perhaps I should rephrase and ask – do you understand them? Don’t feel the need to grope in the dark for an ad hoc explanation of the data – even “experts” fight over the publicised and regularly conflicting reports that solidly “claim” we’re both in a rising and falling market.
In fact, Oxford Mathematician Peter Donnelly produced a wonderful <a href="https://www.ted.com/talks/peter_donnelly_shows_how_stats_fool_juries">Ted Ed lecture</a> on the subject, which demonstrates rather succinctly how a simple and common misreading of statistics can have serious repercussions on an individual’s life. He paints the story of Sally Clark, a British lawyer who was imprisoned for the murder of her two sons who tragically died of sudden infant death syndrome.
The chances of sudden infant death syndrome occurring in a professional “non-smoking” family unit are around one in 8,500 – therefore the “distinguished” paediatrician who testified against Sally at her trial, “logically” squared the formula and calculated the chances of two children dying of the same condition was around one in 73 million. In effect, it put the jury in no doubt of her guilt.
Of course, the paediatrician was absurdly incorrect in his “assumption”. In truth, the chances of a second child dying from the same condition could be influenced by a number of external factors – both genetic and environmental – of which a microscopic view of basic statistics won’t take into consideration. Therefore, without going into too much detail, two deaths flag the need to consider the overall picture from a broader angle, eventually proving it was “more” not “less” probable for the second death to occur. Thankfully, the conviction for Sally was overturned and consequently, two other mothers convicted for similar crimes were also released. However, it clearly demonstrates how frequently statistics are misinterpreted by seemingly well-respected and educated individuals.
As for property prices – going into intricate detail on how monthly and quarterly data is collected, collated and interpreted is a science in itself. The reasons for the discrepancy can be broadly explained by the method, duration and specific grouping of data which differs between each agency provider. However, for those interested, it’s worth browsing through the ABS publication – it’s written in such a way, that if you’re not presently confused or averse to reading heavy educational research documents – you soon will be! Therefore, before you feel tempted, take note of the following ABS statement which sums up their purpose perfectly: <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6416.0Main%20Features4Mar%202012?opendocument&amp;tabname=Summary&amp;prodno=6416.0&amp;issue=Mar%202012&amp;num=&amp;view=">“They are published primarily for use in Government economic analysis.” </a>
As a case in point, over the past few weeks we’ve seen RP Data-Rismark, Residex, and the REIV all produce differing interpretations of the state of Melbourne’s market for the both the month of June and June quarter. RP Data were first off the bat, recording a rise of 1% in Melbourne’s median house price over the month of June to $480,000. The REIV were slightly more “bullish”, recording a rise of 2.9% in the June quarter taking the median to $520,000 (although they did specify that the gains were no more than a correction of previous drops in Melbourne’s median data). As for Residex, they have collated their own figures and recorded a drop in both the month of June and the June quarter by -0.49% and -1.31% respectfully. They record Melbourne’s current median house price at $555,000. So who do you believe?
All of the above is irresistible fodder for industry professionals who can “pick and choose” which data to reference (or ignore) based on their own reference point. However, I often wonder if any actually take the time to weigh up the information or research the methodology behind their findings?
The dialogue that has been published and subsequently scrutinised based on these conflicting results has consequently split the “bulls” and “bears” directly down the middle. According to random groups of commentators we’re both “recovering” and “falling”. Furthermore, how does the average home buyer or investor cope with such conflicting information circulating through various social media outlets or out of the mouths of “respected” industry professionals?
Does a vendor add or subtract a percentage or two to their asking price or reserve prior to an auction?
Do investors and buyers make hard and fast choices whether to sell, buy or hold based on the information?
I know from my own experience, purchasers who read media commentary will often be shaken one way or the other – depending on the report. However, considering how commonly the statistics are “skewed” it’s a somewhat foolish path to adopt.
Having said this, you can understand why various realtors jump on any glass half full opportunity to pump the market. In an industry reliant on turnover, a lack of confidence in the investment sector – the demographic particularity sensitive to statistical commentary – can be extremely detrimental. Investors are all but worshiped by realtors; well known for their non-emotional and often speedy approach to the buying/selling process.
However, as I cited above regarding the falsely convicted lawyer Sally Clarke, it’s important to understand a broader set of influences other than median data if you really want to grasp the statistics and draw a line where conflicts arise. For example, assuming a rise in median prices signals a broad based “recovery” the housing market becomes rather shaky when you take into account (as I pointed out last week) “overall” year to date turnover is lower than it has been over the previous four years – particularly so in Melbourne.
Other statistics indicate a large amount of stock lingering on the market. Nationally there are over 300,000 homes for sale and the previous norm has been closer to 200,000. Once again, this is specifically pronounced Melbourne – and therefore any assumption we have entered an extended period of growth, goes against the well known premise that more supply equals lower values.
Furthermore, the clearance rate of late has been jumping around like a yoyo. Melbourne’s clearance rate last week came in at 61% based on a similar number of auctions to the previous week, during which it came in at 52%. Clearance rates don’t generally move nine percentage points in one week, however, once again, industry commentators can take their pick which to “believe” or reference, all depending on their glass half empty or glass half full viewpoint.
The other layer of complexity that needs to be considered, is even with a stratified index which segregates property into different types based on number of bedrooms and so forth, it’s impossible to draw a hard and fast conclusion on a commodity which is purchased – in many cases – solely on a buyers individual tastes and needs. Unless we’re looking at a row of identical terraces with little to no differentiation between them, a home can mean one thing to one buyer and something completely different to another. Therefore, any reading of statistical data – especially when turnover is low – is no doubt down to the particular composition of properties selling rather than an indication of market recovery.
Take for example the tale of two houses recently auctioned on the same street in the attractive bay side suburb of Hampton in Melbourne. Both are four-bedroom detached dwellings situated on ample land sizes with north facing rears. One block featured a rather dated 1990s dwelling, “liveable”, but in need of work over the long-term. The other featured a property that had been updated with an element of “wow”, complete with an in-ground swimming pool in the back yard.
At the beginning of June this year, the 1990s dwelling was auctioned, attracting a large crowd of interested participants and no less than four bidders. The sale price exceeded both expectation and reserve, selling under the hammer for $1,695,000. It was a boom price and trended directly against the doom and gloom reports recently circulating in the media. No doubt the owner of the second property was rubbing their hands together in gleeful expectation.
Three weeks later and the second home was auctioned, however this time, the event only attracted a small crowd of neighbours. With no evident interest from the crowd, the home passed in on a vendor bid for $1,625,000 and remains on the market today.
This tale is far more relevant to property buyers than the frequently referenced statistics. There is no fast and hard rule to what will attract one buyer to pay above current assessed value or a second to turn their nose up at the same property – as the well known saying goes: “Beauty is in the eye of the house buyer” – and ever more so in a market atmosphere where turnover is arching back to that of the late 1990s.
However, the number that will feed into the median statistics is the boom result – thereby inflating the median data. Considering the above story is a common function of a sluggish market, where only the “best” homes attract healthy demand – a rise in the median indicates precisely this – and is not necessarily an emerging trend of market recovery.
The same applies to the two properties in Hampton. I could give you a number of reasons why the first property attracted four bidders and sold for a boom price in a dwindling market atmosphere – however I won’t be assessing the stats. I’ll be looking at the property, location, buyer interest, historical performance, suburb profile and potential for future development.
As for the average home buyer, well the statistics may indicate whether it’s a buyer or vendor market, however they’ll give little clue to the current value of a property aside perhaps an inkling of overall sentiment. Similarly, a valuer will give statistics just a passing thought when completing a sworn valuation – assessing recent comparable sales is obviously a better property specific indication.
Until overall turnover markedly improves and the clearance rate – which broadly indicates the heat in the market – rises and stabilises consistently week to week you may as well give microscopic monthly, or for that matter quarterly, statistics little more than a cursory glance.
Over the past few weeks there have only been around 350 properties auctioned in Melbourne – approximately half the usual numbers we experience. Therefore, a relatively low number of “extra” sales occurring from one Saturday to the next obviously affects the clearance rate percentage to a greater degree than it would had there been 600 properties auctioned.
So does a jump in one week’s clearance indicate market recovery? No. Rather, it represents the particular composition of “good” properties available from one week to the next. Similarly, a rise or fall in the median house price in any one month when turnover is so terribly low, indicates little more than a monthly blip on the radar. As you can see from the Hampton example cited above it is possible to achieve growth in a flat market. However, it simply reiterates the rule, you have to buy well, to sell well.
Market research is important, however it never accounts for individual circumstance and neither is it sight for the blind. There are always risks associated with any investment, however property isn’t an item to be traded like stocks and shares. It’s a vital commodity essential to our very survival. Therefore, prior to any purchase put aside the market commentary and weigh up the risks carefully.
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm" style="outline-style: none; outline-width: initial; outline-color: initial; text-decoration: underline; color: #6888b1;">The Circle</a>.
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