A new 25-storey apartment tower proposed for Mercer Street would push Geelong’s western gateway skyline higher, with Morphy Birrell Property Group lodging plans for a project directly beside one of the city’s most significant heritage streetscapes.

The <a href="https://www.apartments.com.au/architects/fk-australia">FK</a>-designed development at <a href="https://www.apartments.com.au/new-apartments/65-67-mercer-street-geelong-vic-3220">65-67 Mercer Street</a> has now been referred to Victoria’s Planning Minister. The site sits opposite the Geelong rail corridor and immediately south of the heritage-listed St Peter and Paul’s Catholic Church and Ashby Hall precinct.

Rather than compete with the neighbouring ecclesiastical buildings, the proposal adopts a sculpted podium intended to reference the materiality and scale of the heritage context. Planning documents note the design draws cues from the “dark stone brick” church and surrounding masonry buildings, while the tower above transitions into a softer, curved form oriented toward Corio Bay and the Geelong waterfront.

<img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="b797d10c-d4a6-47af-b8df-1aeaa3b382be" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/public%20square.png?VersionId=QGIpcz1x1hKB6lQLl2iobyHqb6PS2Ztc" />

The development forms “Stage 5” of Morphy Birrell Property Group’s broader Mercer Street precinct strategy, following the completion of the 21-storey Miramar tower on Cavendish Street and several additional approved redevelopment stages nearby. Planning consultants Ratio said the proposal “represents an exemplary development outcome” aligned with the strategic ambitions for Central Geelong’s continued urban renewal.

The mixed-use project would replace an existing low-rise commercial building and surface parking area on the 3,320 sqm corner site. FK’s urban context report describes the proposal as a residential development comprising apartments, resident amenities, commercial space, and integrated landscaping positioned to maximise bay views and northern sunlight access.

Renders show a deeply articulated tower with curved balconies stepping above a lower masonry podium that frames a landscaped forecourt facing Mercer Street. The design intentionally preserves sightlines toward the adjacent church buildings, with the podium scaled to reinforce the heritage edge before the tower recedes upward.

<img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="2bdca91e-66f7-4ac7-8baa-2f93bd5b564e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/geelong%20site.png?VersionId=QOhbino4ZgzKYw5dW3QE14E.2yq.Sv87" />

The planning report highlights the site’s strategic location within 400 metres of key Geelong destinations including Cunningham Pier, the Geelong Station precinct, Deakin University, and the convention centre. Bus services run directly along Mercer Street, while the Corio Bay foreshore sits around 100 metres north of the site.

The proposal arrives amid accelerating redevelopment across central Geelong, where planning policy continues to encourage higher-density housing close to transport infrastructure and the waterfront. Mercer Street in particular has emerged as a focal point for taller apartment development due to its proximity to Geelong Station, the bay, and major civic infrastructure.

Joel Robinson

Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct

Development giant&nbsp;<a href="https://www.apartments.com.au/developers/hamton">Hamton</a> and joint venture partner Hostplus have revealed the next residential stage of their $3 billion Moonee Valley Park masterplan, lodging plans for 512 more apartments within the precinct on surplus racecourse land at 110 Wilson Street, Moonee Ponds.

The proposed development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/trackside-house-110-wilson-street-moonee-ponds-vic-3039">Trackside Gardens</a>&nbsp;in the planning application, follows the <a href="https://www.apartments.com.au/news/vic/first-look-exclusive-hamton-and-hostplus-reveal-sixth-stage-of-moonee-valley-park-masterplan">recent unveiling of the sixth-stage Cox Place Precinct</a> and continues the long-running transformation of the Moonee Valley Racecourse into one of Melbourne’s largest urban renewal projects.

Positioned on the north-eastern edge of the racecourse adjacent to CityLink, Trackside Gardens will comprise three residential buildings rising between 61.8 metres and 86.4 metres within a heavily landscaped precinct shaped by Hamton’s Nature Based Cities framework.

The project forms part of the broader Moonee Valley Park redevelopment being delivered by Hamton, Hostplus and the Moonee Valley Racing Club, which is reshaping the 40-hectare racecourse site into a mixed-use neighbourhood with housing, retail, commercial space, hotels, parkland and community infrastructure.

Trackside Gardens sits separately to the recently proposed Cox Place Precinct, a five-building stage comprising around 1,100 residences, two build-to-rent buildings, two build-to-sell towers, retail, office space, and a hotel overlooking the racetrack. Together, the projects continue to accelerate housing delivery across the precinct.

<img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="5fc1941e-52d3-41c6-abc4-0f13fe8ae5ea" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/DA%20Edits%20%281%29.png?VersionId=7qwRHq5dcvXWNot2hNOgoQhN2GIWudNK" />

Designed by <a href="https://www.apartments.com.au/architects/dko-architecture">DKO Architecture</a> with landscape architecture by Tract, Trackside Gardens has been conceived as a botanical-style residential precinct prioritising canopy planting, communal green space, and vertical landscaping.

“The architectural vision for the proposed development centres around buildings in a botanical park setting that champions the important role of nature,” the planning submission states.

“The proposal incorporates principles of biophilic design, with landscape and environmentally sustainable development influencing the ultimate design response of the buildings and prioritising the ground plane to ensure a high amenity for both occupants and visitors.”&nbsp;

Trackside Gardens will deliver 512 apartments across the three buildings, alongside 518 basement car spaces and 523 bicycle spaces. Around 20 per cent affordable housing is proposed across the broader North East Precinct, equating to around 158 dwellings.&nbsp;

The affordable housing component will be concentrated within the Wilson East building, while the remaining apartments are expected to be delivered as build-to-sell residences.

Trackside Gardens has been designed around Hamton’s Nature Based Cities initiative, founded by Executive Chair Paul Hameister OAM in partnership with the University of Melbourne, Urbis, Ark Resources and Tract. The initiative promotes integrating higher-density urban development with significant biodiversity, tree canopy and landscape outcomes.

<img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="89353449-7b3c-42fd-8fd8-8bf64a5ef80f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_4.png?VersionId=X8jRt0P2L7fIWjLhfX6gPknXToXIBeLj" />

A comprehensive landscape strategy would introduce deep soil planting, vertical greening, communal gardens, and new pedestrian links throughout the site.

Planning documents state the development is targeting a 5 Star Green Star Buildings rating, a 7.5-star average NatHERS rating, and “Exemplary” Nature Based Cities certification.&nbsp;

The proposal joins an expanding pipeline of approved and proposed buildings within Moonee Valley Park, including the recently launched Eveline apartments and the approved Grandstand North and South towers.

Hamton has increasingly focused on precinct-scale, nature-led communities across Melbourne’s middle-ring suburbs, with projects spanning Hawthorn, Kew, and Moonee Ponds.

Hampton unveils Trackside Gardens, latest stage of $3 billion Moonee Valley Park masterplan

The Paul Gedoun-led <a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Group</a> has achieved another milestone in its $1 billion transformation of Rainbow Bay on the southern Gold Coast with the completion of the company’s third project in four years, the $160 million <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a> residences.

Delivered by <a href="https://www.apartments.com.au/builders/hutchinson-builders">Hutchinson Builders</a> and designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker Architects</a>, Esprit buyers have now moved into the 94 apartments across two interconnected buildings at 217-227 Boundary Street.

The successful settlement of Esprit marks another astounding chapter in the S&amp;S story, which launched its highly successful Flow apartments three years ago and created its own ultra-luxury branded fingerprint on an area craving new luxury residences.

Most early purchasers have secured gains of well over $1 million since the project launched in 2021.&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172129]

S&amp;S Projects Founding Director Paul Gedoun said the completion of Esprit reflects sustained demand for premium apartments in tightly held coastal locations.&nbsp; 
&nbsp;&nbsp; &nbsp; 
“Esprit has attracted buyers seeking a combination of quality design, considered amenity and a location that is becoming increasingly difficult to replicate,” said Gedoun.

“We identified some years ago that Rainbow Bay is a unique market where supply of luxury residences is limited, and we see the settlements in Esprit further underpinning this thinking - that for both owner-occupiers and investors.”&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172174]

A key feature of the development is ‘Club Esprit’, a 1,000sqm residents-only rooftop level combining wellness and recreation, believed to be a first for the Gold Coast, and which is fast becoming a signature of the S&amp;S brand.

Positioned to capture views across Snapper Rocks, Rainbow Bay and the Tweed River, the rooftop includes a 25-metre lap pool, gym, yoga lawn, sauna and steam facilities, ice bath, private dining spaces, outdoor cinema and landscaped areas for residents.&nbsp;

<a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a> Director Jayde Pezet, who led the sales campaign for Esprit and S&amp;S’s Flow and Awaken apartments, said the project’s performance reflects both the strength of the product and the depth of demand for premium apartments on the southern Gold Coast.&nbsp;

“In some cases, we’ve seen values double since launch, which is a clear reflection of how tightly held Rainbow Bay has become and the level of demand for well-executed projects in this market,” said Pezet.&nbsp;

“Buyers recognised early what S&amp;S Projects was delivering here, and that conviction has been rewarded as the project has progressed towards completion.”&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=214819]

Esprit offers a mix of two- three and four-bedroom apartments and sits within walking distance of the beachfront, cafés and local amenities, reinforcing its appeal as both a lifestyle and investment destination.

The project is the third completed by S&amp;S Projects in Rainbow Bay, following Flow Residences and Awaken Residences, which together have contributed to the suburb’s emergence as one of the Gold Coast’s most sought-after coastal pockets. &nbsp;

S&amp;S Projects is continuing its investment in the area with Radia, a $215 million development currently under construction.&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172175]

Gedoun said the completion of Esprit signals continued confidence in the southern Gold Coast market.&nbsp;

“We’ve seen strong interest in well-located, high-quality apartments, particularly in areas where future development opportunities are limited."

“That’s been a key factor in the performance of Esprit and the broader Rainbow Bay market”.

[smartcode_project_cta:default project_id=102921]

Owners move in as Esprit completes at Rainbow Bay

Few developers can boast a portfolio across South East Queensland's luxury markets quite like <a href="https://www.apartments.com.au/developers/mosaic-property-group">Mosaic Property Group</a>.

The builder-developer, founded in 2004 by Managing Director Brook Monahan, has projects in planning, on the market, and under construction, from Burleigh Heads and Broadbeach to Kangaroo Point and South Brisbane.

With a pipeline exceeding $2 billion, Mosaic remains highly selective when it comes to development sites, having spent years refining its strategy around feasibility research and product planning. The group is set to continue growing into 2026 and beyond.

In Brisbane, Mosaic currently has three projects in the market. It is in the final release stage at <a href="https://www.apartments.com.au/new-apartments/the-bedford-by-mosaic-16-30-prospect-street-kangaroo-point-qld-4169">The Bedford</a> in Kangaroo Point, which is approaching complete sellout ahead of its late 2027 completion.

[smartcode_project:default project_id=134792 project_image_fid=328123]

Designed in collaboration with <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, The Bedford comprises 128 two- and three-bedroom residences. A selection of ultra-luxury Masterpiece Series Skyhomes, positioned across the top levels, offer expansive floor plans and sweeping views of the river and city.

High-end inclusions, such as natural stone benchtops, bespoke cabinetry, and Miele appliances, feature throughout all apartments, alongside the Rooftop Recreation &amp; Retreat Sky Terrace. This includes a resort-style pool with sun deck and loungers, spa, cold plunge pool, sauna, steam room, private dining room with a full kitchen, residents' lounge, multiple barbeque and relaxation zones, an outdoor viewing deck, and landscaped gardens with water features, all oriented to sweeping city and river views.

A gym with indoor and outdoor zones, and a golf simulator, further enhances recreational choice within the building.

[smartcode_project:default project_id=134792 project_image_fid=328119]

A defining feature of the development is its integrated mixed-use component, which will deliver Kangaroo Point's first major supermarket, alongside a café and liquor store, bringing long-awaited convenience to the peninsula.

Monahan says The Bedford represents the culmination of a near-decade-long journey, after first identifying the A-grade Prospect Street site in 2016. While they came close to acquiring it at the time, the site was ultimately purchased by Woolworths' development arm, Fabcot. The opportunity resurfaced in 2024 when the site, vacant for nearly three decades, was brought back to market.

Monahan says Mosaic projects often begin years before any formal plans are drawn. Their new South Brisbane development is no exception, with the site first earmarked in 2018.

"We aren't opportunistic," Monahan says. "Every site purchase is carefully considered. As seen with Kangaroo Point and South Brisbane, it can take years to eventuate. There are sites we're looking at now that we may not secure for several years."

[smartcode_project:default project_id=141711 project_image_fid=353495]

A similar story unfolded at <a href="https://www.apartments.com.au/new-apartments/the-carter-by-mosaic-77-linton-street-kangaroo-point-qld-4169">The Carter</a> in Kangaroo Point, opposite The Gabba. Like The Bedford, it is also approaching sellout of its 125 two- and three-bedroom apartments. The majority of sales are attributed to returning customers and referrals, with a balanced mix of investors and a strong majority of owner-occupiers.

BDA Architecture was again engaged to design the 22-storey building, which will feature a suite of wellness and lifestyle amenities, including a golf simulator and cinema, a commercial-grade gym, and a rooftop recreation level with a pool, steam room, sauna, cold plunge, teppanyaki bar, private dining spaces, and landscaped terraces.

Construction is on track for completion in mid-2027.

[smartcode_project:default project_id=151614 project_image_fid=362759]

Mosaic's latest offering is its most ambitious yet, boasting a rare, north-facing riverfront position on Montague Road in South Brisbane.

<a href="https://www.apartments.com.au/new-apartments/the-riversdale-by-mosaic-south-brisbane-91-montague-road-south-brisbane-qld-4101">The Riversdale by Mosaic</a> is a 39-storey tower comprising just over 200 residences and Masterpiece Series Sky Homes. Designed in partnership with Bureau Proberts, it will feature nearly 3,000 sqm of genuine, internationally benchmarked six-star, hotel-style amenities, including a wellness precinct, pool, gym, massage and treatment rooms, cinema, golf simulator, and extensive outdoor dining areas across a two-level rooftop deck.

Early works are underway, with full construction expected to commence in the second half of 2026, and an anticipated late 2029 completion.

[smartcode_project:default project_id=151614 project_image_fid=362759]

Since 2012 alone, Mosaic has completed more than $2 billion in projects and is set to deliver another $2 billion worth of developments, comprising hundreds of luxury apartments, each defined by Mosaic's signature standards of quality, detail, and delivery.

"We never arrive, there is no finish line," says Monahan. "Our ambition is to keep evolving what luxury means, creating design- and lifestyle-led residences in incredible locations, places people genuinely aspire to and want to live, homes that are loved deeply and endure long beyond their moment."

Mosaic's Midas Touch

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> (Urban) has broken ground at Keira Place, its new major mixed-use residential precinct in the heart of Wollongong CBD.

Held at 120-122 Smith Street, the groundbreaking marked the commencement of construction on Stage 1 of <a href="https://www.apartments.com.au/new-apartments/keira-place-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, with the opening of the new display suite. 
&nbsp; 
Keira Place is a State Significant Development that will deliver new housing supply, affordable homes and inclusive living options within walking distance of Wollongong’s CBD, coastline, transport, hospital and education precincts.

[smartcode_project:default project_id=144442 project_image_fid=369868] 
&nbsp; 
Stage 1 is now under construction and will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, along with activated ground-floor retail and commercial space. 
&nbsp; 
Urban Co-CEO Patrick Elias said the groundbreaking represented a significant milestone for Wollongong and reflected Urban’s long-term commitment to regional cities.

“Today’s groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong’s city centre,” Elias said. 
&nbsp; 
“Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection.”

[smartcode_project:default project_id=144442 project_image_fid=369869] 
&nbsp; 
Hon. Paul Scully MP, Minister for Planning and Public Spaces, Member for Wollongong said Keira Place is exactly the kind of development Wollongong needs – delivering new homes close to transport, employment and services, while supporting the continued growth and renewal of the CBD.

"This project reflects the Minns Labor Government's commitment to increasing housing supply in well-located areas." 
&nbsp; 
Wollongong Lord Mayor Cr Tania Brown said Keira Place would deliver lasting community benefits for the city. 
&nbsp; 
"Keira Place is a welcome addition to Wollongong's CBD delivering new housing, affordable homes and activated street-level spaces that will benefit our community for years to come," Brown said. 
&nbsp; 
"Urban Property Group's investment reflects the confidence that quality developers have in Wollongong's future, and I look forward to seeing this precinct come to life."

[smartcode_project:default project_id=144442 project_image_fid=369867] 
&nbsp; 
Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a>, with interiors by <a href="https://www.apartments.com.au/interior-designers/dko">DKO,</a> Keira Place prioritises liveability and long-term performance, with landscaped shared spaces, generous apartment layouts and a pedestrian-friendly streetscape along Smith Street. 
&nbsp; 
Residents will have access to landscaped podium areas, communal rooftop amenities with views to Mount Keira and the Wollongong skyline, and convenient ground-level retail.

The development will have 10-year Latent Defects Insurance by Resilience Insurance.

[smartcode_project_cta:default project_id=144442]

Groundbreaking marks start of construction at Keira Place in Wollongong CBD

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

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

<html><body>
<h3 class="post-title entry-title"> </h3>
It's sometimes under-appreciated how Australia's free floating dollar, monetary policy autonomy, flexible labour force, and comparatively low government debt have allowed the economy to adjust through a seriously tumultuous period.
At the peak of the resources construction boom in the third quarter of calendar year 2012 engineering construction activity peaked at $34.8 billion, yet by the end of 2016 had dropped by some 43.3 per cent to under $20 billion. 
This is what some people termed the "mining cliff", essentially the period through which resources projects transitioned from the construction phase through to production. 
And through all of that we never really did get all that close to a recession, though admittedly rising private debt levels did help to grease the wheels a bit.
Rebound
More than four years on, and engineering construction actually began to rise again in early 2017.
Some of this was to do with infrastructure projects - rail, road, and highways - and some was related to ongoing resources investment in existing projects. 
Activity rose quite strongly by +2.8 per cent to $20.3 billion in the first quarter.
Engineering work in the public sector was +10.2 per cent higher over the year, while the quarterly rebound was also helped by a +3 per cent rise in private sector activity in Q1. 
<a href="https://www.propertyobserver.com.au/images/2017/07/03/B2.jpg" target="_blank">Click to enlarge</a>
<div id="post-body-8977417442327794616" class="post-body entry-content">
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/03/B2.jpg" alt=""></div>
 <div>State versus state</div>
<div> </div>
<div>Queensland took most of its medicine back in 2014 as a number of major LNG projects approached the production phase, but the worst has now passed and annual construction activity levels in the Sunshine State have now been rising for four quarters consecutively.</div>
<div> </div>
<div>Annual construction activity has also been rising steadily in New South Wales and Victoria since 2015. </div>
<div> </div>
<div>At least as importantly, Western Australia is now at last getting pretty close to the nadir, meaning that WA is no longer suffering the chronic declines that have characterised that past three years. </div>
 <div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/03/B1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/03/B1.jpg" alt=""></div>
 <div>No boom on the horizon, then, but arithmetically speaking this is positive news for the economy, simply because engineering construction is no longer acting as a drag.</div>
<div> </div>
<div>The next pressing challenge will be whether construction employment can remain at today's elevated levels through a combination of residential building and infrastructure projects. </div>
 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
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">Four Green Houses and a Red Hotel</a>.
</div>
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pwargent-M4siyDbqQY

Engineering construction no longer an economic drag

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There is no Australian recession in the immediate horizon, if the yield curve is taken as an indicator, according to LF Economics latest analysis.
The research, Australian Economic Cycles and the Yield Curve, says the yield curve is an accurate predictor of recession and financial instability.
It relies on the 2-Y/10-Y bond yield curve, which it says can indicate larger downturns in economic activity, while avoiding the smaller declines and also the 90-Day/10-Y yield curve, which can detect both large and smaller declines in growth.   The economic forecaster says the economy will keep lumbering along without recession despite “anemic levels of real GDP growth, kept in positive territory only by our disgraceful population Quantitative Easing, public sector deficits, household sector dis-saving and record levels of private debt”.
It does note that shocks can swiftly make an impact.
The research is based on the premise that when yields on bond and bills with shorter-term maturities surpass longer-term maturities (the yield spread inverts), it is a “clear indicator economic growth will decline in the near future”.
Typically, the yield curve is calculated by subtracting the 2-Y Treasury bond yield from that of the 10-Y Treasury bond. The US provides a case study for demonstrating the accuracy of the inverted yield curve as a predictor of recession, usually one to two years in advance.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/US10Yr.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/30/US10Yr.png" alt="">
The Australian data is also accurate, it says. The quarterly 2-Y/10-Y public bond yield curve demonstrates the impending early 1980s recession, the near mid-1980s recession, the early 1990s recession and the GFC. It turns out there was plenty of warning for the GFC, with the yield curve turning negative in 2006Q2.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/Aust10yearYield.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/30/Aust10yearYield.png" alt="">
 <a href="https://www.propertyobserver.com.au/images/2017/06/30/AustTwoYields.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/30/AustTwoYields.png" alt=""> 
“Using the 90-Day bill/10-Y public bond yield allows for superior detection of future downturns in economic growth, including rises in the unemployment rate” says the research.
This yield curve picks up the small increases in the rate during the mid-1980s, 2001 and 2013/14, but these periods were not recessions. The mid-1970s recession is obvious, it says.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/Aus90DayBill.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/30/Aus90DayBill.png" alt="">
Recently, a research paper by the RBA attempted to detect historical recessions while filtering out noise by employing standard econometric techniques. It concluded that “Because the coincident indices present a smoother perspective of the business cycle in the 1960s and 1970s, they identify fewer recessions in this period than does GDP. Over the past 45 years, the coincident indices locate three recessions – periods when there was a widespread downturn in economic activity; in 1974-1975, 1982-1983 and 1990-1991.”
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jonathanchancellor-7SQnKwU6yx

Yield curves don't indicate recession in the near term: LF Economics

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Sydney’s retail market has continued to rise, according to Herron Todd White’s (HTW) latest June report.
The property investment firm says it has noted increased average market rental rates and values.
“Since the start of 2017, the Sydney retail market has continued its upward movement,” the report stated.
“The increase in both average market rental rates and capital values has continued.
“Increased demand from investors has continued to drive the market.
“The demand for CBD assets remains strong, particularly as infrastructure improvements continue.
“Across the board, Sydney is continuing to experience yield compression in the commercial domain.”
Heated residential markets and low borrowing costs have compressed all areas Herron Todd White says.
“A heated residential market along with an inherently low cost of borrowing have seen yield compression across all sectors over the past 12 to 24 months,” the report advised.
“There is strong appetite for retail properties with long term lease covenants.
"We consider this trend will continue while supply remains relatively low,” the report commented.
Entry level retail opportunities are tight at the moment in the outer and middle suburbs Herron Todd White advises.
“Entry level opportunities in the retail market are constrained to strata lots in the outer and middle ring suburbs of Sydney.
“This market has had an increase in supply due to the increase in mixed use developments coming onto the market.
Typically these assets are in fringe retail locations prone to longer vacancy periods and are often best suited to owner-occupiers.”
Mixed use retail opportunities below $1 million is very uncommon Herron Todd White states.
“There are very few mixed use retail opportunities below $1 million,” it said.
“Recent sales indicate that some suburbs such as Beverly Hills, Haberfield, Chester Hill and Leichhardt still have some limited mixed use options below $1 million.
“Many of these assets are purchased based on the future redevelopment potential.
“Strata lots presently represent the main opportunity for entry level buyers.
“The inner west, south Sydney and central west areas all have options priced below $1 million.
“Typically these assets are strata lots less than 100 square metres.
“If they have secure long term tenancies, these assets represent an investment option for entry level buyers.”
Herron Todd White comments that stock supply has increased due to redevelopment works in Sydney.
“Supply of this stock has significantly increased due to the redevelopment of many parts of Sydney,” it said.
“In terms of current yields, these assets are trading below 6% with some recent examples showing yields below 4.5%, particularly where the asset has a good lease covenant.
“Examples include leases to medical centres, cafes and dry cleaners.
“The outlook for retail in Sydney remains positive for 2017.
“Prime locations continue to perform well.
“That said we are of the opinion that the market is reaching the peak of the cycle and any tightening of monetary policy or increase in the cost of debt will result in the prevailing investment yields not being sustainable.
“For the time being though, all signs are that 2017 will be a good year for retail assets.”
A retail building at <a href="https://www.realcommercial.com.au/property-retail-nsw-leichhardt-502075890" target="_blank">283-285 Parramatta Road</a>, Leichardt (above) has been listed for sale.
Similarly a retail property at <a href="https://www.realcommercial.com.au/property-industrial+warehouse-nsw-beverly+hills-5626183" target="_blank">8/159 Penshurst Street</a>, Beverly Hills (below) has been listed for sale.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/22/8159%20Penshurst%20Street.jpg" alt="">
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j.ballantyne1990-6AQqhLzZaK

Optimistic time for Sydney retail industry: HTW

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One of the criticisms of macroprudential measures to cool lending (as opposed to the Reserve Bank lifting the cash rate) has been that they can't "get in all the cracks".
And those sneaky lenders have been up to their old tricks, with mortgage growth accelerating strongly in May, directly contradicting almost all market commentary.
It's hard to get a read on this.
With borrowing capacity increasingly constrained, it may imply higher volumes. 
APRA released its Monthly Banking Statistics yesterday which confirmed that banks expanded mortgage books by 0.6 per cent in May, with owner-occupier loans rising by 0.7 per cent. 
Respected banking analyst Martin North referred to the growth as "too strong", noting that "home prices will continue to rise", although this wasn't reported anywhere of note, at least as far I could see. 
Growth in investor loans also accelerated in May, up from 0.39 per cent to 0.42 per cent.  
For more detailed analysis of the individual components, including the speed at which the individual banks are growing their respective investment mortgage books, subscribe for our monthly reports.
Housing credit picks up
It was a busy day indeed for credit-related statistics yesterday, with the Reserve Bank of Australia (RBA) also releasing its Financial Aggregates figures for the month of May. 
Credit growth expanded by 5 per cent of the year to May, while broad money growth remained somewhat stronger at 7.3 per cent.  
<div id="post-body-5590776051175794007" class="post-body entry-content">
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<div> </div>
<div>Drilling into the components of credit growth, housing credit had a stronger month, meaning that the annual rate of housing credit growth has continued to pick up speed from 6.32 per cent in November to 6.59 per cent in May. </div>
<div> </div>
<div>Investor credit grew by 7.5 per cent over the year, but the trajectory up growth looks to be calming as banks jack up investment loan rates to encourage more owner-occupier loans.</div>
<div> </div>
<div>Despite being inherently 'riskier', at least on a historical basis, business credit growth is considered by many to be vital.</div>
<div> </div>
<div>However, stock exchange (ASX) market data records three consecutive months of strong aggregates in initial and secondary capital raisings totalling more than $12.5 billion, showing that business lending is far from the be all and end all for investment.</div>
<div> </div>
<div>Business surveys also saw conditions hit multi-year highs early in 2017, while job surveys point to a broad-based improvement in hiring. </div>
<div> </div>
<div>In other words, you can't just look at total outstanding business credit increasing by 3.1 per cent over the year and dismiss growth as weak. </div>
 <div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/02/RBA1.jpg" target="_blank">Click to enlarge</a></div>
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 <div>Since July 2015 the purpose of some $53 billion of loans has been switched from investment to owner-occupier, following the introduction of an interest rate differential. </div>
<div class="separator"> </div>
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 <div>Thus, investor credit may be slowing, but the way the figures dovetail these days, the lines between what is an investment loan and what isn't seem to be increasingly blurred. </div>
<div> </div>
<div>In any event, reported as a total housing now accounts for a record 62 per cent of outstanding credit.</div>
 <div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/02/RBA4.jpg" target="_blank">Click to enlarge</a></div>
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 <div>Finally, and not too surprisingly, through netting off the results we can see that non-bank lending has picked up some of the slack to grow by a faster pace in May. </div>
 Total housing lending now sits at some $1.67 trillion.</div>
<div class="post-body entry-content"> </div>
<div class="post-body entry-content">
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
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">Four Green Houses and a Red Hotel</a>.
</div>
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Mortgage growth displays strength: Pete Wargent

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Industrial property firm Goodman Group said it was sticking to its full-year forecast of a 7.5 percent growth in operating earnings over the previous financial year.
The group said in an ASX announcement for the quarter ended March 31 that its “strong performance” was due to benefit from the urbanisation of cities around the world and the concentration of consumers in these locations.
It forecast FY2017 full year operating earnings per security of 43.1 cents, up 7.5 percent on FY2016.
Goodman said it expects demand for prime industrial space to stay strong across key locations.
Earlier this year, the group pre-leased an additional one million square feet of logistics space to Amazon at its Goodman Commerce Center Eastvale, California.
“The business is positioned to take advantage of the structural and cyclical influences in the market, particularly in locations positively impacted by the expected increase in urbanisation and rising consumerism,” said the ASX release. 
Goodman’s total assets under management (AUM) were at $34.6 billion with valuation growth offset by asset sales ($2.1 billion for the nine months to 31 March 2017 excluding urban renewal).
The group leased 2.5 million sqm for the year to date, equating to $296 million of annual rental property income.
During the quarter, the group sold $200 million of assets but noted that the pace of sales is expected to moderate. It has completed $2.1 billion of asset sales in the nine months of the financial year to March 31, which will be used to fund its development pipeline.
“We’re continuing to realise the benefits of our strategy which has consistently been to invest and develop in quality locations, close to the consumer,” said chief executive Greg Goodman.
“We believe demand for quality industrial properties will be strongest in these locations and scarcity of land will see higher values, supporting sustainable long-term growth.”
Its development pipeline is across 75 projects with a forecast yield on cost of 7.7 percent and pre-commitments on completions of 86 percent.
The group’s credit rating was upgraded by both S&amp;P and Moody’s, aided by its lower gearing targets.
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Goodman Group sticks to operating earnings growth outlook

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SPONSORED POST
Sam Khalil's property investment outlook investigates and dissects recent market changes that Australian property investors should be aware of.
In part one, Sam Khalil gave his thoughts on <a href="/expert-insights/investing/sam-khalil-s-property-investment-outlook-part-one">Australian property investment in 2017</a>.  He looked at performance in the capital cities and identified regions that will continue to grow despite changing market forces. 
In part two, Sam investigates and dissects recent market changes that property investors should be aware of.
Stricter lending rules
There are far tighter lending guidelines than ever before. This has all been generated by ASIC, worried about high levels of risk in a red hot market.  It has trickled down to all the major lenders. CBA and Bankwest are refusing to refinance investors. While AMP will no longer offer new investor loans through their mortgage channel. Other lenders such as MyState have imposed a 12 basis point margin on all variable and fixed rates, for both investment and residential loans. Meanwhile APRA is bringing in a 10 percent speed limit for investors. There could be more restrictions on the horizon with APRA worried about the level of risk in the market.
Overall lenders are charging more for investment loans and then again for interest only. This will make people revaluate their lenders and question if they will purchase at all.
Foreigners locked out of the market
There has been a distinct clamping down on foreign investment over the last year. Westpac is not writing loans for non-residents, ANZ is no longer lending to non-residents and the CBA is following suit. Other banks have similar tight restrictions. The sum effect has been that foreign investors are walking away in droves, many unable to get funding. This in turn will have a flow on effect to the construction industry, impacting on the number of new builds. There’s also speculation that foreign investors will favour apartments over houses even more than they currently do because they need a lesser deposit.
Development slowing down
Developers have seen significant tightening in lending for projects. This has slowed down supply, which may be a stabilising measure to avoid any large property bubble bursting.  Banks have especially tightened down on lending to residential property developers with an oversupply of apartments and high-rise towers an especial concern. This has led to many developers to put projects on hold and others look to for alternate funding.
Shortage of land
There’s a desperate demand for new land supply in <a href="https://www.dpn.com.au/learn/market-updates/macarthur-the-sleeping-giant-of-sydney" target="_blank">Sydney’s fringe</a> as well as Wollongong and Newcastle. Developers are finding it extremely difficult to process land through local councils and then register the land. We must hope that the NSW government can fast track services to bring land to the market sooner so pricing doesn’t continue to increase dramatically due to lack of supply. This is the primary issue affecting housing affordability: land supply and how quickly it arrives to the market. Remember there’s always a lag between development and construction and the frantic nature of the market itself.
Apartment oversupply
There’s a real concern about apartment oversupply in the major capital cities, especially in Melbourne. The Commonwealth Bank estimates 140,000 new apartments will be built in the city from 2016 to 2018. This oversupply will ultimately lead to a drop in prices. Some experts are anticipating drastic drops of up to 20 percent in some suburbs by 2019.  So projected growth for apartments in many major cities has hit its peak and is estimated to correct or be sideways for next 5-8 years, with owners losing money and not getting capital growth. So there’s a clear message here: be very wary of apartment purchasing for the next few years. Research the area and project meticulously.
The global market
Well, it’s almost impossible not to talk about the political upheavals last year. From Brexit through to Trump it was a year of surprises. Trump’s avowal to increase spending around infrastructure and his distancing from the Asia trade pacts will certainly have an effect on Australia. His promise to pour money into defence and infrastructure will act as a fiscal stimulus. It’ll also mean lots of capital fleeing Australia and going into the USA. Potentially Australia will have to lift interest rates to compete and keep capital here. This in turn will effect market sentiment. Properties and projects that are vulnerable will be exposed awfully quickly.
You can read the original article <a href="https://www.dpn.com.au/learn/market-updates/sam-khalil%E2%80%99s-property-investment-outlook-part-two-winter-2017" target="_blank">here</a>.
For more information from <a href="https://www.dpn.com.au/" target="_blank">DPN</a>.
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jchancellor-FAypfDUnLy

Sam Khalil’s property investment outlook - part two

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SPONSORED POST
The Australian property market is shifting and changing thanks to a multitude of forces. DPN's Managing Director, Sam Khalil shares his thoughts on the current market and reveals property investment opportunities in the Wollongong, Newcastle and Brisbane areas.
The last five years have seen a phenomenal surge in the demand for property. It’s been a perfect storm of consistently low interest rates; an endless, thirsty demand for stock and foreign investment at record high levels. This in turn pushed up construction and new builds and kept up supply.
However, like all good things it had to come to an end. This is not to say the market is in trouble by any means. More that it’s no longer like 2012 or 2013 where property investment was like shooting fish in a barrel. Almost anyone with a little knowledge and a lot of luck could do well in the prosperous conditions.
But things have changed in <a href="https://www.dpn.com.au/learn/market-updates/sam-khalil%E2%80%99s-property-outlook-for-summer-2016" target="_blank">the last 12 months</a> and so 2017 and beyond will still present golden opportunities, but only for the canny and well researched investor.
How property investment is changing in the capital cities
2016 saw Melbourne and Sydney continue to rise significantly compared to other Australian cities. Despite gloom and doom predictions - remember there were lots of experts claiming Melbourne would slump in 2016 and that Sydney would stagnate - both cities outperformed expectations. In fact, dwelling prices rose 15.5 percent in Sydney whilst Melbourne had a rise of 13.7 percent for the year.
Perth had experienced seven quarters of negative growth and is in major recovery mode after its boom and bust. However, it may well have reached the bottom and signs are that it’s slowly starting to ascend. In the last 3 months there has been a small increase in property prices for the first time in a long time. It’s still a long way back, but investors who can’t afford the big capital cities may start looking in this direction.
Brisbane started a gentle ascent and should continue to find value in housing and land appreciation, whilst inner city apartments may experience price correction as I detail in part two.
So how will 2017/2018 play out? I’m confident we’ll see rises in Sydney and Melbourne as demand and sentiment still remain positive. Brisbane investment property will continue to follow closely behind. The lending measures that may impact the market and sentiment are the move in interest rates from lenders separate to the Reserve Bank.
Look to the regions
Land in <a href="https://www.dpn.com.au/learn/market-updates/macarthur-the-sleeping-giant-of-sydney" target="_blank">South Western Sydney</a>, Wollongong and Newcastle remains very tight with strong local and investment demand helping sustain and increase prices of land.  These areas will only continue to grow in 2017. It’s not just investors but we’re seeing many Sydney “refugees” – that is younger owner-occupiers - who are moving to these areas in search of houses they can afford. Because all three areas are within coo-ee of Sydney and they all have their own strong infrastructure and local economy they are highly desirable and will continue to rise.
It’s worth noting that Brisbane is also showing signs of upward movement in land values in the metro area. And not just Brisbane itself, but even further out there’s some very strong opportunities as we recently noted in the case of <a href="https://www.dpn.com.au/learn/market-updates/why-springfield-brisbane-is-a-hot-investment" target="_blank">Springfield</a>.
Overall forecast
So what does all this tell us? Sam Khalil’s outlook is positive, there are a myriad of opportunities in the market. Which, as we know, are really <a href="https://www.dpn.com.au/learn/how-to-guides/what-is-a-property-market" target="_blank">many different markets</a>.
The caveat being that one has to be more selective as market forces could change due to macro economic factors and policy changes by the regulators as well as the oversupply of apartments. This apartment oversupply poses the greatest risk for investors. It’s a cautionary reminder of not buying through emotion. Or buying the wrong product at the wrong time.
There are some excellent prospects for property investment in the right areas that may not fit investors’ usual comfort zones. 2017/2018 will definitely be about hunting in different fields, certainly not in the usual areas that investors have been doing.
So there won’t be any quick rewards from backing the same winners of the past five years. The investors that will do well in the next 12 months will be those who put in the solid research and are prepared to look in other areas off their normal radar. As always: if you put in the work, the research and don’t automatically follow the herd, you can reap great rewards.
In part two, Sam Khalil investigates and dissects recent market changes that <a href="/expert-insights/investing/sam-khalil-s-property-investment-outlook-part-two">property investors should be aware of</a>.  He covers lending policy, slowing development and challenges with land and apartment supply.
You can read the original article <a href="https://www.dpn.com.au/learn/market-updates/sam-khalil%E2%80%99s-property-investment-outlook-part-one-winter-2017" target="_blank">here</a>.
For more information from <a href="https://www.dpn.com.au/" target="_blank">DPN</a>.
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Sam Khalil’s property investment outlook - part one

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SPONSORED POST
Be prepared and knowledgeable about year-end tax deductions for your investment property. This checklist will help make the end of the financial year smoother.
It’s the end of financial year, which, for some means a mad scramble for paperwork. Even if you’ve been proactively monitoring your expenses and tax deductible claims, this checklist should make the year-end smoother for all property investors.
Tax deductible property expenses include:
<ul>
<li>Property management fees and expenses</li>
<li>Professional commissions and fees</li>
<li>Rental marketing expenses</li>
<li>Body corporate fees and charges</li>
<li>Council rate</li>
<li>Land tax</li>
<li>Water supply charges</li>
<li>Building, contents and public liability insurance</li>
<li>Cleaning</li>
<li>Garden and lawn maintenance</li>
</ul>
Repairs and maintenance – specifically, the cost of work undertaken to remedy defects in, damage to or deterioration of the property. Repairs include fixing electrical appliances or replacing storm damaged roofing or guttering for instance. Examples of maintenance deductions are things that will prevent future deterioration or address existing issues, such as painting the interior and exterior, or keeping the plumbing in good order. These are distinct from capital expenses (i.e. a renovation) – which would need to be depreciated.
Loan Interest expenses - incurred as a direct result of: the purchase of a rental property, the purchase of a depreciating asset for the rental property (eg. new dishwasher), cost of repairs, financing renovations for your rental premises or the acquisition of land on which to build rental accommodation.
Prepaid loan interest – you can also claim interest you’ve pre-paid up to 12 months in advance. This can be a useful way to bring a tax deduction forward into the current tax year if you have a particularly high-earning year that pushes you into the next tax bracket.
Claiming a tax deduction on loan interest
It’s important to note with regard to interest related deductions, if you use a portion of your loan for any private purpose, such as buying a new car, you cannot claim interest on that portion of the loan.
No Longer Tax Deductible: Investor Travel Perks
While the government asserted it would leave negative gearing entitlements untouched prior to this year’s federal budget announcement, they did wind back one significant tax perk: travel expense claims related to rental assets.
Whereas it used to be possible to claim travel expenses when visiting a rental property (even interstate) this is no longer the case.
This information is of general nature and should not be considered financial advice. DPN recommends you see your Accountant or Financial Advisor to understand how this information applies to your situation.
You can read the original article <a href="https://www.dpn.com.au/learn/how-to-guides/2017-tax-time-checklist-for-property-investors" target="_blank">here</a>.
For more information from <a href="https://www.dpn.com.au/" target="_blank">DPN</a>.
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2017 Tax time checklist for property investors

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If the only inevitabilities in life are death and taxes, then the economy and government policy will start to reflect it.
This is particularly evident when the baby boomer generation goes through the significant transition to retirement.
In March 2017, an unprecedented value of building work was approved in construction of aged care facilities, totalling $340 million over the month.
Australia’s population aged 65 and over is an estimated 3.7 million people by the Australian Bureau of Statistics (ABS). Approximately 5 percent are living in retirement communities, or some 184,000 Australians. Based on current projections, Australians aged 65 and over will make up over 20 percent of the population in 10 years’ time.
Despite a rapidly ageing population, the reality of developing aged accommodation – particularly retirement villages – is a harsh one. Like many assets, growth in the residential housing market has crowded out capital for aged accommodation.
According to a 2016 joint survey by the Property Council of Australia and Retirement Living, the national average price of a standard, two bedroom independent living unit increased just over 3 percent between 2015 and 2016. In the same period, CoreLogic data shows the national standard dwelling increased 7.3 percent.
Competition for vacant land, age friendly regulation compliance and investment into green technology to reduce long term service fees are factors that can inflate initial investment. This is amplified by the average tenure in retirement villages, which is approximately 12 years.
However, some areas across the country lend themselves to aged care development. Advantages such as relatively affordable land and mild climates make them popular with retirees. New incentives to downsize introduced in the federal budget may further boost these areas.
CoreLogic data of aged care facilities, independent living units and retirement villages reveals the areas most likely to benefit from the ageing population.
Of the states and territories, the most aged accommodation construction is occurring in New South Wales. The state has 113 projects with construction commenced or imminent over the next five years.
Within New South Wales, the highest frequency regions for construction were The Hills Shire, Newcastle, Wyong and Gosford. Between these regions, there are 26 aged care accommodation projects either approved or commenced, with completion expected by 2023. Newcastle, Wyong and Gosford offer lower land prices along the coast. As for the Hills Shire, while its lack of public transport to the city makes it relatively unattractive for young professionals, the area has a quiet, leafy exclusivity for retirement communities.
The number of aged accommodation developments in each state and territory is generally proportionate to population. The exception is South Australia, where there are 56 developments expected to be completed over the next few years. Of these, 10 are located in Onkaparinga Council, and 6 are located in the Port Adelaide Enfield region. South Australia has a higher proportion of 65’s and over to the total population.
Looking at individual council areas, Brisbane City is by far the most popular spot for aged accommodation projects. In the last 5 years, the region has seen over $725 million in aged care and aged living construction, ranging from upgrades of existing facilities to a $60 million integrated care facility at Carina. By 2020, a further 22 projects in the space are expected to be completed. In the same period, a further 11 are planned for the Moreton Bay Regional area, 9 in the Sunshine coast and 5 in Toowoomba.
A common trend in new developments is the blending of care types in the one precinct, such as the three tiered levels of care in The Village Coorparoo, mean that people are likely to stay on the one site for a longer period of time, or, ‘age in place’. The ageing in place model was also adopted in the recently completed Woodlands Aged Care Facility in the Sunshine Coast.
In the residential care sector, the Aged Care Financing Authority estimates that over the next decade, approximately 76,000 new places will be required, compared with just 35,000 established in the previous decade. In addition, much of the existing stock will require a knockdown and rebuild. The forecast investment required over the next decade is $33 billion. While the initial costs make aged accommodation unappealing for the average investor, the boomer retirement transition could represent a further boom for the construction industry.
Cameron Kusher is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/" target="_blank">here</a>.
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ckusher-ujnxiKuFQs

The areas capitalising on an ageing population: Cameron Kusher

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Household net worth increased by $227 billion to $9.64 trillion in the first quarter of 2017. 
Contrary to what you intuitively might expect, the total value of residential housing as a share of the total assets hasn't really changed all that much over recent decades, even today sitting at just a little over half. 
A big part of the reason for that has been due to the popularity and success of compulsory superannuation, while Aussies are also now hoarding some $1.06 trillion in cash and deposits, a thumping 22 per cent of financial assets. 
<a href="https://www.propertyobserver.com.au/images/2017/06/30/HW1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/30/HW1.jpg" alt="">
Average net worth per capita has come absolutely storming back since the March 2009 nadir, rising by an extraordinary 67 per cent to make Australia the world's second wealthiest country after Switzerland in per capita terms.
Now someone will no doubt Tweet me to say that the housing component should be subtracted - you can do it yourself, the numbers are right there above!
Average net worth per capita increased by ~$34,500 over the year to a record high of ~$394,000.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/HW2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/30/HW2.jpg" alt="">
Housing loan debt also continues to rise to well beyond $1.6 trillion, making households twitchier about increases in mortgage rates than has ever been the case before. 
<a href="https://www.propertyobserver.com.au/images/2017/06/30/HW5.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/30/HW5.jpg" alt="">
Mortgage debt has expanded at a slower pace than asset values, however, bringing the household debt to assets ratio down to 19.5 per cent, while the mortgage debt to land and dwelling values ratio declined again to 26.4 per cent.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/HW3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/30/HW3.jpg" alt="">
The most noteworthy housing market change in recent months has been mortgage rates being ratcheted higher on interest-only loans.  
Given that the hikes largely took place after the end of March, it's likely that interest payable will rise throughout the remainder of 2017.
<a href="https://www.propertyobserver.com.au/images/2017/06/30/HW4.jpg" target="_parent">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/30/HW4.jpg" alt="">
EOFY brings super returns
It's the end of another financial year today!
After an up-and-down sort of a year at times - and assuming the share market doesn't unexpectedly crash this morning - superannuation funds will return about 10 per cent for 2016/17 to notch up an eighth successive year of positive returns, as the share market continues to claw its way back.
From a housing market perspective, almost all commentators are now on board with the notion that the Sydney market has moved into a slowdown phase, which will have knock-on effects to household net worth later in 2017.
Banks will continue to push home loans hard, but investment mortgages will be harder to come by following a raft of tightening measures. 
Yet we also shouldn't ignore that every set of labour force figures released lately has been pointing to a Sydney jobs market that is firing on all cylinders. 
Population growth accelerated to about 91,000 in Sydney in 2016, despite internal migration to Queensland. 
Meanwhile, the unemployment rate has declined to 4.4 per cent, and job vacancies in New South Wales have risen to unprecedented highs, suggesting that many more jobs are being created. 
Anecdotally, I've heard from more than one source that some professional jobs in Sydney are attracting dozens if not hundreds of applications, though whether the applicants are unemployed, under-employed, or from interstate, who can say? 
With first homebuyers sitting out of the market in recent weeks awaiting the introduction of new incentives - applicable to established properties priced up to $800,000 from 1 July - I wouldn't yet rule out a resurgent Sydney housing market later in 2017, at least in the bottom quartile of the market.
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