<p><a href="https://www.apartments.com.au/developers/mayd-group">MAYD Group</a> has set a new residential price record in Queensland with the $30 million sale of the penthouse at its <a href="https://www.apartments.com.au/new-apartments/one-burleigh-88-the-esplanade-burleigh-heads-qld-4220">ONE Burleigh</a> development in Burleigh Heads.</p>

<p>The sale equates to around $37,500 per sqm.</p>

<p>The two-level, 800 sqm penthouse, featuring five bedrooms, five bathrooms, five car spaces, and a private infinity pool overlooking the Pacific Ocean, was acquired by a Gold Coast-based entrepreneur, highlighting continued demand for ultra-premium beachfront product.</p>

<p>Selling agent Freddie Tehle of PRD Burleigh Heads said the result reflects tightening supply of high-quality, large-format apartments in Burleigh.</p>

<p>“There’s very limited opportunity to secure this level of scale and absolute beachfront position in <a href="https://www.apartments.com.au/developments/burleigh-heads-qld-4220">Burleigh Heads</a>,” Tehle said.</p>

<p>“Buyers are increasingly seeking apartments that genuinely replace a standalone home, and this penthouse delivers that with its size, privacy, and direct ocean frontage.”</p>

<p>[smartcode_project:default project_id=146358 project_image_fid=323057]</p>

<p>The sale comes as construction progresses on ONE Burleigh, a boutique development of 17 full-floor residences at 88 The Esplanade, scheduled for completion in early 2027.</p>

<p>Developed by MAYD Group and designed by <a href="https://www.apartments.com.au/architects/mas-architecture-studio">MAS Architecture</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/sici-design">Sici Design</a>, the project has been positioned as a collection of house-sized beachfront apartments, each occupying an entire floor with around 381 sqm of internal and external living space.</p>

<p>When construction commenced, MAYD director Todd Mould pointed to the long-term resilience of premium coastal real estate as a key driver behind the project.</p>

<p>“Real estate, particularly at the premium end, remains one of the most resilient and proven long-term investment avenues,” Mould said.</p>

<p>“Our ambition is that anyone who buys a MAYD-built product can genuinely feel the care, craftsmanship and commitment we bring to every detail.”</p>

<p>[smartcode_project:default project_id=146358 project_image_fid=323055]</p>

<p>Each residence has been configured with four bedrooms, multiple living zones, a private office, and expansive ocean-facing terraces. Interiors draw on a restrained material palette, including travertine stone, timber joinery, and integrated premium appliances.</p>

<p>Interior designer Sici Design said the approach was to reflect the project’s coastal setting through both materiality and spatial planning.</p>

<p>“ONE Burleigh is our vision of luxury living, designed to bring the essence of Burleigh Heads' vibrant coastal beauty into an unparalleled residential experience.”</p>

<p>Residents will have access to a suite of wellness-focused amenities, including pools, sauna facilities, and dedicated relaxation spaces, reflecting a broader shift toward lifestyle-driven apartment design on the Gold Coast.</p>

<p>[smartcode_project:default project_id=146358 project_image_fid=323052]</p>

<p>The project occupies a southern Esplanade site with uninterrupted beachfront frontage, an increasingly rare offering in Burleigh Heads, free from the Norfolk Pines that line much of the coastline and often limit direct ocean outlook.</p>

<p>Mould said the design intent was to balance that outlook with a sense of retreat.</p>

<p>“Living at ONE Burleigh is about how your day naturally unfolds, morning light across the ocean, coffee on the balcony, and being in Burleigh but elevated above the noise.”</p>

<p>The result further reinforces Burleigh Heads’ emergence as one of the Gold Coast’s most tightly held and supply-constrained beachfront markets, where boutique, owner-occupier-focused developments are increasingly setting new price benchmarks.</p>

<p>[smartcode_project_cta:default project_id=146358]</p>


Joel Robinson

MAYD Group sets Queensland record with $30 million penthouse sale at ONE Burleigh in Burleigh Heads

<p>Apartment developers in the Gold Coast are finding new, creative ways to differentiate themselves from competing projects, as new supply starts to flow through up and down the Coast.</p>

<p>Developer Big Projects brought in the renowned Sydney-based design studio YSG to craft the interiors for The Frederick, Big Projects' new Mermaid Beach project and YSG's first move into the multi-residential development space.</p>

<p>[smartcode_project:default project_id=110588 project_image_fid=5346]</p>

<p>It was a strategic move for Big Projects to bring in a Sydney eye to the development.</p>

<p>“Our role is to give our design partners the space and freedom to explore,” says Matt Barrett, Director of Big Projects.</p>

<p>“We wanted YSG Studio to capture the essence of Nobby’s, to design a building that embraces life, light and connection, while creating a genuine sense of place.”</p>

<p>There are only 39 apartments in The Frederick, including a striking beach house, just 100 metres from the booming Nobby Beach precinct.&nbsp;</p>

<p>[smartcode_project:default project_id=110588 project_image_fid=5347]</p>

<p>Yasmine Ghoniem, Director of YSG Studio, says their vision&nbsp;for The Frederick "reinvents coastal living."</p>

<p>“Nobby’s has such an iconic energy, it’s one of those rare pockets of the Gold Coast where the community, the beach, and the streets all feel connected,” Ghoniem says.</p>

<p>"Responding to the neighbouring coastline, soothing curves add a relaxing regional overlay, while unique detailing really sets it apart. It’s a place that feels lived in from the moment you step inside.”</p>

<p data-end="236" data-start="64">A standout feature of The Frederick is its rooftop terrace, an uncommon inclusion for a boutique, low-rise building, where amenity is typically concentrated at ground level.</p>

<p>[smartcode_project:default project_id=110588 project_image_fid=5360]</p>

<p data-end="523" data-start="308">Positioned to capture panoramic views from the hinterland to the ocean, the rooftop has been designed as a series of intimate zones. It includes a pool, sauna, sun decks, workspaces and dedicated entertaining areas.</p>

<p data-end="670" data-start="525">“The rooftop was conceived as a collection of spaces where residents can unwind and connect, an extension of the Nobby’s lifestyle,” Barrett says.</p>

<p data-end="760" data-start="672">Architecture for the project was led by Plus Architecture, with landscape design by LDG.</p>

<p data-end="951" data-start="762">SRQ Projects Director Nick Clydsdale, who is handling sales at The Frederick, says the majority of enquiry is coming from South East QLD and Victorian buyers who have been actively searching between Broadbeach and Mermaid Beach for some time.</p>

<p data-end="951" data-start="762">"They’ve reviewed a number of projects, however this one has stood out for its design flair/ appeal,"&nbsp;Clydsdale says.</p>

<p data-end="951" data-start="762">Site demolition is slated for this month, with construction commencing soon after. Big Projects is targeting a late 2027 completion.</p>

<p>[smartcode_project_cta:default project_id=110588]</p>


Big Projects taps Sydney’s YSG for first multi-residential project at The Frederick Mermaid Beach

<p>Melbourne-based property developer ALTA Property has this week achieved planning approval for the adaptive re-use of a former commercial tower into a $200 million, 169-apartment project at 10 Queens Road, one of the last developable sites along the Albert Park Lake-fronting boulevard.&nbsp;</p>

<p>Set within one of Melbourne’s most sought-after precincts and designed by <a href="https://www.apartments.com.au/architects/fraser-partners-0">Fraser and Partners</a>, the illustrious building will offer unparalleled views across Albert Park Lake, Port Phillip Bay and Melbourne CBD.&nbsp;</p>

<p>The mix of 1, 2 and 3-bedroom residences will be complemented by a ground-floor amenity featuring private dining, a lounge bar, gym and wellness spaces, co-working, outdoor communal gardens, and retail.&nbsp;</p>

<p>The 17-storey building is a masterclass in adaptive re-use, with the existing commercial building’s façade, shell and internal structure to be retained, before high-end residences are built from the ground up in a newly built Albert Park facing addition to the building.&nbsp;</p>

<p>Sitting atop the building will be two 320+sqm penthouses with private rooftop terraces, which are expected to be priced between $9 - $11 million.&nbsp;</p>

<p><img alt="ALTA Property achieves permit approval for $200 million Queens Road tower" data-entity-type="file" data-entity-uuid="aa11211b-5581-43f9-940c-fc84d30a0e61" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/C_04.png?VersionId=Yhf5p_1EgGDu_zOIMFgvA8Ug8j3sTFQs" /></p>

<p>Architecturally, the building will feature a curved, geometric façade that celebrates and elevates the existing structure, with warm, muted tones which were selected to extend the materiality of the existing building rather than contrast it.&nbsp;</p>

<p>Interiors will bring together three metre high ceilings with waffle concrete in some spaces, natural timber, granite and Australian materials, culminating in crafted, generous and considered spaces that are defined by authenticity.&nbsp;</p>

<p>The adaptive re-use means that the Queens Road project will be a sustainability led, high-quality finished product, with a 62% saving in carbon emissions by re-using the existing structure rather than knocking it down and rebuilding.&nbsp;</p>

<p>ALTA Property was launched by Nigel Givoni in 2023, bringing over 25 years of experience in multi level residential delivery.&nbsp;</p>

<p>Melbourne’s property market growth is currently led by apartments. According to RPM VIC Apartments &amp; Townhomes Market Report (April 2026), units are outpacing houses, especially in the middle ring suburbs where median prices hit $757,500 – a four-year high that represents 2.9 percent growth quarter-on-quarter.&nbsp;</p>

<p><img alt="ALTA Property achieves permit approval for $200 million Queens Road tower" data-entity-type="file" data-entity-uuid="647e13d7-b4bc-433a-9bc9-fe3c3dd4f2ec" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/V_06.png?VersionId=ou4NUCWUgA3NAy.6CQJlEdKX50j3dOk6" /></p>

<p>For ALTA Property Founder Nigel Givoni, this performance speaks to the confidence he has in the Melbourne market.&nbsp;</p>

<p>“Queens Road represents a rare opportunity to continue to shape our presence in the Melbourne market.,"&nbsp;Givoni says.</p>

<p>"With a considered project team and a premier site along one of the city’s most sought-after boulevards, we look forward to contributing to the fabric of this established address.</p>

<p>“Other Australian markets are getting a lot of attention, but I believe the depth of value in Melbourne is being overlooked. The fundamentals are strong, population growth is steady and, based on our preliminary conversations with a leading builder, construction costs are beginning to normalise, creating further opportunity."</p>

<p>Givoni says the project is a&nbsp;highly considered example of adaptive re-use, delivering quality, high-end residences, premium hotel-inspired amenities and an architecturally striking façade, all achieved without the need to remove the existing structure.</p>

<p>"We are really looking forward to the market’s response,” he said.&nbsp;</p>


ALTA Property to deliver $200 million Queens Road apartment tower

<p>Construction is set to begin at <a href="https://www.apartments.com.au/new-townhouses/orchard-mews-glen-iris-18-scott-grove-glen-iris-vic-3146">Orchard Mews</a> in Glen Iris, with&nbsp;PC Whitehall &amp; Sons&nbsp;now appointed as the townhome development moves into its next phase.</p>

<p>The development by&nbsp;<a href="https://www.apartments.com.au/developers/montcoeur">MontCoeur</a>,&nbsp;located at 18 Scott Grove, is now around 30 per cent sold, with completion targeted for late-2027.</p>

<p>Orchard Mews comprises a curated collection of three- and four-bedroom customisable townhomes, positioned within one of <a href="https://www.apartments.com.au/developments/glen-iris-vic-3146">Glen Iris</a>’ more tightly held residential streets. The low-density project has been designed by <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>, with landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/jack-merlo">Jack Merlo</a>, bringing together a team known for high-end residential projects across Melbourne.</p>

<p>[smartcode_project:default project_id=150128 project_image_fid=366285]</p>

<p>The development is defined by its focus on flexible living and long-term usability. Each residence includes multiple living zones and a customisable multipurpose room, allowing buyers to tailor spaces to suit changing needs, whether as a home office, additional bedroom, wellness area or entertainment space.</p>

<p>Architecturally, the townhomes emphasise natural light and spatial volume, with dual-aspect layouts and double-height living areas incorporated into the design. Interiors feature natural stone benchtops, premium appliances, and a neutral material palette intended to support everyday functionality rather than statement-driven finishes.</p>

<p>All residences are all-electric and include private lifts and secure double garages, reflecting a broader shift toward sustainability and future-focused housing in Melbourne’s established suburbs.</p>

<p>[smartcode_project:default project_id=150128 project_image_fid=366277]</p>

<p>Outdoor connections are also central to the offering, with a mix of private courtyards and terraces extending internal living spaces and integrating with the landscaped surrounds.</p>

<p>The Scott Grove address places Orchard Mews within close proximity to some of Melbourne’s key lifestyle and education amenities, including Scotch College, Sacré Cœur, Cabrini Hospital and the retail hub of Chadstone. Public transport access is also nearby, with trams and Gardiner Station providing connectivity to the CBD and surrounding suburbs.</p>

<p>[smartcode_project_cta:default project_id=150128]</p>


Construction to commence at luxury Glen Iris townhome project, Orchard Mews

<p data-end="150" data-start="66">A rare new apartment development has been proposed on the fringe of St Ives Village.</p>

<p data-end="370" data-start="152">Developer Newquest Property has lodged plans for a low-rise apartment project designed by well-regarded architecture firm Warren &amp; Mahoney, which is best known for its work in the multi-residential sector in Melbourne.</p>

<p data-end="370" data-start="152">The building, proposed for a 1,916 sqm site on <a href="https://www.apartments.com.au/new-apartments/st-ives-residences-3-5-memorial-avenue-nsw-2075">Memorial Avenue</a> opposite St Ives Village Green, has been designed to blend into the surrounding natural environment.</p>

<p data-end="370" data-start="152"><img alt="St Ives" data-entity-type="file" data-entity-uuid="5c1c7437-2fba-4345-a6d7-05321714ad3e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-04%20at%201.28.46%E2%80%AFPM.png?VersionId=KrYyMaJvNqR7vbx0xbB3Ef8sJ6FuHpmn" /></p>

<p data-end="745" data-start="537">“Drawing inspiration from the pale trunks and flowering canopies of the scribbly gums and blue gums prevalent in the area, a considered material palette was developed,” the architectural design report states.</p>

<p data-end="912" data-start="747">“This palette references the established materiality of the suburb while elevating it through refined finishes to achieve a more luxurious architectural expression.”</p>

<p data-end="1185" data-start="914">Of the 33 apartments proposed, 21 will be three-bedroom residences. The remaining mix includes nine two-bedroom apartments, one one-bedroom apartment and two four-bedroom residences. The development will be supported by 62 car parking spaces and 33 secure bicycle spaces.</p>

<p data-end="1270" data-start="1187">The proposal would replace two single-storey brick buildings currently on the site.</p>

<p data-end="1270" data-start="1187"><img alt="St Ives" data-entity-type="file" data-entity-uuid="21422eaf-09a9-4439-9278-b9bd9daf22a1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-04%20at%201.38.10%E2%80%AFPM.png?VersionId=v.fXSgcUcEscvOZzqcjG5nk3gVqk_Amt" /></p>

<p data-end="1467" data-start="1272">St Ives remains a relatively untapped market for new apartment development. North Shore developer WINIM has a number of projects in the area, while INCA is nearing completion of Ellis Residences.</p>

<p data-end="1635" data-start="1469">More recently, Traders In Purple has lodged plans for one of the denser projects proposed in the suburb, a 75-apartment development on a 5,900 sqm site on Cowan Road.</p>

<p data-end="1635" data-start="1469">NewQuest, a construction, design and development firm, has delivered over 24 projects across commercial, residential, industrial, and lad markets.&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>


First look: NewQuest Property proposes new St Ives apartment development

<p>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.</p>

<p>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;</p>

<p>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.</p>

<p>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.</p>

<p>Even in the low seasons of May and June, occupancy levels reach around 40 per cent.</p>

<p><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" /></p>

<p>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</p>

<p>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.</p>

<p><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" /></p>

<p>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.<span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><span><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" /></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span></span><span><span><span><span><span><span>​</span></span></span></span></span></span></p>

<p>The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;</p>

<p>Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.</p>

<p>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;</p>

<p>Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.</p>


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

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<p>Vacancy rate figures are a leading example of how generalised data can be dangerously misleading for real estate consumers.</p>
<p>Research companies like to publish statistics which describe an entire city in a single figure. One might tell us that “Sydney house prices” have risen 8 percent in the past year, but what does that mean for a metropolitan area with over 700 suburbs and five million residents?</p>
<p>The overall vacancy rate for Melbourne is a healthy 2.1 percent, according to SQM Research, but does that make investment in the city generally safe? Behind that generalised figure lie myriad different situations, including some (like inner-city Southbank and suburban Doncaster) where vacancies are in the 5-6 percent range.</p>
<p>The Brisbane metropolitan area provides a sobering case study for this topic. The overall vacancy rate is 2.9 percent, which is within the accepted comfort zone.</p>
<p>But closer examination reveals some worrying information. The city’s generalised vacancy rate has risen from 2.6 percent a year ago to 2.8 percent in June and 2.9 percent in July.</p>
<p>But specific areas show much higher vacancies and it’s not just the inner-city apartment markets. The unit development frenzy has extended to the suburbs and some precincts have alarmingly high vacancy rates now.</p>
<p>The latest figures show the Brisbane CBD has a vacancy rate of 5.3 percent. Surrounding near-city markets including South Brisbane, Woolloongabba, Kangaroo Point and Fortitude Valley all have vacancies in the range from 4.1 to 5.8 percent.</p>
<p>With major projects under construction, many of these rates will get considerably worse before they get better.</p>
<p>But now suburban markets well beyond the inner-city high-rise precincts are joining this disturbing trend.</p>
<p>There is major new construction of units happening in many of the suburbs on Brisbane’s Northside, in the middle ring suburbs where houses have dominated in the past. Thousands of new apartments received council approval in the financial year just ended. </p>
<p>The suburbs most impacted are Albion, Chermside, Everton Park, Kedron, Gordon Park, Wooloowin and Lutwyche. </p>
<p>The Albion postcode now has a vacancy rate above 9 percent. The postcode covering Kelvin Grove, where major urban renewal projects have been targeted, has a vacancy rate above 5 percent.</p>
<p>The postcode covering Lutwyche and Windsor is at 4.4 percent, while Herston is 4.8 percent. </p>
<p>Chermside’s vacancy rate is currently reported as 3.7 percent but is trending upwards and is likely to go much higher as there is widespread new development in this area. </p>
<p>There was recent publicity for this area, based on a research report that Chermside would become a property hotspot because of projected population growth. This was based on recent residential building approvals. Property marketers weighed in, suggesting this was a good place to buy.</p>
<p>There’s no doubt that the Chermside precinct has many good qualities – well-established residential areas supported by major infrastructure, facilities and jobs nodes. It’s part of a precinct that I wrote about favourably a few years ago, when Brisbane Northside generally was leading price growth in metropolitan Brisbane.</p>
<p>But those days have passed. The momentum has shifted to other parts of the Brisbane market and, in the meantime, developers have dived en masse into the Northside market. </p>
<p>All those positive qualities– population growth, good transport links, employment growth and great services and amenities – can be overpowered and rendered meaningless by one simple factor: oversupply. </p>
<p>Brisbane’s overall vacancy rate of 2.9 percent does not alert us to the reality that places like Chermside have much higher vacancies, which are rising steadily and set to become worse.</p>
<p><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
</body></html>

terryryder-YECXbqmri2

Brisbane unit development frenzy hits the suburbs: Terry Ryder

<html><body>
<p>Seasonal adjustments for department store sales have delivered a bit of a wild ride in recent years, and this month's Retail Trade figures recorded a monster -6.2 percent decline for the sector in July. </p>
<p>It's not the first time we've seen a 'far out' reading for department store retail (last time the figures snapped back the following month) - but we'll have to wait until next month to see whether that happens again.</p>
<p>In any event, this contributed a flat result in seasonally adjusted terms, for just a +0.1 percent increase in trend terms.</p>
<p>Excluding the department stores reading retail turnover would have been up by +0.4 percent for the month, so we'll have to wait and see what next month brings. </p>
<div id="post-body-3081326569916919721" class="post-body entry-content">
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<div class="separator"><img src="/images/2016/09/05/A1.jpg" alt=""></div>
<br><div>Year-on-year retail turnover growth has sagged over the past year to just +2.7 percent, to now sit well below the half decade average.</div>
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<br><strong><span style="text-decoration: underline;">State versus state</span></strong><br><br><div>The powerhouse states New South Wales (-0.2 percent) and Victoria (-0.5 percent) unusually both recorded negative results in July, possibly because department stores have their head offices in Sydney and Melbourne, though nobody really seems to know if that's why.</div>
<div> </div>
<div>The only decent monthly results were seen in Queensland and South Australia.</div>
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<br><div>Over the past year the opening of a new IKEA in Canberra was the spark to create the strongest retail turnover growth in the Australian Capital Territory (ACT), while the southern states have fared relatively well over the year to July.<br><br>This month's surprise negative result knocked the quarterly and annual figures for NSW and Victoria quite hard.</div>
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<div> </div>
<div>Note how demand in the the resources rich Northern Territory has fallen away in tandem with Western Australia, where iron ore and LNG construction projects have recently transitioned to production.</div>
<br><strong><span style="text-decoration: underline;">Department stores crunched</span></strong><br><br><div>Erm, and then there's this. Maybe everyone stopped shopping for a month and there's a rebound pending, or perhaps the timing of revenues being booked is a bit of a lottery.<br><br>Leaving aside the department stores outlier, it's become clear that the household goods boom that piggy-backed off rising house prices as now ended. </div>
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<br><div>Food retail turnover was also weak in dollar terms, in part reflective of soft food prices and intensified competition from low cost supermarkets such as Aldi.</div>
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<br>The best performing sector of the year has been clothing and footwear.<br><br>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>A rubbish result! We won't know until next month whether department store retail turnover was an anomaly, but it was an inauspicious start to Q3 for retail trade!</div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Retail flat again (far out!) Pete Wargent

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<div>In Britain the topical political and media talk is of whether an "Australian-style" points based immigration system should be introduced, without any real clarity about what that would mean in practice.</div>
<div> </div>
<div>Back Down Under it's often said that Australia's population growth must slow if the economy isn't creating enough jobs. This is essentially true for 457 visas, but does overlook the potential underlying demand for other visa classes.</div>
<div> </div>
<div>I previously looked at the newly relaxed international student visa rules which were made effective from 1 July, easing the rules for parents and guardians of primary school age students in Australia.<br><br>The recent election campaign also led to some potentially interesting shifts via proposed policies for...</div>
<div> </div>
<div><strong><span style="text-decoration: underline;"><span>Parent visa rules</span></span></strong></div>
<p><span>In 2016, the percentage of Australians born overseas hit its highest level in 120 years at a massive 28 per cent. </span></p>
<div>
<span>Immigration policies understandably prefer immigrants to be of the young, working (or creating jobs through business), and tax-paying demographic.</span><br><span><br></span><span>Thus over the</span><span> 2015/16 Migration Programme year, parent visa places were capped as follows:</span>
</div>
<ul>
<li><span><strong>1,500 places allocated to Parent (non-contributory) visas </strong></span></li>
<li>
<span><strong>7,175 places allocated to Contributory Parent visas</strong></span> </li>
</ul>
<div><span>This means that your best chance of getting a parent visa in the last financial year was likely <a href="https://www.border.gov.au/Trav/Visa/Fees" target="_blank">to pay</a> the prohibitive A$47,000 for a contributory visa - about A$100,000 for a couple! - while successful sponsorship for standard parent visas was extremely hard to come by. </span></div>
<div><span> </span></div>
<div><span>The unattractive alternative for parents wanting to join their families in Australia was to come in on a one year visitor visa, then leave the country for six months on each occasion. It would be a sore test of anyone's resolve to repeat this process over any meaningful period of time! </span></div>
<div><span> </span></div>
<div>
<span>With some 6.8 million Australians having been born overseas the potential demand for parent visas is massive and growing, particularly from China and India. </span><br><br><span>I wouldn't believe anything a politician told me these days, but Google trends activity shows that </span><span>there has been an explosion of interest in parent visas since the last full Census in 2011.</span>
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<span>It's worth noting that previous rules weren't favourable to Chinese families, due to China's one child policy meaning that most parents naturally had only one child in Australia, which was an obvious mathematical hindrance in proving that the balance of your family lived here. </span><br><span><br></span><span>As at 30 June 2016 due to the caps there were 38,770 persons in the queue for standard parent visas (up 59 percent from last year), and another 5,160 persons for aged parent visas (up 28 percent). </span>
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<div><a href="/images/2016/09/06/Parent.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/09/06/Parent.jpg" alt=""></span></div>
<p> </p>
<div>With standard parent visas presently capped at 1,500 per year, a queue of this size at 30 June equated to a ridiculous 25.8 year average wait time for an application to be processed. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Election pledges</span></strong></div>
<div> </div>
<div>During a keenly contested election campaign the Australian Labor Party (ALP) announced plans to extend visitor visas to parents out to a far more palatable three years - with parents only being required to leave the country for four weeks at the end of each visa term and paying a $5,000 bond to ensure cover for medical and social services.<br><br>Surely a potential vote-winner for the ALP in the rapidly growing migrant communities, particularly in an era where so many young families also strive to be dual-income households. </div>
<div> </div>
<div>As tends to be the way of these things, the Coalition's knee-jerk response was to announce a new parent visa plan itself, especially aimed at Chinese and Indian visitors (provided that new arrivals pay for health insurance and don't rely on the welfare state for health care, shamelessly piggybacking from the ALP proposals!) and allowing for continuous <strong>five year</strong> visitor visas. </div>
<div> </div>
<div>Given that the number of overseas born Aussies is soon to pass 7 million, such a policy could potentially lead to hundreds of thousands of applicants for visitor visas from parents sponsored by Australian citizens, largely from ageing, non-English speakers hailing from Asia (which is not really the ideal target demographic for policy makers).<br><br>For this reason the Coalition's proposed policy denotes that parents of Australian citizens and permanent residents who have lodged a permanent parental visa application "may" be issued a five year visa "on a case-by-case basis". </div>
<div> </div>
<div>In other words, this is an 'out'. Minister Dutton has the discretion to limit the number of visas issued and retains the right for policy to change course henceforth. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>At this juncture there appears to be very little clarity surrounding what will happen with respect to parent visas.</div>
<div> </div>
<div>The Coalition probably doesn't know the answer itself, election pledges doubtless being dreamed up on the hoof in response to the ALP's evidently popular proposal. </div>
<div> </div>
<div>A point here relevant to the property markets is that if Australia does end up with an oversupply of thousands of apartments as many have forecast, there are levers that can be pulled to loosen immigration policies.</div>
<div> </div>
<div>After all, a sceptic would say that if there's a policy that's always guaranteed to garner support from governing parties of either persuasion, it's one aimed at propping up ailing capital city housing markets. </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Immigration levers and the apartment oversupply scenario: Pete Wargent

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<p>In my blogroll I link to some useful sources for the diminishing number of fans of Australian share markets, including Motley Fool (stock picking) and Montgomery (value fund).</p>
<p>Both have put out pieces recently talking about the property market peaking.</p>
<p>Demonstrating excellent efficiency Motley Fool simply released a near carbon copy of last year's note, while by my last count Montgomery has run no fewer than seven articles in a dozen days (could be eight, I've lost count). An impressive hit rate indeed!</p>
<p>Of course, as a property market advisor, I'm duty-bound to say that just as there is no one 'share market', so do homebuyers buy one house, and not the entire real estate market with all of its gleaming dog-boxes in the sky.  </p>
<p>In any case, share market promoters predict property market downturns every year; it's all part of the sales pitch. </p>
<p><strong><span style="text-decoration: underline;">Why property?</span></strong></p>
<p>I do a good deal of my work with hedge funds, and one of the points which often requires explanation to curious visitors from overseas is why everyday Australians even invest in property at all.</p>
<p>Good question. It's partly because Aussies are encouraged or incentivised to do so, since the government invests as close to zero as makes no difference in the provision of rental housing.  </p>
<p>It's also because because Australia is one of the most urbanised nations on earth, with a population broadly set to double by mid-century, and with more than four fifths of that population growth expected to be in just a handful of capital cities. </p>
<p>Investors fancy that by owning property in middle ring capital city suburbs, land prices will rise over time, and over any meaningful period of time they've consistently been very handsomely rewarded for taking that view.</p>
<p><a href="/images/2016/11/11/LAND.jpg" target="_blank">Click to enlarge</a></p>
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<div class="separator">Perhaps even more important than all of the above, it's because with our compulsory superannuation contributions tens of thousands of Mum-and-Dad investors saw their retirement plans cruelly FUBAR by the last share market crash (it's a family blog, so you'll have to look up a few of today's acronyms). </div>
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<div class="separator">Small wonder that people look at bricks at mortar as an investment option with mortgage rates close to record lows. </div>
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<div class="separator"><strong><span style="text-decoration: underline;">Elephant in the room</span></strong></div>
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<div class="separator">Since we're on the subject of asset classes that are set to underwhelm, let's talk about Aussie shares!</div>
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<div class="separator">The towering elephant in the room is that Australia's share market has been performing atrociously, with the ASX 200 some 24 per cent below where it was nearly a decade ago, despite yesterday's bounce and in spite of the lowest interest rates on record ("time in the market....lol).</div>
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<div class="separator">Since December 2012 while record low rates have pushed the S&amp;P 500 around 50 per cent higher, Australia's ASX 200 is struggling to record any gains at all (not that this is a new phenomenon - hardly! - Aussie stocks have chronically underperformed the S&amp;P 500 for well over two decades). </div>
<div class="separator"> </div>
<div class="separator">And what's more, since we have an index that has a fair weighting towards resources stocks, the market is not even heading back to 6000 any time soon, at least not sustainably, however much the vested interests may try to talk it up. </div>
<div class="separator"> </div>
<div class="separator"><span>Thanks to collapsing resources earnings, the market is actually offering less value than all those years ago, not more, as measured by forward PE ratios.</span></div>
<div class="separator"><span> </span></div>
<div class="separator"><span>What's that you say? Ah, you don't invest in the market, you invest in individual securities? Ha, t<span>ouché!</span></span></div>
<div class="separator"><span><span> </span></span></div>
<div class="separator">Yes, I know, I know, it's all about the dividends (assuming that those don't get slashed as well). </div>
<div class="separator"><span><span> </span></span></div>
<div class="separator"><span><span><strong><span style="text-decoration: underline;">Market is not returning to 2007 peak</span></strong></span></span></div>
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<div class="separator">In my opinion, the share market is more likely to fall than rise, just as soon as the latest ridiculous spike in commodity prices inevitably reverses, and as APRA taps on the credit brakes again.</div>
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<div class="separator">When I wrote my first book in 2011, I set out some introductory guidelines for how investors should assess 'value' in the share markets.</div>
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<div class="separator">I noted in that book that healthcare was definitely a sector worthy of attention, not only because I'd previously worked in the listed healthcare sector as a Group FC - spending endless hours and weekends fine-tuning my beloved Annual Reports and ASX releases - but because of our ageing population.</div>
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<div class="separator"><strong><span style="text-decoration: underline;">Volatility</span></strong></div>
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<div class="separator">Share market investors could be forgiven for being confused, as there is a lot of conflicting advice around. Some like to invest actively or trade, others like to invest passively with low fees, others still take a more focused or value approach.</div>
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<div class="separator">As a value investor, Montgomery has previously noted that technical analysis is "nonsense", which may well be so, but TA does at least present market participants with some guidance for when to sell. </div>
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<div class="separator">Value investors need to be rigorous, and to employ a considered judgement call for when a stock is no longer offering value, all the while benchmarking a portfolio against new opportunities as they arise. </div>
<div class="separator"> </div>
<div class="separator">One of the challenges for value investors is that the most mouthwatering opportunities inevitably lie outside the largest listed companies, in smaller and more dynamic businesses with far greater potential for growth.</div>
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<div class="separator">These mid-cap companies have potential for greater returns, and can be more volatile (higher beta, if CAPM is your thing), which means that you might sometimes need to be able to cope with large drawdowns. </div>
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<div class="separator">Here's value stock favourite Vita Group (VTG), for example, which recently crashed spectacularly. </div>
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<br><div>And in the healthcare sector, which has performed tremendously well in recent years, here's another favourite value stock Healthscope (HSO), which has also recently crashed.</div>
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<div><a href="/images/2016/11/11/3%20HSO.jpg" target="_blank">Click to enlarge</a></div>
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<br><div>It's also been quite a rollercoaster ride for value investors' favourite Sirtex Medical (SRX) over the past year, which rose quite impressively before crashing.</div>
<div> </div>
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<a href="/images/2016/11/11/SRX.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><img src="/images/2016/11/11/SRX.jpg" alt=""></div>
<br>A value investor's motto is that you should buy shares like you buy groceries (i.e. BTFD...more acronyms sorry) and therefore theoretically these crashes in the share price can represent buying opportunities.<br><br>Assuming that you still see the intrinsic value stacking up, and assuming that you are right and the market is wrong, that is.<br><br><strong><span style="text-decoration: underline;">Buyer beware</span></strong> </div>
<div>
<br>Like you and me, all businesses have a life cycle. They are born, they grow, and one day, they wither and die (or merge, or get bought out, or taken over).<br><br>For that reason a value investor must know when to sell as well as when to buy.<br><br>
</div>
<div>Forge Group (FGE) was one of Montgomery's "A1" services businesses of yesteryear, while Decmil (DCG) was another favourite, both of which ran into trouble after the resources capex cycle peaked in 2012.<br><br>Fortunately Montgomery is a market pro, and being in the market full time he has the ability to manage risk, so in turn he was able to see the writing on the wall for the mining service sector and sold out in 2012 before the SHTF.<br><br>The way in which this is possible is to forecast the economy and its unpredictable cycles, and to recalculate the intrinsic value of a security on an ongoing basis.<br><br>In my experience, too many amateur investors fall in love with their analysis, and while they enjoy the process of buying stocks they find that breaking up is harder to do (too often they think the market is wrong, when perhaps it is the outlook for the company or sector that has changed).<br><br>Here's what happened to Decmil (DCG), which struggled to stay profitable after the resources investment boom peaked in 2012:<br><br><div class="separator"><a href="/images/2016/11/11/DCG.jpg" target="_blank">Click to enlarge</a></div>
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<div class="separator"><img src="/images/2016/11/11/DCG.jpg" alt=""></div>
<br>Forge Group (FGE) went to the wall almost overnight in 2013 after massive power station losses were unexpectedly revealed to the market, with Forge's Managing Director David Craig (not the singer) noting that the this was "extremely disappointing".<br><br>David Craig (not the singer) proved to a master of understatement as he noted that unexpected writedowns on two power stations for the 2013/14 financial year totalling $127 million were "not acceptable to the board". Probably not that acceptable to shareholders either, tbh.</div>
<div> </div>
<div><a href="/images/2016/11/11/1%20Forge.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/11/11/1%20Forge.jpg" alt=""></div>
<br><div>Even in September 2013, just before the company went into administration, the intrinsic value of FGE was said to be above $13 (when the real value was closing in on $nil, had the full story been disclosed to the market). </div>
<div>
<br>Herein can lie some of the many challenges with value investing in individual stocks - companies can report half-truths, or mask enormous losses, or trade while insolvent, or sometimes even worse. </div>
<br><div>In case you think you won't ever pick a dud stock, recall that Warren Buffett recently took an enormous bath on his huge investment in Tesco, when a corporate fraud was uncovered in the guise of aggressive accounting and overstated profits.<br><br>
</div>
<strong><span style="text-decoration: underline;">ASX to fall</span></strong><br><div> </div>
<div>Don't be duped into believing that the Australian share market offers better value just because the index is still much lower than it was in 2007. It doesn't.<br><br>In fact, in my opinion the index is probably heading lower when the prices of coal and iron ore crash again, and, as always, it's only a matter of time before the next 30 to 50 percent drawdown. So you'd better be prepared. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Why Australians invest in property

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<div>Property transaction volumes are reportedly declining in Sydney, and nationally.<br><br>There are about 9.75 million residential dwellings in Australia, but despite a record construction boom stock turnover has fallen to well below 3 per cent, and way below the historical averages.<br><br>There could be any number of reasons for this.<br><br>Like a property market Jim Bergerac, I took a look through this month's housing finance data angling for clues.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Reason 1 - Staying put!</span></strong></div>
<div> </div>
<div>We know that the ridiculous cost of stamp duty (and selling fees) is a discouraging factor for people wanting to move house in Sydney, the only real question is how much of a factor it actually is.<br><br>Sure, stamp has been around forever, but the bands were designed with old dwelling prices in mind, and only recently have duties become farcically high.</div>
<div> </div>
<div>Stamp duty receipts in New South Wales have more than doubled since June 2013 to $8.63 billion. </div>
<div> </div>
<div>In June 2013 the buyer of a median priced house in Sydney paid about $27,000 in stamp duty, mortgage fees, and transfer duties. Today, they'll pay nearly $45,000.</div>
<div> </div>
<div>That's a lot of capital growth required to justify the costs of moving house, so we'll arguably see a shift towards renovating and staying put (or buying cheap and renovating) just as we did at Sydney's previous cyclical peak in early 2004.</div>
<div> </div>
<div>In fact, that's already happened to some extent in Sydney, while renovations activity is rising steadily in Melbourne and Brisbane.</div>
<p><a href="/images/2016/11/14/b1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/11/14/b1.jpg" alt=""></p>
<p> </p>
<div>People will campaign for higher or different types of property taxes, but it's hard to see it happening in NSW while this unprecedented windfall is enriching the state government.<br><br>The state's finances are in enormous nick - debt free and racking up big surpluses!</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Reason 2 - The trusty buy &amp; hold strategy</span></strong></div>
<div> </div>
<div>A structural change over the medium term has been the "asset lock in" associated with property investors, with the prevailing tax legislation more or less compelling investors to use interest only loans and play a longer term capital growth strategy.</div>
<div> </div>
<div><a href="/images/2016/11/14/B4.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2016/11/14/B4.jpg" alt=""></div>
<div> </div>
<div>Again, investors have been around forever, of course, but since the latest round of monetary easing from 2012 this cohort has become a more substantial force in the larger capitals. </div>
<div> </div>
<div>The recent reclassifications of the stock of outstanding credit from investors to owner-occupiers are all too convenient to be taken seriously.<br><br>In any case, there has still been a 300 per cent increase in outstanding investor credit since 2003. Buy, hold, and compound the capital gains.</div>
<p><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Reason 3 - Offshore investors</span></strong></p>
<div> </div>
<div>What of the residential construction boom?<br><br>In Australia non-residents are generally restricted to the purchase of new dwellings, thereby encouraging new construction, and this is clearly working now interest rates have been dropped.</div>
<div> </div>
<div>The housing finance figures show that domestic owner-occupiers accounted for only 31,500 or so financed purchases of new dwellings over the year to September 2016. </div>
<p><a href="/images/2016/11/14/B2.jpg" target="_blank"> Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/11/14/B2.jpg" alt=""></div>
<div class="separator"> </div>
<div>The numbers are up in the most of the larger capital cities, but not that much in the context of a record residential construction boom.</div>
<p> <a href="/images/2016/11/14/B3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/11/14/B3.jpg" alt=""></div>
<div> </div>
<div>So, who is buying the new stock? Downsizing cash buyers would account for a proportion of new dwelling sales, super funds, and investors sold new stock by 'white knight' middlemen or advisors some more. </div>
<div> </div>
<div>But a huge share would be non-resident buyers, particularly now from China.<br><br>This is also a new trend - FIRB approvals have tripled in only two years!</div>
<div> </div>
<div>The Chinese phenomenon in Australian property in particular is a relatively recent one, so nobody can say for certain what trends will play out, but intuitively it wouldn't be a surprise if most non-resident buyers are in for the long haul.</div>
<div> </div>
<div>Arguably a fair proportion of dwellings bought by non-residents don't even make it to the rental market, let alone become resales. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>Unfortunately - unlike in <em>Bergerac</em> where the culprit was invariably either one of lovable rogue Charlie Hungerford's mates or someone related to the glamorous jewel thief - there is no singular  explanation for why transaction levels are down.</div>
<div> </div>
<div>High transaction costs represent one valid argument. </div>
<div> </div>
<div>Perhaps most people wanting to move house in this cycle have already done so, and the line of willing sellers is becoming exhausted. </div>
<div> </div>
<div>Other prospective vendors may fear that if they sell they might never get into the market as prices levitate away from them, for despite a thousand warnings prices are again forecast to rise strongly in Sydney, Melbourne, and Brisbane in 2017 (and with listings down, there are fewer homes to pick from). </div>
<div> </div>
<div>Certainly with so much hype around, lots of vendors may just decide that the easiest option is to do nothing.</div>
<div> </div>
<div>And finally, arguably a higher proportion of owners and investors are simply using real estate as a long term inflation hedge, due to rising land prices. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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3 reasons why property sales volumes are declining: Pete Wargent

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<p> Get the good oil from SQM Research's annual Boom &amp; Bust report.</p>
<p>"As the table below reveals, SQM Research forecasts an acceleration of dwelling price, with Sydney dwelling prices forecast to rise 11 percent to 16 percent for the 2017 calendar year," the report states.</p>
<p>"The capital city average forecast is for dwelling prices to rise 6 percent to 10 percent."</p>
<p> Click to enlarge</p>
<p><img src="/images/2016/11/17/unnamed.png" alt=""></p>
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<div><span style="text-decoration: underline;"><em>Source: SQM Research</em></span></div>
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<div>SQM has an impressive track record being more right than the rest, even when going against consensus.</div>
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<div>Purchase your copy of the detailed Boom &amp; Bust report <a href="https://www.sqmresearch.com.au/boombustreport.php" target="_blank">here</a>.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Where to for property prices in 2017?

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<p>Many of the Sydney residential markets are showing resilience – refusing to lie down – but the overwhelming weight of evidence is that the big price boom has run its course.</p>
<p>You will note my reluctance to speak about “the Sydney property market” as a single entity. The tendency by media (and many of the attention-seekers, like economists and publicity-obsessed research companies, who feed journalists misinformation) to distil market dynamics for a major city to a single growth figure is really unhelpful and often misleading. </p>
<p>The Sydney metro area, with over 700 suburbs, has many different markets. They’re not all moving as one. To describe Sydney house price movements as a single figure might satisfy a simplistic media but it tells no one anything useful. </p>
<p>My latest analysis of sales data reveals there are still a small number of Sydney suburbs with growth markets, a much larger number which I classify as “plateau” markets (have levelled off a little below the peak), a few that show notable consistency of sales over time, and a small but growing number that I categorise as “danger” markets.</p>
<p>That amounts to lots of different scenarios within the boundaries of the Greater Sydney Area. </p>
<p>If there is any commonality to be found, it’s that the volume of sales overall has dropped in 2016 and that most research sources are publishing data which confirms that the overall rate of price growth has dissipated considerably.</p>
<p>The other common feature is that many Sydney areas are hanging tough. Some of the key factors that drove the boom – the strength of the Sydney/NSW economy and the high level of spending on infrastructure – are still in place.</p>
<p>But some of the other influences – the absence of major growth in the decade pre-2013 and the relative affordability it created – has passed into history. There’s no way that strong level of price growth could continue beyond three years, because price becomes an issue for more and more people.</p>
<p>But a lot of Sydney markets are showing resilience – still making good sales and maintaining strong prices, just without the double-digit annual growth of the recent past. This is one of the reasons I’m not expecting any significant decline in Sydney markets in the near future.</p>
<p>But there are exceptions. There are now eight suburbs which I classify as danger markets. They’re all locations dominated by apartments and they’re places where sales rates have dropped markedly at a time when developers are still bringing lots of new supply to the market.</p>
<p>In some of those standout locations, like Parramatta, the rate of sale is a third of the levels of three years ago. Practitioners who claim Sydney can build unlimited numbers of new apartments because the city has a dwelling shortage are deluding themselves and others. There are specific markets in Sydney heading for major oversupply, regardless of the overall supply-demand situation for the metro area as a whole.</p>
<p>The areas showing the most solidity in the face of the overall decline in the market heat are headed by the City of Penrith. There’s still plenty of life in markets out in the far west – and this is typical of the Sydney places investors should consider to achieve growth in coming years.</p>
<p>Sydney’s property boom was caused by a number of core factors, including the overall strength of the NSW economy and the lengthy period without strong growth pre-2013.</p>
<p>But the biggest single factor for me is the high level of spending on infrastructure. Tens of billions of dollars are being invested and that’s generated economic activity and jobs, while improving the amenity and/or accessibility of locations. Transport and medical-educational facilities are the big ticket items.</p>
<p>So the way forward for investors in Sydney is to follow the infrastructure trail – and, in general terms, that means looking west where the second airport is being built, as well as new motorways and rail links.</p>
<p>Municipalities like Penrith, as well as Blacktown and Liverpool, are the most likely beneficiaries.</p>
<p>Buying property that lies in the path of progress has always been a core method of making money in real estate – and that’s one of the keys for investors contemplating the inevitable wind-down in markets in Sydney.</p>
<p class="Body"><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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Parramatta on list of eight danger property market suburbs: Terry Ryder

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<p>Huh, so much for the predicted 'disorderly rush for the exits'.</p>
<p>4.5 years of rising property prices later listing volumes and turnover rates have sunk to their lowest levels on record, as a percentage of total property stock. </p>
<p>Having executed its IPO, McGrath (ASX:MEA) provided the below chart as part of its Presentation to the 2016 Annual General Meeting.</p>
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<a href="/images/2016/11/25/MEA.jpg" target="_blank">Click to enlarge</a><br><div class="separator"><img src="/images/2016/11/25/MEA.jpg" alt=""></div>
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<div class="separator"><span style="text-decoration: underline;"><em>Source: ASX: MEA</em></span></div>
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<div class="separator">McGrath's diagnosis left little doubt as to the reason for this, being excessively high stamp duty costs.</div>
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<div class="separator">It's a point I've visited here often before. </div>
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<div class="separator">Stamp duty bands were designed with far, far lower dwelling prices in mind.</div>
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<div class="separator">By consistently refusing to raise stamp duty and land transfer brackets authorities are effectively loading more and more up front tax on to property purchases (in addition to other taxes, such as rates and land taxes).</div>
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<div class="separator">By effectively raising the stamp duty from a bit over 1 percent of the purchase price three decades ago to around 4 percent, the tax has gone from being a consequence or by-product of the transaction to an actual barrier. </div>
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<div class="separator">No doubt the stamp duty windfall has been great for state governments and their overflowing coffers, particularly in New South Wales which has raised $8.6 billion in the last year alone and where we have net debt of less than zero for the first time ever. </div>
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<div class="separator">Unfortunately, the high transactional cost of moving is predictably leading to 'asset lock in' and indirectly impacting labour force mobility.</div>
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<div class="separator">Meanwhile investors remain wedded to their buy-and-hold strategies since if they choose to sell they get hit with capital gains tax (not that this stops unthinking 'think tanks' from campaigning for higher CGT). </div>
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<div class="separator">As for non-residents, presumably some of them must sell but I've rarely come across it, probably because they purchase expensive new property and it can take years to break even on that type of stock with its inherent price premium (particularly now with the new levies on foreign buyers loaded on top of stamp duties, plus land taxes). </div>
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<div class="separator"><strong><span style="text-decoration: underline;">Asset lock in</span></strong></div>
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<div>Unsurprisingly capital city owners of houses now hold on to their houses for 10.7 years on average, way up from 6.7 years in 2005.</div>
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<div>Owners of apartments now hold for 9 years, well up from 5.9 years in 2005.</div>
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<div>The negative feedback look has become self-fulfilling, with so little stock available prospective capital city vendors are hesitant to list for fear of becoming locked out of rising markets. </div>
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<div>Due to low listing volumes, McGrath implied that we can expect to see low transaction volumes in FY17. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Listings lowest on record says McGrath: Pete Wargent

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<p>It may be the biggest mistake property investors make: once they have bought something, they stop researching.</p>
<p>There’s a common mentality among real estate consumers that the need to stay informed disappears once you’ve fulfilled your buying criteria.</p>
<p>Prior to purchase, some (not all) will spend some time and/or money on research and advice. But they won’t make the same effort, or any effort, to stay informed beyond acquisition. </p>
<p>I recently hosted a webinar in which Melbourne buyers’ agent and author Miriam Sandkuhler was the guest presenter. One of the key points she impressed upon her audience was the importance of a regular review of your property portfolio and your overall goals and strategies.</p>
<p>Most Australians don’t do that. Set and forget seems to be the overriding philosophy. And many with that approach get caught in bad situations.</p>
<p>Hotspotting receives a lot of distress calls from investors who bought in locations where property values have fallen subsequently.</p>
<p>Sometimes they’ve bought in locations that were never going to perform. But often they’ve bought in an area that delivers growth initially, until something fundamental changes. That causes a downturn in the market – but investor owners often find out too late.</p>
<p>Queensland boom-bust industrial city Gladstone provides a case study. Five or six years ago, this looked like a good place to invest, with three gas projects worth a combined $60 billion (bringing tens of thousands of jobs) poised to start construction. And, for a couple of years, that promise was borne out by results. Rents and prices rose strongly.</p>
<p>But then big changes occurred in that market. One was that developers had flocked in large numbers to that market and too much new product was being built. The problem was exacerbated by the second fundamental shift, which was the decision by the resources companies to use primarily FIFO workforces with personnel staying in temporary accommodation camps, rather than buying or renting local dwellings.</p>
<p>We wrote extensively about the shift in that market and the likely consequences. The message was: stay out of that market – or, if you already own there, now might be a good time to sell before the market drops.</p>
<p>But many of those who had already bought in Gladstone had tuned out. They no longer had their finger on the pulse. By the time many owners realised the tide had turned against them, it was too late to sell without taking a loss.</p>
<p>Anyone who bought in coal-mining town Moranbah in the early part of the century would have enjoyed a decade of the most spectacular capital growth in Australian history. If they’d sold at any point before 2013, they would have made lots of money.</p>
<p>Then the market turned for reasons that are similar to those for Gladstone, with the added element of the big downturn in coal prices. What followed by the polar opposite of the previous spectacular growth. </p>
<p>Similar, though less dramatic, scenarios are being played out regularly in markets around Australia. Two or three years ago the middle-market suburbs on Brisbane’s northside were market leaders for sales activity and price growth. Small to medium sized developers saw an opportunity and suddenly these areas are awash with development of new units and townhouses. Vacancies have risen to unacceptable levels in some suburbs. </p>
<p>If you bought something in that precinct two years ago and then focused on other things, you’re probably not aware of the change in the market.</p>
<p>The message again and again is: you can’t stop the research process just because you’ve filled your current buying criteria. You need to stay up to date. And you need to conduct that regular review of your investment situation suggested by Miriam Sandkuhler.</p>
<p><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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Property price slides in mining towns Gladstone, Moranbah playing out around Australia

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<p>If online listings are any guide, the rental market in Sydney has been tightening lately, with fewer rentals being advertised across a high number of suburbs.</p>
<p>According to the REINSW inner Sydney vacancy rates were unchanged in August at 1.9 per cent, but middle ring Sydney tightened by 0.3 per cent to 1.6 percent, while outer Sydney's vacancy rate of 1.7 per cent was the lowest since November 2015.</p>
<p><a href="/images/2016/09/23/B1-1.jpg" target="_blank">Click to enlarge</a></p>
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<br><div>Smoothing the figures on a 4mMA basis to nip out a bit of the noise shows that Sydney vacancy rates have been fairly flat over the past year in the middle and outer ring, but are some way tighter in the inner suburbs.</div>
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<div>The vacancy rate in Newcastle has sneaked back up to 3 percent.</div>
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<div>The Tenants' Union (TU) Rent Tracker found that Sydney unit rents moved 5 percent higher over the past year, while house rents were 3 percent higher. </div>
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<br><div>Rents have moved sharply higher in Randwick and Woollahra over the past year according to the TU, but regional areas have been found to be "much more stable".</div>
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<div>The TU believes that the CPI measures understate Sydney's rental price growth. Their long run data also shows Sydney rents rising much faster than inflation.</div>
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<div class="x_separator"><span>According to the TU over the last 20 years new rents have generally increased at an average of around 8 per cent across Sydney and 5 per cent across the rest of New South Wales.</span></div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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