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“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into.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>
Today I want to try and add a new chapter to our understanding of Australia’s $4 trillion housing market. This is a story about massive divergence followed by convergence in state-wide housing costs. It traces the stunning rise in the price of NSW, ACT, and Victorian housing during the late 1990s and early 2000s followed by years of relative stasis. Just as housing costs across this slab of the eastern seaboard started to freeze or slow down, an even more striking boom was gathering momentum in the mining states of Western Australia, Queensland and the Northern Territory.
Most readers should now be familiar with the well-trodden explanation of what factors first drove the unusually sharp house price appreciation in Australia during the 1990s and 2000s. This is a narrative that has been regularly relayed by both the central bank and myself.
The short version goes like this: take the last 30 or so years and split them in half around the time that the RBA adopted an “inflation target”. While informally this occurred in 1993, it was officially set in stone in 1996, so let’s take 1995 as a crude line in the sane between the pre- and post- inflation targeting epochs.
Between 1980 and 1995 inflation in Australia averaged 6.6% per annum. Unsurprisingly, variable home loan rates also averaged an astonishingly – for anyone under the age of 35 – high 12.7%. And by 1995, the value of total housing debt held by families divided by their disposable incomes was only about 55%.
Average headline inflation has dropped 58% from its 1980 to 1995 level to just 2.8% per annum in the period since. As night follows day, average variable home loan rates have also plummeted to 7.5%. The 41% decline in home loan costs has, of course, enabled families to boost the amount of mortgage debt they can service for any given level of income. And so Australia’s mortgage debt-to-household income ratio started rising from its 55% level in 1995 to a peak of 156% by 2006. Importantly, it has not increased any further since this pre-GFC apogee – that is, for the last six years, housing credit has expanded at about the same rate as family incomes. Indeed, as at December 2011, it was off a touch at 149.6%, according to the RBA.
With the above insights in mind, our research team has shown that about 96% of the increase in median house prices in Australia between 1985 and today can be explained by changes in household borrowing capacity resulting from the long-term reduction in mortgage rates combined with the growth in family incomes (see first chart below). Said another way, the growth in Aussie housing costs over the last 25-30 years is entirely explicable when one references incomes and interest rates (i.e., we have not even discussed the supply-side at this stage).
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may151.gif"><img src="/images/stories/may151thumb.gif"></a>
Yet there appears to be another story to be told. And this one relates to the time that it took for the enormous positive shock to household purchasing power (via lower rates and higher incomes) to become fully capitalised into asset prices.
In the chart above you can see that the blue purchasing power line lies above the red median dwelling price line up until about 2002-2003. This is one way of saying that households could afford to buy more expensive homes – if they assumed the changes to incomes and rates were permanent – but understandably took some time to bid up the value of housing to a level that equated with their purchasing power.
The chart also seems to suggest that, setting aside supply-side considerations, asset values did run ahead of income – and interest-rate linked fundamentals in the years after 2002-2003.
In my next exercise I want to lift the lid on the national level data to study how housing costs across states have diverged over time. In order to do so I use state-wide median dwelling prices since 1990 from NSW, Victoria, Queensland, Tasmania, Western Australia, South Australia, the ACT and the Northern Territory. The chart below illustrates the change in these raw median prices over time.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may152.gif"><img src="/images/stories/may152thumb.gif"></a>
While at first it is hard to make head or tail of the chart, if you look closely you can see apparent regime shifts in the state-wide capital growth rates: in particular, NSW, the ACT, and Victoria experience very robust dwelling price gains between 2000 and 2003, which, to varying degrees, stops or slows down thereafter.
House price inflation in Queensland, South Australia, and Tasmania step ups with a lag, but, importantly, continues to kick-on after 2003, recording healthy capital growth right through to end 2007.
It is in this period 2003 to 2007 that we also start to find an extraordinary acceleration in the cost of Western Australian homes, which is denoted by the aqua blue line in the chart above. Dwelling prices in the Northern Territory also accelerate alongside Western Australia, albeit at a lower rate.
Here again one sees another difference: while Queensland and Western Australia suffer house price falls during the GFC, which they claw back in 2009 and 2010, home values in the  Northern Territory appear to keep appreciating during the crisis until they finally run out of steam at the end of 2009.
To more precisely measure the time-series divergence in national housing costs I created two new benchmarks that are highlighted in the next chart. The blue line is simply the highest state median dwelling price divided by the lowest state median during any given month between 1990 and today.
The red line tackles dispersion another way: it subtracts the difference between the highest and lowest state medians and then divides this number by the national median price. Both metrics tell similar stories.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may153.gif"><img src="/images/stories/may153thumb.gif"></a>
Irrespective of which measure one uses, the analysis shows us that house prices across Australia underwent an enormous break in the early 2000s fuelled by NSW, Victoria and the ACT, which was only remedied in the years after 2003 by catch-up growth across the other states.
Whereas in the decade 1990 to 1999 the highest state median price was, on average, about 200% the size of the lowest, this differential soared to 321% by the end of 2002. After that climax (refer to the spike in the chart above), the coincidence of much lower capital growth in NSW, Victoria and the ACT combined with faster gains in almost every other region allowed the ratio to normalise back to its pre-boom average of 200%. And, comfortingly, it has stayed around this level since 2006.
One explanation for the phenomenon highlighted might be variations in income growth rates, and hence purchasing power, across the states. Perhaps this was just a case of the NSW, Victorian and ACT economic cycles leading the remaining states.
We can try to address this issue by deflating state house prices by state disposable incomes. Once we have done this, we can repeat the analysis above to determine whether the pattern still holds.
My final two graphs summarise the results over the period 1995 through to end 2011. The first chart shows the individual state house price-to-income ratios indexed to 100 since 1995. The second replicates my earlier analysis by dividing the highest state ratio by the lowest.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may154.gif"><img src="/images/stories/may154humb.gif"></a>
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/may155.gif"><img src="/images/stories/may155thumb.gif"></a>
 
The final chart demonstrates that the same dynamics in housing cost dispersion have asserted themselves even after deflating by state incomes: namely, a very large increase in the housing valuation gap from 1995 to 2002-2003, when the highest state price-to-income ratio was around 200% the size of the lowest. By December 2011 this gap had fallen back to just 130%. That is to say, housing costs had converged to their pre-boom levels.
An interesting question for researchers nevertheless remains.  If these changes in housing costs were triggered by the tremendous increase in purchasing power permitted by the decline in mortgage rates in the 1990s, which in turn drove a commensurate increase in household leverage, why did the transmission to house prices  occur at such different times in different states? One for another day, eh.
Christopher Joye is a leading financial economist and a director of <a href="https://www.ybr.com.au/savings/index.cfm" target="_blank">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
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chrisjoye-JYhJsTrNRC

The gap narrows as east almost meets west (and Queensland) in housing prices and costs: Christopher Joye 

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The world banking system is about to be tested once again by another European crisis because politicians and central bankers underestimated the power of people. And here in Australia we have a version of the ‘Greek game’ being played under the surface.
In Europe whether they be Greek, French or Spanish, 21st-century Europeans will only suffer German imposed austerity for a limited period. The Greek crisis will be the trigger for the euro to be used by fewer countries. Bankers will suffer big losses because they underestimated people power and did not understand that in long term you can’t have a common currency operating in vastly different economies.
The Greek crisis gains the headlines but deep down there is a global consumer nervousness sweeping the Western world. Australian consumers are as nervous about the future as those in Europe or the US. Among the major developed countries around half of consumers feel they are in financial trouble or not financially secure.
Fascinatingly, Chinese consumers feel the most secure. Enlarge the graph below and you will be fascinated by the trends that emerge.
Click to enlarge
<a href="/images/stories/gott1.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/gott1thumb.gif"></a>
Australians, along with Germans, share the ‘honour’ of having the biggest rise in the number of consumers who feel they are in financial trouble or not financially secure. In Australia the number rose a whopping 11% from 36 to 47%.
Australians are affected by the European crisis because it boosts the cost of our wholesale overseas borrowing by banks. But we also have our version of the Greek disease. Like the Greeks, we allowed our worker productivity to fall dramatically and we then were handed a high dollar courtesy of the mining investment boom. (The Greeks got a high Euro). But then our Canberra crazies dreamed up a carbon tax to further boost the cost of Australian goods and services and then sprayed money to lower income people while squeezing middle income Australia. (Federal Budget 2012: Ripping into middle Australia, May 8). Just as the Greek politicians are being taught by their people, so will Australian politicians who do silly things be taught a lesson.
This lack of job security is causing a dramatic change in Australian spending habits and I think the change is going to be with us for the medium term so businesses better get used to it.
For example the percentage of Australian consumers saying they will spend less on discretionary items in the next year increased from 47% in 2011 to 50% in 2012. This is higher than in the US (46%), the UK (47%) and about level of the average of the major European economies surveyed.
In other words Australians are saving.
But they are also changing the way they are spending and are increasingly seeking and expecting special offers. They are using the internet to compare prices and are increasingly shopping overseas.
I have taken out the graph of Australian internet shopping as a reminder to all those who own shopping centres – your world is being turned upside down so you had better change your ways including lowering exorbitant rents. This particularly applies to those aiming at higher income consumer markets.
Just as a batch of new politicians will not be able to ease the Greek misery, so this switch to the internet is going to gather even more momentum. Here is the graph.
Click to enlarge
<a href="/images/stories/gott2.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/gott2thumb.gif"></a>
Footnote: The Boston Consulting Group’s annual Consumer Sentiment Survey was conducted in April and covered 15,000 consumers in 16 countries. The survey included more than 1,400 consumers in Australia.
 
This article originally appeared on <a target="_blank" href="https://www.businessspectator.com.au/">Business Spectator.</a>
 
 
 
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rgottliebsen-VjLFh9nsD4

Australian consumers are as nervous as Greeks about their economic future: Gottliebsen

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There is no doubt you can certainly accelerate your overall return from commercial property by gearing up with a loan.
Even so, you should first make sure that you can say "yes" to each of the following questions.
<ul>
<li>Am I approaching this purchase over a five- to seven-year time frame?</li>
<li>Is borrowing the only way for me to reach my investment objectives?</li>
<li>Do I have other income, outside of what the property will generate?</li>
<li>Would I be able to cover the mortgage payments, if interest rates were to rise 3%?</li>
<li>Will my equity represent at least 30% of the overall value?</li>
<li>Does the intended property make sense, without relying upon depreciation benefits?</li>
</ul>
Understanding the proper time frame
While you may choose (or need) to sell your commercial property in three or four years’ time, you ought to initially approach each purchase as a five- to seven-year exercise.
And that's mainly because your greatest costs (as with any investment) will always be at the beginning and the end of every transaction.
Therefore, it is always wise to spread those costs over at least five years — rather than look to turn properties over quickly.
Adequate coverage
Assuming you have no choice but to borrow, your financier will (and you should too) be concerned about having sufficient coverage for your mortgage payments.
For most commercial properties with 70% gearing, your tenant should cover your normal loan payments at current interest levels.
But what if the tenant were to leave at the end of the lease? Or interest rates were to suddenly rise?
The second issue can be resolved by simply fixing your interest rate, to provide you with greater comfort. Whereas tenant continuity is probably best addressed through ensuring your property is professionally managed.
That way, there will be a good ongoing relationship established with the tenant. And there is every likelihood of the lease being extended.
Bottom line: Commercial property is capable of providing you with some quite extraordinary returns.
But like any business venture, you need to plan things out and have a clear set of investment objectives and buying criteria.
With those in place, sensible borrowing can then greatly enhance the overall results you achieve.
 
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 target="_blank" 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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chrislang-EQKojcgJPV

Borrowing money to invest in commercial property must be done sensibly

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If you've been following the budget and numerous political highlights over the past few weeks and getting tired of fluctuating insecurity over interest rate movements and unemployment figures, take a break and look towards the property market, because it's currently in a phase of unchangeable stability. However, the aesthetics of the localities we have become familiar over the last 20 years have changed considerably – and consequently the value and potential liveability the existing established real estate holds has, and is, changing as well.
Australia 2030, and the shape of our cities as we move towards 2030, is firmly in the hands of urban developers and well underway for rapid expansion. For example, in <place><city>Sydney</city></place>, by 2030 the focus is to stop urban sprawl and the development of freestanding houses. According to <a target="_blank" href="https://bit.ly/JvstFb">Graham Jahn</a>, director of planning, development and transport for the City of Sydney, the new city will be “compact” apartment living close to the CBD, providing a “more communal way of life”.
It’s prospected that by 2031, the 26 square kilometres of Sydney City will have 55,000 new dwellings housing 88,000 new permanent residents. Needless to say, high-rise towers will be the dominant feature and any outdoor living activities for those in inner-city localities will need to take place in the local communal park.
Across all states, the building boom of high-rise apartments is astounding. In Melbourne, plans are well underway to accommodate 90,000 new dwellings by 2031. In Brisbane, the Infinity Tower – which will dominate the skyline and provide “546 meticulously designed apartments” over 81 levels – is one of many projects currently under construction. Every capital city government website has a prospected plan for 2030, which outlines its new vision for Australian cultural life.
Even with the recent slowdown in population growth – which at 1.4% (ending July 2011) is the lowest it’s been since 2005-06, our capital cities are crying out with growing pains – not due to lack of roof space as such, but lack of affordable roof space and affordable rental accommodation. However, despite the bursts of construction, the buying market remains soft. Gaining credit is harder than it was pre-GFC, first-home buyers don’t generally qualify for high-rise accommodation due to various loan restrictions– issues I have pointed out previously. Neither does this type of accommodation offer affordable rental opportunities, as any quick search through internet listings will prove. Instead, they are principally marketed to the foreign market, for which there are no buying restrictions for new or off-the-plan dwellings – and it can only be hoped demand is sufficient, considering our high Aussie dollar, to soak up the reserves currently in progress.
Residents familiar with the current outlook of their neighborhoods are understandably concerned. Organisations such as <a target="_blank" href="https://www.sos.org.au/">Save Our Suburbs </a>– active in various states across Australia – have been established to combat development of high-density housing and the consequences of an increasing population. Needless to say, there is little if any consultation with the community in light of the new developments affecting various neighborhoods. As Save Our Suburbs points out on their NSW website “the majority of communities report that they feel their governments are not concerned with community preferences on planning issues”.
It’s a common cry – no one likes a neighborhood changing. And as we’re all aware, having a block of flats or large subdivision constructed in the near vicinity will not only affect the streetscape increasing the general foot traffic, it can also have consequences on local public transport facilities, which struggle to cater for a higher numbers of residents.
The federal government’s <a target="_blank" href="https://bit.ly/JvtIEl">‘Our Cities’ discussion paper</a> reads like a tourist brochure – full of pictures of laughing residents or artist drawings of leafy parks with children playing and parents picnicking. Within it, the national 2030 vision is set out
“To provide for our communities, urban development needs to offer a diversity of housing options that incorporate a substantial component of affordable housing that is age friendly, innovative and has good environmental performance.”
I’m not so sure the mass building of high-rise projects fits into the description above, however the words are noble in themselves.
The initiatives outlined in the report to improve housing affordability include the ‘Housing Affordability Fund’. However, as I’ve pointed out previously, it’s hardly an initiative to be proud of. When I last checked the<a href="https://www.anao.gov.au/Publications/Audit-Reports/2011-2012/Implementation-and-Management-of-the-Housing-Affordability-Fund"> 2011 audit</a>, the fund had outlaid $12 million for administration and set aside a promised $500 million for the projects , yet on last count it had only assisted 749 home buyers, while encountering some major administrative cock ups along the way. I don’t call this improving affordability or wise use of taxpayer funds. Yet it’s an initiative the government continues to boast about.
Also outlined in the report is <a href="https://www.coag.gov.au/coag_meeting_outcomes/2008-11-29/docs/20081129_national_affordable_housing_factsheet.pdf">National Affordable Housing Agreement</a>, which requires each state to dedicate federal funds towards the achievement of “key outcomes”. Some of the outcomes include decreasing homelessness and ensuring people have access to affordable rental accommodation and housing. Any initiatives dedicated towards such outcomes are commendable, however when you delve into the progress reports to see how progress for this agreement is tracking, highlighted are some serious problems in auditing the results. The latest report states:
“It is not possible to track progress towards each of these outcomes on an annual basis. Performance reporting under the agreement is particularly reliant on survey and census data that are not available annually. In addition, the performance framework itself is still under development, and not all outcomes are currently able to be measured.”
Furthermore:
“There is very limited information on the nature and extent of homelessness and risk of homelessness, including the housing” 
And of course, last year’s admission from the ABS showing its homeless figures had been <a target="_blank" href="https://www.theaustralian.com.au/national-affairs/opinion/inflating-homeless-to-fund-lobbyists/story-e6frgd0x-1226165274504">“inflated” </a>further confuses the data and ignited arguments from homeless advocates who maintained the existing figures had been underestimated, not over-estimated.
 
<hr class="system-pagebreak">
 
The federal budget outlined its commitment to the first-home buyers’ grant, but in truth, what a dismal failure it’s been. The percentage of first-home buyers “shopping” in the market is no higher now as a result of the grant and rarely fluctuates from the long-term average. State by state, first home buyer activity currently varies between 13.1 per cent in <state>South Australia</state> to 23 per cent in the <place><state>Northern Territory</state></place>. As many ‘potential’ first home buyers will now tell you, the dream of buying a ‘home,’ is just that – ‘a dream’.
Commitment to the <a target="_blank" href="https://bit.ly/JagS23">National Rental Affordability Scheme</a> also remains in this year’s budget. It’s a commendable initiative established to increase the supply of affordable rental accommodation for “key workers” such as police officers, nurses, teachers, and so forth. The scheme provides financial incentives for investors to purchase housing, which is identified as “suitable” by the government.
There are conditions of course; there is a requirement to hold the property for a minimum of 10 years while allowing a rental rate 20% below the market average. For doing so, there is an annual income tax kick back – currently at $9,524 per dwelling, indexed annually to the rental component of the CPI. However, it’s not intended for the solo investor and neither is it “social housing”. It’s primarily for property trusts and superannuation funds, and the accommodation is intended for “low- to middle-income wage earners”. Although the scheme has helped a proportion of families – as the Tenants Union rightly <a target="_blank" href="https://bit.ly/KPvbU8">points out</a> – the rents charged are still too expensive for a large number of low-income households. Therefore, there are still a too many falling through the net.
As for the social housing initiative, this has no extra money forthcoming in the budget. As <a target="_blank" href="https://www.shelter.org.au/">Shelter </a>and <a target="_blank" href="https://www.anglicare.org.au/">Anglicare</a> point out, any drop in the waiting list figures nationally have been due to a tightening of eligibility criteria in many jurisdictions rather than a genuine reduction. Again, in light of this, monitoring numbers of those in need starts to get blurred in the rhetoric that travels back and forth between government and social housing advocates. Trying to assess the success or failure of the project is not an easy task – it often gets lost in various criticisms over hasty built or inappropriately located projects. However, broadly speaking the initiative is a good one especially when you consider there are some 250,000 people sitting on waiting lists for public housing often waiting nine months or more.
In Victoria the public housing problem has reached crisis point after the release of its recent audit report, which showed the state was “facing a cash crisis, with all cash reserves expected to be exhausted during the 2012–13 financial year based on current budget estimates”. Interestingly enough, the government has come up with <a target="_blank" href="https://bit.ly/JPImVX">'radical reforms'</a> to combat this problem, which look positive in themselves, however judging from past record, expensive reports into various reforms never seem to transpire into promised results.
For example, if you go into the <a target="_blank" href="https://www.imap.vic.gov.au/">IMAP</a> reports (the Inner Melbourne Action Plan ) a collaboration of inner-city councils currently assisting in the state government developments towards 2030, you’ll find a specific section devoted to “housing affordability”.
It seems since mid-2009 letters have been going back and forth between various ministers trying to investigate site-specific opportunities for “inclusionary zoning” (a process whereby governments mandate a certain proportion of a new development be marketed below market rates).
Fast forward to mid-2010, and finally a suitable site was found at 400 City Road in South Melbourne. Unfortunately, or perhaps predictably, it failed to gain support from the state government. So back to square one, and now, three years since ‘inclusionary zoning’ was mentioned we’re apparently awaiting another report into “Community Land Trust Models and their application in Australia”. According to the latest progress paper “reports will be provided to the Committee in due course”. An “end date” for “due course” isn’t provided
All of this rhetoric about social housing wouldn’t be such a problem if we hadn’t experienced such a boom in house prices for which wage growth couldn’t keep pace. It’s all OK for some economists to argue that when you take the national wage growth and national house price, the inflation has not been so extreme. This is true; however the main sticking point with the argument is contained with the stubbornness to keep the bulk of development in inner-city locations. Limited outer urban land releases have also been another hot topic along with hefty development overlays in growth activity centers, which add, disproportionably, to the capital cost.
Those benefiting from increased equity in their house prices have taken full advantage of Australia’s negative gearing policies to purchase a second, third and fourth investment properties. With more borrowing power than first-home buyers looking for similar established homes, this has locked increasing numbers out of home ownership.
Rents have increased disproportionably to wage growth, and there’s growing disconcertment in the younger population charged with handing over 50% or more of the weekly wage for the privilege of shelter.
How many uncountable reports have there been into extending train lines to outer urban areas to provide greater options for first-home buyers willing to compromise on location and move further out? Better transport systems would enable them to do so. However the reports have resulted in nothing more than expensive promises that remain sitting on a minister’s desk. Along with this, it could be argued that money spent on government first-home buyer incentives has been wasted, ineffectively inflating market prices rather than improving affordability.
The big key to our problem is allowing those who are working on an average wage the chance to enter the property market should they choose to do so. This can only be achieved with lower property prices and more affordable stock to meet demand. Back to the report I cited at the beginning of this article and it boldly announces: “Australia’s future tax system noted that some existing taxes on housing, especially stamp duties, are inefficient and can impede housing supply. The review suggested that reforms such as introducing a broad based land tax, along with changes to the taxation of rental housing and rent assistance, would go some way toward improving housing affordability”.
I don’t know the cost of the ‘Australia’s future tax system” review. However, it’s clear that the current government has firmly ruled out any changes to current models of negative gearing or increases to rental assistance.
As for first-home buyers – the road ahead is bleak. The advice I have is to start saving young and take advantage of the few positive initiatives out there such as the <a target="_blank" href="https://bit.ly/IHqSym">first-home buyers savings account</a>. Don’t be afraid to compromise on expectations and purchase a first property in an area further out from the city where land is more affordable. Considering our population growth and current future economic forecast, outer-suburban locations will continue to attract strong demand.
Keep your feet on the ground and be aware of the sacrifices property ownership entails before stepping in. If you’re prepared and able to tread the road, and have the ability to do so, it’s hard to beat the security that results from owning your own home. It’s just a shame more having been given the opportunity to do so.
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://bit.ly/I7SGaw">The Circle</a> and a senior consultant for <a href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs of property owners Australia wide.
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catherinecashmore-6LXia3pPQj

While governments provide rhetoric and reports, thousands are waiting for real housing solutions

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The Reserve Bank does not expect the residential construction sector to mount a recovery in the near future, assistant governor Philip Lowe has said in a speech comparing the performance of the mining and non-mining sections of the economy.
His comments come as ABS housing finance figures show the number of loans for the construction or purchase of new homes lifted by 3.5% in March but are still tracking at post-GFC levels of below 8,000 monthly mortgage commitments.
Lowe said the RBA had expected dwelling approvals to pick up gradually over 2011, but this pick-up had not eventuated.
He described this as the “biggest surprise” in terms of the demand-side of the economy.
“One possible explanation for this is that it is one of the side effects of a return to more traditional savings and borrowing behaviour by households,” Lowe said.
“This change in behaviour is having ripple effects through the economy, including through a lowering of expected capital gains on housing.
“This has made developers, financiers and households less willing to commit to new construction despite rising rental yields, lower prices relative to income and ongoing growth in population.
“While, at some point, the improving fundamentals should generate a pick-up in home building, the recent forward-looking indicators do not suggest that this is imminent,” Lowe said.
During the speech, Lowe also highlighted that the RBA expects the current low rate of underlying inflation to persist over the next few years, which would give it the flexibility to cut interest rates further.
“The bank’s latest inflation forecast is for underlying inflation, abstracting from the effects of the carbon price, to stay close to its recent rate over the next one to two years,” said.
He also highlighted big differences in the growth rates and demand for goods and services related to the mining sector compared with the non-mining sector, with the March quarter CP data showing “declines in the prices of most goods, the price of domestic holidays, and for the price of new dwellings”.
“These are all areas where demand growth has been soft and firms’ margins are under downward pressure,” Lowe said.
He said the RBA expected overall GDP growth to “return to around trend over the forecast horizon” with recent reductions in the cash rate providing “some boost to demand in the non-mining-related parts of the economy”.
“However, it does seem likely that growth in some sectors will remain below the average experienced over the past couple of decades.
“How things develop will depend importantly on the ability of firms to improve their productivity and on the ability of the labour market to match workers with the new jobs being created.”
 
 
 
 
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lschlesinger-FZcF9M3vE6

No imminent recovery in home building: RBA

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Vendors in Tasmania are set to face higher disclosure requirements when selling their homes under a new set of draft rules being proposed by the Tasmanian government.
The draft Residential Property Transactions Bill 2012 seeks to repeal the 2005 “vendor statement” requirement, which was found after public consultation to be “impossible” to implement, and replace it with a new set of draft requirements.
The new requirements include that vendors provide sellers with third-party documents such as title documents, plans and a section 337 council certificate as well as giving consumers the option to obtain a building inspection report.
The draft rules also give the purchaser the right to rescind a contract in the private treaty sales of residential property during a cooling-off period of five business days after the contract date.
The new draft rules were compiled with the assistance of the Real Estate Institute of Tasmania and the Law Society of Tasmania.
Public consultation carried out by the Tasmania’s Consumer Affairs and Fair Trading (CAFT) in 2010 identified “a number of significant problems” with the vendor statement approach, including that “the property information available to a purchaser would be dependent on the knowledge and memory of the vendor and how long the vendor had owned the property”.
The public consultation also identified that the “vendor statement would require a vendor to make an assessment as to the condition of the property, and to make judgements in relation to matters concerning the legality of building work” and would expose vendors to the risk of legal claims if they “incorrectly answered a question required by the vendor statement in relation to a technical matter”.
In explaining the need for the new rules, CAFT says “there is general support for the view that the principle of 'buyer beware' no longer serves the interests of purchasers”.
“Further it is commonly accepted that purchasers should have the right to access relevant information when deciding whether to purchase a residential property,” says CAFT.
Introducing the bill, Minister for Consumer Protection Nick McKim said the new legislation focused on providing better information to consumers about illegal building works. 
“The draft legislation released today has been developed through collaboration between government and the real estate and legal professions,” he says. 
“I would like to thank the Law Society of Tasmania and the Real Estate Institute of Tasmania for their valuable input to this process. 
“Following the public consultation process I will be moving to finalise the bill and obtain cabinet approval with a view to introducing the legislation into the Parliament before the winter recess. 
“Tasmanian consumers have waited many years for the introduction of vendor disclosure, and I am committed to seeing this regime implemented,” he says. 
The government seeking public comment by June 12, 2012.
 
 
 
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Tasmanian vendors to face higher disclosure requirements 

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I recently wrote about the concept of being a ‘renter-investor’, <a href="https://www.propertyobserver.com.au/landlords/the-pros-and-cons-of-buying-your-first-property-as-an-investment-and-continuing-to-rent/2012031153777" target="_blank">where I reviewed some of the positives and negatives associated with it</a>: 
The more research I conduct, the more I see this trend emerging as an increasingly popular investment strategy. But what of those who go half-way there, as in: owning and occupying their principal place of residence (PPOR) and then renting one or even two of the bedrooms in that dwelling? 
It is certainly a trend that is picking up steam. <a href="https://www.apimagazine.com.au/api-online/news/2012/05/renting-out-rooms-a-popular-option" target="_blank">In fact, a recent poll conducted by PRDnationwide</a> concluded that 14% of respondents already had at least one person renting a room in their PPOR, with one in three home owners considering the idea of renting a room out as a revenue driver.
In fact, a simple Australia-wide search on Gumtree.com.au today reveals over 10,173 listings Australia of users advertising a room to rent in their homes. Sure, a portion of these ads are for those who are renting themselves, and effectively sub-letting. 
I guess what I’m getting to is this: I am currently (and have been for almost two years) a renter-investor, finding the strategy suitable to my lifestyle as well as to my balance sheets in my holding cost analysis Excel spreadsheets. But, having exchanged contracts two weeks ago on a PPOR for myself (yes, I’ve decided I need a permanent place to hang my hat), I am actually less than four weeks away from settlement, and my mind is ticking over to the possibility of renting the second bedroom of this residence. 
But with this notion comes so many additional questions. What of the tax issues apparent with this arrangement? And what of the practicalities? What are your rights (and the rights of your tenant) in a circumstance where you let a room, with no formal lease for which the tenant is to comply to?
I do not have all the answers, but I am keen to raise the questions and get the feedback of the investment community.
1)      Tax issues This is something I’m not sure of. In theory, any income you are earning from a property must be declared to the ATO. But what effect does this have on the “tax-free haven” nature of your principal place of residence? There are those who have suggested that by wording the tenant not as a “tenant”, but as a “lodger” or “boarder” this creates a grey area in which the “intended use” of the property is unclear, however I am not certain this is the best way to play it. I’ve had people I know recommend to pocket the weekly board/rent in cash and not declare it, and because the tenant is not on a formal lease, a formal “investment property revenue” should not be declared to the ATO. I’m keen to hear from the community their thoughts on such a notion. 
2)      Practicalities This is an area in which I bring much more experience. Having house/flat shared for the better part of the last 10 years, both in larger four-person plus share houses, down to two-bedroom apartments with just one flatmate, I can attest to the importance of good tenant selection. You need to consider the practicalities of the space that you will inhabit with one (or more, if relevant) flatmates. Small apartments can be tricky, and you may feel you are living on top of one another. Personality clashes are common, and can help be avoided by proper screening of your flatmate. Remember the gruelling process you have to go through to successfully ‘win’ a rental housing application? Well, agencies do this to ensure they are accepting only the best, most trustworthy future tenants, into a property. You should demand the same from your applicants. Sit them down after an inspection of the room for a more formal interview. Ensure you ask all the right questions (Google this for suggestions; there are many you can ask). 
3)      Tenant (and your!) rights I must be honest; over the years I’ve been lucky with flatmates. Usually they are ‘friends of friends’ (coming with references and trust), or even better, friends of my own. But when interviewing complete strangers, establish a “way we live together” list before they move in. Also, it is your place and you could ask for a bond/deposit. Legally you’d be best to lodge this with the Department of Fair Trading, but this is your call. Make clear the rules of the house, expectations, and especially duration of stay. This will ease any potential clashes or misunderstandings further down the track. 
4)      Industrialisation of the flatmate ‘industry’. The advent of sites like Flatmate Finder is an indication that house/flat sharing is an increasingly popular trend. In fact, niche audiences within this category are now being catered to, thanks to specific niche flatmate-finding sites now gaining popularity. There are sites dedicated to mature/older flatmate seekers, gay and lesbian, and even pet-owning/sensitive flatmate seekers!
While renting a room in your own place may not be a strategy that is for all; it’s one to consider, as it may help with the cashflow of whatever your current living arrangement may be. For investors, it is always going to be about that bottom line. And if you can claw back even a few hundred dollars per month by renting a room, imagine what future growth opportunities you could unlock by pouring that money back into an investment stream of your own.
Cameron McEvoy is a property investor and maintains a blog, <a target="_blank" href="https://propertyspectator.blogspot.com.au/">Property Spectator.</a>
 
 
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The rising trend of renting out part of your home as an investment

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The budget showed that the Labor government intends to win back its traditional voters by pushing money to households through tax cuts and cash bonuses for school children.
But although the budget seemed politically smart, it was built on assumptions rather than certainties.
The primary assumption is that the current government will still be the government in 2013 and beyond. Some of the accounting tricks and new revenue programs used to put the 2012-13 budget in surplus require that the government who put them in place will still have its hands on the levers.
In the current environment, that’s a hopeful assumption.
Secondly, the improved budget position is expected to come about because of cuts to government spending and an increase in tax receipts driven by next year’s expected growth rate of 3.25%.
Strong growth is going to be driven mainly by the mining sector because sectors such as retail, hospitality and manufacturing are not doing well. Yet many factors can arise to change growth forecasts and it will only take one sector of the economy to stumble – mining – and all bets are off.
Thirdly, there’s a raft of carbon tax-related initiatives that have been factored into the budget estimates but the one to watch is the so-called ‘carbon price’ of $29 a tonne.
This represents revenue to the Commonwealth, but the more I read about this carbon price the more it becomes apparent that it is not necessarily the price that will be paid by businesses. In fact, carbon emissions are currently being traded in Europe at below $10 per tonne and the momentum is for even cheaper carbon prices.
So, $29 per tonne actually being levied on Australian emitters is not a given.
Lastly is the Treasurer’s forecast that official interest rates will decrease into 2013. This will apparently stimulate the economy.
Even if the assumption on interest rates is accurate, it’s not entirely consistent with an economy growing at 3.25%.
When the economy grows at 3.25% and household consumption is growing by 3% (as forecast) the Reserve Bank will act to stop inflation. And that will mean interest rates go up.
And we should all be concerned about the 1% reduction in company tax promised to business owners that the government abandoned on budget night.
If you base the coming-right of the economy on strong growth in 2013, then you’d expect Australia’s 2.7 million small business owners, who employ 60% of the workforce, to play some part in that.
I know that the government places their faith in an ongoing resources boom but that still leaves about 85% of the economy who are flat or going backwards.
Many householders will be happy with this budget, but can I suggest that everyone who receives their schoolkids bonus spend it wisely? The world economy is going through a structural change and our best defence – along with surplus budgets – is an educated population.
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance. He runs a <a href="https://twitter.com/#!/markbouris" target="_blank">Q&amp;A session on Twitter</a> every Monday afternoon at 4pm for small business owners using the hashtag #bizQandA.
 
 
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Federal budget was politically smart but built on hopeful assumptions

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What is passing through the mind of the Sydneysider approaching retirement age right now? Standing on the precipice of oblivion, or beginning to quaff the blissful serenity of freedom? ... unless, of course, the kids have moved back in with grandkids in tow.
The baby boomers – those born between 1946 and 1964 – constitute some 25% of Sydney’s population, and for the leading edge of this group – the “imminent retirees” – thoughts of retirement and downsizing are likely to be at the forefront of their minds. And they are beginning to make their plans. Around 80% of the baby boomers own their property outright and – significantly – many also hold investment properties.
With reduced super balances – read sweat and toil of the last 20 years – and no indication of any future success soon, for many, retirement may not be an option in the short to medium term. Indeed, a study by Merrill Lynch (2005) suggests that retirement will be “neither a life of full-time leisure or full-time work”. Similarly, a University of Tasmania study (2007) found that the most likely outcome will be “a phased withdrawal from the labour market over an abrupt cessation from work”. Instead of disappearing, the 65+ers will simply fade away.
The financial model adopted by retirement funds assumes that a retiree will survive on regular series of payments, in a special – almost magical world – where costs (such as electricity and petrol) remain orderly, until the invested capital, and coincidently the retiree, expire around the age of 85 ... but there is an awful lot of living to do in the intervening 20 years. And this is not a generation renowned for its thrift like its predecessors – a good news story for the retail and hospitality sectors. Not so good for any prospective 86-year-olds, or those banking on an inheritance, or those hoping to rise the corporate ladder by filling the retirees’ old positions.
Consequently, some baby boomers may opt to augment their retirement finances by selling the family home and downsize to a more affordable dwelling, while others may sell and move to enjoy the fruits of their next life stage.
Marketing to the baby boomer generation has focussed on larger apartments, with space and storage, good quality design, and offering security and lifestyle. Conversely, a 2001 study by BIS Shrapnel on Sydney’s empty-nesters found that preferences lay in single-level villas, acknowledging that stairs would become an issue in the future. Ideally, dwellings would have ample space, but small, low maintenance gardens – a place for barbecues and grandkids – or better still large balconies as an extension of the leisure-orientated living area with common area rooftop gardens.
A further common theme is that location is paramount – they will not be herded off to Sydney’s Never Never. While some may move away to be close to their children, to find a more affordable dwelling, or move to leisure/lifestyle areas, most prefer where they live and wish to remain there. Developments to accommodate this group need to be strategically placed (walking distance) from their local haunts. The majority will not, so it seems, relocate to the Gold Coast. These people want to live – and live it up – not simply exist.
However, the supply of land for new development in Sydney is tight. After taking into account the cost of land in the established areas and all of the changeover costs, downsizing to a new home doesn’t provide much change after selling your established home – even if the land isn’t as big as their current home. If new dwelling prices stymie the trade down activity of the baby boomer generation, what will be the impact on the market?
The underlying demand for the baby boomers’ family nest egg will come mainly from the Gen X demographic, with some 26% of Sydney’s population; aspiring to provide their children (Gen Y and Z) with something resembling a house with a backyard, sort of like the one they grew up in. But, if family homes are not freed up by the downsizing baby boomers, where will Gen X find their large family home? Chances are the answer lies to the new housing estates on the city fringes, where the land is available. This is likely to continue to diminish housing affordability in established suburbs, where limited houses will be put on the market, and Gen X demand will be pushed to Sydney’s outskirts. But will the Gen X-ers go there or will they opt to reside in apartments closer in?
Conversely, if the baby boomer generation does downsize en masse, then what impact does this have? House price pressures should ease as established housing stock becomes attainable for the Gen X buyers. However, unless NIMBY-ism attitudes and the planning rules were to change, how do you accommodate both the downsizers and the Gen X-ers in their current suburbs where land supply is tight? In addition to approving larger infill apartment projects, up-zoning to medium (or high) density would squeeze more housing out of the land, especially if neighbours co-operated, on-selling their properties as a single site to developers. Simon and Garfunkel cautioned against being “a rock ... an island”, by co-operating, many more should stand to benefit. Moral of the story: if the neighbours are around the same age, get to know them and encourage them to join the local IMBY chapter. Perhaps greed is good after all?
Sydney’s problem is one of undersupply, which has driven price growth. Specifically, an under-supply in the established communities people desire to remain in. Of course, poor planning, decisions of expediency, easy credit and dual income families have also played their part in driving price growth. Something needs to happen within “the system” so that all these people – baby boomers, Gen X, Y, and Z – can be housed; a greater intensity of land use, especially close to commercial and employment centres; a drive to consolidate the larger land parcels in the suburbs to facilitate medium to high density housing would be a (good?) start.
For other retirees, this will be all too hard; another report (Sweeney, 2006) pointed to “aging in place” for reasons centred around emotional attachment and the notion of the “nest egg” for Gen Y children. Most retirees still remain active, and a “seniors’ needs” refurb of the family home is likely to be a distant expense, some 20 years down the track. Perhaps, in the instance where the land is sufficiently large enough, a granny flat extending the family nest to accommodate the kids (and grandkids) on a permanent basis – maybe they’ll even pay for it! – would be cheaper than the commute to the Sydney’s fringes, just as long as it leaves enough room for the Winnebago.
It looks as though we’ve highlighted the issues facing the medium term outlook for the baby boomers – or have we? The truth of the matter is that this is the demographic that has changed the rules to suit their changing needs, why should retirement be any different? There is no one simple answer; this is an issue of lifestyle choice and locality and some of these choices require change – both subtle and dramatic. <a href="https://www.bis.com.au/reports/sydneys_baby_boomers_r" target="_blank">BIS Shrapnel</a> is looking to commence a study examining how the landscape will change, the effects on Sydney’s future housing market, supply and demand patterns, and any sub-regional socio-economic variations. It will flag the policy obstacles and highlight the desired dwelling types and locations.
All of this should be to the forefront of a manager’s mind; anyone involved in property – planning, development, investment, design, government policy, tourism … because the field is changing. New game, different rules. Are you prepared?
Martin Bregozzo is a senior project manager and property economist at <a target="_blank" href="https://www.bis.com.au/">BIS Shrapnel.</a>
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What baby boomers' retirement will mean for the Sydney property market: BIS Shrapnel's Martin Bregozzo

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Kubba Roonga, the Blue Mountains guest house where Sir Donald Bradman took Jesse for their 1932 honeymoon, has been listed for sale.
It’s a rambling 1915 Blackheath guest house now with seven ensuited bedrooms.
Normally associated with Bowral, Australia's most famous sportsman had a soft spot for Blackheath, having knocked up his fastest century – off 22 deliveries – at the local cricket oval shortly before his 1932 stay.
<img src="/images/stories/kubba1.jpg">
Kubba Roonga has a AAA fours-star rating.
Set about 120 kilometres from Sydney, Kubba Roonga sits on 1,315 square metres of English-style gardens close to the spectacular Grose Valley.
The house has open fireplaces, polished timber floors, and stained glass windows. There’s a commercial kitchen and restaurant dining space for house guests.
Ray White Blackheath agent Peter Torok has it for July 1 auction, along with the adjoining 695-square-metre Arcadia Road property, which after its 1915 construction served as the manager’s cottage.
The guest house is tipped to fetch more than $800,000 and the manager's cottage more than $380,000.
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