<a href="https://www.apartments.com.au/developers/sunland-group">Sunland Group</a> has officially lodged plans for its first Gold Coast apartment project since the departure of the Abedian family from the company three years ago, unveiling a new high-rise proposal for a prominent Broadbeach corner site on Old Burleigh Road.

The application was submitted by an entity directed by Tom Jamieson, stepson of longtime Sunland leader Soheil Abedian, and Riaz Rezvanipour, brother-in-law of Sahba Abedian, Soheil’s son.

Sunland acquired the 1,283 sqm site on the corner of Old Burleigh Road and Armrick Avenue for $9.5 million late last year and is now seeking approval for a <a href="https://www.apartments.com.au/new-apartments/99-101-old-burleigh-road-broadbeach-qld-4218">42-storey tower with 81 apartments</a>.

<img alt="First look: Sunland Group returns to Broadbeach with new Old Burleigh Road tower plans" data-entity-type="file" data-entity-uuid="fea2946d-90ee-4cfc-babe-2a8ad5db2cb6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers.png?VersionId=BV0fihJw31nDIQ8ozY_h3GbS8mxDyhnm" />

Designed by <a href="https://www.apartments.com.au/architects/contreras-earl-architecture">Contreras Earl Architecture</a>, the proposed tower at 99-101 Old Burleigh Road would deliver a predominantly larger-format apartment mix aimed at the owner-occupier market. Plans include 17 two-bedroom apartments, 55 three-bedroom apartments, and nine four-bedroom residences across 35 residential levels.

The development also incorporates three basement levels, four podium parking levels, two levels of communal recreation facilities, and rooftop plant and equipment. A total of 189 car spaces are proposed, significantly exceeding the 90 spaces required under the planning scheme.

The architecture adopts a sculpted, curvilinear form, with deep wraparound balconies and integrated landscaping intended to soften the tower’s vertical expression. The planning report states the building’s “slender footprint/form provides a complimentary yet varied built form within the local streetscape” and contributes to “a varied, yet ordered skyline.”

Contreras Earl noted in its Architectural Statement that from the early stages, the project addressed a fundamental challenge: how to accommodate the required residential yield while avoiding the conventional model of a tower sitting on a rigid, fully resolved parking podium.

“The most direct response would have been to consolidate parking into a singular, flat podium and extrude a repetitive tower above,” the statement said. “While efficient, this approach would result in a consolidated built form with limited engagement with the surrounding landscape and public realm.”

Instead, the conventional podium model was “deliberately rejected”. The architects described the base of the building as “a landscaped architectural condition where structure, planting and circulation are integrated”.

“Rather than presenting a continuous built mass, the base of the building is articulated through a series of concrete planter elements that organise the podium into a fragmented system,” the statement said. “This approach reduces the perceived bulk of the lower levels while establishing a more permeable interface with the streetscape and adjacent open space.”

<img alt="Sunland" data-entity-type="file" data-entity-uuid="923fad8d-c960-4527-8fbe-975cf1ddf88d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%2010.32.03%E2%80%AFAM.png?VersionId=pngwb0hYOIUpq9vDw6F2EsOiVuHF3DiX" />

&nbsp;

The site sits within the High Density Residential Zone and inside the City of Gold Coast’s unrestricted “HX” building height area, where the planning framework anticipates intensified residential development tied to the expanding light rail corridor. The planning report notes the area is undergoing “transition toward more intense development forms” given its proximity to Broadbeach, Surfers Paradise, and high-frequency public transport infrastructure.

Positioned directly opposite Broadbeach Park and within walking distance of Florida Gardens light rail station, the development would sit among a rapidly evolving stretch of Old Burleigh Road that has become one of the Gold Coast’s most active apartment development corridors.

The application joins a growing pipeline of luxury residential projects reshaping Broadbeach, including nearby developments by 5Point Projects, Polycell, and Graya.

The planning report argues the project contributes toward the Gold Coast’s long-term housing targets under the South East Queensland Regional Plan, which forecasts the need for more than 100,000 additional high-rise dwellings across the city by 2046.

<section data-scroll-anchor="false" data-testid="conversation-turn-4" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" dir="auto">
The Abedian family departed Sunland Group in late 2023, ending a four-decade association with the company, and subsequently established the private development firm Abedian &amp; Co. The group is currently delivering <a href="https://www.apartments.com.au/new-apartments/greenmount-residences-cnr-hill-street-and-marine-parade-coolangatta-qld-4225">Greenmount Residences</a> at Rainbow Bay and recently launched <a href="https://www.apartments.com.au/new-apartments/18-mary-avenue-14-18-mary-avenue-broadbeach-qld-4218">18 Mary Avenue</a> in Broadbeach.
</section>

Joel Robinson

First look: Sunland Group returns to Broadbeach new apartment market with new Old Burleigh Road tower plans

The Minns Labor Government has established the new Bays West Delivery Authority to lead the development&nbsp;of the Bays West Precinct and Blackwattle Bay Precinct.&nbsp;

The Authority is charged with creating Sydney’s newest precinct, a thriving, connected, sustainable hub with White Bay Power Station as its cultural heart. Its vision is to build on the area’s natural, cultural and industrial history to shape a vibrant new neighbourhood.

The precinct will deliver up to 8,500 well-located homes, including a minimum of 10 per cent affordable and essential worker homes. Combine new housing with public open space, opening public access to the waterfront for the first time in more than 100 years, while retaining important deep-water facilities to support Sydney’s working harbour.

Located just minutes from the Sydney CBD and connected to a world-class metro, ferry, walking and cycling links, the Bays West precinct will rebalance housing growth towards well-serviced inner-city locations and help tackle the state’s housing crisis.

The Bays West Delivery Authority,&nbsp;an agency of the Department of Planning, Housing and Infrastructure, will report to the NSW Minister for Lands and Property who already has oversight of major precinct renewal projects including at Blackwattle Bay and Barangaroo.

As part of the broader Bays West transformation, the Minns Government recently announced that a proposal from Lendlease to redevelop part of the Bays West Precinct has progressed to Stage 2 of the NSW Government’s unsolicited proposals process.

<img alt="Sydney" data-entity-type="file" data-entity-uuid="2ed71eb9-d8e8-4fa7-b9d1-de4531dcf2f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%209.42.31%E2%80%AFAM.png?VersionId=IDryFIbped9SNDg72LEN_EecvhUsOPvp" />

The Minns Labor Government has also confirmed the Bays West precinct will have a new suburb name. This will be the first major suburb built in close proximity to Sydney’s CBD in decades and will encompass the area currently being referred to as Bays West, including Glebe Island and the White Bay Power Station. Served by a new Metro station just five minutes from the CBD, it will become one of the most populous suburbs in the Inner West and one of Sydney’s premier cultural destinations.

An early works program is taking shape, which&nbsp;includes the first stages of an international design competition.&nbsp;

The aim of the Bays West&nbsp;International&nbsp;Design Competition is to&nbsp;ensure design excellence is embedded in the project from the start. The competition will deliver an&nbsp;urban framework that defines the character, ambition and long-term identity of&nbsp;this&nbsp;former industrial precinct as it transitions to a vibrant, inclusive and sustainable residential&nbsp;neighbourhood.

The competition will be led by the Bays West Delivery Authority in partnership with Government Architect NSW.&nbsp;

It will launch with an invitation for a global Expressions of Interest, before moving to an invitation-only stage that will be assessed by a panel that&nbsp;will provide advice to Cabinet who will select a winner.

Premier of NSW, Chris Minns said the establishment of the new Authority is the first step in transforming the Bays West precinct into a vibrant, livable suburb minutes from the Sydney CBD and two stops from Hunter St Station on the Metro West line.

“The Authority will deliver well-located homes close to the heart of the city and integrate the new precinct with Blackwattle Bay and the new Sydney Fish Market.

“This is a generational opportunity to build a new suburb on the city’s edge and open the harbour foreshore to the public for the first time in a century.”&nbsp;

Minister for Lands and Property Steve Kamper said the new Bays West Delivery Authority established by the Minns Government will turbocharge the development of Sydney’s newest suburb.

“The Authority is working at a record pace to deliver an international design competition, planning pathways and a financial model so that this development benefits Sydney with well-designed homes in a central location, close to public transport, jobs, entertainment and essential services.

“If we want Sydney to stay liveable and affordable, we need to be bold about using underutilised government-owned land to deliver homes for the future while making sure essential working harbour functions can be accommodated.”

Bays West Delivery Authority established to "turbocharge" Sydney’s newest suburb

Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.

A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.

Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.

“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.

Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.

“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.

The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.

It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.

The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.

One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.

Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.

The developer is also exploring the potential for additional affordable housing outcomes.

Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.

Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.

Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.

&nbsp;

&nbsp;

Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.

“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”

Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.

Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.

Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.

400 new homes planned for Adelaide's former West End Brewery site

Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.

The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.

Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" />

“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.

The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”

The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" />

The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.

According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.

“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.

A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.

Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" />

All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.

The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.

Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.

The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.

Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" />

Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.

The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.

"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.

The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.

The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" />

Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.

Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.

First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Fitzroy apartments

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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GUEST OBSERVATION
The Abbott government is preparing to give Sydney’s WestConnex road project a <a href="https://news.smh.com.au/breaking-news-national/westconnex-to-get-2bn-in-budget-20140508-37wzp" target="_blank">A$2 billion boost</a> in this week’s federal budget, part of a broader $10 billion <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-05-08/government-to-detail-road-funding-and-detention-centre-closures/5437748" target="_blank">infrastructure package</a> aimed at boosting productivity and private sector investment.
Congestion in Sydney continues to escalate with gridlock on roads impacting passenger and freight logistics. The persistence of this situation reflects poorly on project selection and asset management processes, along with distortions that have arisen from poor interactions between the Commonwealth and the states.
Reform is urgently needed where there is less focus on ribbon cutting and more use of well-targeted “pinch point” interventions.
For example, removing congestion and bottlenecks from existing infrastructure along with shifting a small amount of demand from the peak to the shoulder period can often have superior productivity impacts compared with building expensive greenfield assets.
The school holiday effect on roads is an example of this point, when there are better traffic flows when less than 5% of traffic is absent in the peak. Surely there must be a way to win the community’s confidence that we can make the peak hour work better by shaping demand through means other than just pricing. Changing school opening times and retail operating hours could be a starting point.
Thinking beyond roads
While NSW has a strong case to build more new infrastructure like WestConnex and North Connex; it must use these once in a lifetime opportunities to do much more than build a new road.
The reality is the Sydney of today and yesterday is simply too “land hungry” to be sustainable into the 22nd century.
The appetite for land, unchecked with proper pricing signals for the provision of infrastructure has seen an un-virtuous cycle demanding ever more capital and diminishing return.
Many Sydney-siders have sought relief from escalating land prices on the city fringes, and have done so without the benefit of any genuine choice on where else they could live. Spacious residences on the fringe compare poorly in their mind to the expensive “compact” living of the inner areas.
Important projects like WestConnex can be a catalyst for triggering a new wave of innovative investment, that is, if we consider WestConnex the road project and WestConnex the urban revitalisation project.
A critical question that needs to be answered is how much extra housing and urban revitalising can and should we expect from WestConnex?
Despite the best intentions of those tasked with delivering WestConnex the public documentation suggests that the A$11.5 billion price tag will only deliver 25,000 new strategically located residences for Sydney over 20 years.
Sydney requires at least 800,000 new residences by 2050.
Given that WestConnex is developing such a valuable artery for the city, can it do more?
The first step will require governance model that breaks down traditional administrative silos and enables integrated land use and transport planning to occur.
Productivity matters
The objective of lifting state productivity has been missing from project planning in the past, making it difficult for governments to be purposeful and consistent in their infrastructure decisions in recent decades.
To accommodate the extra three million people by mid-century in NSW, the stock of transport infrastructure will need to either expand by 60% or its productivity must lift by a similar magnitude.
Obviously, it will be some combination of the two.
But anyone flying into Sydney can see that there is not a lot of room for new roads and rail systems. So productivity is going to matter a great deal.
To that end the regulatory system requires reform, as it must provide the right price signals and incentives to make the best use of existing infrastructure. This means a willingness to allow prices to reflect full cost recovery for the infrastructure provided.
Tolls are an option, but a toll should always be a fee for a defined level of service, and the community has the right to expect choice in the services available. The problem is that infrastructure often fails this test to the detriment of business and community confidence.
Tolls need to be justified
It is notable that the M1, M2, M4 and M5 toll roads in Sydney all originally demonstrated great benefit to commuters with faster travel time. But the reality is that now each of these toll roads has a peak hour exceeding 10 hours per day; slow speed and uncertain travel time is the norm.
To address this situation, state and federal infrastructure agencies need to enshrine customer service benchmarks that govern lifetime performance of major assets and networks. Government and the private sector concession holders will then require a framework to sustain them together.
Citizens living in our global cities expect globally competitive transit times during the peak hour. But the reality is Sydney has an average commute speed in peak hour that is 17% lower than London, at just 50km/h, and Melbourne is only marginally better.
Given Sydney and Melbourne are small cities by comparison to London, this is a concerning signal about the health of the road transport system.
Using tolls to help fund transport infrastructure is reasonable but without service benchmarks such as minimum speed guarantees in the peak then commuters are not assured of value for money; a toll becomes just another tax.
Tolls and user charges are not a panacea without fundamental institutional reform. Infrastructure must perform a service to the community that is relevant and compelling in order to justify a user charge in the first place. This is one of the missing ingredients to a successful infrastructure future.
Garry Bowditch is CEO, SMART Infrastructure Facility at University of Wollongong.
Garry Bowditch does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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gbowditch-XhQ427ncp8

The budget will be big on infrastructure, but we need more than just roads

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Cameron Kusher of RP Data drew the ire of a few pundits recently as he highlighted a number of points as to <a href="/expert-insights/buying/slight-fall-in-number-of-negatively-geared-property-investors">why negative gearing won't be abolished</a>.
There are four main points which advocates put forward in favour of abolishing negative gearing:
<ol>
<li>
Rents wouldn't rise Nobody knows for certain whether this is actually true. But let's face it, the inevitable hand of self-interest means that if negative gearing rules were quarantined landlords would probably take the opportunity to at least try it on by jacking up their rental charges (cf. the colossal 57% increase in rents in Sydney last time the rules were tweaked, 1985-1987). Let's suppose for the sake of argument that rents stayed flat.... 
</li>
<li>
Government would save billions This was one of Kusher's main points:  "The government only owns and rents out 4.1% of the housing stock. Conversely dwelling approvals data shows that a very small proportion of new housing approvals are granted to the public sector." Common sense dictates that if the government scraps the prevailing negative gearing legislation it would have to step up its public housing expenditure. "If negative gearing was to be removed the government would likely have to play more of a role in constructing new homes and managing a portfolio of properties. On balance, they probably play see that foregoing almost $8 billion in taxation revenue is more cost effective than developing and managing a greater proportion of housing stock." <img src="https://3.bp.blogspot.com/-HfOBu6rlp88/U24XeBqSg0I/AAAAAAAANGY/mV9lzdx4Ksg/s1600/camkusher.jpg"> So much for all the billions in tax savings: the biggest furphy of the lot. Indeed, according to contemporary commentary the principal reason that negative gearing rules were reintroduced in the first place in 1987 was the spiralling waiting list for public housing, particularly in New South Wales where numbers increased alarmingly by nearly 40% to 140,000. Again, let's suppose that the government recovered in full the foregone funds from its negative gearing subsidies and a grandfathering or quarantining of the prevailing rules proved to be fiscally neutral. 
</li>
<li>
Renters would buy up the properties sold Kusher again: <img src="https://3.bp.blogspot.com/-_nBJi-3W908/U24KdlkeXuI/AAAAAAAANGI/Wmf9ohsWcg8/s1600/CKusss.jpg"> This is obviously true. If property investors sell their properties, are renters who have not been able to buy previously really going to be in a position to suddenly step in and buy them? That seems unlikely, unless renters already had pre-existing deposits and closing costs ready to roll. But again, let's suppose that investors sold their properties and renters somehow did find the deposits and the appropriate financing to buy up the surplus stock with no associated decline in lending standards (also unlikely).  This is where the housing affordability arguments become circular and contradictory... Higher home ownership rates? On the one hand, people say "we should be like Germany with its stable housing market where most people rent" and on the other they argue "renters should be able to buy into the property market". One or the other argument might make sense, but I can't see how they both can. Certain economists believe that artificially pumping up home ownership rates beyond their natural levels promotes boom/bust cycles.  Look at countries where home ownership rates are artificially high, such as Singapore, where dwelling prices are up by 60% since 2009. Hardly a model for affordable housing, and rents are preposterously high in the city too (at least, they have certainly seemed to me to be when I've visited friends in the city - I'm happy to stand corrected on this point if it's incorrect on a city-wide basis). Britain too experimented with making home ownership a part of the very fabric of society through Maggie Thatcher's selling off of council houses, pushing UK home ownership rates to exceptionally high levels of around 70% by the end of the century. This all seemed to be a tremendous success when house prices were booming in the 1980s (and again in the 1990s and first half of the 2000s) with the stakeholder economy benefiting from an unprecedented boom in credit and wildly exaggerated wealth effect. However, it's commonly acknowledged that the UK housing market has also been one of the most manic-depressive boom/bust markets in the world ever since ownership rates increased. Meanwhile, ownership rates until recently appeared to be in the process of heading all the way back down to from whence they came...until, that is, the government stepped in with its Help to Buy and Funding for Lending wheezes - the cycle repeats... 
</li>
<li>Negative gearing doesn't increase supply</li>
</ol>
This point is logical enough, since negatively geared properties are mostly comprised of existing housing stock.
<div>Let's disregard all of the above factors which are precluding the negative gearing rules from being quarantined.</div>
Suppose for a moment that:
(a) the negative gearing rules are quarantined or grandfathered out;
(b) a large number of property investors sell their properties;
(c) renters buy up the surplus stock increasing home ownership rates to 70%+;
(d) rents don't rise;
(e) a decline in lending standards doesn't lead to a mass of defaults when interest rates rise;
(f) no boom/bust market ensues; and
(g) dwelling prices fall by, say, 20% (which presumably is the main underlying point of this entire debate after all).
Ongoing supply? 
As I <a href="https://petewargent.blogspot.com.au/search?q=construction+costs" target="_blank">looked at here</a>, our major residential developers in Australia are not generating strong margins. Far from it in fact.
So if dwelling prices are to fall, who is going to build the new housing stock? 
If you think developers are going to do anything other than maximise shareholder returns, as indeed they are compelled to do, then you likely also believe in tooth fairies.
The Reserve Bank itself highlighted the reason why margins on multistorey apartment block residential developments are so slender: construction costs on infill sites are too high for it to be otherwise.
<img src="https://2.bp.blogspot.com/-g-Oo-rk32eU/UyzA8AHYD4I/AAAAAAAAL_o/UftvW2FtvtA/s1600/CC.gif">
This chart shows why a long drawn out fall in apartment prices in Sydney was never feasible since it would have quickly taken the price per dwelling below its equivalent replacement cost.
Land developer Stockland's (SGP) underlying profit in FY13 was hampered by weak housing conditions, with that financial period encompassing the period from 1 July 2012 when sentiment was  still in the process of picking up.  Stockland's (SGP) residentiual division recorded an EBIT margin of 19.9% in FY2013.
<img src="https://1.bp.blogspot.com/-HLTcTuf2p2A/Uyz4daslyXI/AAAAAAAAMAM/OZEeDiagq_k/s1600/stockland+resi.jpg"> The Mirvac Group (MGR) managed to improve group gross margins on its residential developments to just 22% from a desperately poor 18% in the prior year.
 <img src="https://4.bp.blogspot.com/-jAnKNC6uhSY/Uyz3uhTUatI/AAAAAAAAMAA/bqbqdKWpz8w/s400/Mirvac+margins.jpg">
<div>Lend Lease might yet prove to be the biggest basket case of the lot, the group reportedly struggling to turn a decent worthwhile ROI on some of its resi developments even at today's higher dwelling prices.</div>
<div> </div>
<div>Lend Lease's (LLC) entire Australian geographical segment is recording EBITDA of only $500-$600 million and NPAT of around only $400-$500 million from colossal annual revenue streams of  $7.5 billion plus.</div>
<div> </div>
<div> <img src="https://2.bp.blogspot.com/-DE-MRz3KKWI/Uyz5EFxBebI/AAAAAAAAMAo/hRJtqfrVRQs/s400/LL.jpg">
</div>
<div> </div>
<div>I'm sure that $7.734 billion top line figure is keeping a few execs living in the manner to which they have become accustomed, but those kind of net margins are hardly likely to see shareholders sending the champagne corks flying.</div>
Even back up at a PE of above 14, the share price is still at only at around half of its former glory.
<img src="https://chartbigchart.gtm.idmanagedsolutions.com/custom/etrade-australia/chart.asp?symb=LLC&amp;time=10yr&amp;freq=1dy&amp;type=1&amp;compidx=aaaa%3a0&amp;uf=0&amp;ma=2&amp;maval=25&amp;lf=268435456&amp;style=2061&amp;size=1&amp;comp=">
Lend Lease's FY14 H1 results for its Australian geographical segment have disappointed as development and construction profits have once again slipped back.
<div>
<img src="https://1.bp.blogspot.com/-TkgUgqpwV68/Uyz6QeInzXI/AAAAAAAAMA0/h1MHVaibJqE/s1600/LLAustralia.jpg"> </div>
<div> </div>
<div>Implications</div>
If you're not familiar with accounting convention, what this means simply is that if dwelling prices fall, developers ain't barely going to be making a profit even before financing charges, and it will almost immediately be a case of 'see you later new dwelling supply'.
Say, for the sake of argument dwelling prices fall by 20%.
You can be more or less certain that absent new subsidies, major developers would instantly put any new planned projects on ice until upwards price pressure returned. In case it's still not clear why, this table explains the basic maths:
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="205">
<div> </div>
</td>
<td valign="top" width="48">
<div align="center">FY13 </div>
</td>
<td valign="top" width="47">
<div align="center">FY??</div>
</td>
</tr>
<tr>
<td valign="top" width="205">
<div>Turnover</div>
</td>
<td valign="top" width="48">
<div align="center">100</div>
</td>
<td valign="top" width="47">
<div align="center">80</div>
</td>
</tr>
<tr>
<td valign="top" width="205">
<div>COS</div>
</td>
<td valign="top" width="48">
<div align="center">(80)</div>
</td>
<td valign="top" width="47">
<div align="center">(80)</div>
</td>
</tr>
<tr>
<td valign="top" width="205">
<div>EBIT margin</div>
</td>
<td valign="top" width="48">
<div align="center">20</div>
</td>
<td valign="top" width="47">
<div align="center">-</div>
</td>
</tr>
</tbody></table>
In our cities with booming population growth this would be disastrous for renters. 
<div>Even in the event of interest rates remaining at their lowest levels in a generation, developers would soon have zero incentive to build since if dwelling prices are sliding, since they'd only be breaking even before financing charges were booked. </div>
There would be no corp tax to pay since there wouldn't even be a net profit upon which to raise tax, so the government would be getting zinged on its own revenues there too...and zinged again would they be on stamp duty foregone as the supply of new dwellings evaporated.
So much for all the billions in tax savings. As for the capital gains tax take, which forms a part of the individual income tax assessment: when prices are falling...oops there goes another revenue stream
So <a href="https://www.stockland.com.au/assets/crs2013/financial-report-2013.pdf" target="_blank">when Stockland discussed in 2013</a> "the prolonged downturn in the Australian residential land market" as adversely impacting results, they aren't being facetious.
They are simply noting what is plainly the case for developers in their resi divisions - there ain't barely no money in it, which is why it has taken a significant upturn in Sydney's prices to see dwelling approvals at last begin to flow through, after a woeful lull across the past decade.
Conclusion
If dwelling prices fall over any meaningful period of time in a city such as Sydney, we would quickly see supply dry up and with a population growing at 80,000 plus per annum we'll be back into chronic undersupply territory in just a few short years.
This is why negative gearing rules probably won't be quarantined or grandfathered out.
And this also why, if affordable housing is considered to be a genuine target, the government would probably need to look at tackling supply through subsidies as I posted about <a href="/expert-insights/buying/how-to-fix-australias-affordable-housing-problem">here</a>, while at the same time easing demand through considering other property tax reform and not the NG rules.
As I've noted before though, I'm sceptical as to whether there is any real desire to make housing more affordable from those in power.
You can visit <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) or Pete's <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blog</a>.
His new book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.
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pwargent-M4siyDbqQY

If negative gearing is quarantined cities like Sydney will be facing chronic undersupply

<html><body>
I am not an economist and after the release of the federal government’s Commission of Audit report this is a fact for which I am somewhat grateful.
Having stated my position on the economics involved, some of the Commission of Audit’s 86 recommendations could, it appears, from all of the commentary potentially re-shape Australia. It could re-shape many aspects of society and many aspects of Federalism, which seems a shame really given that only last year, Canberra, the seat of Federalism, celebrated its 100th birthday – just as well it’s not this year.
Part of the intention of the report was to spark a conversation about what sort of society we want to be, in particular over the next 50 years or so. And it appears that conversation has got off to a flying start. When you search ‘Commission of Audit Australia’ on Google there are already some 280,000,000 references.
I have found myself asking the very specific question of how will the report impact the residential housing market? How will the report influence buyers and developers now and over the next few years?
It might be foolhardy to venture into this territory while the report is still so new, but I want to join the conversation, and because the report will reach into so many areas of our social structure I think the conversation is urgent.
A Shift in Demographics
Over the years the market has had to live and adjust to some big issues, like the introduction of universal superannuation guarantee levy (1992), the GST (July 2000), the 9/11 attack on New York and Washington (2001) and the GFC (2007/2008).
However even these big events did not have some of the potential impacts on the very structure of government and beyond that the wider demographic of the Australian population, and it is in the potential demographic changes that a much wider topic opens up for discussion relative to housing and the development market.
And while some changes are not due until mid century, I stop today and think how in just over two decades the arrival of the superannuation guarantee levy is now, thanks in part to the growth of SMSFs, central to many aspects of the residential housing market.
And some seven years later we are still in part dealing with the GFC and so it does not take a crystal ball to appreciate that change can be both long-term and to a degree painful.
Shifts in Demand Shifts in Confidence
Post the audit report in Sydney this weekend auction clearance rates were reported at some 77%, that’s down a little on some recent weekend results, but still slightly higher than the last few months. However after the delivery of the federal budget on 13 May the combined impact on consumer confidence will come into sharp focus over the next few months.
Consumer confidence in Australia increased to 99.73 in April of 2014 from 99.46 in March of 2014 but has been on a falling trend over the last six months.
While the level of consumer confidence is a closely watched measure of the economy, shifts in demographics are far more subtle and until now have been less in focus.
It’s somewhat remarkable how the impact of the baby boomer generation has now started to consume the government’s attention, despite the fact that this age bracket was always going to cause pressure points as it moves out of work and into retirement, and the property market has been feeling the presence of the ‘boomers’ for some years now.
Demographic Touch Points to Watch
The proposed change to the retirement age, has grabbed a lot of attention because it has the potential to impact the entire population. This change could have varied and possibly unexpected effects on the housing market; delayed retirement could impact the demand for downsize opportunities, it could also force more people to consider selling sooner to fund the gap between their retirement and ability to collect the pension and linking the family home to any sort of pension means this would be a big change.
The family home would move into a different light and how a future inheritance is impacted could change the housing ambitions of many younger people. While changes to the cost of education could re-shape the sometimes already fragile prospects of first time buyers, as they have to fund a degree well into their careers. This could also lead to a lowering of employment prospects and impact the earning power and relevance of the middle class in the housing market.
While the audit did not directly comment on tax issues, there is an ongoing debate about the GST – an increase could impact the market, but if there is also a change in the relationship between the Commonwealth and the States, then we could see greater mobility and demographic changes across state boundaries.
Infrastructure and Privatisation
One clear result of the audit will be greater pressure for all governments to venture into a wholesale period of privatisation. This may well deliver some greater opportunities for the property development industry, and the potential sale of the Defence Housing Authority would be a very competitive process.
However the real test will be an assurance that a real improvement in infrastructure must result, if it does not, or if projects are badly delivered this could impact the continued recovery in the housing market.
This is a conversation set to take a lot of time and effort, and so I wanted to remind myself of what an audit of this kind sets out to achieve; "A systematic check or assessement, especially of the efficiency or the effectiveness of an organization." 
While demographics: "The characterises of a human population, especially the size, growth, density, distribution and statistics regarding birth, marriage, disease and death." 
With the audit touching upon so many key social issues, the flow onto demographics is certain and the housing market may well be impacted, at first indirectly by a possible drop in confidence, but in the long term more directly as demographics, incomes and taxes change.
The audit looks like the first step in an extended agenda of economic reform, and while there may be some unpopular fiscal measures taken in next week’s budget, it does appear that interest rates are set to remain low. Because any increase would boost the dollar and possibly shake consumer sentiment so for the immediate future property will remain attractive due to the long run of low rates.
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pchittenden-eLqUUC8TWW

How will the Commission of Audit affect the residential housing market?

<html><body>
I’d rather be a seller than a buyer in Sydney in 2014. That’s my general response to a frequently-asked question: is it too late to buy in Sydney?
The time to buy in Sydney to achieve maximum gain from the recent recovery was late in 2012. Most of the Sydney locations I was recommending back then have experienced capital growth between 15% and 20% in the past 12 months. That won’t be repeated in the next year, although there will be further growth.
Some commentators have sought media profile by making the absurd statement that “the property boom is over”.
It has a similar ring to the declaration in mid-2013 that “the resources boom is over”. A year later we still have projects worth around $250 billion under construction, with major new ones (like the $9 billion Roy Hill mine and Galilee Basin projects totalling $30 billion) just getting under way, but if it makes a headline no one seems to care too much about balance or accuracy.
The claim that the “the property boom is over” is equally flimsy and made for the same shallow reason: short-term publicity and the truth be damned.
Sydney’s boom is unlikely to retain the heights of 2013 but growth continues. Melbourne is yet to reach the levels of Sydney. Brisbane and Adelaide are just getting started and are likely to feature among the growth leaders by the end of the year. Perth still has momentum and Hobart, following the election of a new state government, is set for its best year in a long time.
The thing about Sydney is that it’s a very big city, with 700-plus suburbs. There are many locations with activity created by local reasons, rather than city-wide momentum. There will be ongoing growth in specific locations for specific reasons, most of them related to transport infrastructure.
There will investment opportunities from the Badgerys Creek airport, once definitive information about flight paths and infrastructure location is known. The North West Rail Link is advancing, with impacts on real estate along its route to Rouse Hill. Ditto the South West Rail Link. WestConnex will be another game-changer, impacting suburbs such as Westmead.
So the secret to finding further growth in Sydney is to <a href="/expert-insights/investing/follow-the-infrastructure-trail-to-find-future-growth-suburbs">follow the infrastructure trail</a>.
Beyond that, investors can profit by looking outside Sydney to regional New South Wales. When capital cities boom, there is often a ripple effect out to the regions. Two cities not far from Sydney, and advancing for local reasons also, are Wollongong and Newcastle.
Wollongong has defied predictions that it would lapse into recession following economic reversals such as downsizing by Bluescope Steel. One hysterical headline suggested property values would fall 50%. But the Illawarra is the latest example of a regional community fighting back from adverse circumstances. A lot of infrastructure and property development money is pumping into Wollongong and real estate markets are rising.
Others to watch include Dubbo, Tamworth and Gunnedah, as well as Newcastle - which continues to be one of Australia’s most under-rated cities and property markets.
You can contact Terry via   <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://www.twitter.com/hotspotting" target="_blank">Twitter</a>.
Image courtesy of Wikipedia/Creative Commons.
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terryryder-YECXbqmri2

Too late to buy Sydney - try Wollongong or Dubbo, Tamworth and Gunnedah, and Newcastle

<html><body>
The Northern Territory government has <a href="/expert-insights/investing/northern-territory-s-fhog-directed-to-new-builds-only-from-2015">abolished its first home owners grant for established homes</a>, extending the grant only to new dwellings from January 2015.
While announcing the changes, Treasurer David Tollner acknowledged that first home owners grants have added upwards pressure on housing prices. The government cited economist Saul Eslake’s <a href="/news/the-senates-inquiry-into-affordable-housing-six-submissions">submission to a Senate inquiry into affordable housing</a>. Eslake criticised the grant, saying that when applied to established homes, it "served to simply to exacerbate the already substantial imbalance between the underlying demand for housing and the supply of it."
According to Tollner, the unintended inflationary effects of the first home owners grant were a factor in the government’s decision to abolish the grant for established homes.
"That’s why the Territory government will direct the first home owners grant solely towards the construction or purchase of new homes from next year," said Tollner.
"By targeting the first home owners grant towards the purchase of newly built homes, the grant is more likely to contribute to growth in housing supply and employment in the construction sector."
The Territory government will maintain the payment for first home owners of established homes for eight months.
"...ultimately, we want this grant to encourage the construction of new homes, create more jobs in the residential construction sector and improving housing affordability by increasing housing stock." Tollner said.
"This is a far better result than merely creating a churn in existing dwellings that is widely accepted as having an inflationary effect on the cost of housing."
Eslake is not the first industry figure to criticise the first home owners grant. Writing on the grant last year, <a href="/expert-insights/investing/slow-demise-of-first-home-owner-grant-schemes-monique-sasson-wakelin">observer Monique Sasson commented</a>:
"The scheme is meant to make property more affordable for first home buyers. Unfortunately, experience shows that the grants don’t achieve this end.  Instead, the nominal increase in purchasing power it delivers to first home buyers transmits directly into higher prices for the properties they hope to buy.
"The real beneficiaries are the vendors of properties that first timers buy."
The Northern Territory follows Victoria, New South Wales, Queensland and the Australian Capital Territory in its removal of the first home owners grant for established properties.
 
 
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jrichardson-uRX5hFdKfN

Northern Territory government acknowledges that FHOGs for established houses have "inflationary effect"

<html><body>
The National Rental Affordability Scheme (NRAS) has been debated heavily in recent weeks and the federal budget will be heavily scrutinised to see what changes, if any, will be made.
However, Property Asset Planning’s managing director Brian Chant said that he was in support of the Property Council of Australia’s executive director of the residential development council, Nick Proud, for the federal government to continue their support of the scheme.
Chant, it is noted, has sold hundreds of NRAS properties in South Australia under the name NRAS4SA.
“In South Australia we have seen little evidence of problems with NRAS which have been recently reported in The Australian newspaper and other national media,” said Chant.
YOU MIGHT ALSO WANT TO READ: <a href="/expert-insights/scrapping-nras-should-the-affordability-scheme-continue">Scrapping NRAS: Should the affordability scheme continue?</a>
Chant noted that the criticisms, which suggested that international students were benefiting from NRAS, was not an issue in South Australia.
“To suggest that the program should be wound up is short sighted and misguided. Australians consistently nominate housing affordability and supply as a top five issue and this is the one Federal Government program that aims to address Australia’s housing shortage,” he said.
“Given the success I have seen from the point of view of both investors and a tenant I see no reason to scrap NRAS now. Yes there are a few areas that need to be tightened up but lets not start from scratch with a new program to address an urgent problem.”
“Combining changes to negative gearing with a reinvigorated NRAS program will, based on our experience in South Australia, make a huge difference and very quickly,” Chant said.
Green Building Council of Australia chief operating officer Robin Mellon also agreed with the Proud’s comments.
He pointed to recent comments from Proud that claimed ditching NRAS would be throwing the baby out with the bathwater.
“Increasing housing affordability in Australia requires a range of complementary measures, together with commitment from industry and all levels of government. NRAS is a vital piece of the jigsaw – one that we can't afford to lose,” Mellon said.
An academic from a research hub has <a href="/expert-insights/investing/nras-fears-are-misplaced">also said that NRAS fears are misplaced</a>.
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jduke-EHk3XBmHkn

Property Asset Planning supports call for federal government to continue NRAS

<html><body>
The Reserve Bank of Australia has noted that the strong established housing market has stimulated consumption in its latest Statement of Monetary Policy.
In its outlook for 2014-15, the Reserve Bank predicts that low interest rates will continue to support the housing market. Low rates are also expected to boost the construction of new dwellings and household consumption.
According to the Reserve Bank, a “pronounced increase in dwelling investment is underway”, with growth higher than was forecast three months ago. Increasing housing turnover is expected to stimulate renovation activity, which the Bank notes has “to date been quite subdued.”
The market for new housing remains strong, with building approvals also surpassing previous expectations. Forward looking indicators such as loan approvals and first home owner grants for new dwellings are also showing strong growth.
The Reserve Bank cites low interest rates, rising housing prices, average rental yields and first home owner grants for new dwellings as key drivers for housing investment.
Nationally, house price inflation has moderated somewhat in recent months. The Reserve Bank also notes that auction clearance rates have declined from their recent highs, while loan approvals remain stable. According to the Reserve Bank, "it remains to be seen whether these signs of tempering conditions represent a shift to a more sustainable growth rate for housing prices."
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RBA’s May 2014 statement: Dwelling investment increasing

<html><body>
As of 1 January 2015, Northern Territorians looking to buy their first home will only be able to get the First Home Owners Grant if they buy new, under recently announced changed.
The current property value limit of $600,000 will be removed, and the value of the grant for building or buying new homes has increased $1,000 to $26,000.
These changes are in effect as of tomorrow.
Dave Tollner, treasurer, said that the removal of the value limit will remove the requirement that the buyer pay for a valuation of the property.
“These are practical changes that will make the grant more appealing and flexible to first home buyers that are buying or building new homes,” Tollner said.
At the moment, a $12,000 grant can be obtained for established dwellings in an urban area, or in Darwin, Palmerston and Litchfield. A $25,000 grant is available for those outside of the urban area.
These grants for established homes will be gone from next year, with hopes of stimulating new home construction and to encourage a take up of the accelerated land releases.
“By targeting the first home owners grant towards the purchase of newly built homes, the grant is more likely to contribute to growth in housing supply and employment in the construction sector,” said Tollner.
Those looking to buy an existing dwelling have an opportunity for the next eight months to take advantage of the existing grant.
“This will ensure an orderly transition and allows buyers who are currently in the process of buying a home, or intending to do so in the near future, with sufficient opportunity to take advantage of the FHOG as part of that purchase until the end of the year,” he said.
“But ultimately, we want this grant to encourage the construction of new homes, create more jobs in the residential construction sector and improving housing affordability by increasing housing stock.”
In announcing this decision, the government acknowledged that providing a grant for existing property is <a href="/expert-insights/investing/northern-territory-government-acknowledges-that-fhogs-for-established-houses-have-inflationary-effect">“widely regarded” as contributing to higher property prices</a>, noting economist Saul Eslake’s comments.
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Northern Territory’s FHOG directed to new builds only from 2015

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Calling the increase in strata developments and land sales in Western Australia a “boom”, Consumer Protection has provided some clear guidelines for prospective off the plan buyers.
Revealing a booklet to buying off the plan on their website, acting commissioner for Consumer Protection, Gary Newcombe, said that the biggest risk is if the development fails to go ahead as planned.
“For this reason, it is absolutely essential that buyers ensure that any deposit they pay up front is held in a designated trust account by an independent party such as a real estate agent until the property is ready to settle,” Newcombe said.
“When buying off the plan it is also important to know the status of any planning approvals, the likely timelines for these being settled and what happens if approvals are not granted within acceptable periods.”
He noted that the contracts for developments are usually created by the developer and their agents, and so there’s a risk that the developer’s interests are protected but that consumers’ are not to the same extent.
He also said that buyers should consider whether their own circumstances may change, and then affect their ability to fulfil their contractual requirements.
 “There might be changes in the buyer’s financial situation, interest rates may rise and property values may fall – all factors that will affect their ability to get finance when settlement time comes many months or even years down the track,” he said.
“The risk of a buyer defaulting could mean their deposit is lost and the developer could claim other damages and losses.”
He warned that their guidelines should not replace legal advice.
The top seven questions from the guide:
<ol>
<li> What are the pros and cons of buying off-the-plan? 
</li>
<li> Who should hold the deposit and to whom will interest, if any, be paid? 
</li>
<li> What happens if the buyer can’t go through with the deal, or the development doesn’t proceed as planned? 
</li>
<li> Can the developer increase the price of the land or property after the contract with an agreed price is signed? 
</li>
<li> Can the quality of the property be guaranteed and what happens if the builder changes the plans? 
</li>
<li> What’s at risk if the buyer can’t get finance by the settlement date? 
</li>
<li> Under what circumstances can a buyer pull out of the contract without any penalty?</li>
</ol>
Source: Consumer Protection
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Seven questions every off the plan buyer should be asking

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Treasurer Joe Hockey will tomorrow announce the Abbott government’s first federal budget.
The Coalition pledges to return the budget to surplus by 2023-24. With talk of a <a href="/expert-insights/investing/australia-s-economy-is-healthy-so-how-can-there-be-a-budget-crisis">budget “emergency” or “crisis”</a>, <a href="/news/john-symond-fears-fallout-from-overly-tough-federal-budget">some are worried that the government will deliver a tough budget</a> to the detriment of the economy. 
Here's what the experts think of the prospective federal budget and the impact it will have on the country's housing sector.
<img src="/images/2014/05/12/rogers-profile.jpg" alt="" style="float: right;">DALLAS ROGERS - Research Fellow, Urban Research Centre at University of Western Sydney
It’s worth remembering on budget night that we all live in subsidised housing. The great Australian dream to own a house has long been underwritten by the great Australian housing subsidy. Whether you are a public housing tenant, a private renter or a homeowner, chances are your house was subsidised through a rental subsidy, housing grant or taxation credit. There will be housing winners and losers on budget night.
It’s not looking good for public and social housing subsidies this budget. The Commission of Audit urged the Commonwealth to limit its involvement in public and social housing by providing rent assistance to income support recipients. If Hockey followed through with these recommendations social and public housing tenants would have to pay market rent for their currently subsidised housing. The National Rental Affordability Scheme would go too. This would be bad news for housing equity. The frail and elderly, those with carer responsibilities or complex medical needs, or very low-income Australians in public or social housing would be hit hardest.
Comparably, The Commission of Audit was silent on private housing taxation. Private housing subsidies are like chocolate, we know that we should use them in moderation but we just cannot cut back. We often pretend that they are not subsidies at all. AMP <a href="https://m.afr.com/p/national/big_talk_small_acts_on_bn_budget_AkRrPW2xaygUjpIodRK8IK">chief economist</a> says ‘changes to negative gearing or the CGT exemption on the family home would be seen as “unAustralian”’. <a href="https://grattan.edu.au/">Grattan Institute</a> data suggests that more than 90 per cent of private housing subsidies go to property owners over private renters (see below). Including the roughly $30 billion pa capital gains tax benefit for owner-occupiers and the $7 billion pa negative gearing benefit for landlords. Most tax concessions do not generate new housing stock. They all, with the addition of the first homebuyers grant, drive up property prices. This is good for homeowners and developers, and bad for renters.
<img src="/images/2014/05/12/grattan.jpg" alt="">
If we want housing equity and socially just cities we need to rethink public and private housing subsidies. There is scope for innovative private sector models and taxation policy – e.g., National Rental Affordability Scheme – that provide additional housing stock. But we will always need housing tenure forms that operate outside the market for the poorest and most disadvantaged Australians.  
You might also want to read: <a href="/expert-insights/joe-hockey-treating-australian-public-as-fiscal-fools-ahead-of-the-federal-budget">Joe Hockey treating Australian public as fiscal fools ahead of the federal budget</a>
 
SHANE OLIVER - Head of investment strategy and chief economist, AMP Capital <img src="/images/stories/2014/02/21/shane-oliver-profile.jpg" alt="shane-oliver-profile" style="float: right;">
There is a possibility that negative gearing might be tightened, but at this stage I’d only put it in the possibility camp. I think it’s probably unlikely. I can’t see any other changes that directly affect housing. The government has virtually ruled out including family homes in the means test for pensions, and it’s unlikely that they’ll remove CGT tax-free status for the family home.
Most implications will be indirect. That’s the biggest risk. The government is fairly intent on significant fiscal tightening to deal with the “budget emergency.”
That means tougher means testing and reducing eligibility criteria for family benefits. We might see possible tax hikes for high income earners and numerous cuts to the level of government spending. Those changes could adversely affect spending power in the economy and could affect housing demand. The risk is that they’ll get carried away. There’s tough budget talk prior to every budget. Often things aren’t quite as tough as you’ll expect, but the rhetoric has been quite a bit tougher this time.
[The Coalition] have painted themselves into a corner, saying that there’s an emergency. Having talked up the budget crisis, there’s a bit more pressure than normal for the government to deliver.
There is a potential upside for property in the sense that if the budget is too austere and too aggressive with cut backs, it may mean lower interest rates for a longer period of time. [AMP Capital] have predicted a September or October rate hike, but we’d be inclined to think that that won’t occur if the budget is too tight. And if upper income tax rates rise, people might more inclined to negatively gear.
You might also want to read: <a href="/expert-insights/what-do-we-need-to-see-from-the-federal-budget-the-experts-have-their-say">What do we need to see from the federal budget? The experts have their say</a>
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ROBERT SIMEON - Director of Richardson Wrench Mosman and Neutral Bay <img src="/images/authors/fullbody/Robert-Simeon.png" width="150" style="float: right;">
Historically real estate has been a minor player come budget time. The government of the day prefers to address the industry from more of a macro positioning, given that is by far an easier option when compared to a microeconomic analysis. For all intents and purposes, if the real estate/housing demographic were that essential then it would be fair to say there would actually be a designated Housing Minister which is not the case with the Abbott led government.
Landlords and investors can breathe a sigh of relief - negative gearing won’t be touched, although given the recent Commission of Audit it would be fair to say at some time in the future this will come under much greater scrutiny. When one looks at the real estate/ housing markets there is the one common theme; record high rents and record high average prices across the board. Again this is easy to disguise as this will be camouflaged with macroeconomic dialogue.
Infrastructure will be front and centre given the recent COAG meeting endorsed the compilation of an asset sales list that would see them attain federal funding based on these sales for a massive infrastructure spend. The only problem with this is that the infrastructure expenditure is already decades behind where it should be today.
Sadly there won’t be any incentives for the housing construction industry which is seriously lagging behind where it should be today – this is reflective with what is happening to property values and rents. The Australian Bureau of Statistics (ABS) released their building approvals data to March 2014. It showed that in the past year 188,070 houses/units were approved yet the real figure is that Australia needs to be building over 300,000 each year to get close to meeting demand.
The latest ABS figures identify that total household debt in Australia stands at $1.84 trillion as at December 2013 – this is equivalent to $79,000 for every person living in Australia and is the highest amount ever recorded for the last 25 years.
Foreign ownership of Australian residential real estate should and must come into budget considerations given the government restrictions are weak and at best need tightening.
As I mentioned previously, all the machinations pertaining to the property industry will be covered with macroeconomic spin. The budget is all about the government’s financial positioning which will be hinged to weak productivity, an ageing population and falling terms of trade.
So expect the focus to be on government debt and how we all will be expected to lend a hand to correcting this economic anomaly. Just don’t mention microeconomics.
You might also want to read: <a href="/expert-insights/investing/budget-week-is-all-about-huff-and-puff">Budget week is all about huff and puff</a>
LEANNE PILKINGTON - General Manager, Laing+Simmons<img src="/images/2014/05/12/pilkington-profile.jpg" alt="" style="float: right;"> 
Affordability issues have come to the point where they are more than simply a barrier for first home buyers looking to enter the market. People in this bracket are increasingly dismissing even obtaining a mortgage as a lost cause.
While existing property owners welcome reports of rising prices and investors continue to participate actively in the market, the pessimism among first home buyers is palpable. There is a definitely a feeling among this sector that property is simply a pipedream, one that might never come true.
The flow-on impacts in the coming years and decades could be huge and potentially disastrous. It’s time Governments at different levels recognise and respond to the challenges first home buyers face and to work with industry to generate new policies capable of providing optimism and driving first home buyer activity.
One of the key barriers to more first home buyers being able to participate in the market is the difficulty many have in accumulating a deposit.
Perhaps there is scope for some form of Government-backed savings scheme whereby those first home buyers serious about saving a deposit can access tax advantages or even Government contributions to match their own, be it means tested or otherwise. Another potential avenue for Government to investigate might be to enable first home buyers to access their superannuation to contribute to their deposit.
Encouraging investors to refresh their portfolios where it’s appropriate to do so might serve to release more stock to the market. While these ideas may vary in terms of feasibility and practicality, particularly as we prepare for a difficult Federal Budget, the point is clear: something needs to be done.
You might also want to read: <a href="/expert-insights/investing/the-reias-10-point-wishlist-for-the-federal-budget">The REIA's 10 point wishlist for the federal budget</a>
CATHERINE CASHMORE - Independent market analyst<img src="/images/authors/fullbody/Catherine-Cashmore.png" width="150" style="float: right;">
As we approach the federal budget, once again we have to endure another round of economic nonsense as the Treasurer tries to convince ‘ordinary’ Australians that the country is ‘running out of money’ – facing a ‘budget crisis.’
There is no evidence and no economic wisdom that indicates running a surplus is good for the economy. 
This is something <a href="https://www.youtube.com/watch?v=D0iFiUfDqSw">Steve Keen</a> does an excellent job of demonstrating in a recent lecture given in Sydney, in which he shows the inevitable consequence to GDP should our Government attempt to do so.
Economic orthodoxy stubbornly insists on austerity measures to pay down government debt by imposing onerous taxes on its working population.
There are lessons that should have been learnt following the Great Depression in the 1930s. When the government tightens its belt for no other reason than a vain attempt to ‘spruik’ a surplus, it has the unwanted effect of withdrawing money from the economy – leaving the private sector (the working class population) to pick up the slack.
Therefore “repairing the [government] budget” is not putting the fate of  Australians on “the right track.”
It is the government’s responsibility to make sure our monetary system works for the population, by spending enough money into the economy to keep employment and productivity thriving. 
Catherine Cashmore's comment is an edited extract from <a href="/expert-insights/investing/economic-nonsense-and-the-consequences-for-future-generations">her column</a>. 
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