<a href="https://www.apartments.com.au/developers/capital-corporation">Capital Corporation</a> has announced that its <a href="https://www.apartments.com.au/new-townhouses/lovedale-farm-1054-1184-wine-country-drive-lovedale-nsw-2325">Lovedale Farm</a> residential, resort and golf project has secured $24.6 million in sales in just three weeks since the opening of its display home, underscoring the appetite for premium lifestyle property in the Hunter Valley countryside.

The sales milestone has been driven by a diverse mix of buyers, including owner-occupiers and investors from Sydney, Newcastle and the local Hunter region, purchasing both land-only lots and house and land packages across the development.

<img alt="Lovedale" data-entity-type="file" data-entity-uuid="e173edc9-e60e-4f19-a060-9dc4421a3233" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/LovedaleFarm_20250215-1.jpg?VersionId=1LY6CvOaD.Dzrt8tWpWxXtPyfchixNIo" />

&nbsp;

The result builds on the momentum generated at the display home opening on 22 March, which attracted more than 460 attendees.

With house and land pricing from $1.14 million, Lovedale Farm continues to attract strong interest from buyers seeking a premium lifestyle offering at a compelling price point. The development’s vision, a championship golf course, future epicurean village and access to the Hunter Valley’s celebrated wine country, has resonated with a broad buyer profile, from first-time investors to those looking to make the move and call the Hunter Valley home.

<img alt="Lovedale Farm records $21.4 million in sales in three weeks" data-entity-type="file" data-entity-uuid="b358e789-e1eb-40ed-8105-ed5c8297136f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/20260321LovedaleFarmDisplayHomeOpening--6.jpg?VersionId=6GUO8TNnxuELONrsM6n9imDB6oc82Bor" />

Jim Hunter, Managing Director of Capital Corporation said the response since opening the display home has been encouraging.

"To reach $24.6 million in sales in just three weeks speaks to the genuine demand for a lifestyle community of this calibre in the Hunter Valley," Hunter says.

"We’re seeing buyers from across the region and beyond, including investors who recognise the long-term value, and owner-occupiers who simply want to live somewhere truly special.

“Lovedale Farm is two decades in the making, and the market’s response is everything we hoped for. We’re excited to see these first buyers become part of the Lovedale Farm story from the very beginning."

<img alt="Lovedale" data-entity-type="file" data-entity-uuid="54d985cf-2ac2-400b-ac02-4401f3421ac7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/20260321LovedaleFarmDisplayHomeOpening--5.jpg?VersionId=3866bPoqpLZsm.3ACg9EafAr1W3miC_f" />

&nbsp;

Spanning 240 hectares on Wine Country Drive in <a href="https://www.apartments.com.au/developments/lovedale-nsw-2325">Lovedale</a>, the $1 billion development is expected to deliver around 1,250 jobs during construction and inject more than $300 million into the local economy. The first 200 homes and championship 18-hole golf course are anticipated for completion in late 2027.

Capital Corporation has also lodged development plans for the Lovedale Farm clubhouse, set to become a vibrant hub for residents and the wider Hunter Valley community. Further releases are planned for later this year.

[smartcode_project_cta:default project_id=14476]

Joel Robinson

Lovedale Farm display home opening triggers $24.6 million in sales in three weeks

Prominent Malaysian developer <a href="https://www.apartments.com.au/developers/osk-property">OSK Property</a> has unveiled <a href="https://www.apartments.com.au/new-apartments/aura-at-melbourne-square-7-hoff-boulevard-southbank-vic-3006">Aura</a>, the next stage of its $3.5 billion Melbourne Square precinct in Southbank, continuing its push into wellness-led, amenity-rich apartment living.

The $800 million tower, planned for 7 Hoff Boulevard, will rise 67 storeys and deliver 673 apartments, with COX Architecture drawing on both Japanese design principles and Australia’s natural landscape to shape the building’s identity. A rectangular grid aesthetic defines the building’s exterior, with COX drawing design cues from New York high-rises and Tokyo’s skyline.

Aura builds on a growing trend in high-density living, where wellness is no longer an add-on but central to the product. The development is structured around four key pillars, combining calm, minimalist residences with layered communal spaces, landscaped gardens, and a suite of wellness amenities designed to support both physical and mental wellbeing.

[smartcode_project:default project_id=151921 project_image_fid=367465]

At the core of the project is what OSK describes as a vertical wellness ecosystem, a multi-level approach to amenity that integrates health, lifestyle, and social spaces throughout the building rather than confining them to a single level.

The main resident hub, the Aura Club on level seven, will include a pool, cold plunge, spa, gym, Pilates and yoga studios, alongside more lifestyle-driven inclusions like a golf simulator, music rooms, library, and work-from-home spaces. Above, a series of higher-level amenity zones, including the Meridian Club and Cumulus Club, introduce more refined, social and retreat-style environments, with private dining, lounges, and premium wellness spaces positioned to take advantage of city views.

[smartcode_project:default project_id=151921 project_image_fid=367467]

The residences themselves will largely include balconies, a key design move in a market increasingly focused on natural light, airflow, and connection to the outdoors. Views will extend across the CBD, the Arts Precinct, Royal Botanic Gardens, and beyond.

Aura also introduces approximately 1,600 sqm of retail across the lower levels, further activating the Melbourne Square precinct, which already includes Kennedy Park, a Woolworths, childcare, and a growing mix of hospitality operators.

[smartcode_project:default project_id=151921 project_image_fid=367474]

“Aura stands tall as an exemplar of holistic wellness – its focus on social, physical and mental health culminate in a building that is calming, restorative and relaxing, where residents will have their own sanctuary within the well-connected and sought-after <a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>," says&nbsp;OSK Property CEO Chong Boon Woon.

“We have been very encouraged by the market’s response to the BLVD offering, and we know there is a strong demand for the level of amenity, service and design that the Melbourne Square precinct is known for.

“Complemented by work-from-home lounges for professionals, family friendly outdoor garden spaces, and state-of-the-art fitness and wellness facilities, Aura will continue our focus on maximising physical, emotional, and mental wellbeing,” he said.&nbsp;

[smartcode_project:default project_id=151921 project_image_fid=367475]

The project follows the strong performance of BLVD, which is now around 80 per cent sold, and reinforces OSK Property’s long-term commitment to Melbourne Square as a fully integrated, mixed-use precinct.

Construction is expected to commence in late 2026.

[smartcode_project_cta:default project_id=151921]

OSK unveils AURA, the latest stage in Southbank's $3.5 billion Melbourne Square precinct

National developer Time &amp; Place appears to have settled on a design for its long-anticipated Potts Point project.

After several years of back and forth with local council and the NSW Government, the developer, which has spent seven years targeting the former The Chimes site on Macleay Street, has now progressed its plans.

Following a concept design submission last year by SJB, Time &amp; Place has lodged a full State Significant Development Application with the NSW Government, this time for a scheme designed by Kerry Hill Architects.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="504d2a27-d65f-4227-8189-1e35e3376e62" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.38.24%E2%80%AFAM.png?VersionId=_XqFKATYHF30KnVByPxhaI9UBzmkmfn7" />

The 16-storey proposal includes 44 apartments, 21 of which will be build-to-sell. These will comprise 19 three-bedroom apartments and two four-bedroom units.

More than 50 per cent of the development will be dedicated to affordable housing, with 23 studio apartments to be delivered in line with the NSW Government’s Housing SEPP.

Kerry Hill Architects said the proposal is driven by a strong response to place.

“Our proposal for a new residential building for Potts Point in Sydney is driven by a deep consideration of place,” the practice said in its submission.

“This operates on multiple levels, including a landscape approach that reinstates endemic flora of the Sydney peninsula and provides a ground-floor garden for residents, reconnecting the site to its pre-European history. A brick podium further strengthens this relationship to context, integrating planting and fine bronze detailing that references the predominant material language of Macleay Street.”

The three-level podium will be topped by a communal resident space, featuring a covered pool designed to receive direct afternoon sun in winter, a neighbouring reflection pool, dining and event areas oriented to maximise sunset views, and an outdoor exercise zone.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="8d3eedc1-babb-44a3-bd96-d8a42f3adf1f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.37.48%E2%80%AFAM.png?VersionId=Ii7.4dvqNatu5GQi6bhqNjAswrMB998." />

The design also incorporates highly crafted shopfronts and a clearly defined residential entry to activate the street. Juliette balconies to the podium residences will provide passive surveillance and a strong sense of habitation.

Above, the larger apartments are housed within a light-coloured masonry and bronze tower.

“The tower steps back in a series of gently curved volumes that reference the rich Art Deco context of Macleay Street,” the architects said. “Carefully calibrated vertical fins frame the views while providing privacy and a sense of refuge.”

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="6fab60f4-3140-4469-b47a-48c781e0a30b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.28.44%E2%80%AFAM.png?VersionId=e5XxrM3kzdASdKlcIACHAHbOSZhSKC9O" />

Time &amp; Place has been one of the most active developers nationally in the last 12 to 24 months. Late last year they completed&nbsp;The Queensbridge in&nbsp;<a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>, a mixed-use tower with 353 apartments and a hotel. They are currently selling Park Modern, 246 apartments near the famous Botanic Gardens in South Melbourne.

The developer has approval for The Burke, a mixed-use project in&nbsp;<a href="https://www.apartments.com.au/new-apartments/glen-iris-vic-3146">Glen Iris</a>&nbsp;being delivered in partnership with Woolworths. The 60 apartments, positioned above a new Woolworths supermarket, are expected to launch in the coming months. Time &amp; Place is also progressing plans for the redevelopment of&nbsp;<a href="https://www.apartments.com.au/developments/northcote-vic-3070">Northcote</a>&nbsp;Plaza, and have recently submitted plans for a <a href="https://www.apartments.com.au/news/vic/time-place-unveils-plans-22-storey-south-melbourne-tower">22-storey tower</a>, another in South Melbourne.

In&nbsp;<a href="https://www.apartments.com.au/developments/sydney-nsw">Sydney</a>, the developer has two projects in Manly: Two Tides, which is currently under construction, and an ultra high-end building on&nbsp;<a href="https://www.apartments.com.au/buildings/shoreline-manly-beach-89-90-north-steyne-manly">North Steyne</a>, fronting the beach. It is also continuing to work through the redevelopment of The Chimes building on Macleay Street in&nbsp;<a href="https://www.apartments.com.au/developments/potts-point-nsw-2011">Potts Point</a>, as well as Marlborough House, the redevelopment of the original David Jones warehouse building in&nbsp;<a href="https://www.apartments.com.au/developments/surry-hills-nsw-2010">Surry Hills</a>.

First look: Time & Place settles on design for The Chimes, Potts Point redevelopment

<a href="https://www.apartments.com.au/developers/develotek">Develotek</a> is joining the likes of TOGA, Deicorp, and One Global Capital, betting on a boom in Five Dock ahead of the 2032 mooted opening of the Five Dock Metro Station.

Develotek, which is currently developing Bianca on the Drummoyne waterfront and has plans approved for a tower in Chatswood, has filed a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/79-81-queens-road-five-dock-nsw-2046">two-building project in the evolving Kings Bay precinct</a>.

The buildings, one more boutique just five storeys and the other 26 storeys, will rise from an 3,158 sqm site across&nbsp;79–81 Queens Road and 2–8 Spencer Street, will home 134 one-, two-, and three-bedroom apartments, above ground-floor retail and five basement levels of parking.

A key component of the proposal is the inclusion of 15 per cent of residential floor space as in-fill affordable housing, unlocking additional height and density under the Housing SEPP.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="3ee31bf7-75ba-4bc5-b190-49885193219f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium_2.png?VersionId=730UbrduuwK3C1sO28RHjiLPUPqXqjkh" />

Designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, the scheme adopts a podium-and-tower configuration, with a five-storey street wall along Queens Road transitioning to a 26-storey tower set deeper into the site. The ground plane prioritises activation and permeability, with retail frontages and a new through-site link connecting Queens Road to Spencer Street.

At the upper levels, the tower façade has been conceived using a modular system to support prefabrication and reduce construction waste, while improving build efficiency. The splayed form draws on the geometry of surrounding industrial rooftops, reinterpreting the area’s heritage in a contemporary expression while also helping to reduce solar heat gain to east and west-facing apartments.

“This project aspires to transform a former industrial site into a connected, resilient and people-focused urban community, grounded in Country, shaped by history, and designed to enrich everyday life within the evolving Kings Bay Precinct,” said John Walsh, Principal at Plus Studio.

The proposal reflects the broader transformation of the Kings Bay Precinct under the Parramatta Road Corridor Urban Transformation Strategy, marking a shift from its industrial past to a higher-density, mixed-use urban neighbourhood.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="abde734c-1e31-4a97-a1d2-fa9bcf31c380" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/building%20podium.png?VersionId=fNUupP6u146yEytQT31kKVRxwtACgPpP" />

Develotek is emerging as an active participant in the state’s affordable housing-led uplift pathway. The developer recently secured approval for a 34-storey mixed-use tower in Chatswood, where it similarly leveraged the in-fill affordable housing provisions to increase scale and deliver a 101-unit scheme with dedicated affordable apartments.

Their entry into Five Dock places them alongside a growing list of developers targeting the suburb ahead of its anticipated transport uplift, with Sydney Metro set to extend into the area. Major players including TOGA, Deicorp, and One Global Capital are all progressing large-scale precinct-style developments nearby, collectively reshaping the low-rise industrial fabric into a higher-density mixed-use corridor.

The Five Dock site sits within the Kings Bay Precinct, a key renewal area under the Parramatta Road Corridor Urban Transformation Strategy, where planning controls support significant uplift tied to affordable housing delivery. The consolidated 3,158 sqm site is currently occupied by low-rise industrial uses, including warehouses and vehicle workshops, earmarked for transition.

First Look: Develotek joins in Five Dock apartment boom

Ascot’s Racecourse Road continues to be a hive of activity for Brisbane developers.

Following Fortis and GRAYA, which are both preparing new projects along the key strip connecting Kingsford Smith Drive and Eagle Farm Racecourse, local developer <a href="https://www.apartments.com.au/developers/skyhold">Skyhold</a> is the latest to lodge plans for its own development.

The group is proposing One One Two Residences, a boutique project comprising just seven apartments, named after its address at 112 Racecourse Road.

The proposal outlines a five-storey building on an 810 sqm site. The built form slightly exceeds the four-storey expectation under the neighbourhood plan, aligning instead with the emerging character of the strip. As the planning report notes, “the locality is characterised by a transition toward medium-rise residential development, with a number of recent developments… above the stipulated height limits.”

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="ec577631-8c51-4163-960e-e7b3a77d655b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot.png?VersionId=iAzQ46D4Uu1UqiS0mVnlcy9jeFKBpJIj" />

Designed by 111 with landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/paul-bangay-garden-design">Paul Bangay Studio</a>, the scheme adopts a layered architectural approach with strong articulation and a subtropical response. Deep balconies, integrated planters, and a mix of masonry and textured finishes define the façade, while upper-level setbacks reduce perceived bulk. The architectural statement describes “a series of horizontally expressed layers, defined by deep balconies and a consistent robust material palette,” aimed at delivering a refined streetscape presence.

Apartments are configured as large-format residences, including multiple three-bedroom layouts and a full-floor penthouse, supported by ground-level parking. A rooftop terrace will provide communal amenities including a pool and landscaped recreation areas. The design prioritises privacy, natural ventilation, and greenery, with planting integrated across all levels to soften the building form and contribute to the public realm.

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="1e1219bd-b45a-4d7f-bbc7-7207d7b2fc94" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot%20entry.png?VersionId=JIoUOLMgQ5xWpEF0etEI3ffIoIVjD7gO" />

The proposal sits within the Racecourse Road precinct, a key mixed-use spine in Ascot that continues to attract renewed development interest.

Later this year national developer Fortis will launch its own boutique development, which, pending council approvals, will be 16 apartments designed by Koichi Takada Architects, just down the street.

“Racecourse Road is going through a massive revitalisation and we’re proud to be a part of that transformation,” said Fortis's QLD General Manager, Dan Boman.

Nearby, GRAYA is advancing its larger-scale The Gallery, a mixed-use shop-top housing project designed to act as a “catalytic project for Racecourse Road.”

First Look: Racecourse Road, Hamilton revitalization to continue as Skyhold joins the party

depreciation

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Brought to you by
<img src="/images/marketing/frasersProp_black_rgb.jpg" height="50px">
Like a brand new car, new apartments and contents depreciate in value almost immediately but many investors are not aware of the depreciation benefits they are entitled to claim.
The Australian Tax Office enables investors to cover part of the purchase price by allowing them to claim depreciation on certain items like fittings and fixtures at the end of every financial year.
Although there is no percentage that fits all off the plan purchasers, Matusik Property Insights director Michael Matusik says up to 60% of the built cost of a new apartment can be tax-deductible over time.
Purchasers of off the plan apartments can take the contract of sale to a quantity surveyor to have a depreciation schedule put together, as the contract will detail inclusions such as price, size of the unit and size of the building.
A tax depreciation company can also inspect a property to determine the current value of every item and will then calculate how much value each of those items will lose every year for up to 40 years.
However, Multifocus Properties and Finance chief executive officer Philippe Brach says to get a definite schedule that an accountant can use, the property must be settled as the settlement acts as the starting date for the depreciation entitlement.
The depreciation report is submitted at the end of every financial year and is allowed to be back dated by up to two years.
BMT Quantity Surveyors director <a href="/expert-insights/finance/depreciation-tax-deduction-opportunity-for-investors-as-the-block-sky-high-reality-television-series-turns-serious">Brad Beer says on average investors can claim between $5,000 and $10,000</a> as a first full-year deduction.
Brach says for the first few years, depreciation will fall away rapidly but is largely compensated by rising rent revenue in keeping the cash flow constant.
“After about 10 years, depreciation will stop declining but rent will still keep rising, therefore the cash flow starts increasing,” says Brach.
Property investor <a href="/expert-insights/finance/the-benefits-of-depreciation-or-how-wear-and-tear-can-be-to-your-advantage">Cameron McEvoy</a> says the amount an investor can claim is always much higher in the first few years.
“It goes without saying that the figure for say year three, will be much higher than year 27.
“This is due to the gradual degrading value of items.
“More often that not, properties that are one to five years old have the most depreciable potential,” says McEvoy.
Brach advises that when looking at potential investment properties, fittings and fixtures should be taken into consideration when short-listing apartments as they will give high depreciation in the early years.
Off the plan buyers should be able to obtain a depreciation schedule from the developer free of charge to help them work out their numbers properly but if one is not available, a report can be constructed for around $300 to $1,000 through a depreciation specialist.
“Without a schedule, your cash flow may be way out of reality and you investment decision will be wrong,” says Brach.
The one-off report fee is also tax deductible.
{rsform 49}
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ntrotman-Et3xWpamVh

How to: Check your depreciation entitlements

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<div>No surprise that the Reserve Bank of Australia opted to leave interest rates on hold at 2% yesterday, preferring to "wait and see" how data flows play out in the months ahead.</div>
<div> </div>
<div>Not all that many surprises in the <a href="https://www.rba.gov.au/media-releases/2015/mr-15-11" target="_blank">media release</a> either in truth. </div>
<div> </div>
<div>Perhaps the most notable point was this:</div>
<div> </div>
<div>"The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices."</div>
<div> </div>
<div>Although the Aussie dollar has touched a six year low against the US dollar at 74 cents, with commodity prices in an ongoing funk, the Reserve Bank wants to see further depreciation still. </div>
<div> </div>
<div><a href="/images/2015/07/08/audusd.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/08/audusd.jpg" alt=""></div>
<div> </div>
<div>
<div>Just how much further depreciation is open to interpretation, but given the strength of the wording one might safely assume that this means at least 10 per cent, and probably more.</div>
<div> </div>
<div>With the release also noting that "monetary policy needs to be accommodative" there is every chance that interest rates will fall again at some point within the next year.</div>
<div> </div>
<div>Futures markets are all but pricing in another cut over that time frame.</div>
<div> </div>
<div><a href="/images/2015/07/08/RBA.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/08/RBA.jpg" alt=""></div>
<div> </div>
<div>
<div>Asset markets</div>
<div> </div>
<div>The ASX 200 (XJO) surged by well over 100 points for no apparent reason to record its second strongest trade of the year to date.</div>
<div> </div>
<div>Another interesting development this week has been lenders tightening the screws further on investor loans.</div>
<div> </div>
<div>As of today Westpac - the Australian bank with the largest dollar amount of credit outstanding to investors - will reportedly apply a maximum 80 per cent loan to value ratio on its investment loans.</div>
<div> </div>
<div>This will make it comparatively more difficult for investors without substantial deposits to purchase property.</div>
<div> </div>
<div>To compensate we can expect that some lenders will instead encourage owner occupier loans, perhaps by dropping lenders mortgage insurance in some instances, or by dropping standard variable rates in others.</div>
<div> </div>
<div>The regulator APRA has evidently applied heavy pressure to banks and other lenders to slow the pace of credit growth to investors, and therefore the outlook for our property markets will shift accordingly over the period ahead.</div>
<div>
 With rock bottom interest rates all but assured through 2015 and 2016 we can expect to see a shallower but probably longer recovery in property markets, driven increasingly by owner occupiers.</div>
<div> </div>
<div>Another point of interest is that certain capital city markets have already been distorted by a steady flow of foreign capital, while simultaneously we also have a central bank which wants to depreciate the currency by a further 10 to 20 per cent. </div>
<div> </div>
<div>This may well be the action which opens the sluice gates...just sayin'.</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
</div>
</div>
</div>
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pwargent-M4siyDbqQY

No surprise from the RBA: Pete Wargent

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There’s no doubt that depreciation can make a <a href="/guides/property-depreciation-continues-to-maximise-cash-flow">significant difference </a>to any investor’s cash flow, but how does it work? 

What is property depreciation?

As a property gets older, its structure and assets wear out – they depreciate. The Australian Taxation Office (ATO) permits owners of income-producing properties to claim this depreciation as a tax deduction.

What can be claimed?

Depreciation is claimed under two categories, capital works and plant and equipment. 

Capital works deductions are claimed on the building’s structure and any permanently fixed assets. Common assets that are claimed under capital works include driveways, walls, basins and roofs. 

Plant and equipment deductions are claimed on assets that are considered to be easily removable or mechanical in nature. Some common examples of plant and equipment assets include air-conditioning units, blinds, hot water systems and flooring. 

How is depreciation calculated? 

<a href="/guides/how-to-invest-in-property-in-2020-the-ultimate-guide">Property investors</a> can claim capital works deductions at a rate of 2.5 per cent for up to forty years. Capital works deductions generally make up an average of 85 to 90 per cent of a total depreciation claim. 

Depreciation for plant and equipment assets differs from depreciation of capital works. These assets are generally depreciated based on their effective life through the diminishing value or prime cost method. 

The diminishing value method is the most commonly used method of depreciation for plant and equipment assets. Under this method, depreciation deductions are calculated as a percentage of the asset’s depreciable balance. This results in higher deductions in the earlier years of ownership. 

Alternatively, the prime cost method calculates depreciation as a percentage of the cost. When the prime cost method is used, deductions are not as high in initial years but are spread out over time and produce a more even claim each financial year. 

Claiming depreciation with the low-value pool or immediate write-off

Depreciation deductions on plant and equipment assets can be claimed sooner through the low-value pool or as an immediate write-off. 

The low-value pool allows qualifying assets to be depreciated at an accelerated rate. Assets in the pool can be claimed at a rate of 18% in the first year, and 37.5% each following year. 

There are two different ways that an asset can qualify for a low-value pool:

<ul>
<li>
Low-cost asset: Is a depreciable asset with an opening value of less than $1,000. </li>
	<li>
Low-value asset: Is a depreciable asset that has a written down value of less than $1,000. This means the asset’s value was more than $1,000 in the year of acquisition but the residual value of depreciation is now less than $1,000.</li>
</ul>
The immediate write-off is also available for eligible low-cost assets. For individual residential investors, qualifying assets that cost $300 or less can be claimed as an immediate write-off. 

Depreciation and renovations 

Significant depreciation deductions can be claimed before and after a renovation has been completed on an <a href="/guides/looking-to-buy-an-investment-property-top-3-things-you-must-do-online-first">investment property</a>. 

A process called scrapping allows property owners to claim deductions for the un-deducted value of removed assets in the year they were removed. To take advantage of scrapping, a depreciation schedule must be arranged both before and after the renovation takes place. 

How does property tax depreciation boost cash flow?

Property depreciation is a non-cash deduction that essentially reduces a property owner’s taxable income. This means they pay less tax each financial year without paying for any additional costs. 

To claim depreciation, a tax depreciation schedule completed by a specialist quantity surveyor is essential.

Estimating depreciation deductions before buying an investment property

Owning an investment property is a balancing act of income and expenses. When deciding whether to <a href="/new-apartments">buy an investment property,</a> investors should consider obtaining a depreciation estimate of the property they are looking to buy. 
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Investor’s Guide to Residential Property Depreciation 

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GUEST OBSERVATION
Well, the dust has finally settled on the new legislation regarding the changes to depreciation that will apply to second-hand residential properties.
In this article we will dig deep into some of the questions we have commonly been asked since the 9th of May 2017, when the changes were announced in the Federal Budget.
Before we get into the nitty gritty let’s begin with a quick recap.
Property investors who acquire a second-hand residential property after May 10, 2017, that contain “previously used” depreciating assets, will no longer be able to claim depreciation on those assets. Depreciating assets, in this case, refers to things like ovens, dishwashers, blinds, etc.
As you already know, in 2017, the rule book on depreciation changed massively.
The Federal Government successfully voted on new legislation to change the way depreciation works, representing the biggest move in the industry that I’ve ever seen – and I’ve been a quantity surveyor for over 25 years!
The changes were effective as at 9 May 2017 at 7.30pm, when the federal budget was handed down. As you can imagine, they have huge implications for property investors and more importantly, the property equation, which we’ll go into later.
So, how have things changed exactly?
The best way to understand it is to break the changes down into nine simple key points:
<ol>
<li>If you acquire a second-hand residential property from 10 May 2017, which contains ‘previously used’ depreciating assets, you will no longer be able to claim depreciation on those assets. This refers to the plant and equipment portion of a depreciation schedule, including: Ovens, Dishwashers, Lights, Air-conditioners. Televisions, Carpets, Lounge suites, Blinds, Common property plant and equipment items. 
</li>
<li>However, the building allowance, or claims on the structure of the building, has not changed at all. You will still need a depreciation schedule to calculate these deductions, which typically accounts for 85% of the overall construction cost. The structure includes things like brickwork and concrete so there’s no change to that. 
</li>
<li>Acquirers of brand-new property will carry on claiming depreciation in exactly the same way as they have done so to-date – for both plant and equipment and structure. This is great news for the property industry, because a lot of developers rely on depreciation as part of their marketing strategy to attract investors. The government resisted making changes to depreciation on brand-new property because it did not want to halt construction, which would have impacted upon the supply of new property. A downturn in the construction industry would also have a knock-on effect – if tradies are out of work, they aren’t paying tax! 
</li>
<li>If you renovate a house while living in it, then sell the property to an investor, the assets will be deemed to have been previously used and the new owner cannot claim depreciation on the plant and equipment. 
</li>
<li>The proposed changes do not apply if you buy the property in a corporate tax entity, super fund (note self-managed super funds do not apply here) or a large unit trust. In other words, you can still buy a second-hand property in a company name and claim depreciation on it. You can buy a second-hand property in a super fund – as long as it’s a large one – and a large trust can buy a property as long as it has 300 members or more, and claim depreciation on that property. 
</li>
<li>The proposed changes only relate to residential property. Commercial, industrial, retail and other non-residential properties are not affected, so you can still buy a second-hand office or similar and continue to claim the second-hand carpet, exactly as you could before. You can’t do this for residential property, as I’ve explained above. 
</li>
<li>If you engage a builder to build a brand-new house, or do the work yourself and it remains an investment property, you will still be able to claim depreciation on both the structure and the plant and equipment items. This is because it’s brand new, and was brand new when you put in that oven. Therefore, you can still claim it because the costs are known. 
</li>
<li>If you engage a builder to renovate a property – or you do the work yourself – and it is also being used as an investment property, you will still be able to claim depreciation on it when you have finished the renovations. As above, this is because the assets you install are brand new, therefore you can still claim. But if you bought a property renovated by someone else and they lived in it for six months or a year and then sold it – you can’t claim depreciation on the oven and dishwasher, etc. in the future, because they have now been previously used. See the difference? 
</li>
<li>While investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property. How? Well, when they replace or remove an item of plant &amp; equipment they would have been able to claim in depreciation under the previous legislation, the opening value of the asset can be claimed as a capital loss.</li>
</ol>
In my opinion, it seems like a lot of work to get the same result. The new rules have just moved depreciation from one line of the budget to another!
The good news is that the new legislation is ‘grandfathered’. That means that for everyone out there with an existing depreciation schedule, you can continue to claim exactly as you have been doing. So, if you bought a property prior to the budget – 9 May 2017 – nothing has changed. And if you have bought an investment prior to this date, and you don’t have a depreciation schedule, there’s never been a better time to get one! You might not get these allowances again.
One final point on grandfathering; if you bought a property prior to the budget and it is owner-occupied, and then you move out after 1 July 2017 – you will not be able to claim depreciation on the plant and equipment in that property.
Those items will be deemed to be previously used and caught in the net of the changing legislation – even though you acquired the property prior to the budget. So, these changes are kind of ‘half grandfathered’ if you ask me.
You will, however, still be able to claim the building allowance in this scenario if the property was built after 1987.
TYRON HYDE is a director of quantity surveying firm Washington Brown.
Read the <a href="https://www.washingtonbrown.com.au/blog/depreciation-budget-changes/?utm_source=ONTRAPORT-email-broadcast&amp;utm_medium=ONTRAPORT-email-broadcast&amp;utm_term=&amp;utm_content=The+New+Rules+-+We+wanted+to+make+sure+you+know&amp;utm_campaign=17092019" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Understanding new depreciation legislation on second hand residential property: Tyron Hyde

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Property investors are set to save time and money through the launch of the first-ever <a href="http://www.nationaldepreciationregister.com.au/" target="_blank">National Depreciation Register</a> (NDR) in Australia. 
The NDR, revealed as one of two major announcements by one of Australia’s oldest quantity surveying organisations, Washington Brown, at its Surprise 40th Birthday on February 23 at the Australian Museum, is an established database that includes most residential apartments in Australia and their depreciation costs.
The firm has made use of the extensive data it has accumulated over the past 40 years to create the NDR, which property investors will be able to access online, searching for their property in seconds and downloading a report quickly, after selecting the right affordable package for their needs.
The NDR was established in response to the changes to depreciation in the Federal Budget last year, which saw depreciation claims for second-hand residential properties purchased after May 10, 2017 limited to building allowances, with plant and equipment allowances no longer able to be claimed.
The changes left many property investors feeling confused about what depreciation costs they can claim moving forward, but the NDR provides a quick and easy way to find out for each property.
While investors will still need a property inspection to prepare a depreciation schedule for a house or a property purchased before May 9, 2017, it may not be required for apartment purchases after this date. You may simply be able to jump online to the NDR and get a report that way, without an inspection.
If you purchased a residential second-hand apartment after May 9, 2017, Washington Brown most likely already has the costs for your property on file, as you’ll only be able to claim deductions for building allowances. You don’t need to pay for an inspection, as the firm already knows the construction costs associated with your unit.
This is the first-ever NDR, so there has never been a faster, easier and more affordable way for property investors to claim the maximum depreciation costs for their investment property, maximising tax returns and putting more money back into their pockets.
To try it out and find your property depreciation report, visit <a href="http://www.nationaldepreciationregister.com.au" target="_blank">www.nationaldepreciationregister.com.au</a> .
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jrobinson-rf4aSBido9

First-ever National Depreciation Register launched by Washington Brown

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Tyron Hyde expects property investors may start looking into commercial and other forms of non-residential property following the passing of Federal Budget legislation on depreciation claims.
The chief of Washington Brown also expects investors will be looking into different structures to acquire the property – like companies, that have not been affected.
Parliament has passed the legislation yesterday which changes how depreciation deductions on a second-hand property can be claimed. 
Hyde says the six key takeaways from the legislation are:
1.   If you acquire a second-hand residential property after May 10, 2017, which contains “previously used” depreciating assets, you will no longer be able to claim depreciation on those assets.
2.   Acquirers of brand new property will carry on claiming depreciation exactly the way they have done so to date. This is great news for the property industry and the way it should be.
3.   The proposed changes only relate to residential property. Commercial, industrial, retail and other non-residential properties are not affected in the slightest.
4.   The building allowance or claims on the structure of the building has not changed at all. You will still need a Depreciation Schedule to calculate these deductions. This component typically represents approximately between 80 to 85 percent of the construction cost of a property.
5.   The proposed changes do not apply if you buy the property in a corporate tax entity, super fund (note Self-Managed Super Funds do not apply here) or a large unit trust.
6.   Perhaps the most interesting point: Whilst investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property.
Tyron Hyde suggests while there has been some merit in regards to these changes, "a more balanced approached would’ve been more suitable."
"These changes will create a two-tiered property market in my view, where investors selling near-new property will struggle to compete with those selling new property.
"Developers should be dancing in the street, as there stock is now more appealing to investors.
"I suspect investors may start looking into commercial and other forms of non-residential property and also looking into different structures to acquire the property – like companies, that have not been affected."
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Depreciation legislation will change investor property preferences and help developers: Tyron Hyde

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The weekend finale of The Block Eslternwick saw comedian Dave Hughes buy the renovated home of celebrity couple and winners on the night, model Elyse Knowles and her boyfriend Josh Barker.
He paid $3.07 million for the home marketed as Regent House, which won Knowles and Barker the top prize, pocketing $547,000 in the process.
Hughes could stand to claim a maximum of nearly $2.4 million in depreciation deductions (below) as a property investor in his tax returns, as he has signalled he intends to rent the well-positioned top seller out.
Property Observer noted pre-auction that the forecast rentals were $2000 plus a week.
Price estimations were conservative by the marketing agents, while ANZ auction tipping website RealAs were way off the mark with their predictions given five days prior.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/10/30/Hughesmaximum.jpg" alt="">
The minimum estimation of available depreciation by BMT suggest he will be able to claim around $1.95 million over the property's timeline.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/10/30/HughesMinimum.jpg" alt="">
Two years ago the buyers of apartments in The Block: Blocktagon could claim an average of over $1.5 million in depreciation deductions.
The penthouse of Dean and Shay had the highest deductions available, with a minimum of $62,735 claimable in the first year and $1,621,688 claimed over the specified lifetime of the property.
For the buyers of The Block Triple Threat townhouses in 2015, the fully-furnished South Yarra properties with new interiors were able to claim between nearly $40,000 and $55,000 in depreciation benefits in the first year of ownership.
Tim and Anastasia's renovation offered the greatest deductions, with between $44,316 and $54,163 claimable in the first year. In total, their apartment offers a maximum deduction of $1,389,708.
Legislation allows the owners of any income producing property to claim depreciation deductions for the wear and tear of the building structure and the assets contained within.
Win a free depreciation report by signing up to Property Observer. Just <a href="https://www.surveymonkey.com/r/freedepreciationreport" target="_blank">click here</a>.
Download a free e-book on the relocating of entire homes.
 
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What depreciation the comedian Dave Hughes gets on his Block Elsternwick investment buy

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Two months after the Federal Budget announcement, property investors have received guidance on the Federal Government’s plan to tighten depreciation deductions available for residential properties.
Depreciation is the tax break for investors who own income-producing investment properties. Depreciation is an important, but sometimes overlooked, component of any investment property’s viability among the nation's two million landlords.
In what was described as an “integrity measure", the Government will limit plant and equipment depreciation deductions for investors in residential investment properties to assets not previously used. Plant and equipment items are usually mechanical fixtures or those which can be easily removed from a property such as dishwashers and ceiling fans.
Plant and equipment used or installed in residential investment properties as of the May 9, 2017 Budget night will continue to give rise to deductions for depreciation until either the investor is no longer owns the asset, or the asset reaches the end of its effective life.
Public consultation on the draft legislation will run until August 10.  
The measure is calculated to claw back $260 million over the next four years of the budget.
The key takeout is that if an investor acquires a second-hand residential property after May 10, 2017, which contains “previously used” depreciating assets, they will no longer be able to claim depreciation on those assets in future tax returns.
It address government concerns that some items were being claimed as tax write-offs by successive investors often in excess of their actual value.
The proposed changes only relate to residential property. Commercial, industrial, retail and other non-residential properties are not affected. 
The building allowance or claims on the structure of the residential building has not been changed. Investors will still need a depreciation schedule to calculate these deductions which typically represents between 80 to 85 percent of the construction cost of a property.
If investors renovate a property that is being used as an investment, they will still be able to claim depreciation on it after the renovations.
Perhaps the most interesting point, according to Washington Brown's quantity surveyor Tyron Hyde, is that while investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property. 
Hyde noted what investors would have been able to claim in depreciation under the previous legislation, now simply gets taken off the sale price when it comes to capital gains tax calculations.
Finally it should be noted buyers of brand new property will carry on claiming depreciation exactly the way they have done so to date.
"This is great news for the property industry and the way it should be," Hyde said.
This article first appeared in The Daily Telegraph.
 
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jchancellor-FAypfDUnLy

Guidance on the Federal Government’s plan to tighten depreciation deductions

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GUEST OBSERVER
The property market has finally received some clarity in relation to the Government’s plan to reduce depreciation deductions for residential properties. It’s good news too, if you ask me. 
On Friday 14th July, the Treasury Office released a <a href="https://treasury.gov.au/ConsultationsandReviews/Consultations/2017/Housing-Tax-Integrity" target="_blank">draft bill</a> regarding how depreciation deductions on second-hand property can be claimed moving forward. They also invited interested parties to make submissions.
It's complicated to say the least, so I’ve tried to simplify this Bill and the key points. Here are my 9 Key Takeaways from the draft Legislation;
1. If you acquire a second-hand residential property after May 10, 2017, which contains “previously used” depreciating assets, you will no longer be able to claim depreciation on those assets.
2. Acquirers of brand new property will carry on claiming depreciation exactly the way they have done so to date. This is great news for the property industry and the way it should be.
We suspected this would be the case and I believe the property industry can collectively breathe a sigh of relief. 
3. The proposed changes only relate to residential property. Commercial, industrial, retail and other non-residential properties are not affected in the slightest. 
4.  The building allowance or claims on the structure of the building has not changed at all. You will still need a Depreciation Schedule to calculate these deductions. This component typically represents approximately between 80 to 85 percent of the construction cost of a property.
5. The proposed changes do not apply if you buy the property in a corporate tax entity, super fund (note Self-Managed Super Funds do not apply here) or a large unit trust.
This is interesting and I suspect a lot more people will start buying properties in company tax structures.
6. If you engage a builder to build a house and it remains an investment property, you will still be able to claim depreciation on both the structure and the Plant and Equipment items. 
7. If you renovate a property that is being used as an investment, you will still be able to claim depreciation on it when you have finished the renovations.
8. If you renovate a house, whilst living it in, then sell the property to an investor, the asset will be deemed to have been previously used and the new owner cannot claim depreciation.
9. Perhaps the most interesting point: Whilst investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property. 
How? Well, in summary, what you would’ve been able to claim in depreciation under the previous legislation, now simply gets taken off the sale price in the event you sell the property in the future.
Here is an example of how this will work: 
Peter buys a property in September 2017 for $600k, included within the property was $25k worth of previously used depreciating assets.
As they were previously used, Peter can’t claim depreciation on those items.
Peter sells the property in 2022 for $800k, which included $15k worth of those depreciation assets.
Peter can now claim a capital loss of $10k ($25k-$15k) for the portion that Peter has not claimed in depreciation.
SUMMARY OF THE PROPOSED CHANGES
In my view the Draft Bill could've been a lot worse for both the property industry and the Quantity Surveying professions.
It will certainly address the integrity measure concern of stopping “refreshed” valuations of plant and equipment by property investors.
It may, however, create a two-tier property market in relation to new and second hand property.
You can see the ads now “Buy Brand New - We’ve Got The Depreciation Allowances”. 
It will still be just as critical for all property investors to get a breakdown of the building allowance &amp; plant and equipment values so you can:
A. Claim the building allowance (where applicable) and
B. Reduce the CGT payable when selling the property by deducting the unclaimed Plant and Equipment allowances.
The Quantity Surveying industry, just like the property development industry just breathed a huge sigh of relief.
I believe this integrity measure could've been better addressed and will be making a submission accordingly. 
But it wasn’t a bad ‘first run’ by the Government!
Tyron Hyde is a director of Washington Brown and can be contacted <a href="https://www.washingtonbrown.com.au/staff/tyron-hyde/" target="_blank">here</a>.
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What depreciation property investors can now claim: Nine key insights from the draft legislation: Tyron Hyde

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GUEST OBSERVER
If you have been following my tweets and Facebook comments, you would have noticed that I have been very vocal about the new budgetary measures and, in particular, the new rules on plant and equipment depreciation. Up until yesterday, it was obvious that large sections of the media were not aware of the full ramifications of what had been announced in last week's Budget. Indeed, headlines last week claiming that “Negative gearing was left untouched” could not have been further from the truth. Ultimately, these headlines left me in a state of bemusement with sections of our media which is cause for a blog of its own.    That all changed yesterday, where through the hard work of Australian Financial Review reporter, Su-Lin Tan, the full ramifications of what had been announced came to the fore via this front page story: Negative Gearing - Scalpel will cool apartment demand - experts
The new depreciation measures are significant as they massively reduce the ability of property investors to make deductions on their investment property, thereby reducing their ability to negatively gear.  These were the very words used by the Treasurer:
“And from 1 July 2017, the Government will improve the integrity of negative gearing by disallowing deductions for travel expenses and, for properties bought after today, the Government will also limit plant and equipment depreciation deductions to only those expenses directly incurred by investors.
To give you an idea of the impact on investors, the mocked up depreciation schedules below clearly show what was normally claimed, with the columns circled in red showing what can no longer be claimed if these new measures are passed. Both schedules assume a circa $500,000 price tag on the properties. 
This first property assumes a newly built situation where a Division 43 allowance (depreciation on buildings) can still be claimed.
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v1.jpg" width="700" height="559">
The second example is of an older style property where a new renovation has been completed.  Both these depreciation schedules have been provided with thanks to Mike Mortlock from MCG Quantity Surveyors.
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v2.jpg" width="688" height="580">
In both instances, plant and equipment depreciation are a significant component of the total deductible depreciation on a residential property. Literally, many thousands of dollars can no longer be claimed. Just keep in mind as well that these new changes only apply on residential property. Commercial property depreciation is still fully deductible.
<div>
The effective result is that tens of thousands of properties that were cash flow positive properties after the depreciation benefit will no longer be cash flow positive, keeping in mind these affect property purchases after May 9, so there is grandfathering. In its simplest terms, also consider the following scenarios: Property A
I own a new unit that was just built. I can claim the significant plant and equipment depreciation that comes with newly built dwellings. However, if I sell to you that unit tomorrow, you can not claim the plant and equipment depreciation. 
At this stage, it is not clear regarding the plant and equipment depreciation  that If I own an off-the plan development that is not complete and I then flip it on to you (before completion) whether you can claim the depreciation or not. The Federal Government needs to clarify this situation. Property B
I just bought a newly constructed unit after May 9, 2017. Normally, I would be able to claim the plant and equipment depreciation, however, at this point it is unclear under the new Budget measures whether I can going forward. A strict reading of the new measures suggests I cannot as it was the developer who originally purchased the plant and equipment.
This has been the view of some quantity surveyors while others believe the Government doesn’t intend to be so punitive. Once again, we are waiting for clarification. Property C
I own an older style property on which I recently completed a renovation whereby I purchased $200,000 worth of plant and equipment. I then sell this property to you, today. You cannot depreciate any of the plant and equipment that I have spent money on during the renovation.  
No further clarification is required here. This is exactly how the Government wishes the new measures to apply. In my view, this new measure, combined with recent APRA initiatives, plus the potential for the banks to pass on the new bank levy, will very likely result in a drop in property investor demand. When that drop happens is uncertain. But it could start at any time given once these changes are passed by the Senate, there will be a retrospective impact back to the May 9, 2017. So those people who purchased an investment property last weekend will likely be impacted by these new measures.
As quantity surveyor Washington Brown stated in their blog earlier this week, these new measures might actually have some unintended negative consequences for affordability in that:
<ol>
<li>
Property investors may now feel the need to hang onto their existing properties to continue claiming depreciation because if they sell that property they won’t be able to get as many deductions on their next one.
</li>
<li>
Developers rely on high depreciation figures in the early years to show investors how affordable an investment property can be. If these depreciation allowances are taken away, they will struggle to get pre-sales which are required by banks to fund the deal.
</li>
</ol>
I am also concerned for investors in a new property as it is likely that any secondary buyer will demand a discount on a resale to take into account that lack of deductible depreciation, which is significantly large on new dwellings. It’s a similar issue we had with Labor’s policy on negative gearing during last year’s election. As it is, off-the-plan investors regularly experience price declines in new properties when selling in the first few years of the property's life. These new measures may aggravate this reality which could then have a negative impact upon the supply of new housing stock in the long term.  
What the Liberals have announced is a light version of this policy in a way this will be a good test to see what would happen to dwelling prices and home affordability and rents under a no-negative gearing scenario. Are these measures good for First Home Buyers?  In addressing the affordability question one must ask do these measures, plus others announced such as the additional superannuation contribution scheme, the additional CGT discount on ‘affordable’ properties, the tax break for senior empty-nesters to sell their homes, the additional land supply, create the incentive for first home buyers to come back into the market? Well maybe, maybe not. Regardless, developers will need more first home buyers to take up the slack that investors leave behind. Potentially, first home buyers could do just that, which is what we all want. But they kind of need to. And if they don’t, the rent rises that may well follow could just force them to. This brings us to the final unintended affect – the rental market. Note the recent trend in falling building approvals.
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v3.jpg" width="243" height="300">
We are nearing the peak in housing completions in this cycle which we believe will be early 2018. Yet vacancy rates in Sydney and Melbourne are still tight.
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v4.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v4.jpg" width="700" height="384">
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v4.jpg" target="_blank"></a><a href="https://www.propertyobserver.com.au/images/2017/05/17/v5.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v5.jpg" width="700" height="377">
This is happening because our population growth rates have exploded in recent years. Melbourne is now expanding by 120,000 people each and every year. Sydney's population is rising by 90,000 people. The growth rates are above and beyond what was expected and is causing systemic strains on our two largest cities.  For more on this I strongly recommend you read the recent blog on population from Macro Business  
Remember, this time last year there was a real fear of a unit oversupply. Forget that now for Melbourne and Sydney. There is no oversupply. And, depending upon how first home buyers respond to the Budget, there could be significant under-supply later in 2018-2019 which may cause rents to skyrocket. 
After all, rents in Melbourne are already well above expectations this year.
<a href="https://www.propertyobserver.com.au/images/2017/05/17/v6.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/17/v6.jpg" width="700" height="389">
<div>Our 2017 Housing Boom and Bust Forecasts</div>
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 It was reported yesterday that SQM Research may be revising down its 2017 forecasts as a result of the changes. After careful consideration, our base case forecasts stay un-revised for now.   
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However, we believe that the probabilities have substantially increased that a peak in the price growth rates of the Sydney and Melbourne housing markets will happen this current June quarter and that the September and December quarters will record slower growth rates. The possibility of a modest price fall in either the September or December quarter has also increased. Subsequently, we now believe the lower end of our base case forecast range is likely to be reality. And, depending upon how and when the banks respond, we may revise our price forecasts down. For now, they remain on track with no current slowdown occurring in the housing market.
</div>
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<div>Louis Christopher is a managing director of SQM Research. He can be contacted <a href="https://www.sqmresearch.com.au/" target="_blank">here</a>.</div>
 
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