Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay 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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Chinese smartphone maker Xiaomi is looking to expand internationally during 2014, with the south-east Asian region a likely first growth target, according to reports.
According to <a target="_blank" href="https://www.techinasia.com/xiaomi-sets-its-sights-on-southeast-asia-with-plans-to-set-up-singapore-office-as-quickly-as-possible/">TechInAsia</a>, the Chinese tech company has revealed it is looking at south-east Asia as it next market, with its first stop “most likely” in Singapore.
Hugo Barra, who resigned in August as Google’s vice president of product management in favour of the position at Xiaomi under chief executive Lei Jun, revealed the company views Singapore as an important regional hub.
“I’ve been spending a lot of time with potential partners in other countries, in south-east Asia primarily,” Barra said.
“We just came back from a trip to Singapore a few weeks ago, and we’re trying to get our operations for south-east Asia set up as quickly as possible.
“It’s an important hub for the region. A lot of businesses start there, so that’s why we researched that area first.”
The Chinese smartphone maker first gained the attention of the tech industry after analysts noted it had beaten a range of established rivals, including ZTE, HTC and Lenovo, to claim one of the <a target="_blank" href="https://www.smartcompany.com.au/technology/information-technology/34035-xiaomi-claims-top-five-spot-in-chinese-smartphone-market">top five spots in the Chinese smartphone market</a>.
Xiaomi is estimated to now claim around 7.1% of the Chinese smartphone market, a higher share than larger rivals such as HTC (6.8%), Lenovo (6.3%) and ZTE (5.1%).
China is believed to be the world’s largest by volume.
<a target="_blank" href="https://www.smartcompany.com.au/technology/information-technology/34159-xiaomi-sells-100-000-mi3-smartphones-in-90-seconds-says-hugo-barra">In October</a>, Xiaomi made headlines after Barra claimed it had sold 100,000 of its Mi3 smartphones within just 90 seconds of its launch.
The feats were made all the more impressive by the fact the company only launched in 2010 and didn’t begin shipping smartphones until 2011.
However, the company has often been criticised as being an Apple imitator due to Jun’s preference for black mock turtleneck tops and jeans, along with the company’s use of an iOS-style user interface, called MIUI, on top of Android.

<hr>
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
 
 
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jake-cSmGT7VXVf

Chinese smartphone maker eyes up international expansion

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Over the last three years, the Aussie dollar has outperformed just about all other currencies.
In recent weeks, however, sentiment has turned bearish with many analysts predicting a rate closer to 80 US cents 12 months from now. The pendulum is swinging in the opposite direction now that the UK, Europe and the US economies are all showing some healthy signs of recovery.
Magnetic forces at play
Given the exchange rate is a relative value (one currency against another) it may help to think of exchange rate influences as magnetic forces where the opposites attract. So if, for example, one side of the currency (the Australian economy) is performing badly and the other side (the US) is improving or growing strongly then these opposite forces work together to move the currency quickly.
This is what we have seen drive the value of the AUD down at the same time that the USD is being pushed higher, triggering the recent move lower from 97 cents to 90 cents in two months.
It is these same forces (in the opposite direction) that drove the AUD/USD exchange rate higher between 2009 and 2011. When both forces are moving in the same direction it then becomes a game of inches and we see more stable trading ranges and a decrease in volatility.
So will these opposite forces persist in 2014?
It seems the new year will begin in the same vein with US and UK economies in particular expected to continue their recovery. The markets have been fixated by the US Federal Reserve and its quantitative easing program with a general expectation that they will begin to wind down their monthly purchases of around 85 billion USD a month. The question is not if but when.
This will serve to strengthen the USD as it will decrease the money supply. We have already seen this begin to play out in recent months and Fridays stronger than expected employment report has only increased speculation this may occur at the Fed’s next meeting on December 17.
As things stand, and if everything goes to plan (mind you it rarely does), towards the end of 2014 or early 2015 could coincide with a possible increase in US interest rates which would add to the USD strength. The market has just about priced this in already and so I expect the pace of the decline in the Aussie dollar to slow.
Losers beware
Importers, travellers and overseas property buyers are set to lose out from a lower Aussie dollar in 2014. But it doesn’t have to be this way. There are tools available to those concerned about a lower Aussie dollar in 2014 and it pays to plan ahead.
Importers and property investors can use hedging tools such as forward exchange contracts or options, while travellers can take advantage by locking in travel money in advance of an overseas trip on foreign currency debit cards.
By locking in exchange rates in advance the Australian dollar cost base is fixed, providing cash flow certainty and peace of mind.
<a href="https://www.linkedin.com/in/jimvrondas" target="_blank">
<hr>
Jim Vrondas</a> is chief currency and payment strategist, Asia-Pacific at <a href="https://www.ozforex.com.au/" target="_blank">OzForex</a>, Australia's leading international money transfer service. 
OzForex's cutting edge technology powers foreign exchange services for 100,000 private and institutional clients across six continents, and the company is a key provider of <a href="https://www.ozforex.com.au/news-commentary/daily" target="_blank">forex news</a>.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
 
 
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The magnetic forces behind the Australian dollar in 2014

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The great divide facing Australia CBD office markets deepened in the third quarter of this year.
While office investment activity soared in the three months to September, CBRE's latest Q3 Australia Office MarketView report showed that weakening business investment across the board had prompted occupiers to increase their focus on preserving margins.
Click to enlarge
<a rel="shadowbox" href="/images/stories/2013/12/11/chart-of-the-week-dec-11-big.gif" title="Click to enlarge"><img src="/images/stories/2013/12/11/chart-of-the-week-dec-101-small.gif"></a>
"As a result of occupiers adopting cost saving measures, employment growth in the office market has slowed markedly, while a number of CBD tenants are also consolidating or contracting operations and therefore, space requirements," the report said.
CBRE Senior Research Manager Claire Cupitt said that had led to negative net absorption in all markets so far this year.
CBRE is forecasting that in 2013, a total of 170,000 square metres of negative net absorption is due to be recorded in all major CBD's  nationally – 30,000 square metres more than in 2009 during the depths of the Global Financial Crisis.
Hardest hit has been the Brisbane office market, with the CBD recording about 90,000 square metres of negative net absorption.
Ms Cupitt said it was anticipating demand for space over the next few years would be largely driven by the business service sector in line with broad sector based economic improvement.
The report also highlighted the rise in sublease availability across Sydney, Melbourne, Brisbane and Perth, pointing out that in some cases it was at historic highs.
"Space consolidation and contraction accounts for approximately 80% of sublease availability in the Sydney CBD," it noted.
CBRE regional director of office services Andrew Tracey said in line with the shift in sublease availability, incentives had increased in most markets.
Melbourne and Brisbane CBD incentives are currently around 30%, while Perth CBD incentives also continue their upward momentum, with expectations of 14% by the end of the year.
The national vacancy rate stood at about 10.1%, but CBRE pointed out that several capital city markets experienced record high availability. Melbourne vacancy rates have peaked at 9.8% - up from 7.0% in July and Brisbane’s CBD has reached an unprecedented 14.1%.
Rents remained unchanged in the quarter.
Despite those weakening fundamentals, investment activity remained strong in the third quarter, with domestic and offshore investors outlaying $3 billion purchasing office assets around the country.
The Sydney CBD accounted for $785 million worth of sales during the quarter.
CBRE is tipping prime yields in Sydney to hover at 7.20% by the end of 2013 – down 30 basis points from December 2012, while Melbourne prime yields are expected to average 6.8% at the end of the year.
Brisbane prime yields are forecast to average around current levels of 7.70% at year end and Perth yields are also expected to remain steady at 8.00% into early 2014.
<a target="_blank" href="mailto:news@propertyobserver.com.au">news@propertyobserver.com.au</a> 
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kjiminez-eaYKfU7qd2

Divide within CBD office markets deepens: CBRE

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Median house prices are a useful tool for analysing growth in the property market and looking at which suburbs are doing well. However, it is important to remember that median house prices can be skewed by a few particularly low or particularly high sales in an area.  So breaking down the prices within a suburb according to whether the property sold was a house or unit and how many bedrooms it had can give a more detailed and useful snapshot of what is happening.  
For example, while the median price of a one-bedroom unit in Melbourne was $340,000 in September, it was $355,500 in inner Melbourne and only $240,000 in outer Melbourne.  
Checking out particular suburbs shows even more variation.  For example, a one-bedroom unit in Collingwood had a median price of $335,500 in September – $20,000 below the overall inner Melbourne price.  But just across the street in neighbouring Fitzroy, a one-bedroom unit had a median price of $390,000 and a one-bedroom unit in nearby Abbotsford's median was $370,000.  
Research is essential for investors looking for the highest rental yields or capital growth, for downsizers wanting to free up home equity but stay in the same neighbourhood and for those feeling squeezed out of their preferred suburbs.  
Suburb-by-suburb information about median prices according to property type and number of bedrooms for the 12 months to September is now available free on the REIV website at <a href="https://reiv.com.au/BedroomMedians" target="_blank">reiv.com.au/BedroomMedians</a>.
Investors will be particularly interested to know that this also includes weekly median rents, gross rental yield and five-year annual capital growth.  Simply click on a suburb and all the information about it will appear.

<hr>
Enzo Raimondo is CEO of the <a rel="nofollow" href="https://www.reiv.com.au/" target="_blank">Real Estate Institute of Victoria</a>.
 
 
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enzoraimond-7fvRFHPR52

The limits to median house price data

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Online shopping for Christmas gifts is becoming the norm for shoppers, with 65% planning to buy a gift via local websites this year, new research shows.
A survey of more than 1000 shoppers conducted by financial services group Aussie found that 47.7% of shoppers plan to buy a gift from overseas retailers.
However 4.4% confessed they stop at a service station on Christmas Day to buy a last-minute gift, while 24.3% do their shopping at a local shopping centre on Christmas Eve.
Aussie chief executive Ian Corfield said that local and online retailers are making a “real dent” in Australian’s gift spending habits.
One quarter of shoppers plan to spend between $250 to $499 on gifts, while almost 19% intend to spend between $1000 and $1999.
Just over 15% responded that they will spend between $750 to $999 on spoiling friends and family.
The remaining 5.7% intend to spend under $249 in total on gifts.
Cash looks set to be the number one method of payment for gifts, at 67.6%, followed by credit cards at 54.3% and debit cards at 48.8%.
PayPal and other online purchasing tools will get a solid workout, 32.4% of respondents intending to use them.
“It looks like Australians will be racking up many millions of dollars in credit card fees again this Christmas,” Corfield said.
The survey also found that 70% of shoppers do their shopping at a steady pace leading up to Christmas, while 60% dedicated a full day to get it done before December 25.
Handmade gifts still got a look-in, with just over a 25% intending to give things they had created themselves. And 8.3% said they will re-gift last year’s presents.
The results come as Australian Christmas shoppers are forecast to spend $7.07 billion this week, up $490 million from last week, in the second-biggest shopping week of the year, according to the Australian National Retailers Association Christmas Retail Index.
This is part of a <a target="_blank" href="https://www.smartcompany.com.au/marketing/sales/34545-pre-christmas-spending-tipped-to-rise-to-42-1-billion-but-it-s-not-the-whole-picture">$42.1 billion expected spend on Christmas</a> from November 14 until Christmas Eve.
ANRA chief executive officer Margy Osmond said the next two weeks will see the bulk of Christmas shopping occur.
“We’ve reached the serious end of the shopping calendar and Australian shoppers are expected to spend almost $16 billion over the next fortnight in what will be the two biggest shopping weeks of the entire year,” she said.
“Bricks-and-mortar stores will experience a sizeable increase in sales at the till, with spending expected to hit $5.5 billion – an increase of 32% since last week.
“Domestic online retailers will have their biggest week of the year where sales will reach $1.55 billion – up 23% on last week’s figure.
“Overseas online purchases will begin to peter off as the delivery deadline closes in and shoppers look for other alternatives to ensure they’ve crossed everyone off the Christmas shopping list.
Ormond said that shoppers in NSW will make the biggest contribution to sales, spending about $2.15 billion, while in Queensland they will spend $1.49 billion.

<hr>
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
 
 
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moliver-7qYWqnHmyR

Online retail a priority for buying Christmas gifts, but some still dash into the servo

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“It is potentially the biggest economic and social challenge we face. Yet, it hardly registers in the popular debates. Within the lifetime of the typical Australian the number of people living here is expected to jump 60% from 23.3 million today to 37.6 million by 2050.” <a target="_blank" href="https://www.afr.com/p/national/why_australia_needs_to_get_real_7hEC3IX0RZWitSkELPcJEI" title="Why Australia needs to get real on population growth">Why Australia needs to get real on population growth</a> by Christopher Joye in the Australian Financial Review shows exactly why the modern day politicians are more concerned about re-election over strategic policy making.
Just this week we saw <a target="_blank" href="https://www.dailytelegraph.com.au/news/nsw/sydneys-weekend-traffic-not-only-rivals-weekday-peak-hour-but-also-lasts-through-most-of-the-day/story-fni0cx12-1226766853634" title="Sydney’s weekend traffic not only rivals weekday peak hour but also lasts through most of the day ">Sydney’s weekend traffic not only rivals weekday peak hour but also lasts through most of the day </a>where traffic at 11am on a weekend is now the same as at 5pm on a weekday, where there are close to 500,000 travelers on Sydney roads, according to the state government’s Household Travel Survey 2011–12. The problem is now that bad that the state government is now introducing permanent weekend clearways which will definitely enrage local businesses that rely on this parking for passing trade. As they roll out more and more permanent weekend clearways local councils will be forced to provide more community parking facilities – but where?
The only intelligent alternative that I can see is under existing playing fields – for example a super car park built under Alan Border Oval would be a perfect example. Councils could then charge for all day parking which would see less cars going to the city with direct bus and ferry transport packages sold to those using the car park.
Even if many see such a proposal to be farfetched, we approximately know what the population will be in 2050 but have absolutely no idea what needs to be done to meet this surge in population.
It is just as interesting to note that car ownership is up 24% over the past decade to 2.6 million vehicles whilst the city’s population has grown by 12% to 4.5 million people. There are now 1.54 vehicles for every Sydney household. About 42% of households own two or more cars.
Today, we see the state government investing robustly in future road projects like WestConnex and the M2 to M1 link, however there needs to be much more. The only problem as to why there is not more is simply due to governments having insufficient funds, which paints a very sad long term view of where we will be in 37 years’ time.
<img src="/images/stories/2013/12/09/abs-dec-9-two.gif" width="470" height="292" alt="abs-dec-9-two">
<img src="/images/stories/2013/12/09/abs-dec-9-one.gif" width="470" height="174" alt="abs-dec-9-one">
Source: ABS
Interestingly HIA chief economist, Harley Dale, commented that these updated projections represent a “massive shift” and “it is now clear that the Australian Bureau of Statistics (ABS) has been materially underestimating real population growth rates for some time.”
Christopher Joye for years has criticised ABS projections for being too conservative. In a speech to the Housing Industry Association in July he posited that the nation faced a “population planning crisis” that could precede an equally serious housing and infrastructure catastrophe.
CommSec’s Craig James said: “Who would have thought 10 years ago that we would be building more apartments than free-standing homes today.
“At the end of the day somebody has to take a stand and drive this agenda.”
I would have thought a Housing Minister would be a great start and Malcolm Turnbull would be the ideal candidate. Makes one find it hard to comprehend the reasons why, Prime Minister Tony Abbott does not see a need for a Housing Minister in his government.
We observed this week a rapid decline in the number of houses on the market as vendors conclude negotiations for 2013. Surprisingly our peak selling season this year (spring/summer) failed to break the 100 mark although on November 21 it did reach 99.
I was scanning through Twitter (at home) this week and I came across an interesting conversation about property auction statistics <a target="_blank" href="https://www.afr.com/p/business/property/auctions_missing_sydney_impossible_o3CDeT026j6UhTA4ZvgJ5N" title="1438 auctions missing: Sydney’s Impossible Property Search">1,438 auctions missing: Sydney’s Impossible Property Search</a>. “Looking back at the data for Sydney from APM, only 510 (483 auctions + 27 withdrawn) actually got reported. So an incredible 392 (902 – 510) auctions went missing. Of those 510 auctions that did get reported, there were 410 that sold, giving a reported auction clearance rate of 80.4% (410/510).”
“Using APM’s data: my transparent calculations show the real clearance rate was a decidedly chilly 45.5% (410/902); the lowest clearance rate since 13 April 2013.
“Once again there is a huge difference between the reported rate and the real rate. This week it was 34.9 percentage points; the biggest difference since I started collating the data in March 2013.”
This has been going on for years and these figures have been fudged by agents to prop-up clearance rates, and APM is after all owned by Fairfax Media whose very own print media revenues are struggling.

<hr>
Robert Simeon is a director of <a style="font-size: 14px;" title="RWM" href="https://www.rwm.com.au/" target="_blank" rel="nofollow">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 title="Virtual Realty News" href="https://www.rwm.com.au/news/" target="_blank" rel="nofollow">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

Our politicians are ignoring the realities of population growth

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Australia is fast becoming a mecca for international retail brands.  What’s behind this modern-day gold rush and what do landlords need to do to attract these iconic global brands?
The retail landscape in Australia has changed forever.  With the rise of online retailing, Australian consumers suddenly realised there was more out there – greater range, greater variety and faster access to the latest fashions, electronics and a whole host of consumer goods.  And of course there’s the value question – the economies of scale available to those brands that started out in Europe and the US, meant that they could offer their products at far more competitive prices.  All these factors meant that Australian consumer started demanding change.  They wanted more variety and they were seeking value.
In response, we saw an initial wave of truly international brands coming to our shores.  Fashion brand Zara was one of the first, along with iconic technology brands Apple and Samsung.  These three brands have been highly successful in Australia.  Their global counterparts watched closely and they were keen to get a slice of the action when they saw what a successful move it was for these pioneers.
The second round of international retailers is starting to migrate to our shores.  Brands like Gap, H&amp;M, Uniqlo, River Island, Mango, Pottery Barn and Williams Sonoma have either recently opened their doors or have announced their intention to do so shortly.
So what is it that differentiates these brands from a landlord’s perspective?  As a landlord, you’re probably used to the demand for 125 square metre ground floor retail spaces from Australian retailers.  With these international brands it’s time to think again.  These retailers are looking for spaces of 600 square metres and upwards, and they’re not afraid to take on multi-level spaces.  Just look at the Zara shop in Westfield Sydney, which is over three floors.  They’ve cleverly designed it to draw the consumer in on the ground floor with women’s fashion, but once you’re in your drawn to the other levels, which offer their entire range of products from men’s wear to kids, tweens and so on.  This is another differentiator.  Few Australian brands offer the variety that these international brands offer.
It’s also important for landlords to be sympathetic towards the international brand itself.  These brands have a proven concept that is tried and tested across the globe.  They don’t compromise on their look and feel and it’s important that local landlords respect this and work with them.  Be it floor space, layout, street frontage or a myriad of other complexities, it’s important to realise they do things differently and there are certain brand attributes that they simply won’t be flexible with.
For most international brands their first site is generally the CBD flagship brand awareness store – their greatest tool in launching the brand into the country, and then they’ll look at super regional centres.  For landlords wanting to attract these tenants, the key is to demonstrate they have the customer base who will be attracted to this brand.  It’s all about having a strong market share, the right customer base and ultimately volume of sales.  Hollster moving into Bondi Junction is a great example of this.  Chadstone has also done a phenomenal job of positioning themselves for these retailers, and with such a stable of international brands already in residence they are the natural choice for the second wave coming in.
The outlook for these international brands coming to our shores is positive.  With a number of significant new CBD projects launching in the next two years, we’re estimating there will be more than 30 new stores launched to host a range of international retailers including many premium and luxury brands.  The time is right for local retail landlords to change the way they think to accommodate these new players.

<hr>
Michael Bate is head of retail at <a target="_blank" href="https://www.colliers.com.au">Colliers International</a>.
 
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mbate-4o8tT37tLw

How can landlords attract top-tier international retail brands?

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The latest affordability index by the Adelaide Bank and Real Estate Institute of Australia has once again flooded the real estate headlines with the jolly news that housing is growing ever more affordable.  
This pre Christmas gift of optimism from the newly updated affordability studies commissioned by the financial and real estate sectors, comes with a host of commentary – usually from those with a vested interest – who happily advise aspiring home owners that ‘they’ve never had it so good’ – in other words, to paraphrase Terry Ryder’s thoughts, first home buyers should <a href="/news">‘put up, or shut up.’</a>  
Of course, it wouldn’t be half as palatable if it didn’t come accompanied with the seeming contradiction that not only is it more affordable than it’s been in the last decade (according to the HIA-Commonwealth Bank affordability index), it’s also substantially more expensive than its ever been. Yes, housing is only item than can be both affordable and unaffordable at the same time.  Work that one out Einstein.  
In fact, according to <a href="#more-3603" target="_blank">Residex</a>, median prices in both Sydney and Melbourne have already exceeded their historical highs, ‘nudging’ $750,000 in Sydney and $600,000 in Melbourne - additionally, Perth has also reached its previous peak of 2008, with a median price of $521,000.  
<a href="https://www.rpdata.com/" target="_blank">RP Data’s</a> dwelling price index shows a year to date increase of 14.3% in Sydney, 6.4% in Melbourne and 9.7% in Perth.  For home buyers, the benefit derived from lower lending rates has been all but offset by the inflationary pressure placed on prices.  
Rarely is it mentioned that housing affordability and the cost of servicing a mortgage are two separate entities.  
Mortgage rates are set up with different structures dependant on circumstance, and subject to interest rate changes influenced by the macro environment.  
To take out a 25 year mortgage requires the expectation of secure employment in a terrain where frequent job changes or part time work are becoming a norm.  
They may influence house prices through a cycle, but they do not take away the fact that home prices now – even with lower lending rates – require longer terms to pay down, with the interest over the duration of that period adding considerably to the capital cost.  
In fact I couldn’t put it any better than current governor of the Bank of England - <a href="https://www.theguardian.com/business/2013/nov/29/mark-carney-bank-of-england-home-buyer-warning" target="_blank">Mark Carney</a>, when he warns;  
“Think about the mortgage you are taking on, the debts you are taking on…You are taking at least a 25-year mortgage, maybe a 30-year mortgage.  Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher? Or are you counting, even subconsciously, on the price of your house keeping going up and if something happens an ability to sell it quickly and not facing the consequences of not being able to pay?"
Carney’s cautionary words pre-empt the Bank of England’s decision to scale back its inflationary Funding for Lending Scheme amidst fears of a rapid escalation of house prices in the south-eastern regions of the country.  
From next year funding for lending will only be available for business loans -not mortgages – and if the banking sector’s concerned about signs of frothiness in an industry in which it’s heavily invested, so should we also be.  
The Bank of England governor is not alone. Central banks in Sweden, Hong Kong, Norway, New Zealand, Canada and Switzerland (to name but a few) have all adopted macro prudential measures to buffer against the associated risks of a boom/bust investor lead recovery in a post GFC environment - highlighting the importance of keeping lending standards robust – all, that is,  except Australia.  
Having weathered the impact of the GFC a little more effectively than others – the RBA seem to think we live in some magic faraway tree, effectively doing little more than wagging a cautionary finger to a sector which for the duration of the year, have outstripped owner-occupier lending with well over a third of all new loans on interest only terms and roughly the same proportion with LVRs of over 8%.  
In other words, there are still over a third of all loans in which the principle is not being reduced – with 37.3% lent on these terms for the September quarter alone.  
In NSW, investment lending is at record highs, making up over 50% of the market and although many use the well worn argument that the unwanted boom is predominant ‘only in Sydney’ – let’s not forget, Sydney is not some nether land off the coast of Tasmania. What happens in our biggest capital, with the largest and most diverse economy in Australia, inevitably impacts us all.  
Historically, this sector is more sensitive to interest rate changes with a tendency to wax and wain pro cyclically with market movements, exaggerating both gains and falls.  A housing recovery built on the back of small mum and dad investors pouring their money predominantly into negatively geared established dwellings – especially considering our current levels of private debt to income ratios - is not ideal for the long term the stability of our housing market, or house prices.  
The common Aussie term ‘spruiking’ - which APRA warns against in the self-managed super sector, is not only a contributing aspect of what inspires our culture to see property as the undiversified road map for building wealth for retirement – it is also part and parcel of what has kept our property prices high by both local and international standards.  Yet the risks associated with spruiking in SMSFs is simply the tip of a much larger iceberg.  
Having worked in many aspects of the housing industry, I have seen first hand the type of material that’s presented at seminars not just from those who receive under the table commissions from developers, but also from advocates working as independent advisors for either the seller or buyer.  
It really isn’t unusual to see slides presented at seminars with straight lines charting the difference between investing in properties that supposedly “grow” at steady 5% per annum, compared to those that grow at 10%, using historical median data as ‘evidence’ that future returns can replicate those achieved in the past, without any distinction of how such data is correlated or the difference between individual “house prices” and “median values.”  
This information borders on financial advice and comes with no mention of risk or the type of rigorous analysis, which you would reasonably expect when choosing to invest in a single asset.  
Another widely used industry favourite is the statement;  
“FACT: fewer than 5% of properties are investment grade”  
A myth if ever there was one.  Perhaps the well-known companies that use this as an advertising tool, would like to point to the person who researched every property in Australia to correlate such a statistic? Maybe we could also ask for a comprehensive definition of what ‘investment grade’ really is – because I guarantee there would be no shortage of differing opinions from industry ‘experts.’  
This endless promotion of residential property, with rows of investment magazines lining newsagency shelves, promoting subjective ‘hotspots,’ or as I <a href="https://catherinecashmore.wordpress.com/2013/11/18/do-we-have-a-changing-landscape-concerning-australian-real-estate-and-property-prices/" target="_blank">pointed out</a> a few weeks ago, agencies cold calling households, and sending ‘advisors’ round to ‘educate’ and encourage inexperienced investors to negatively gear against their principle place of residence, is toxic.  
Article continues on next page. Please click below.
 
<hr class="system-pagebreak">
Meanwhile, the RBA continue to sit on their hands, not wanting to pull a regulatory lever, instead <a href="https://www.afr.com/rw/2009-2014/AFR/2013/09/25/Photos/160229d4-2585-11e3-bbca-a7ec88bfff7c_FSR.pdf" target="_blank">warning</a> investors to employ caution, hoping they will fall into line like a bunch of good school kids. However, whilst macro prudential tools may assist in ensuring banking lending standards remain robust – can they have any long-term sustainable or lasting impact on property prices?  
In a recent research paper by BIS (Bank for International Settlements), entitled <a href="https://www.bis.org/publ/work433.pdf" target="_blank">“Can non-interest rate policies stabilise housing markets?”</a>, evidence was gathered from 57 countries spanning more than three decades, investigating the effectiveness of nine non-interest rate policy and macro prudential tools on restraining credit growth and house prices.  
The analysis used a new dataset going as far back as 1980, making it the most comprehensive study to date in terms of both scope and time span.  
The paper concluded that whilst reductions in the maximum LTV (loan to value) ratio can restrain demand, its effects can be partially or wholly offset by a rising market enabling the investor to borrow more, therefore, changes in the maximum DSTI (debt service to income) ratio were assessed to be more substantial.  
But importantly;  
“Only tax changes affecting the cost of buying a house, which bear directly on the user cost, have any measurable effect on prices” and,  
“None of the policies designed to affect either the supply of or the demand for credit has a discernible impact on house prices.”
The study puts this down to the ‘can buys’ still outnumbering the growing pool of credit constrained ‘can’t buys’ – stressing that the importance of housing supply was not explicitly considered. Therefore if we want to lower house prices or put in place policies to aid affordability, we need to look outside the limited powers of the RBA alone.  
As has been proven <a href="https://www.businessspectator.com.au/article/2013/1/21/national-affairs/built-backs-first-home-buyers" target="_blank">time and time again</a>, intermittently stoking at the bottom end of the market with FHB grants and incentives does little more than provide a short term happy pill for vendors, as the price multiplier effect ripples across the rest of the housing terrain, stimulating both an inflationary and volatile environment.  
Instead, we need to focus on the real problem in Australia – and it’s not property prices, it’s land prices - as economist <a href="https://www.macrobusiness.com.au/2013/11/residential-land-values-reflate-across-australia/" target="_blank">Leith Van Onselen effectively points out</a> when he analyses the difference between commercial and rural land compared to residential land values, and building costs.  
“Whilst commercial and rural prices have remained relatively stable over the last 24 years relative to GDP, residential prices have skyrocketed.”  
In other words, the cost of residential fringe land, which without constraint, should be close to its ‘raw’ value, is not cheap at all – and it’s all down to ineffective urban planning policy.  
As I (<a href="https://www.macrobusiness.com.au/2012/12/englobo-the-shady-world-of-land-banking/" target="_blank">and others</a>) have pointed out previously, even within a wide expansive boundary as mooted in Melbourne’s new urban growth strategy, the government limits land use until they have gone through a lengthy process of mapping out areas for infrastructure known as a ‘<a href="https://www.gaa.vic.gov.au/precinct-structure-plans/" target="_blank">Precinct Structure Plan’</a> (PSP) – it is a slow laborious process and as soon as you restrict the supply of anything, scarcity inevitably inflates values.  
Larger developers are not slow to purchase swathes of acreage prior to rezoning, and then once PSPs have been finalised, drip feed it onto the market. Not only do government bodies have little understanding of how released plots respond to consumer demand, they have no policy in place to deter the practice. It’s therefore a failure.  
Furthermore, facilitation of infrastructure is currently financed via hefty development overlays, which are passed onto the buyer rather than initiatives such as bond financing, where residents pay back proportionally over a lengthy period of time, as was the case historically.  
We must remove these barriers with effective policy and let land prices revert back to normal levels to reflect a real price closer to commercial values.  
Without doing so, we can’t gain a true indicator of the trade-off buyers are prepared to make between price and distance. Currently, the average price of a newly built house and land package is around $400,000, this is not serviceable on the single median wage, and therefore can hardly be deemed affordable.  
Get the land supply, price, and infrastructure equation right and I suspect there would be no lack of demand from genuine aspiring home buyers.  Only when this is done, can we have a truly transparent debate on first home buyers’ willingness to spread over the land.  
 
<hr>
 Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.
 
 
 
 
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catherinecashmore-6LXia3pPQj

Can housing really be affordable and unaffordable at the same time?

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Australian banks are much more heavily exposed to mortgage lending than banks in most parts of the world, which is why the latest publication of <a target="_blank" href="https://www.apra.gov.au/statistics/Pages/default.aspx">APRA data</a> on home lending has set the hares running.
The data showed 14% of the recent mortgage lending by banks has been for loans which exceed 90% of the relevant property valuation.
The IMF has also been in Australia on its annual review and <a target="_blank" href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2013-11-21/imf-issues-property-warning/5107090">commented</a> on the risk to the banking sector from its exposure to mortgages. It often does.
This is a well-worn theme. The IMF’s last <a target="_blank" href="https://www.imf.org/external/pubs/ft/scr/2012/cr12305.pdf">review</a> (p7) expressed the risk in these terms:
“Domestically, despite a recovery in the household savings rate and a recent softening of house prices, high household debt coupled with elevated house prices remains a vulnerability”.
It is an important issue, particularly in Australia. Kevin Davis has <a target="_blank" href="https://www.rba.gov.au/publications/confs/2011/pdf/davis.pdf">pointed out</a> the unusually high levels of exposure of Australian banks to residential real estate. He suggested that some 59% of the total loans of Australian banks in 2009 were for this purpose compared with the US 38%, Canada 32%, Germany 17% and the UK 15%.
In essence there are two areas of major risk in the Australian financial system.
Australian banks are heavily exposed to domestic mortgages and they are still very reliant on borrowing from foreign wholesale markets to fund their lending.
The banks have worked hard to manage the funding risk in recent years by increasing their use of local deposits and to ensure that their offshore borrowing is more long term and hence more stable. We can worry less on that score than we did once.
Bank lending for mortgages also looks quite stable. Most borrowers have a lot of equity in their houses so that even a big price fall would not mean their loans were worth more than their houses, and most have made extra payments so they have a buffer against unemployment.
Less than 2% of loans are low-doc, potentially the highest risk category. The local banks also normally require borrowers take out insurance when they are borrowing more than 90% of the value of the loan.
We can see the impact of these factors in NAB’s recent results. The bank’s average mortgage borrower is eight months ahead of the required payments, and two-thirds of customers are at least one month ahead, the average loan to valuation ratio on its books is 48%, and some 15% of the book is insured. The consequence is that the bank’s loss rate on mortgage lending is 0.04%. Clearly there are still risks, for example if a mortgage insurer were to collapse, but it looks quite safe.
Nevertheless most analysts, investors and parties which lend wholesale funds to the Australian banks, pay close attention to their housing exposures.
Particularly in an environment where credit growth is quite slow, one way in which banks can increase their returns is to take on more risk. Hence the interest in the APRA data published this week. Are the banks moving up the risk curve?
Even there it is not clear that there are particular concerns (see chart below). The recent proportion of loans at high LVRs shows no clear trend over the last two years. Looking back earlier we see similar numbers for the period in the mid-2000s.<img width="470" style="font-size: 0.8em;" src="https://c479107.ssl.cf2.rackcdn.com/files/36781/width668/sb5j4qpk-1386046684.jpg">
Percentage of loans above 90% of property valuation (High LVRs). Source: APRA
Just eyeballing the data suggests that APRA might well have had some conversations with the banks requesting them to keep the proportion of high LVR loans in their portfolios to below 15%.
 
<hr>
 Rodney Maddock is Vice Chancellor's fellow at <a target="_blank" href="https://www.vu.edu.au">Victoria University</a> and adjunct professor of economics at <a href="https://www.monash.edu.au" target="_blank" rel="nofollow">Monash University</a>.
This article was originally published at <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/risk-on-australian-banks-skirt-unofficial-home-lending-limits-20839">original article</a>. 
 
<img width="1" src="https://counter.theconversation.edu.au/content/20839/count.gif" height="1" alt="The Conversation">
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Over-exposed? Australian banks are taking risks by skirting unoffical home lending limits

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A director and sales manager of a <a href="https://www.smartcompany.com.au/growth/economy/33481-red-energy-bears-brunt-of-accc-crackdown-on-telemarketing---fined-for-false-claims">telemarketing</a> company that sold ink cartridges have copped $100,000 in fines for knowingly breaking Australian Consumer Law.
Tuan Nguyen, the sole director of Artorios Ink, and sales manager Thuan Nguyen have each been ordered by the Federal Court to pay a penalty of $50,000 each.
The pair admitted to acting deliberately to mislead and deceive small businesses to generate ink cartridge sales.
Artorios Ink was a telemarketing company that sold printer cartridges to businesses from 2008 to 2012. It went into voluntary liquidation in February after the ACCC began proceedings against it in September 2012.
The Federal Court found that between 2011 and 2012, the company engaged in false and misleading representations to five small businesses.
The misrepresentations included telling businesses that they had agreed to purchase printer cartridges from the company, when there had been no agreement. They also told the small businesses that they were already an approved or regular supplier of the business when in fact they were not.
Artorios Ink also told businesses they instituted proceedings in the Magistrates’ Court of Victoria against the business to obtain payment for printer cartridges, when they had not instituted any such proceedings.
The court also found that the company asserted a right to payment for unsolicited goods, by sending demands for payments for ink cartridges to businesses, which had never been purchased.
Justice Mortimer stated that the conduct involved “deceit” of businesses for financial benefit.
Justice Mortimer also inferred “there was a deliberate and calculated plan constructed to misrepresent to small businesses (through calls to unsuspecting employees or shop managers) some kind of existing supply relationship, then to take advantage of the misrepresentation to supply goods and then demand payment”.
The judge found that the most serious aspect of this was its “premeditated character”.
In addition to the fines, the Court accepted undertakings from the pair that they would not manage or be a director of a corporation for five years.
ACCC deputy chair Michael Schaper said in a statement that the court’s ruling was a lesson for people involved in misleading practices.
“These penalties send a warning to traders that dishonest business practices can result in substantial penalties being imposed against the individuals responsible,” he said.
Schaper said small business should watch out for companies targeting them with misleading claims, perhaps via inexperienced junior staff members who may not know the company’s history.
Hall &amp; Wilcox partner, competition and consumer law, Ben Hamilton told SmartCompany that the conduct of the pair was at the more “extreme” end of misleading actions he had seen.
He said the fine towards the two individuals appeared fair, and commented that when companies are fined for misleading conduct the amount can be far greater.
“The court considers a lot of factors in determining a fine … the judge appears to have been guided by the premeditated character of the offences, which influences the penalty,” he says.
Hamilton advises business owners that to avoid <a href="https://www.smartcompany.com.au/legal/34415-accc-issues-luv-a-duck-360-000-fine-for-misleading-claims">misleading customers</a>, they should ensure their teams are compliant with competition and consumer law.
“Often risks can arise when salespeople [who don’t know the law] are representative of the business,” he says.

<hr>
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.
 
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