High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

[smartcode_project:default project_id=5743 project_image_fid=372394]

For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

[smartcode_project:default project_id=5743 project_image_fid=927]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

[smartcode_project:default project_id=5743 project_image_fid=375255]

The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

[smartcode_project:default project_id=5743 project_image_fid=925]

The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

[smartcode_project_cta:default project_id=5743]

Joel Robinson

Buying with confidence: What NSW apartment buyers should check beyond the defect headlines

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

[smartcode_project:default project_id=145324 project_image_fid=372749]

Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

[smartcode_project:default project_id=145324 project_image_fid=354343]

The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

[smartcode_project:default project_id=145324 project_image_fid=354347]

According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

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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You can argue about housing affordability until the cows come home, however being right is an entirely different matter. Let’s face it, Sydney today is a basket case given the gridlocked traffic congestion which simply identifies that it can’t cope as our population surges. This was recently reinforced with the state government forced to declare that some major roads will now be 24 hour, seven days a week clearways.
With great interest I read this week a report that was released <a target="_blank" href="/news" title="Sydney’s ‘global’ vision bad news for local housing affordability ">Sydney’s ‘global’ vision is bad news for local housing affordability, </a>which identified in a recent government briefing paper that in the last decade medium rent for all properties in the inner ring of Sydney more than doubled from A$195 to A$560. Now that’s scary although realistic given the strategy, part of the “Global Sydney” vision from the NSW state government, is almost 10 years old. Updated government forecasts suggest Sydney’s population will grow to 5.8 million by 2031 – approximately 200,000 more people than predicted in 2010.
The report reveals that we can expect little policy movement on private housing subsidies by federal or state governments. Negative gearing has increased the wealth of middle and high income Australians. Developers endlessly lobby governments for taxation concessions. No major political party would dare propose reform.
With the Reserve Bank of Australia (RBA) deciding to leave the cash rate at 2.50% many were quick to declare that the <a target="_blank" href="https://www.afr.com/f/free/blogs/christopher_joye/rba_turns_blind_eye_to_housing_boom_JkFWke1jyGA4yV7vDY4HeJ" title="RBA turns blind eye to housing boom">RBA turns blind eye to housing boom</a>, although I must admit, the current state of the property market has everyone baffled and requiring deeper investigation.
The question that dominates the market is why are there so few listings if the market is this strong? Well that is now easier to address given<a target="_blank" href="https://www.whocrashedtheeconomy.com.au/blog/2014/02/roy-morgan-unemployment-hits-11-3-highest-in-19-years/" title=" Roy Morgan unemployment hits 11.3% - highest in 19 years."> Roy Morgan unemployment hits 11.3% – highest in 19 years.</a> I (like many others) use the Roy Morgan methodology over the Australian Bureau of Statistics (ABS) given it’s absurd and totally unreasonable to consider somebody who works just one hour a week as being in full employment. It is also widely acknowledged that politicians much prefer the ABS figures given it makes them look better. Historically, property markets always contract when unemployment is rising as the two go hand in hand, although at the moment we are witnessing the complete opposite.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; vertical-align: baseline; color: #be002d; text-decoration: none;" href="https://www.rwm.com.au/files/2014/02/10-02-2014-9-16-57-AM.jpg"><img style="margin: 0px auto; padding: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; display: block; max-width: 100%;" height="288" width="470" src="https://www.rwm.com.au/files/2014/02/10-02-2014-9-16-57-AM.jpg" alt="10-02-2014 9-16-57 AM" class="aligncenter size-full wp-image-8418"></a>
So we were told this week that Australia’s 9.3 million homes have reached a new high<a target="_blank" href="https://www.smh.com.au/business/property/australian-homes-worth-5tn-20140211-32eyq" title=" Australian homes worth $5tn "> Australian homes worth $5 trillon </a>with the nation’s residences jumping a huge $184 billion in the last three months of 2013. What many find startling is that previously when unemployment is escalating property prices start dropping however this time around home values are rising and so is the unemployment rate.
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; vertical-align: baseline; color: #be002d; text-decoration: none;" href="https://www.rwm.com.au/files/2014/02/11-02-2014-11-12-24-AM.jpg"><img style="margin: 0px auto; padding: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; display: block; max-width: 100%;" height="286" width="470" src="https://www.rwm.com.au/files/2014/02/11-02-2014-11-12-24-AM.jpg" alt="11-02-2014 11-12-24 AM" class="aligncenter size-full wp-image-8419"></a>
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; vertical-align: baseline; color: #be002d; text-decoration: none;" href="https://www.rwm.com.au/files/2014/02/11-02-2014-11-14-42-AM.jpg"><img style="margin: 0px auto; padding: 0px; outline-width: 0px; font-weight: inherit; font-style: inherit; font-family: inherit; display: block; max-width: 100%;" height="246" width="470" src="https://www.rwm.com.au/files/2014/02/11-02-2014-11-14-42-AM.jpg" alt="11-02-2014 11-14-42 AM" class="aligncenter size-full wp-image-8421"></a>
The number of houses on the market changed little with just 81 houses on the market. The most startling statistic being there are just two houses for sale in Neutral Bay – previously the record low was four houses with an all-time high of 22.
<a target="_blank" href="https://www.businessspectator.com.au/article/2014/2/12/economy/cold-truth-about-hot-property-prices" title="The cold truth about hot property prices">The cold truth about hot property prices</a> answers many questions given the Australian labour market hasn’t been this weak in over a decade. Investors are driving the values up as they have identified weak infrastructure and escalating rents given our population explosion.
Governments won’t address any of the issues as they are worried about losing voters so to coin an old Australian euphemism – “Bugger you Jack – I’m all right!”
Robert Simeon is a director of <a rel="nofollow" target="_blank" href="https://www.rwm.com.au/" title="RWM" style="font-size: 14px;">Richardson  Wrench Mosman and Neutral Bay </a>and has been selling residential real estate in Sydney since 1985. 
He has also been writing real estate blog <a rel="nofollow" target="_blank" href="https://www.rwm.com.au/news/" title="Virtual Realty News">Virtual Realty News</a> since 2000. 
The RWM real estate model has sold in excess of $1 billion in database sales globally.
 
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robertsimeon-hRNTwJyXkQ

Home prices are rising and so is unemployment - that's a first

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It's not a fashionable thing to point out, but as RP Data's Cameron Kusher notes, Sydney property prices have comfortably underperformed the growth in household incomes for over a decade now.
Of course, this doesn't fit with the "it's never been tougher than today" rhetoric that seems to be popular right now.
Ask anyone who actually bought property in 2003 or early 2004 in Sydney and they'll tell you a rather different story, though.
Similarly, those of us who own property bought back in the 1990s will tell you it wasn't much fun grappling with cripplingly high interest rates and significantly higher unemployment levels then either.
Of course, dwelling prices will forge on to "all-time highs" in Sydney, Perth and Melbourne in 2014... just as median wages, household incomes, GDP, the Australian population, the total number of employed Australians, the volume of Australian bulk commodity exports and so on will as well.
<img width="400" height="161" style="padding: 5px; border: 1px solid #ebebeb; box-shadow: rgba(0, 0, 0, 0.0980392) 1px 1px 5px; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; line-height: 18.479999542236328px;" src="https://pbs.twimg.com/media/BflsOC2CQAAQDGG.jpg" alt="Embedded image permalink">
Source: RP Data
Bubble?
Typically a market bubble would see prices roaring upwards (such as in parts of Ireland where prices nigh on tripled in a very short period of time) before collapsing again.
Conversely, Sydney prices have steadily underperformed income growth for more than a decade.
That's not to say that there won't be some kind of cyclical correction in 2015 or 2016 - in all likelihood, there probably will be. But will it be an inevitable bust? Big call that.
It's also drawing a fairly long bow to describe the past six decades as a cyclical boom/bust market.
In some areas, the property markets had some moderate corrections (even recently, in 2008 and 2011/12) or periods of stagnation, such as in the 1970s and early 1990s. But not so much in the way of busts. Not in the capital cities.
Repayments low
Meanwhile, mortgage affordability has improved beyond owners' wildest dreams with standard variable rates falling to around just 5%.
I look back at a number of properties I bought in the inner suburbs of Sydney years ago and can scarcely believe how cheap the repayments are today.
This was also highlighted by Shannon Molloy in API Magazine in November in this earth-scorching article <a target="_blank" href="https://www.apimagazine.com.au/blog/2013/11/on-house-prices-lets-get-real/">here</a>.
First home buyers to return
Expect to see the recorded numbers of first homebuyers steadily recovering in Victoria, Western Australia and South Australia over the next year.
Not so much in states like New South Wales where the equivalent figures simply aren't being recorded, and a fair percentage of first-timers choose to buy a rental property rather than a place of residence.
RP Data's Kusher notes that 28.4% of capital city homes have a value of under $400,000 (Sydney is the most expensive capital city property market, and the figure here is 17.5%), suggesting that the saving of a deposit, while undoubtedly tough for some people, is scarcely an impossible goal.
Waiting for a correction
Of course, you could try to outsmart the market and wait for the so-called inevitable property price correction before making the move in to the housing ladder, as has been strongly recommended by quite a number of commentators over the years.
With cities such as Sydney set to pump up its population by a quite <a target="_blank" href="https://www.smh.com.au/federal-politics/political-news/squeeze-is-on-as-australias-populations-boom-20131126-2y83k">breathtaking figure</a> in the coming years and decades fuelling ever-greater demand, personally I'm not so sure that's a smart choice.
Will median prices really be cheaper in 2030 when there are more than six million people crammed in to the same amount of space? Seriously doubtful.
Therefore, if you a are buying with a long-term horizon in mind, there is little to fear. Sure, if you are looking to buy and sell quickly, then that's a different story. But then, that's always the case in any property market - always has been, in fact.
As RP Data's figures in the chart show, continuing to sit it out has been a comparatively poor option over the past decade, a period through which diligent owners and savers have made significant inroads into their mortgage debt.
And so it will be again in 2014.
I suppose if you honestly believe that there will be a housing bust, then the answer is simple; continue to rent and await your time to make a move.
Most likely though, home owners will continue to do better than renters over the long haul, since rents continue to increase over time with inflation, while homeowners own an unencumbered asset at the end of the mortgage period.
Pete Wargent is the co-founder of <a rel="nofollow" target="_blank" href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a rel="nofollow" target="_blank" href="https://petewargent.blogspot.com/">blogger</a>.
His new book '<a rel="nofollow" target="_blank" href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>' is out now.
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If you are buying with a long-term horizon in mind, there is little to fear

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Malz Motoring &amp; Leisure Zone is up for sale after the car parts retailer <a target="_blank" href="https://www.smartcompany.com.au/growth/economy/34976-the-20-most-notable-collapses-of-2013">collapsed</a> earlier this month.
Malz’s directors appointed Kim Strickland from WA Insolvency Solutions as administrators and then KPMG partners, Hayden White and Damian Templeton, were appointed receivers and managers of Malz on February 3, 2014.
The West Australian retailer sells automotive aftermarket parts, accessories, tools, equipment and leisure items.
Malz operates from four custom-fitted stores across metropolitan Perth and has a standalone head office and warehouse facility.
The retailer has lease arrangements in place for a further two stores.
Malz opened its first store in December 2004 and since then has grown to generate an unaudited turnover for this financial year of $11.3 million.
A spokesperson for KPMG said White and Templeton have assumed control of the assets and operations of Malz and started evaluating the financial position of the business with a view to selling it.
Notices advertising the sale of the business ran in newspapers last week.
“KPMG is already in discussions with a number of parties interested in purchasing part of, or all of, the existing business,” the spokesperson says.
In the interim, Malz is continuing to trade.
Australia’s retail sector has been weathering tough conditions with the collapse already this year of retailers <a target="_blank" href="https://www.smartcompany.com.au/finance/cashflow/35295-creditors-line-up-after-fashion-retailers-collapse-dion-lee-ellery-and-mercedes-benz-fashion-week-all-owed-cash">Jasu</a> and <a target="_blank" href="https://www.smartcompany.com.au/marketing/sales/35064-peeptoe-shoes-collapses-as-retailers-continue-to-face-financial-pressures">Peeptoe Shoes</a>.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany.</a>
 
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Car parts retailer with $11 million turnover collapses

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When it comes to figuring out just how much rent you can achieve for a property, it’s as complicated or as simple as you make it. In a fast moving market, it’s important to analyse just how much demand and how much tenants are willing to pay.

Here are the most common ways of figuring out what your prospective tenants should be paying.

1) Quick rules of thumb

While it’s not a good idea to rely on blanket rules when working with finances, when working out your expectations for rent it’s good to get a ballpark indication.

Usually, investors will cite an average achievable rent of around $100 for every $100,000 of worth on a property.

For instance, on a $500,000 property, you’d be right to expect $500 per week in rent as a starting point for further analysis. 

However, the graph is not consistent. Properties on the lower end of the price spectrum will see investors expecting to receive rent above this rate, while premium-priced properties will see weekly rent fall below this.

[smartcode_project:default project_id=709]

2) Head to the statistics

The next easy step is to jump online and find out what the averages and medians are for the area and asset type where you’re considering buying, or where you already own property. While this assumes your property is at the direct centre of the market, you can quickly get an idea as to whether rents are generally charged around expectation.

You can <a href="https://www.propertyobserver.com.au/finding/location/suburb-data" target="_blank">see your suburb’s free data here</a>, including population statistics and trends, median prices, median asking rents and more.

You will also want to check the vacancy rates, and where they’re trending, to see if there’s likely to be an upcoming pressure on rents that may push it higher than at present.

Don’t get too tied up in statistics that are not local enough. While it is important to be aware of the larger market forces that may later impact you, such as lowered confidence in the area, it is absolutely critical to be aware of what is happening in your LGA or suburb that might impact on your rent.

[smartcode_project:default project_id=27783]

 

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YOU MIGHT ALSO BE INTERESTED IN:

 

How to <a href="/expert-insights/your-weekly-how-to-calculating-rental-yield">calculate rental yield</a>

 

<hr>
 

3) Get input from local experts 

Great, knowledgeable property managers are worth their weight in gold and are handy sources of free information about the market. Speak to some good local property managers (remember they’re not all made equal – here’s <a href="/news/how-to-choose-the-best-property-manager">a guide on how to find a great one</a>) and ask for a rental appraisal of the home.

Don’t forget to get it in writing, as well as to ask for the reasoning behind it and the current state of the rental market. You can also ask them about changes and additions you can make to the property that may make it more desirable for a tenant and may, in turn, allow you to charge more.

These experts leverage off of their experience in the market and their current rent roles to provide you up to date information that may not yet be reflected in the statistics.

If you know any other local investors, ask them for their experiences in getting tenants and some of the successes and difficulties. Leverage off of your network's knowledge.

[smartcode_project:default project_id=2060]

4) Have a look at some comparisons

Head online to listings websites and also go to some open inspections and see what is being tenanted quickly and for how much. Focus on properties that are comparable and nearby to your own as this will quickly let you see how your home will perform in a similar situation.

Create yourself a list of features to take around the properties with you that you can mark as being ‘more’ or ‘less’ desirable than your own. This will enable you to do a final analysis as to whether your property is superior or not, and it will ensure you aren’t assuming it’s superior based on your own bias.

Use your experience of what the property managers and other investors have been saying about what is desirable to create this list. A second bathroom, or a pool, in some suburbs may command huge amounts of extra attention, however in others they may not be as desirable.

Use these to either confirm or disprove the information you have already collected. Remember that some statistics may be driven up by share-house appropriate rentals, or properties that include granny flats wrapped into one price.

[smartcode_project:default project_id=90553]

5) Test the market

Finally, putting your property on the market at the amount you have found is likely to be the best bet. If it doesn’t rent, you may need to adjust your expectations accordingly. You may even be keen to keep your rent slightly lower than your competition to ensure it gets rented quickly – and stays that way!

Some landlords will be happy to charge slightly less to obtain a better quality tenant. If you want to keep your tenant then you want to ensure that you’re charging an amount your tenant can afford – particularly if you are looking at this analysis to justify a rental increase.

Remember, though, that regardless of how much rent you would like to charge, it’s <a href="/expert-insights/investing/market-value-not-landlords-hopes-should-determine-rent-mcgrath">the market and the tenants that dictate how much you will be able to achieve</a>.

If you are hoping to keep good tenants, then you’ll <a href="/expert-insights/investing/how-to-find-and-hold-good-tenants">want to read this guide</a>.

<a href="mailto:jduke@propertyobserver.com.au">jduke@propertyobserver.com.au</a>

 

 
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How to: Estimate the amount of rent to charge

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I know most investors baulk when they see the body corporate levies, but I think that there are many that just don't understand what a body corporate levy is, what it pays for and why they are actually a great thing for investors that don't live where their investment is.  The key to a good body corporate is to have a great chairperson who makes sure all the jobs are done.
For an investor, it is difficult to understand what the body corporate is responsible for and what they aren't.  As a general rule, the body corporate is responsible for all the common area, the building and the insuring of the actual structure.  The internals of the unit are the responsibility of the owner but even so this is a bit blurry.  If you have a leaking tap, then the owner is responsible to get the washer changed.  If there is a burst pipe and that pipe is in the slab then it is the body corporate.  If the kitchen needs replacing due to age, then it is the owner’s responsibility.  If the kitchen is damaged due to an insurable event, then it is covered under the body corporate insurance cover.
Let's say the hot water system is located in the kitchen cupboard and it bursts flooding the unit.  The damage to the kitchen is covered by body corporate insurance.  The owner will have to pay to get a new hot water system installed.  If the carpets are damaged, these are classed as contents and the owner needs to claim this through their Landlords Insurance.  If the walls are damaged, this is a body corporate claim and their policy will fix this - yes I know very confusing.
I will use Palm Tree Apartments for the example.  This is a complex of 44 units, with 24 of them being bedsit units and 20 being two bedroom units.  The complex was built in 1995 and is a besser block, three storey, bomb proof place.  It isn't the prettiest but it is perfect as an investment.  The units themselves are basic internally but very functional.  The beauty of these is they are big internally - much bigger than a two bedroom in a newer property.  When you have a big complex, you really need to be proactive - if something is wrong it needs to be fixed.  If you leave something broken or dumped next to the bin area it sends out a message that this is acceptable.  This is a learning curve that I had to have - just because we pick up that piece of rubbish near the letter box and put it in the bins, doesn't mean everyone else will!
There are two parts to a levy - you have the administration fund, which budgets for the things that will happen each and every year, and then you have the sinking fund. This is for future works to be completed such as new roof, gutters, fences and repainting.
The Queensland government realised that if they didn't make people put money aside for future works, then they wouldn't.  In the mid-1990s they brought in sinking fund and each building had to do a report and estimate what works would be require, what time frame they were needed to be done in and the cost.  They then work backwards and come up with a figure so that there will be enough money in the bank when the work is required.
The sinking fund is the second part of the levies.  This is for the future works or something that doesn't happen all the time.  This can include tree lopping, pressure cleaning, big garden upgrades etc.
I have been driving around and looking at all our properties, and let me tell you that the outsides are starting to look tired and need some work done to them.  If they are in a body corporate it is easy, get the quotes, pass it via the committee and get the work done.  The money is there sitting and waiting for the work to be done.
On the other hand, if it is a property not in a body corporate - the owners have to find the money to get this work done.
Linda Tuck is director of <a rel="nofollow" href="https://www.plrealty.com.au/about_us" target="_blank">Cairns Property Ladder Realty</a>,  an independent real estate agency in specialising in property management, investment and sales expertise in the tropical Cairns region.
 
 
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Body corporate or owner: Who takes responsibility for getting the job done?

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For seasoned and beginner investors alike, the property market offers far less certainty today than it did a decade go. Over a few short years the market has evolved to encompass a vast array of property types including off-the-plan developments, student accommodation, serviced apartments, housing estates and town developments to name only a few.
This evolution has undoubtedly increased the complexities around property investing. The market, now flooded with products, has become complex and confusing ultimately making investors vulnerable to poor property selection. Not all property assets perform the same and with so many to choose from, and many with powerful marketing incentives, the landscape has become difficult to navigate. Today purchasing property without sound advice leaves little degree of certainty that the property will experience good growth over time.
Investing in property to grow personal wealth is not a new concept, in fact some schools are now considering making it part of their syllabus due to its perceived importance in society. Investing in property through self-managed superannuation funds (SMSFs) has risen in popularity in recent times; with SMSFs holding approximately $80 billion of their $495 billion assets in residential and commercial property today. As such ASIC has implemented new rules to protect SMSF holders including preventing real estate agents, not licensed to provide financial advice, from giving advice to investors about their SMSFs -  is a job to be left to finance professionals.  So, although it is integral to always seek independent and reputable advice, it’s important to engage the right professional relative to your needs.
Making sure you seek advice about a product or service from the professional that works with that product or service is of upmost importance. So always obtain financial advice, particularly when it comes to your SMSF, from a reputable finance professional. However if s/he recommends investing in property then seek an independent property professional to help guide your purchase; particularly with today’s complex property market.
Just as financial advisors are critical to growing personal wealth, so are property advisors when it comes to selecting investments that are matched to your goals.  It’s all about seeking professional and independent advice from the right person – make sure they live, breath and are trained in the area you are seeking information on.  After all, you wouldn’t pay a property advisor to help you set up a SMSF or to invest in shares.
 
<hr>
Greville Pabst is CEO of <a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=0CEAQFjAA&amp;url=http%3A%2F%2Fwww.wbpproperty.com%2F&amp;ei=Jb4hUevODOyamQX6mIGYDQ&amp;usg=AFQjCNH0u8Ji9ymluq8AKARfB-KjHZ-aFA&amp;sig2=DNsIKQR7tQj4PtYuiJOHPA&amp;bvm=bv.42553238,d.dGY" rel="nofollow" target="_blank">WBP Property Group.</a>
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Engage the right professional and get the right advice

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Leading Sydney auctioneer Damien Cooley's own Sydney home in Naremburn sold at Friday night auction, kicking off the weekend with a bullish result.
His auctioneer brother, Andrew Cooley from Cooley Auctions, knocked down the Darvall Street house (pictured) at $1,707,000 after the Chinese/Australian underbidder unexpectedly declined the chance to go to $1,708,000.
Damien and his wife Peppi paid $775,000 for the corner home, renovating, extending and building up, so they had confident $1.4 million plus hopes.
The neighbours - and there must have been 150 plus at the onsite auction - had told Property Observer pre-auction that $1.6 million plus was in the neighbourhood's expectation. Bidding started at $1.2 million, with the second bid at $1.6 million, showing the firmness of buying intent. There were the three major bidders in the running from then onwards. 
The current Naremburn median is $1.26 million, according to RP Data.
It was sold by conjunctional agents, the LJ Hooker Willoughby agent John McManus and Peter Chauncey at McGrath who had more than 250 groups through during the marketing campaign and issued 30 plus contracts. 
<a href="/news">It's Valentine's Day timing was co-incidence</a>.
Sydney will have 470 auctions this weekend - some 200 more than the same weekend a year ago. Next weekend is a record 770 for a February Saturday.
Australian Property Monitors says the inner west is the most active region with 74 auctions followed by the upper north shore with 69, the south with 68 and the city and east with upper north shore with 61 auctions scheduled.
APM senior economist Dr Andrew Wilson says Beecroft and Eastwood on the upper north shore are the most popular suburbs for auctions each with eight listings.
Redfern is next with seven, followed by Birchgrove and then Epping, Ryde and St Ives each with six scheduled auctions.
Last weekend there were 296 auctions and 90 odd in the first weekend back in February.
So far this year the weekend clearance rate has been 77% and the preliminary 84% from last Saturday.
The year's success rate sits almost 20 percentage points higher than the 62 per cent recorded over the same time last February.
The top performing regions last weekend were the northern beaches and Canterbury Bankstown, each with 100 per cent clearance rates.
Last weekend's dearest was 6 Long St, Strathfield, a four bedroom house sold at $2,280,000.
The weekend's cheapest was at Arncliffe, when the one bedroom ground floor unit at 2/1 Stanley Street sold pre-auction for $285,000.
 
<ul type="disc"></ul>
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DIY Cooley Auctions beckons Sydney's probably passionate Valentine's weekend auctions 

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Australian actor Portia de Rossi is known abroad not only for her turns on Arrested Development and Ally McBeal, but for her property prowess. With wife Ellen DeGeneres, de Rossi made news last month when the couple purchased the Brody House, a Los Angeles mansion designed by renowned architect A Quincy Jones.
The modernist masterpiece (pictured below) was constructed in 1949, with interiors by Billy Haine and Garrett Eckbo. In October last year, the mansion was updated by designer Stephen Stone to prepare it for market. Rumour has it the property, which has six bedrooms, nine baths and is set over a 4,118 square metre estate, was hardly on the market at all before DeGeneres and de Rossi snapped it up for a reported US$39.89 million (A$44.64 million) sum.
{yoogallery src=[images/stories/2014/02/17/ell]}
Photos courtesy of curbed.com
The house was commissioned by the late arts advocate Frances Lasker Brody and her husband, the late Sidney F Brody. After Frances Lasker Brody’s death in 2009, the property was sold for the first time for US$14.88 million (A$16.65 million) in 2010.
Portia de Rossi, legally known as Portia Lee James DeGeneres (born Amanda Lee Rogers), and DeGeneres have been involved in quite a few notable Los Angeles property transactions in recent years. Last year, the couple sold their ranch in Thousand Oaks, California. The 26 acre property was originally listed by the de Rossi and DeGeneres in 2011, with an asking price of US$16.5 million (A$18.5 million). It sat on the market for nine months after being pulled, and was relisted last year.
The eight bedroom, 11 bathroom ranch (pictured below) was <a target="_blank" href="https://www.propertyobserver.com.au/international/ellen-degeneres-and-portia-de-rossi-re-list-horse-ranch-for-%2410995-million/2013082663802">reportedly sold for US$10.95 million</a> (A$12.14 million). According to de Rossi, the ranch’s redesign was handled entirely by DeGeneres. In an interview with Elle Décor, the Geelong native said that the original property was a horse facility, with an unsalvageable main house. “I thought it might take five years for Ellen to finish the project,” she told the magazine. “And she did it in one! It was shocking.”
{yoogallery src=[images/stories/2013/08/aug27thousand]}
A number of other high profile properties have passed through Portia and Ellen’s capable hands. They purchased a US$26.5 million (A$29.45 million) <a target="_blank" href="https://www.propertyobserver.com.au/news/aussies-keeping-us-realtors-busy-olivia-newton-john-portia-de-rossi-and-frank-lowy/2013062661728">13 acre estate in Montecito</a> (pictured below), just outside of California’s Santa Barbara, in May 2013. Known locally as Saladino Villa, the six bedroom, seven bathroom home overlooks the Pacific ocean.
{yoogallery src=[images/stories/2013/06/june27saladino]}
The couple also sold their sprawling Beverly Hills estate (pictured below) in 2012 to US television personality Ryan Seacrest, for a whopping US$49 million (A$54.43 million).
{yoogallery src=[images/stories/EllenandPortia]}
<a target="_blank" href="mailto:jrichardson@propertyobserver.com.au">jrichardson@propertyobserver.com.au</a>
 
 
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Aussie Portia de Rossi and Ellen DeGeneres big players in the California prestige market

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Unemployment is the highest it has been in a decade and consumers are gloomy about the local economic outlook. But most people still expect house prices to rise and think that now is a good time to buy.
General consumer confidence dropped in February, hitting its lowest point since last July, the <a target="_blank" href="https://www.westpac.com.au/docs/pdf/aw/economics-research/er20140212BullConsumerSentiment.pdf">Westpac Melbourne Institute Consumer Sentiment Index</a> revealed. The index, released last week, fell by 3% in February to 100.2 from the January reading of 103.3. 
Consumer expectations on the outlook for the economy over the next 12 months were at their lowest since March 2012, having fallen 17.9% since the same time last year. Expectations for the next five years were at their weakest since February 2009, the Index showed.
Westpac chief economist Bill Evans put the poor results down to a run of bad news on the motor vehicle industry, other manufacturers, and Qantas, as well as heightened concerns about what to expect from the May Budget. A larger group of people also expected interest rates to rise over the next 12 months compared with the last time the bank surveyed on that topic in August 2013.
Despite the negative views, the latest survey found consumer attitudes towards buying residential property have stabilised and are still firmly in positive territory.
The “Time to buy a dwelling” component of the index came in at 129.3 in February, just a fraction down on January’s 129.4 reading and the 129.8 result for December 2013.
<img width="470" height="276" src="/images/stories/2014/02/14/chart-feb-14-one.gif" alt="chart-feb-14-one">
Source: Westpac Melbourne Institute Consumer Sentiment Index
Westpac senior economist Matthew Hassan told Property Observer a reading of 129.3 was quite good, although it is down 10.8% from its recent peak in September. “It should also be noted that responses tend to be positive - the average reading since 1975 has been 123.5,” Hassan said.
Expectations on house prices were still 26.2% above where they were at the start of last year. That’s despite a 2.2% fall in the house price expectations component of the Index which left it 4.3% below its December peak.
<img width="470" height="324" src="/images/stories/2014/02/14/chart-feb-14-two.gif" alt="chart-feb-14-two">
Source: Westpac Melbourne Institute Consumer Sentiment Index
As to why attitudes towards housing were holding up while broader sentiment was weakening, Hassan said the main reason was likely to be that mortgage interest rates were near record lows and the market was showing strong gains.
“We tend to find the index is influenced by both affordability and expectations for capital gains,” Hassan said.
NAB’s Quarterly Australian Residential Property Survey <a target="_blank" href="/news">released last Thursday</a> showed similar expectations of price appreciation. 
Respondents to that survey anticipate price gains in the range of 2 to 4% over the next couple of years. NAB’s own forecasts are slightly higher. It predicts average capital city house prices will rise by 6% to end of 2014 and 5% to the end of 2015.
“The story is modest but slowing growth over the next couple of years,” NAB senior economist Robert De luce told Property Observer. “That boils down to the impact of low interest rates, affordability, population growth and long-standing supply issues.”
NAB’s survey considers foreign buyers’ impact on the market. These people are outside of the local economy so their demand is less influenced by conditions in Australia.
De luce said there was little hard data around foreign buyers but according to NAB’s analysis, 6.5% of established dwellings and 11% of new properties are bought by overseas buyers.
HSBC chief economist Paul Bloxham said consumer sentiment was usually a timely indicator of economic conditions, but it wasn’t uncommon for there to be a large discrepancy between sentiment and spending behaviour.
“Sentiment indicators can provide valuable signals of what to expect for the future, but not always,” Bloxham says. “When you’re summing up what’s going on in the economy not everything is always moving in the same direction.”
Bloxham and colleague HSBC economist Adam Richardson <a target="_blank" href="https://www.research.hsbc.com/midas/Res/RDV?p=pdf&amp;key=tLvTwP32vL&amp;n=403708.PDF">put out a report last week</a> examining unemployment, which hit 6% in January, its highest level in a decade.
Bloxham and Richardson argue that while the unemployment figure looks bad – like the headline consumer sentiment numbers – other economic indicators, such as retail sales, business conditions and building approvals have picked up in recent months, pointing to a strengthening economy. Booming house prices also showed the economy was more resilient than sentiment would suggest.
news@propertyobserver.com.au
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Analysis – Why weak consumer sentiment hasn’t stopped demand for housing

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First home buyers will return to the property market as governments increase land supply, Stockland managing director Mark Steinert expects.
“We see a proactive focus from governments to improve the land supply that’s going to address the affordability issue,” Steinert said at the group’s half year results briefing last week.
Stockland, which produces small, high density residential properties at low price points, sells about half of the homes it builds to first-time buyers.
Despite low interest rates, first home buyer demand has been subdued as price rises and the removal of government grants for buying established dwellings have made it more difficult to save a deposit.
First home buyers accounted for 12.7% of total owner occupied housing finance commitments in December 2013, Australian Bureau of Statistics data shows.
<img alt="FHB-feb-14" src="/images/stories/2014/02/14/FHB-feb-14.gif" height="256" width="470">
Real Estate Institute of Australia president Peter Bushby said the figure was alarming compared with the long-run average of 19.9%. The REIA has called on governments to help first time buyers back into the market by allowing them to use superannuation savings to buy a home and by reinstating grants.
The Reserve Bank noted in its February Statement on Monetary Policy that demand for established housing was especially weak as changes in state government incentives for first home buyers toward new dwellings and away from established properties had shifted their purchases accordingly.
Housing Industry Association senior economist Shane Garrett said governments would have to further lift constraints on planning for new homes, land supply and infrastructure funding to maintain activity in the market.
“Addressing these issues will do much to improve longer term housing affordability,” Garrett said.
Steinert said there was a large amount of pent up demand from first home buyers for properties and rising prices in inner urban areas were encouraging people to look further out.
“There has been increased activity in the middle to outer rings as people search for a great lifestyle outcome at a competitive price,” Steinert said.
Stockland settled on 2,253 residential lots in the first half of 2014, an increase of 8.1% compared with the first half of 2013. Its revenue from residential property sales to consumers was up by 2.9% to $392 million, the group reported.
“We’ve seen a combination of price increases as well as volume [sales] increases,” Steinert said.
Prices for the group’s properties had increased by 8 to 10% in Sydney, and up to 5% elsewhere, he said. Packages that were previously on offer giving buyers extra such as landscaping included in the sale price were no longer widely available.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a>
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