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]

Joel Robinson

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

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

A proposal to redevelop one of North Sydney's ageing commercial buildings has taken another step forward, with plans for a 38-storey mixed-use tower adding momentum to the long-awaited transformation of the Alfred Street precinct.

Now on public exhibition through the NSW Government's Housing Delivery Authority-led State Significant Development pathway, the proposal for 271-273 Alfred Street would replace an underutilised commercial building with 95 apartments, ground-floor retail, commercial space and affordable housing. The proposal was submitted by&nbsp;Tara Shore Pty Ltd, acting for the John Taylor Family Trust.

While the project will deliver much-needed housing on the southern edge of the North Sydney CBD, it also represents another piece of a broader precinct that has spent years in planning limbo.

<img alt="First look: New public domain vision underpins 95-apartment North Sydney tower on Alfred Street" data-entity-type="file" data-entity-uuid="7e1ce1b4-38df-48ab-992f-386814d86308" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Alfred%20St%20da%20podium.png?VersionId=sC_h6w.A9VEoB98qsqowPlIoz__sBZBt" />

Despite its proximity to both North Sydney Station and the Victoria Cross Metro, redevelopment of Alfred Street has progressed slowly over the past decade as broader planning controls, zoning and building heights remained unresolved. The introduction of the Housing Delivery Authority pathway has provided a new avenue for projects to progress, allowing rezoning and development assessment to occur concurrently and unlocking sites that have long been earmarked for renewal.

Designed by Office of Cortese &amp; Gilder, the proposal seeks to do more than replace an ageing office building. The architects have positioned the project as the first stage of a wider public domain vision that would improve pedestrian connectivity and create a more cohesive mixed-use precinct as neighbouring sites are redeveloped over time.

The proposal includes a widened Alfred Street setback, new street trees, landscaping and outdoor seating, along with a landscaped through-site pedestrian link connecting Alfred Street with Little Alfred Street. The connection is intended to become the first section of a future east-west pedestrian network extending across the precinct.

<img alt="First look: New public domain vision underpins 95-apartment North Sydney tower on Alfred Street" data-entity-type="file" data-entity-uuid="8ea39ac3-46ad-4562-b4a0-b862e91c2dda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Alfred%20St%20da%20site.png?VersionId=K7umCd21KpetEFuVfsPlnJKhUOsmTTdV" />

The mixed-use tower would comprise retail space at ground level, commercial uses on level two and apartments from level three upwards.

In total, the development would deliver 95 apartments, including nine one-bedroom, 28 two-bedroom, 56 three-bedroom and two four-bedroom residences. Twenty-one apartments, representing 15 per cent of the residential gross floor area, would be secured as affordable housing and managed by a registered community housing provider for at least 15 years.

Nine basement levels would provide 133 resident car spaces, seven motorcycle spaces and 111 bicycle spaces.

According to the Architecture and Urban Design Report, the public domain strategy is designed to transform what is currently an inward-facing commercial edge into a more active and connected pedestrian environment, creating a stronger relationship between the commercial core and surrounding residential neighbourhoods.

Office of Cortese &amp; Gilder has also prepared a broader public domain framework spanning neighbouring properties between 263 and 283 Alfred Street, arguing that a coordinated approach to redevelopment will deliver better public spaces, improved tower separation and a more connected streetscape as the precinct evolves.

The proposal comes at a time where North Sydney is slated for future residential growth. Commercial developer FiveX has residential plans for the neighbouring site at 275 Alfred Street. They've proposed a 39-storey mixed-use tower with 184 apartments, while Freecity was recently approved for nearly 300 apartments across a 51-storey building on Walker Street.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-freecity-gets-green-light-for-mixed-use-apartment-and-hotel-tower-in-north-sydney">First look: Freecity gets green light for mixed-use apartment and hotel tower in North Sydney</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-plans-39-storey-residential-tower-in-booming-north-sydney">First look: Fivex plans 39-storey residential tower in booming North Sydney</a>

&nbsp;

Alfred Street the latest North Sydney pocket to be transformed by residential development

Buyers considering a residence at boutique Gordon townhouse development <a href="https://www.apartments.com.au/new-townhouses/lume-gordon-43-47-dumaresq-street-gordon-nsw-2072">Lume</a>&nbsp;now have another reason to bring forward their decision.

For a limited time, purchasers of a residence at Lume will receive a BMW iX3 50 electric SUV, valued at more than $120,000, as part of their purchase. The offer is designed to add value for buyers while complementing the lifestyle envisioned for the architecturally designed Upper North Shore development.

Scott Timmins, Development Manager at <a href="https://www.apartments.com.au/developers/winim">WINIM</a>, said the partnership was created to provide buyers with a compelling reason to act.

"In today's market, buyers need a compelling reason to act now, and the BMW partnership was designed to create that catalyst. We wanted to add genuine value for our future purchasers. Choosing the all-electric BMW iX3 50 also reflects the values behind LUME, forward-thinking design, innovation and a more sustainable way of living. It's a premium incentive that complements the lifestyle our buyers aspire to and rewards those who commit early."

[smartcode_project:default project_id=7354 project_image_fid=374893]

Delivered by WINIM in partnership with Burtonwood Investment Partners, Lume comprises 14 architecturally designed two, three and four-bedroom townhomes created for families seeking the space of a freestanding house with the ease of modern, low-maintenance living.

The three-storey residences, designed by award-winning architecture practice <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, have been tailored for families and multi-generational living, featuring private internal lifts, flexible lower-level spaces, generous open-plan living and entertaining areas, media rooms, and landscaped outdoor spaces with custom outdoor kitchens.&nbsp;

Inside, engineered oak flooring, bespoke dining joinery with integrated wine fridges and backlit bars, sculptural porcelain bathrooms, Parisi freestanding baths and Astra Walker tapware create interiors that balance functionality with refined finishes.

Each townhome has been designed to combine generous internal spaces with sustainability initiatives such as EV charging infrastructure, while <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>'s landscaped communal areas, centred around a restored creek line and native planting, encourage residents to connect with nature and spend more time outdoors.

[smartcode_project:default project_id=7354 project_image_fid=269527]

Rothelowman's Gary Tsui said the architecture was conceived to respond carefully to its Upper North Shore setting.

"Our vision was to create elegant, uplifting homes that draw on and positively contribute to the local character through meticulously considered design and an interaction with the surroundings."

The communal landscape has been designed as more than an open space between homes. Arcadia's Ben Newell and Kate Phillips said the adjoining reserve provided an opportunity to create a distinctive natural retreat for residents.

"Just as waterways carve their way through Ku-ring-gai's landscape, a raised boardwalk weaves through the reserve, connecting the homes to this tranquil oasis."

[smartcode_project:default project_id=7354 project_image_fid=374892]

Located just 300 metres from <a href="https://www.apartments.com.au/developments/gordon-nsw-2072">Gordon</a> Village and Gordon railway station, Lume offers convenient access to Sydney's CBD while placing residents close to some of the North Shore's leading schools, including Ravenswood, Pymble Ladies' College and Knox Grammar. Lane Cove National Park, Gordon Golf Club and a range of cafés and restaurants further reinforce the family-focused lifestyle on offer, with the BMW iX3 50 complementing everything from local trips around Gordon to weekend drives and city commutes.

Construction is underway with completion expected in mid-2027.

[smartcode_project_cta:default project_id=7354]

Boutique Gordon townhomes now come with a BMW iX3 50

Two apartments have sold for more than $10 million at EADE Byron Bay, setting some of the highest apartment prices ever achieved in the coastal town and underlining the growing appetite for luxury beachfront apartments in Australia's most popular coastal locations.

The $210 million project by Vitale Property Group has now secured more than $70 million in sales, led by residences that changed hands for $12.75 million and $11.75 million.

The record-breaking transactions reinforce the shift occurring in Byron Bay's premium property market, where affluent downsizers and lifestyle buyers are increasingly opting for high-end apartments over large beachfront homes.

<a href="https://www.apartments.com.au/new-apartments/eade-byron-bay-29-shirley-street-byron-bay-nsw-2481">EADE Byron Bay</a> occupies a rare 6,000 sqm absolute beachfront site on the corner of Shirley and Milton Streets overlooking Main Beach and The Wreck surf break, just 350 metres from Byron Bay's town centre.

The 25-residence development is the first beachfront apartment project approved in Byron Bay in more than a decade and is currently under construction, with completion expected in May 2027.

[smartcode_project:default project_id=145590 project_image_fid=359521]

The project has attracted a mix of local Byron Shire residents downsizing from larger homes, alongside interstate buyers from Sydney, Melbourne and Brisbane seeking a permanent coastal lifestyle without compromising on space.

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a> and with interiors by <a href="https://www.apartments.com.au/interior-designers/alexander-co">Alexander &amp; Co</a>, EADE comprises&nbsp;10 garden apartments ranging from 284 sqm to 622 sqm, nine with private pools, five full-floor apartments and 10 rooftop residences with private plunge pools, expansive outdoor entertaining areas and uninterrupted ocean views.

[smartcode_project:default project_id=145590 project_image_fid=359527]

<a href="https://www.apartments.com.au/developers/vitale-property-group">Vitale Property Group</a> Managing Partner Chris Vitale said the project's combination of scale, location and limited future supply was driving buyer demand.

"There isn't another beachfront holding in Byron Bay of this size and position that could be developed again," Vitale said.

"Buyers are responding to the scarcity and the irreplaceability of a site of this calibre and to floorplans they can't find elsewhere in the market.

"We are seeing buyers place significant value on quality, space, design, resort-style amenities and the rarity of the location. The sales achieved to date demonstrate that discerning purchasers recognise the long-term significance of what is being created at EADE Byron Bay.

"Many are coming from larger homes in the Byron region, or from Sydney, Melbourne and Brisbane, and are after the space, security and convenience, without the upkeep of a house."

&nbsp;

[smartcode_project:default project_id=145590 project_image_fid=359523]

The Byron Bay project follows Vitale Property Group's delivery of the Mondrian Hotel and Private Residences at Burleigh Heads, with EADE continuing the developer's focus on luxury coastal developments.

Residents will have access to a resort-style swimming pool, gymnasium, sauna, cold plunge pool, concierge services and dedicated workspaces, while the project is targeting an 8-Star Green Star rating.

EADE Byron Bay is being exclusively marketed by Projx Australia in conjunction with WHITEFOX Projects.

WHITEFOX National Projects Director Phillip Rand said demand had been driven predominantly by owner-occupiers.

"We are seeing buyers at EADE place significant value on quality, space, design, resort-style amenities and the rarity of this location," Rand says.

"The sales achieved to date demonstrate that purchasers at this level recognise the long-term significance of what is being created at EADE Byron Bay."

Residences at EADE Byron Bay are currently priced between $4.75 million and $15.95 million.

&nbsp;

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&nbsp;

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[smartcode_project_cta:default project_id=145590]

Vitale breaks Byron Bay records with EADE sales flurry 

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

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About 3.7% of Australian dwellings are now worth less than their original purchase price, according to a comprehensive RP Data analysis.
The decline in property prices following the global financial crisis has had its biggest impact in Queensland, where about 6.3% of all properties are in negative equity.
Queensland is followed by Western Australia, where about 4.9% of properties are worth less than the owners paid.
The Queensland districts with the highest negative equity are far north Queensland, the Gold Coast and Sunshine Coast.
For homes purchased from 2008, the RP Data findings show that 7.7% are now worth less than what the owner paid.
An estimated 13.3% of post-GFC buyers in Queensland are likely to be in negative equity, with the property likely to resell at less than its purchase price.
Queensland is followed by Western Australia with 9.6% in negative territory post-GFC and Tasmania with 9.5% negative equity since the 2008 economic downturn.
“The global financial crisis began affecting housing markets in 2008,” Tim Lawless, RP Data national research director, says.
“The home owners that are at the greatest risk of home values moving below their purchase price are those that have purchased since 2008,” Lawless says.
The Australian Capital Territory was ranked as the least affected, with just 1% showing negative equity. Victoria followed, with 1.8% of Victoria’s owners considered negative-equity households.
But the report concluded that 45% of home owners across Australia are sitting on a nest egg that’s worth at least double what was paid.
“Strong value growth in property over recent years has been the catalyst for most regions enjoying quite strong levels of equity,” Lawless says.
“Over the five years to June 2011 capital city home values have increased by about 30%, providing a significant wealth boost to most home owners during this period.
“More recently the Australian housing market has softened and home values are down 2.7% between their October 2010 peak and June 2011,” Lawless notes.
RP Data estimates that Australia’s residential housing market is now worth $4.56 trillion – almost four times the value of the $1.3 trillion Australian equities market.
RP Data’s report measures the difference between the original purchase price of a home and the current valuation for individual properties around the country.
The property valuations used in the analysis are based on RP Data’s automated valuations model, where the value of more than 8 million dwellings is regularly estimated across Australia.
The report does not factor in home owner debt levels.
Worst-performing areas
<img src="/images/stories/worstareas.gif">
 
Best-performing areas
<img src="/images/stories/bestperformingareas.gif">
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jchancellor-FAypfDUnLy

Queensland hit hardest post-GFC as 6.3% of homes worth less than their purchase price

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Three of the four Richmond properties on the hit Nine renovation series The Block 2011 are now available for rent as its emerges that all four cottages were bought by investors.
Katrina and Amie's furnished house at 41 Cameron Street, which sold for $860,000, is the cheapest rental – listed at $950 a week through Hocking Stuart agent Stephen Chamberlin. It would reflect a 5.74% gross yield.
The three-bedroom, two-bathroom home at 39 Cameron Street renovated by Polly and Waz, which sold under the hammer for $855,000, is for lease at $995 a week through Brant Williams, of Advantage Property Consulting. Its asking rent reflects a 6.05% gross yield.
The dearest home on The Block at 37 Cameron Street, which Josh and Jenna sold for $1 million, is for rent at $1,250 per week through Woodards Carnegie. It reflects a 6.3% gross yield.
Rod and Tania Walsh's property at 43 Cameron Street has yet to appear. It was bought at $922,000 by a Melbourne couple as an investment through Jellis Craig agent Clayton Smith.
The indicative gross rental yield for <a target="_blank" title="Richmond" href="/news">Richmond</a> houses is 3.5%, according to RP Data.
The depreciation reports for the renovated homes heightened investor interest in the offerings.
The depreciation reports were been prepared by BMT Tax Depreciation Quantity Surveyors, which have inspected the older properties – now renovated – and estimated what a buyer could claim in deductions in his or her tax returns.
The house renovated by Polly and Waz at 39 Cameron Street could have an initial maximum $27,000 claimable depreciation in its first financial year. Its depreciation would peak in its second financial year at $29,700.
The house at 37 Cameron Street, which Jenna and Josh renovated, has an initial $25,000 claimable depreciation.
The house renovated by Katrina and Amie at 41 Cameron Street could have an initial maximum $28,000 claimable depreciation in its first financial year. Its depreciation would peak in its second financial year at $30,000.
It is estimated the renovated house at 43 Cameron Street, renovated by Rod and Tania, could have an initial maximum $29,000 claimable depreciation in its first financial year. Its depreciation would peak in its second financial year at $31,500.
Even though the buyers will not have carried out the work themselves, the ATO allows property investors to claim a deduction related to the building and plant and equipment items contained within it. It can be claimed by any owner of an income-producing property.
The asking rents for 41 Cameron Street and 39 Cameron Street are<a target="_blank" title="Friday Form Guide" href="https://www.propertyobserver.com.au/victoria/friday-form-guide-yields-of-up-to-7.5-on-the-block/2011081851199"> far higher than what their agents estimated for their rental potential before auction</a>. The asking rent for 37 Cameron Street is in the rental estimation range provided by Roberts pre-auction.
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Block Richmond properties hit the rental market with yields of up to 6.3%

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A leading housing academic has taken a swipe at Australian property investors and warns that drastic tax changes are needed to prevent the “landed gentry” from making housing affordability even worse.
Ian Winter, executive director at Australian Housing and Urban Research Institute, says the upcoming Canberra Tax Forum should consider measures to limit negative gearing and replace the stamp duty tax system.
He says the “fair go” of the Australian housing market has disappeared.
“Property has become a speculators’ picnic, with homes treated more like share portfolios than as a basic human need,” he says writing for academic commentary website <a href="https://theconversation.edu.au/" target="_blank">The Conversation</a>. 
Winter warns the current imbalance in the housing market calling Australia “a nation of landlords and renters rather than a nation of home owners”.
“With 22% of Australians owning 55% of the homes across our capital cities, the landed gentry are on the rise,” he says.
According to Winter reforming the tax regime as it applies to housing has the potential to improve the lives of many Australians.
“If we get the settings right we can do some good,” he says.
Measures that could work have already been identified in the Henry Tax Review.
These include limiting negative gearing provisions and replacing state-levied stamp duties with a broad-based land tax.
“Limiting negative gearing provisions for residential landlords would likely see an increase in the supply of private rental accommodation from equity investors, such as superannuation funds,” he says.
“Henry’s proposal to replace stamp duty with a broad-based land tax levied on an individual rather than aggregate basis could also see prices drop by up to 10%.”
But he warns that getting the tax changes wrong could make things with the “current generations of wealthy property owners will be responsible for leaving behind a housing system far worse than the one they inherited”.
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lschlesinger-FZcF9M3vE6

Housing academic says 'landed gentry' destroying 'fair go'

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As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
 
It never ceases to amaze how distorted investment thinking can get among even seasoned professionals. A classic example is the very different approaches taken to Australian commercial and residential property in the superannuation fund sector. 
Of the nearly $1 trillion in non-self-managed superannuation money (i.e., held by retail, public, government and industry funds), the average portfolio weight to “real estate” is between 10% and 15% of all fund assets. 
Now the rational observer might reasonably assume that there would in turn be a say, 90:10 split in favour of residential over commercial given the relative asset class sizes. The total market capitalisation of private residential property is about $3.6 trillion based on Rismark’s best estimates. In contrast, the total value of all core commercial, industrial, retail and wholesale property is less than $300 billion, according to RMIT. That gives us a rough 90:10 split. 
Another way of building portfolios is via much more sophisticated “mean-variance optimisations”. We have applied this technique over the last 30 years of data and the results are even more damning: you don’t allocate any money at all to commercial property because of its lower total returns, higher volatility, and strong correlation with the business cycle. 
One could also fairly argue that since more than 30% of contributing superannuants have zero exposure to residential property, and those who do have access own one very risky individual asset and presumably possess a powerful motive to get diversification to a truly national portfolio (much like if you only owned Fortescue shares and wanted to diversify across the whole market), super funds have a logical incentive to deliver these imperatives. 
The final nail in the asset-allocation coffin is the risk, return and correlation characteristics of Australian housing. The table below summarises all the major asset-classes’ performance over the last three decades, which is the longest period over which can objectively evaluate the data.
<img src="/images/stories/joyesept281.gif">
On a risk-adjusted basis, a national portfolio of Australian housing has consistently outperformed Australian shares, global shares, Australian bonds, and Listed Property Trusts (LPTs). The “uncorrelated” feature of residential property returns vis-a-vis equities, whereby housing yielded strikingly superior performance during the 1987 stock market crash, when shares fell 44%, the 2001 tech wreck, when global equities collapsed by around 50%, the 2002-03 period, when Australian shares were down 10% to 15%, and 2007-09, the GFC, when Aussie and global equities once again halved in value, implies that housing is a valuable portfolio “diversifier”. 
The most remarkable thing is that notwithstanding the compelling evidence above, your typical Australian super fund has no allocation at all to housing. That is, the 10% to 15% investment in real estate is dedicated almost exclusively to commercial property. There seem to be few sensible reasons for these decisions. 
One controversial explanation that has been proposed to me is that super funds suffer from an insidious form of “industry capture”. In short, most of the executives responsible for managing real estate investments within super funds previously worked in the commercial property sector in one capacity or another. The same is true of the super funds’ advisors: almost all “asset consultants” that focus on real estate come from commercial property backgrounds. 
This possibly gives rise to an instinctive bias to pursue commercial property strategies. At the margin, there are a few funds that do have some residential development holdings. But in an investment sense these are far removed from the traditional, established housing stock. 
There are good reasons why banks happily lend to established housing but avoid developers like the plague: the probabilities of loss are far greater with the latter, as they are with commercial property. Development assets tend to be located on the fringes of cities with lower quality public infrastructure and amenities. The demand for these homes is often less certain while the buyers frequently have lower incomes. This is why the “risk-weighting” APRA forces the banks to apply to commercial property and developer loans is multiples the risk-weighting attached to established residential loans. Through the business cycle, established housing credits have proven to be much safer (as we shall see shortly). 
It is easy to highlight the comparative risks of commercial and residential property. In the first chart below we contrast the performance of the ASX LPT Accumulation Index (reinvesting dividends) with the total net returns generated by Australian housing in the period since 1982. To proxy for housing’s performance, we have used the capital gains plus only half of the gross rents to control for transaction costs. 
 
<hr class="system-pagebreak">
 
Over the past 29 years, a national portfolio of Australian residential property has produced superior total returns (10.6% per annum) with, crucially, nearly one-third the risk. This was borne out most graphically during the GFC. The peak-to-trough fall in the LPT index was a stunning 69% even allowing for dividends. On the other hand, the peak-to-trough fall in boring old bricks and mortar was less than one-10th this amount. Click to enlarge
 
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/joyesept282.gif"><img src="/images/stories/joyesept282thumb.gif"></a>
Those in the commercial property industry would argue that the ASX-listed returns tell an artificially negative story apropos their asset-class. They instead prefer to use “unlisted returns” measured by a group called IPD. The problem with these unlisted performance estimates is that they are based on human valuations of capital growth over time. They are not based on actual sales data, or the judgments of thousands of investors participating in an actively traded market.
Many of these unlisted valuations are also commissioned by the fund managers that own the underlying assets, which presents a well-known, albeit rarely acknowledged, conflict of interest. In brief, it has been repeatedly documented that human valuations of commercial properties significantly lag real-world events and materially underestimate true losses. This is why we prefer to rely upon the day-to-day pricing afforded by a market such as the ASX. For the record, the house price data we use here is based on around 40,000 home sales a month, and does not include any human valuations.
On the basis of the analysis presented herein, the really big “bubble” was in commercial real estate, not residential property. 
A similar observation applies to Australian shares. In the next chart I have added the All Ordinaries Accumulation Index to our analysis (grey line), and telescoped in on the past 10 years of data (although note this stops in March 2011, and does not account for the recent share market correction).
Once again, the take-away is that by far the two biggest bubbles were in domestic shares and commercial property. This was illustrated by the tremendous price appreciation generated in the years before the GFC (observe the stunning rise in the blue and grey lines) followed by precipitous 50% plus declines. Australian housing just did what it always does: produced low volatility (viz., risk) total returns that typically track changes in disposable household incomes and borrowing capacity. Click to enlarge
 
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/joyesept283.gif"><img src="/images/stories/joyesept283thumb.gif"></a>
 
<hr class="system-pagebreak">
 
In recent years, the RBA has gone to great lengths to highlight the fact that commercial property investments are more hazardous than established housing exposures (see <a href="https://www.businessspectator.com.au/bs.nsf/Article/The-pitfalls-of-commercial-property-pd20100702-6Y9ZX?OpenDocument&amp;src=is&amp;cat=property-al">here</a>). It is widely accepted that bad commercial property loans in 1991 almost bankrupted ANZ and Westpac. 
In this context, the chart below depicts the losses realised by CBA in different parties of its credit portfolio over time. Observe that during the 1991 recession, when unemployment peaked at around 11%, CBA, like the other major banks, suffered an enormous increase in bad debts. These were, however, almost exclusively attributable to CBA’s “business lending” activities, which includes commercial property. Despite a huge increase in unemployment and double-digit mortgage rates, CBA’s losses on its home loans (lower red line) hardly budged. Importantly, a similar pattern reasserted itself during the GFC.
<img src="/images/stories/joyesept284.gif">
The RBA’s bi-annual Financial Stability Review (FSR) is the single most authoritive Australian study on the banking system’s risks. In examining these issues, the RBA offers some fascinating comparisons of the commercial and residential property asset-classes.
The first RBA chart I want to highlight is effectively two diagrams compressed into one. The left-hand-side panel shows commercial property prices in <country-region>Australia</country-region>, the <country-region>US</country-region>, <country-region>UK</country-region>, <country-region>France</country-region>, <country-region>Ireland</country-region> and <country-region><place>Spain</place></country-region> over the period 2003 through to 2011. What is especially interesting is that the RBA’s analysis demonstrates that Australian commercial property prices (blue line) surged way past peer country rates of growth in the years preceding the GFC (note the large protrusion above the other lines). And while Australian commercial property prices naturally fell by a very substantial margin, they remain materially above any comparable country today.
<img src="/images/stories/joyesept285.gif">
In the right-hand-side panel the RBA conducts the same analysis for residential property. Here the results are very different. You can see that in the period 2003 to 2007 Australian house price growth was substantially less than that witnessed in the US, UK, France, Ireland and Spain. In contrast to commercial property, the relative “outperformance” only emerged in the years following the GFC, which makes sense given <country-region><place>Australia</place></country-region>’s underlying economic outcomes. Indeed, even accounting for the deep European recessions, Australian house price growth since 2003 has been substantially less than its French equivalent.
Rismark recently undertook a similar study comparing Australian and <country-region><place>UK</place></country-region> house price growth over a longer period. We used the UK Academetrics house price index because it employs the UK Land Registry’s information, which includes 100% of all <country-region><place>UK</place></country-region> home sales. Other <country-region>UK</country-region> house price measures, such as the <place><city>Halifax</city></place> or Nationwide benchmarks, cover less than 15% of all sales.
Notwithstanding the implosion and ensuing nationalisation of much of the UK banking system, and the exceptionally acute recession experienced in that country, house price growth in Australia and the UK has been nearly identical over the last two decades. In fact, what is most noticeable from this analysis is the much more rapid run-up in <country-region><place>UK</place></country-region> house prices (red line) in the years before the crisis, which significantly exceeded Australian gains. Click to enlarge
 
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/joyesept286.gif"><img src="/images/stories/joyesept286thumb.gif"></a>
 
<hr class="system-pagebreak">
 
I want to conclude today’s column with some more charts from the RBA’s Financial Stability Review. The first examines “non-performing” home loans (ie, mortgages in arrears) in <country-region>Australia</country-region>, the <country-region>US</country-region>, <country-region>UK</country-region>, <country-region>Canada</country-region> and <country-region><place>Spain</place></country-region>. What is important to remember when studying this chart is that mortgage rates in <country-region><place>Australia</place></country-region> are much higher than they are in other countries. All things being equal, that would suggest that the probability of default should also be higher in <country-region><place>Australia</place></country-region>. Yet according to the RBA’s latest information, only 0.8% of all Australian home loans are currently three months or more behind.
<img src="/images/stories/joyesept287.gif">
If we assume that there are about 5 million households with mortgages, that implies that only 40,000 are materially behind on their repayments. That is slightly less than the monthly number of sales transacted in <place><country-region>Australia</country-region></place>’s housing market. While the default rate has understandably trended up as the RBA has lifted interest rates to above-average levels, it remains very low by international standards (compare the lower blue line with the <country-region>US</country-region>, <country-region><place>UK</place></country-region>, Spanish and Irish rates). 
The next chart I want to reflect on quantifies the size of “impairments” in <country-region><place>Australia</place></country-region>’s banking system by loan type. As is the RBA’s wont, we are looking at three different charts compressed into one. The first left-hand-side panel shows impairments of residential home loans. Focus on the red line. We can infer here that there are about $2 billion worth of “bad” home loans in <country-region><place>Australia</place></country-region>. In total, there are more than $1.1 trillion home loans outstanding, so only 0.2% are truly impaired.
<img src="/images/stories/joyesept288.gif">
The blue “past due” line above the red impairments looks to be around $8 billion. That makes intuitive sense: if we multiple the 0.8% national mortgage default rate by the $1.1 trillion of loans outstanding we get $8 billion to $9 billion. If we multiply the 40,000 borrowers who are three months behind on their repayments by the average loan balance of $200,000, we also get about $8 billion. 
Now move to the next, middle panel in the chart above. This shows the same analysis for all the banks’ “business” lending activities. Observe how total impairments are around $20 billion. That is, the size of business impairments in <place><country-region>Australia</country-region></place> is about 10 times larger than residential home loan impairments. Recall that this is similar to what happened in the 1991 recession: most bad debts in the banking system originated from the business, not residential, lending portfolios. 
In the next chart, the RBA splits out commercial property loans from total business lending. You can see in the left-hand-side panel that commercial property impairments are much higher than the overall business lending average, which gels with the regulator’s view of commercial property’s more elevated risks.
<img src="/images/stories/joyesept289.gif">
 
<hr class="system-pagebreak">
 
My final two charts illustrate RBA analysis of changes in Australian banks’ lending standards, and <country-region><place>Australia</place></country-region>’s house price-to-income ratio.  In the first we can see that loan-to-value ratios (LVRs) have fallen significantly in the period since the GFC. Indeed, elsewhere in the Financial Stability Review the RBA explains that the recent increase in mortgage arrears has been largely driven by loans that were extended before the crisis hit, not subsequent to it, as is often claimed.
<img src="/images/stories/joyesept2910.gif">
The last chart reinforces Rismark’s analysis of changes in dwelling price-to-income ratios over time. The RBA finds that <country-region><place>Australia</place></country-region>’s “all regions” dwelling price-to-disposable household income ratio is about four times (the actual levels are less useful than the change in the ratio over time). Importantly, this ratio has been falling for a while now; we have had no house price growth in about one and a half years while ABS-reported disposable household incomes have been expanding at a circa 8% per annum pace based on the latest June quarter National Accounts. Like us, the RBA finds that with the exception of a brief dip during the GFC, Australia’s house price-to-income ratio has fallen to its lowest level since about 2003.
<img src="/images/stories/joyesept2011.gif">
Christopher Joye is a leading financial economist and works with <a target="_blank" title="Rismark International" href="https://www.rismark.com.au/">Rismark International</a>. Rismark and RP Data provide house price analytics products, and solutions that enable investors to go long and/or short the housing market. The above article is not investment advice.
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chrisjoye-JYhJsTrNRC

Commercial, not residential, property in a price bubble

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Strong housing demand in South Australia is expected to wane due to a likely slowdown in jobs growth, according to Westpac’s September Coast-to-Coast report. 
“While the fundamentals for South Australia housing demand and consumption are somewhat supportive, partial data indicates momentum is waning,” the report says.
“Specifically, although the SA unemployment rate has, as yet, not followed the national series higher, employment growth has slowed markedly through mid-2011.” 
Furthermore, the report notes that the state’s population growth moderated through 2010 to about 1% annually, below the1.5% national growth. 
While the report forecasts demand for housing to drop, it notes that dwelling investment was one of the “hotspots of the second quarter in South Australia, rising by 13% on the back of double-digit gains for new housing and alterations and additions”.
<img src="/images/stories/westpacsept28.gif"> 
 Source: Westpac
Over the year, housing investment is up 12% in South Australia, compared with a broadly flat outcome for the nation as a whole. 
“The strength of housing demand is quite a contrast to the recent growth in SA household consumption which was weak in the second quarter ( down 0.4%) and is little changed over the year – compared to 3.2% annual growth for the nation as a whole,” the report says. 
Of particurlar concern for Westpac going forward is a lack of major infrastructure projects planned for the state. 
“While the immediate outlook for investment activity is positive, the absence of material planned (or even mooted) projects is a serious concern. 
“Yes it is true that the Olympic Dam expansion may happen (at some point), but other than that there is little else on the horizon – that certainly gives cause for concern.”
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Strong housing demand in South Australia won't last: Westpac

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As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
 
Sadly, both parties, initially led by the Liberal Party and quickly followed by Labor under Julia Gillard, have opted for Little Australia.  For generations, both political parties have done the right thing by Australia on population.  They have strongly supported high immigration despite great reluctance from voters for it.  Big Australia makes sense.

Cutting migration means higher interest rates in the short term and higher taxes in the long-term as our population ages.  As for house prices, well, don’t expect them to grow much, if at all.  House price devaluation is a more likely outcome if we adopt Little Australia.

A smaller population growth means lower productivity.  In order to maintain our standard of living – assuming lower migration – we will have to work longer (and smarter) plus raise taxes.  Working smarter is a noble aim, but it takes a long-term view; real short-term pain; and genuine investment in education and infrastructure.  Think the East’s commitment to such, not the West’s.  I don’t want to sound like a cynic, but I don’t think Aussies are up for this challenge.  Every time I get behind a “Sustainable Australia” or “Australia is Full” sticker on an RV, I just chuckle and mutter “hypocrite”.  My wife and children, I must add, are getting pretty sick of it.

But the economic argument isn’t the only rationale for maintaining high immigration.  There’s a strong moral case too.  Nearly all Australians are the children or descendants of immigrants.  A deep cut in immigration is inter-generational opportunism on our part, in effect denying to future immigrants and their children the advantages that we ourselves have enjoyed.  I also don’t think the world will allow it.

And as for the environmental squabble, well, let me say that if America and Canada can do it, then we can too.  Yes, we have a more sensitive environment than the Americas, but long-term planning plus a regional approach will overcome most issues.  Did you know that only a handful of US cities are bigger than Sydney, Melbourne or Brisbane?  Most of their population lives in regional centres, many of which are under 500,000 people.  We now need to do the same.

On that note, Ken Henry gave the best contribution to the population debate so far, when he said that the first step around regional population imbalances was to address the range of areas where economic growth is being constrained, often at a local level.  Henry correctly nominated water in addition to the more frequently nominated areas of infrastructure.  But it also applies to housing, where approval processes are an important constraint on the market responding to growing demand.  Throwing money at the problem, vis-à-vis Labor’s $225 million quick fix pledge to 15 regional cities, is a Band-Aid solution to much deeper wounds.  Regional Australia needs major surgery, not ointment and a gauze wrapping.

The Little Australia advocates want to preserve Australia in amber, to prevent it from ever-changing.  Why?  Because change is threatening.  We need leadership now, not spin.  Many of us are hungry for it.  My mate Bernard Salt summed it up well in The Australian when he lamented our incredibly sparse population and the low-quality debate to which our leaders are subjecting the nation.

The cowardly retreat from immigration by both major parties is a policy disaster of the first order.  And it’s one for which future generations of Australians will pay.

Michael Matusik is the director of independent property advisory Matusik Property Insights. Matusik has helped over 500 new residential developments come to fruition and writes the weekly  <a href="https://matusikmissive.wordpress.com/" target="_blank" title="Matusik's Missive">Matusik's Missive</a>.
Photograph by Phillip Capper
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michaelmatusik-49YzLvdmNv

Cutting immigration will hurt not just housing, but the entire economy

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Recent reports reveal that Australia has overtaken the US as titleholder for “home to the world's largest houses”. Large McMansions on expansive suburban blocks have long been held as the ideal “Great Australian Dream”, while smaller inner-city apartments copped a pretty bad rap as the cheap and nasty end of the property market.
However times are changing, with many home buyers and tenants forced to reflect on whether their priority is square footage and a big backyard in the burbs or getting into a property without breaking the budget.
Suddenly that one-bedroom apartment seems a lot more appealing.
While many developed countries have embraced the virtues of high-density accommodation clustered around major cities –  think New York, Paris, London and Tokyo –  here in Australia, our culture has been based on backyards, barbecues and wide-open family spaces.
Now though, a demographic shift is occurring, with more single-person households and childless couples choosing to live in and around our big cities where employment and lifestyle factors are big drawcards.
Figures from the Australian Bureau of Statistics indicate that the number of one-person households will surge to between 3 million and 3.6 million by 2031, a dramatic shift when you consider that in 2006 only 1.9 million people lived alone.
This massive increase is due to factors including:
<ul>
<li>A forecast jump in the number of DINKS (Double Income No Kids). According to the ABS couple-only households are set to overtake the number of families with offspring in the next two or three years, and it's expected that DINKS will make up 60% of all couple-only households by 2031.</li>
<li>A rapidly growing population and continuing housing shortage in some of our major cities.</li>
<li>Ongoing affordability issues and increasing rental prices forcing many to rethink their size requirements. </li>
</ul>
Demand for one-bedroom apartments, which sceptics have long considered to be less desirable, is set to soar as many Australians adjust their ideals according to what they can afford. And one of the questions they'll be asking is: do I really need that extra bedroom? 
In the past singles and couples have, by and large, sought out two-bedroom apartments with the perception that they offer larger living spaces and the convenience of extra storage.  However, with median price tags for such real estate heading upwards of $500,000 and rents soaring over $500 per week in many desirable locations, the affordability barrier is encouraging many tenants, investors and home buyers to accept one-bedroom units as a viable alternative. 
Recognising this growing trend, developers are jumping on the bandwagon and including more one-bedroom units in their large-scale projects. But be wary –  the price of many of these new apartments is going up as their size is going down. 
So do one-bedroom apartments make good, affordable investments? Is there enough ongoing future demand from tenants and owner-occupiers alike to ensure they perform as long-term cash cows? 
The simple answer is yes. 
Why? Because affordability means more owner-occupies will be pushed into this type of real estate as they sacrifice size for location, thereby increasing demand and placing upward pressure on prices.  These apartments are often located closer to the city and major work nodes as well as universities and hospitals, in areas that generally have efficient transport connections, plenty of retail facilities and social amenity, all key elements high on the list of young buyers. 
In addition, tenants seeking rental accommodation in and around desirable lifestyle locations will look for affordable one-bedroom alternatives, meaning investors will have a large tenant pool to help pay the mortgage. 
Sure, one-bedroom accommodation caters to a narrow demographic of one- and two-person households, but the reality is this is a mismatch of the demand from this growing demographic and the relatively restricted supply of established one-bedroom apartments that are “investment grade” properties. I have to say that some of my best-performing investments over the last few years have been one-bedroom apartments. They attract a diverse range of tenants, including Gen Ys making the break from mum and dad; young professional couples, middle-aged singles as well as downsizing baby boomers. 
A few words of warning:
<ul>
<li>Small spaces can either be highly functional or incredibly pokey, meaning the design and layout of your apartment is critical. </li>
</ul>
<ul>
<li>Avoid studio apartments. They are too tiny, the banks don't like them and they are very hard to sell. Instead go for something that offers at least 50 square metres of indoor space and if you can manage a balcony and plenty of clever storage options, all the better. Off-street parking is a desired bonus, but not necessarily required if close to transport. </li>
</ul>
<ul>
<li>Steer clear of new and off-the-plan developments in our major capital cities. Especially in Melbourne and Brisbane, which both have a looming oversupply. </li>
</ul>
<ul>
<li>Avoid the large generic developments sold off the plan in the centre of major cities.  While these might seem shiny and new, they quickly lose their lustre when people realise they lack character and the timeless appeal that puts property in continuous strong demand.  Usually the majority of buyers in these soulless complexes are investors, while owner-occupiers – the true driving force behind real estate vlaues – tend to stay well away in preference of something more established or in a boutique block. </li>
</ul>
So next time you're shopping for an investment remember that it's not the size of the property that counts, it's the size of the profit you'll realise at the end of the day! 
Michael Yardney is a director of <a href="https://www.metropole.com.au/">Metropole Property Investment Strategists</a> who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the <a href="https://www.propertyupdate.com.au/">Property Investment Update</a> blog.
Photo of one-bedroom apartment <a href="https://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/NSW/Potts-Point/?adid=2009161817" target="_blank">403/15 Bayswater Road, Potts Point, NSW</a>, which is for sale with price hopes of $560,000 plus.
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One-bedroom apartments set for a big future

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Some 500 Sydney properties went up for auction last Saturday and an auction clearance rates of 59% was achieved – a result that amazed even me. With first-home buyer incentives, very little stock on the market and interest rates now steady, everyone is feeling comfortable to trade in this marketplace. With the Australian dollar hitting lows of 97 cents this week, the expatriates have been back on the phone looking for a bargain. Our buyer’s agents have been busy purchasing everything from substantial homes in Lindfield, Northbridge, Greenwich and Mosman to penthouse beach apartments in North Curl Curl and two-bedroom apartments in Cremorne. We are finding that vendors are now meeting the market because they want to buy before Christmas, and most people are opting to sell before they buy. I have had PK Property coming up to 15 years now and since introducing the whole buyer’s agents concept to Sydney, I have never seen a market where our buyer’s agents are saving our clients more money than ever before. The selling agents seem to be a little nervous and not confident enough to push for a higher price as they normally would, because they simply just don’t have enough competition on the table. There’s no doubt I can feel a change in the air happening at present because it’s all about stock levels and some vendors are just choosing not to list their properties for sale, creating a higher demand from buyers and therefore pushing prices up. BIS Shrapnel, probably the most respected forecaster in the property space, has come out this week saying Sydney prices will move a bullish 6% over the next 12 months and I must admit I am yet to see the company wrong over the 15 years I have had my business. I think the only thing that will upset growth like that will be a hike in interest rates, but NAB came out last week saying it doesn’t expect a rate hike until November 2011 and cuts could even occur.
The higher end has been performing a little bit better over the last six weeks, with many people opting to upgrade. I recently purchased a property in Mosman for just over $5.75 million when it had an asking price of around $6.4 million. I think the higher end of the market will still struggle next year but the market from $2 million to $3.5 million will start to gain some momentum. We also purchased a substantial family home in Northbridge last week from L.J. Hooker Northbridge that had an asking price of $2.3 million but after long negotiations got it for $1.95 million. October 16th is when it all starts up again after the school holidays but I am hearing that in certain areas the stock is still thin on the ground and if you don’t find anything before Christmas you will have to start your house hunting end of February next year.
Peter Kelaher is managing director of <a target="_blank" title="PK Property Search" href="https://pkproperty.com.au/">PK Property Search and Negotiators</a>.
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Vendors meeting the market in rush to sell before Christmas

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A 2.6-hectare block of land in Port Douglas that was due to be developed by the late Gold Coast property developer Brian Ray has been listed for sale.
The land, which is approved for the construction of 23 strata-titled villas or homes, was to form the third and final stage of Ray’s upmarket Niramaya Resort (formerly called Bale resort).
It includes a central lake, utilities, landscaping and roads and is being marketed by Port Douglas agent Tony McGrath from Tony McGrath Real Estate.
The marketing material notes its listing was to finalise Bale Resorts Ltd holdings in Port Douglas.
Niramaya Resort  was developed by MFS Bale, a joint venture partnership of Brian Ray’s Ray Group and Queensland property and financial services business MFS (later re-named Octaviar).
MFS collapsed in January 2008 owing creditors $2.8 billion.
Brian Ray and his wife, Kathy, died when their plane crashed during a snow storm about five kilometres from the Mount Hotham airport in July 2005.
At the time of his death he was worth a reported $130 million and counted Kerry Packer, Gerry Harvey and John Singleton among his friends.
His most well-known development was the $1 billion Salt Village resort on the north coast of NSW developed in partnership with Octaviar.
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Final piece of the late Brian Ray's Port Douglas dream for sale

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A $100 million resort complex in Queensland owned by developer and marina group Meridien has been placed into voluntary administration.
The 124-unit One Bright Point project, of which 114 apartments have been sold, is now being looked after by BRI Ferrier, which will look to sell the remaining apartments.
It’s understood the project was hit by the weakened property market, troubles in the tourism industry, the Queensland natural disaster and the strong Australian dollar.
The move follows the appointment of receivers to the Meridien-owned Port of Airlie project, Abel Point marina and Horizon Shores marina, the latter with approvals for up to 2000 berths and promoted as being on its way to becoming Australia’s largest marina.
Of its four marinas across Queensland only one of Meridien Marinas' assets is not in administration – its marina in Port Douglas is said to be unaffected by troubles in the industry.
Early this month Meridien Marinas managing director Russell McCart said Abel Point and Horizon Shores were both “excellent assets and have a great future and will continue to trade very well”.
“The receivers have re-employed all marina staff and will continue to operate as usual, without disruption,” McCart says.
He said the collapse can be attributed to the “ongoing GFC and strong Australian dollar” creating difficulty trading conditions for Australia’s boating industry.
Most marinas in Australia are owned by small companies or family companies, the Marina Industries Association of Australia has said.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/property/20110927-100m-queensland-resort-complex-owned-by-developer-and-marina-group-meridien-in-administration">SmartCompany</a>.
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