New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

Joel Robinson

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

Finance

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GUEST OBSERVER
All newly acquired investments by SMSF trustees in collectables and personal use assets since 1 July 2011 have been subject to strict rules under reg 13.18AA of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (‘SISR’).
However, SMSF trustees should be aware that the grandfathering relief in relation to such investments that were held prior to 1 July 2011 will come to an end on 1 July 2016. Therefore, to avoid potential penalties, SMSF trustees with grandfathered investments in collectables and personal use assets will need to consider the current rules carefully and take appropriate action before 1 July 2016 to ensure their investments are compliant. 
This article provides an overview of the rules concerning collectables and personal use assets. 
The origin of the rules
The current rules in relation to collectables and personal use assets arose in response to the 2010 Super System Review (also known as the Cooper Review). The Cooper Review expressed concern that there was an unacceptable risk that investments by SMSF trustees in collectables and personal use assets may be made for present day benefits rather than for the purposes of retirement. Accordingly, the final report recommended a total prohibition on SMSF trustees making such investments. 
However, the federal government rejected the recommended blanket ban and instead sought to allay these concerns by legislating certain restrictions which are contained inreg 13.18AA of the SISR which commenced 1 July 2011. 
Collectables and personal use assets
Regulation 13.18AA covers artwork, jewellery, antiques, artefacts, coins, medallions or bank notes, postage stamps or first day covers, rare folios, manuscripts or books, memorabilia, wine or spirits, motor vehicles, recreational boats, and memberships of sporting or social clubs.
As matter of passing curiosity, we note that collectables and personal use assets include antique firearms but not modern firearms. Moreover, we note that it applies to spirits and wine, but not to beer or pre-mixed drinks. 
No leases to related parties
Sub-regulations (2) and (3) of reg 13.18AA require that SMSF trustees must not lease collectables and personal use assets to a related party of the SMSF, or enter into lease arrangements in respect of these assets with related parties. A lease arrangement is a broad concept covering any agreement, arrangement or understanding in the nature of a lease.
No use by related parties
SMSF trustees must not allow collectables and personal use assets to be used by a related party of the SMSF.
Storage in private residence of related parties
Sub-regulation (3) of reg 13.18AA prohibits SMSF trustees from storing collectables and personal use assets in the private residence of related parties.
The drafting of this provision raises the question of whether it may be possible to store collectables or personal use assets in the offices of related parties where those offices are not a private residence. For example, might an SMSF trustee be allowed to store artwork in the business premises of a related party? 
The ATO has published material on their website which clarifies the position:
You can store (but not display) collectables and personal use assets in premises owned by a related party provided it is not their private residence. They can't be displayed because this means they are being used by the related party. For example, if your SMSF invests in artwork it can't be hung in the business premises of a related party where it is visible to clients and employees.
Remember to keep a record of the reasons for deciding on where to store the assets.
Though this is not binding on the ATO, as the regulator of SMSFs, it is consistent with the legal construction of the regulations and the ATO seems relatively likely to follow the views expressed in such public materials.
SMSF trustees must also make and keep written records of the reasoning behind any storage decisions. There is no specific timeframe as to when the written records must be made, however, the record must be kept for at least 10 years after the decision.
Insurance
The rules stipulate that SMSF trustees must insure collectables and personal use assets in the name of the SMSF within seven days of acquiring such items, excluding memberships of sporting or social clubs.
More specifically, reg 13.18AA(5) provides:
Each trustee of a regulated superannuation fund that is a self managed superannuation fund commits an offence if:
(a)  the fund owns a section 62A item, other than a membership of a sporting or social club; and
(b)  it is more than 7 days since the fund acquired the item; and
(c)  the item is not insured in the name of the fund.
The reference to ‘owns’ is an interesting aspect of the drafting of sub-reg (5). It must be noted that most of the compliance requirements in reg 13.18AA are drafted using the language ‘holds an investment involving’ rather than ‘owns’ [emphasis added]. 
This difference in language raises the question of whether the requirement for taking out insurance in the fund's name would still apply in relation to investments in collectables and personal use assets which are held through an interposed entity. For example, could an SMSF trustee invest in artwork as a unitholder in a div 13.3A non-geared unit trust without the insurance requirement applying? If so, this would allow for more flexible insurance arrangements, such as having artwork insured as part of an overall gallery policy. 
Realisation of assets and related party transfers
Collectables and personal use assets must be realised for a market price determined by a qualified independent valuer if a related party receives an interest in the asset because of the realisation.
More specifically, reg 13.18AA(7) provides:
A trustee of a regulated superannuation fund that is a self managed superannuation fund commits an offence if: 
(a)  the trustee realises an investment held by the fund involving a section 62A item; and 
(b)  a related party of the fund receives an interest in the item because of the realisation; and 
(c)  the realisation was not at a market price determined by a qualified independent valuer. 
Though the ATO has long maintained that qualified independent valuers are desirable, it is notable that this is the first time that there has been an actual legislative requirement to utilise a qualified independent valuer.
Moreover, given the legislation is framed in terms of the SMSF trustee being the entity which ‘realises’ the collectable or a personal use asset, this raises the question of exactly what kind of dealings are covered.  
Neither ‘realises’ or ‘realisation’ are defined in the SISR. Therefore, in the absence of an express definition, we note that words should take their ordinary meaning. Relevantly, Macquarie Dictionary defines realise as follows:
4. to covert into cash or money: to realise securities.
5. to obtain as a profit or income for oneself by trade, labour or investment
6. to bring as proceeds, as from a sale: the goods realised $1000
7. to convert property or goods into cash or money.
Furthermore, the explanatory statement which introduced the provisions in reg 13.18AA uses the language ‘disposes of’. This would tend to suggest that disposal of the asset is required for the purposes of the regulations.
Though the above points are not entirely dispositive, it is arguable that a transfer of an asset directly to a member by way of in specie lump sum would not be caught by reg 13.18AA(7) and thus independent valuation would not be required. Naturally, however, this is a novel and untested construction and therefore the most prudent course of action may be to obtain a qualified independent valuation in any event. 
The end of grandfathering
As noted above, the rules in reg 13.18AA did not immediately apply to existing investments in collectables and personal use assets when the requirements commenced on 1 July 2011. This is because reg 13.18AA(9) provides that sub-regs (2)­–(7) do not apply to investments in collectables and personal use assets that were held by the fund on 30 June 2011. However, the rules will apply to such ‘older’ assets from 1 July 2016 because reg 13.18AA(9) ceases to be enforced as of 1 July 2016 (refer to reg 13.18AA(10)). 
Thus, SMSFs with grandfathered collectables and personal use assets must conform with reg 13.18AA by July 2016. For example, if artwork was stored at a member’s private residence, was not insured, or was leased to a member, the artwork must be leased to a third party at arm’s length terms and insured, or otherwise disposed of by 1 July 2016.
Penalties for contraventions
The prescribed penalty for contravention of any of the above rules is 10 penalty units (ie, $1,800 currently) for each SMSF trustee. This is another timely reminder of the advantages of using a corporate trustee over individual trustees. 
Where contraventions involve a collection of items, the potential for a penalty multiplier to apply to the facts should also be considered. Case law, such as Olesen v Eddy [2011] FCA 13 [32], Vivian v Fitzgeralds [2007] FCA 1602 [33] and Australian Prudential Regulation Authority v Derstepanian (2005) 60 ATR 518 [31] suggests that a multiplier approach is unlikely, however, no guarantee can be given about this and SMSF trustees should be very careful to ensure they comply with the rules.
Conclusion
SMSF trustees who have previously enjoyed grandfathered protection in relation to their investments in collectables and personal use assets held prior to 1 July 2011 will need to take appropriate action to ensure they meet the strict requirements of the SISR prior to 1 July 2016. 
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.
 
William Fettes and Bryce Figot are lawyers at DBA Lawyers and <a href="https://www.dbalawyers.com.au/" target="_blank">can be contacted here</a>.
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jchancellor-FAypfDUnLy

Collectables and personal use assets in an SMSF: Bryce Figot

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GUEST OBSERVER
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 0.8% in December from 101.7 in November to 100.8 in December. 
The Index has held on to most of the gains from last month’s surprise 4% lift and is 10.7% above its levels this time last year. There have only been two months since January 2014 with higher Index readings.
In the December survey we ask respondents about the news items that most attracted their attention and whether these were viewed as favourable or unfavourable. This can give us a guide as to what factors may be driving movements in the Index.
The most recalled news was around ‘economic conditions’ (48% of respondents); ‘Budget and taxation’ (42.8%); ‘interest rates’ (24.3%); and ‘international conditions’ (20%).
The most important change was around ‘Budget and taxation’ with the proportion of respondents recalling news on this topic almost doubling since September and the news assessed as considerably less favourable. Presumably speculation around tax changes, particularly with respect to the GST, is beginning to unnerve respondents.
Despite no official rate cuts from the Reserve Bank and mortgage rate increases from the banks before the November survey respondents viewed news on interest rates more favourably than in September. That comfort with the current level of interest rates is also emphasised by the 8% jump in the confidence of those respondents who hold a mortgage.
News on ‘international conditions’ was less prominent than in September although a vast majority of respondents continue to view international events as unfavourable.
Views around economic conditions were largely unchanged from September.
Other topics that gained less attention were: ‘politics’ (more favourable); the Australian dollar (much more favourable); and employment (much more favourable).
There is an important message from the movements in the components of the Index. Last month we saw a surge in sub- indexes measuring the economic outlook whereas respondents’ assessments of their finances deteriorated. We attributed the economic boost to confidence in the Government’s new leadership team, and the concerns around finances to the banks’ mortgage interest rate increases in October.
In this month’s survey assessments around finances have almost fully recovered their October levels but expectations for the economic outlook have been pared back, albeit with these components still well above their October levels. 
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The sub-index tracking views on ‘family finances vs a year ago’ increased 5.5% while the ‘family finances over the next 12 months’ sub-index jumped 5.8%. The ‘economic conditions, next 12 months’ sub-index fell 4.2% and the ‘economic conditions, next 5 years” dropped 11.3% (the latter is still 10.2% above its October level).
The component tracking assessments of ‘time to buy a major household item’ lifted 0.8% to be 11.8% above its level a year ago.
All components have increased over the last year with gains ranging from 8% to 13.4%.
Two months ago we saw a 13.7% fall in the Westpac Melbourne Institute Index of Unemployment Expectations (recall that a lower print indicates more confidence in the labour market). We have since seen the Index increase somewhat including a 1.7% lift this month. However the Index is still 9.4% below its September level and continues to point to an improving outlook for the labour market.
Confidence around the housing market continues to deteriorate. The index tracking assessments of ‘time to buy a dwelling’ fell a further 3.4% in December to 99.5. The Index is now 5.3% below its level a year ago and 31.5% below its most recent high in September 2013.
The news was worse on house prices. The Westpac Melbourne Institute Index of House Price Expectations fell 9.4% in December to be 19.7% down on a year ago and 38% off its high back in 2013.
Housing-related sentiment continues to show sharper falls and considerably weaker reads in NSW and Victoria where the individual state ‘time to buy a dwelling’ indexes are at 78.0 and 83.4 respectively. House price expectations have also fallen more heavily in these two states although households in WA remain the most pessimistic on prices. 
In December we also ask respondents to nominate the ‘wisest place for their savings’. Responses show that the proportion favouring bank deposits continues to drift down, with 26.2% nominating this option compared to 27.0% in September and 37% a year ago. Preferences for equities are lifting somewhat with 9.9%, nominating equities compared to 7.0% a year ago. While the proportion nominating ‘real estate’ is up on a year ago there was a sharp fall between September (28.2%) and December (23.4%).
The Reserve Bank Board next meets on February 2. We expect the Board will decide to hold rates steady pending further evidence on the labour market; commodity prices; the Australian dollar; and inflation. Westpac has long held the view that the RBA will be on hold throughout 2016 with the risk to any move being clearly to the downside.
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Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
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Consumer sentiment consolidates, but confidence around the housing market continues to deteriorate: Westpac's Bill Evans

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Finance has always been a key of the housing market, and as we have seen over the past few years, low interest rates have helped drive record demand and activity.
While this is not the most glamorous or interesting topic, finance is still a dominant part of the market.
Just a few years ago the suggestion that we might see 3+% for some of our home loan rates may have been unlikely, still today it’s a reality. (There are advertised rates of between 3.69% and 3.89% available for terms of 1-3 years.)
We are now seeing finance again in the main spotlight and there’s a lot going on that buyers need to be aware of and all the constant news about rates may be creating some confusion. As a result buyers entering the market could well be facing a dilemma, because on the one hand we still have record low interest rates, but we are also seeing the major banks move in one direction while smaller lenders move in exactly the opposite direction.
We also have APRA taking a hardline with the banks, while the RBA considers its next interest rate move and all of this commotion will possibly affect anyone looking for a loan, and that includes investors, SMSF and all owner-occupiers including first time buyers. Concerns being expressed by APRA might be unsettling or even seen as a negative, and so possibly causes buyers to be more cautious.
Against this background a number of Colliers International’s clients have recently introduced a special deposit offer based around a select number of projects with those clients accepting a 5% deposit, rather than the usual 10%.
The projects covered by this offer are Bay Pavillions – Lane Cove, Imperial – Hurstville, Atmosphere – Castle Hill, Altitude – Blacktown, The Chelsea – Kensington and 88 Alfred Street – Milsons Point. The offer has been well received in particular among buyers trading an existing property, where the costs of a move do mount up.
It’s not always possible to find $200,000- $250,000 as a cash deposit on a $2m plus apartment, and so the ability to exchange contracts on a 5% deposit has proved a popular idea, and similar offers are set to become more common.
Small Lenders Cut Rates
While the big four banks have recently increased their home-loan rates, ten smaller lenders last week cut some of their rates.
The cuts are for 1-3 year fixed mortgages rates, with cuts up to 74 basis points. This means that the gap between the highest standard variable rate and lowest 1-year fixed term is 260 basis points. It’s easy to appreciate why this is important when securing a $1 million mortgage.
It’s reasonable to expect that these cuts might spread as competition between lenders increases and institutions look to keep their customers and attract new ones. This competition usually involves a basket of products such as insurance, but is good news for buyers.
Still it does cause some head scratching as buyers weigh up the loans on offer and if the market slows other non-lender incentives may start to emerge.
The cuts by the smaller lenders are also a bet that they expect the Reserve Bank of Australia will make more rate cuts, or at least hold steady. Still while the prospect of an official interest rise looks very remote for some time, further cuts are not assured, because we may well be at the low point of the rates cycle. It remains common sense however that anyone looking for finance should do a lot of research and shop around for the best rate and terms.
Big Banks In Step With Rate Increases
The big four banks have all increased mortgage rates while the Reserve Bank of Australia is still expected to cut the cash rate, although this may roll over until 2016. And so where do the different banks now stand with their home loan rates?
ANZ Banking Group has raised interest rates by 0.18% points, its standard variable rate for owner-occupiers is now 5.56%, and for property investors 5.83%.
Westpac has increased its variable rate by 0.2% points. Commonwealth Bank has made a 0.15% point increase and National Australia Bank a 0.17% point increase.
These increases, although very modest, appear to have had the immediate effect on borrowers making them think twice about locking-in interest rates. The reason is that with rates so low on a pro-rata basis a further cut or increase of say 25 base points would be either a blow or a bonus for anyone on a variable rate.
One side result of all this jumping about with rates is that all lenders are also promoting incentives aimed at getting customers to switch between lenders with various cash and rebate incentives on offer. Borrowers can of course have a bet each way and combine fixed and variable rate, and this does appear to be a trend.
SMSF and Investors Face Controls
Tied up in this interest rate mix APRA has instructed the banks to reduce their lending to investors and SMSFs.
This move has had an immediate impact on demand from these two groups, and in part also introduced the requirement for bigger deposits. This tightening of lending restrictions has also seen some of the banks pulling out of this sector.
These changes come at a time when according to the ATO over the past two years there has been a more than five-fold increase in SMSF debt to about $15.6 billion.
The SMSF sector is larger and is estimated to have total assets of $562 billion currently under management and so changes among this group has the potential to impact demand for investment properties.
APRA Keeping Watch
All four banks have each blamed the recent home loan increases outlined on APRA’s requirement for them to hold more capital to cover each bank’s mortgage loan books, which now form a big chunk of their loans, with the extra funds earmarked as a potential buffer against any future financial shocks.
Still it’s the customer facing higher charges and in the housing market that always appears to be the case, as is demonstrated time and again with stamp duty.
APRA’s sharper surveillance of bank lending follows many years when the RBA had ascribed a positive view of the conservatism of Australia’s big banks, that view may have been relevant at the time, but now with so much exposure to the housing market possibly not now.
The tightening of bank lending standards since the global financial crisis has improved the underlying muscle of their loan books. This is an important result if adverse economic circumstances were to creep upon us again.
However a tighter rein on lending and a competitive interest rate outlook looks set to deflate any prospect of a housing bubble, which as demand softens now appears improbable, and that has to be seen as a positive.
 
Peter Chittenden is managing director for residential of Colliers International. He can be contacted <a href="https://www.projectagenda.com.au/" target="_blank">here</a>.
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Finance back in the spotlight: Peter Chittenden

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<div class="column">GUEST OBSERVER</div>
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<div class="column">Consumer sentiment predictably eased last week from 10-month highs. No doubt the terrorist attacks in Paris added a modest dampener to the latest result. </div>
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<div class="column">Overall confidence remains healthy consumers are still more upbeat than a year ago and sentiment is above the short-term average.</div>
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 Interestingly the outlook for family finances over the next year lifted in the past week and is holding just shy of the 20-month highs reached in mid-October. 
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<div class="column">The upbeat employment data last week would have encouraged households when it comes to job security. Also, the Reserve Bank believes that the question on the outlook for family finances is most instructive and the latest result is still well above average levels.</div>
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 The Reserve Bank Board minutes make for interesting reading. Although there was no significant surprise in views. Board Members were slightly more upbeat on the prospects for the Australian economy and continued to reiterate firmer growth over the next two years. No doubt the weaker Australian dollar is supporting a rebalancing and helping to offset the weakness in mining investment. Interestingly the more upbeat view came ahead of the stronger employment numbers last week.
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<img src="/images/2015/11/17/Screen%20Shot%202015-11-17%20at%203.52.04%20PM.png" alt=""> If the anticipated lift in activity does not take place, then this could prompt the Board to assess the need for more stimulus. And clearly the low inflation result has left the door open for a further rate cut.
What do the figures show?
Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.7 points (0.6%) to 115.9 in the week to November 15 Confidence is up 2.6% over the year and above the average of 111.4 since 2014.
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 Just one of the five components of the index rose in the latest week:
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The estimate of family finances compared with a year ago was down from +11 to +10; 
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The estimate of family finances over the next year was up from +25 to +29;
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Economic conditions over the next 12 months was down from +5 to +1;
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Economic conditions over the next 5 years was down from +14 to +12;
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The measure of whether it was a good time to buy a major household item was unchanged at +28 points.
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<div class="column">The key quotes from the Board minutes:</div>
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Stronger growth expected: “Members noted that the forecasts for GDP growth were not materially different from those presented three months earlier. Growth was expected to be between 2–3% over the year to June 2016, before rising to 23⁄4–33⁄4 % over the year to June 2017.”
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Job market: “Employment growth had been stronger than expected over 2015 and this had been accompanied by a noticeable increase in the participation rate. Employment growth had been concentrated in the household and business services sectors. Measures of job vacancies and advertisements pointed to continued growth in employment in the months ahead.”
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Bank lending: “The major banks in Australia continued to raise equity to meet the changes to minimum capital requirements announced by APRA around mid-year, which would take effect from July 2016. Equity as a source of funding for banks had increased by around 1⁄2 percentage point to 8 per cent of total funding. The largest banks had increased standard variable housing rates in October by 15–20 basis points. Members noted that widening margins on mortgage lending were in part offsetting lower margins on lending to larger businesses, for which lending rates had continued to decline in the face of strong competition. Deposit rates had been lowered and funding costs more generally had declined.”
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Inflation: “However, members recognised that there was still evidence of spare capacity, including the relatively high unemployment rate, low wage growth and the lower-than-expected inflation outcome in the September quarter. The gradual nature of the pick-up in domestic growth suggested that spare capacity would persist for some time. Inflation was forecast to be consistent with the target over the next one to two years, but somewhat lower than earlier expected.”
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Outlook: “Taking the above information into consideration, members decided that leaving the cash rate unchanged at this meeting was appropriate. They judged that the inflation outlook may afford some scope for further easing of monetary policy, should that be appropriate to lend support to demand. The Board would continue to assess the outlook, and whether the current stance of policy would most effectively foster sustainable growth and inflation consistent with the target”
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<div class="column">What is the importance of the economic data?</div>
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The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
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The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
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<div class="column">What are the implications for interest rates and investors?</div>
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<div class="column">CommSec expects no change to interest rate settings in coming months. </div>
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Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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Consumers still confident, RBA optimistic: CommSec's Savanth Sebastian

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GUEST OBSERVER
‘Surprising’ survey results are often the most interesting. That was undoubtedly the case with the Nov Westpac–Melbourne Institute Consumer Sentiment survey.
Despite what can be viewed as a de facto tightening in financial conditions following moves by banks to increase mortgage rates, sentiment posted a solid gain in the month to climb back over the 100 level for only the third time in the last 21 months.
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Clearly there were some powerful offsetting positives at work this month. These all centred on the outlook for the economy, with the ‘economic outlook’ sub-indexes up over 20% in the last 2mths on a combined basis.
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The circumstantial evidence strongly implicates the leadership change in mid Sep as a key positive catalyst. Disentangling the various influences on consumer sentiment can often be very difficult but this month we have a closer look at how views on the ‘economic outlook, next 5yrs’ relates to sentiment more generally and responses to opinion polls. The analysis points to recent gains being due to a mix of improved polling, a ‘honeymoon’ effect following leadership changes and a more general improvement in sentiment.
Of course, it remains to be seen how well this resurgence in economic confidence is sustained. And views on the economy tend to have less influence on actual spending decisions than those around family finances and buyer sentiment.
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On this front, the Nov survey was a more mixed update. On the more sober side, our preferred gauges of demand momentum remain subdued in line with the soft spending seen through much of 2015. Sentiment around housing also remains weak with assessments of ‘time to buy a dwelling’ pointing to a material correction and price expectations cooling rapidly.
On the more positive side, responses to direct questions about planned Christmas spending were the most upbeat we have seen since the GFC. The Westpac–Melbourne Institute Unemployment Expectations Index also sustained most of last month’s big improvement, suggesting a genuine breakout from the intense pessimism around job security that has hung over the consumer since 2011.
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On balance, sentiment is starting to look more conducive to a lift in spending but there are clearly still some weaknesses.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Weakness in housing sentiment: Westpac's Bill Evans

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<img src="/images/2015/11/17/Holdencapital_banner.jpg" alt="" width="518" height="109"> 
SPONSORED POST
Your GST obligations are not a project cost as they are ‘self-liquidating’ however, they are a cost that you need to account for from a cash flow perspective.   Financiers have a number of ways of dealing with GST on both the initial site acquisition and then the GST portion of the subsequent development costs. 
GST on Initial Land Acquisition – When considering the funding of the initial site acquisition, you need to be clear with the potential financier on how GST payable on the acquisition is to be dealt with. Some funders will require that you cover the GST from your own cash flow or capital resources while others will allow a temporary gearing excess to fund the GST on the undertaking that you claim the refund and the payment is directed to reduction of the debt.
 GST on Development Costs – Developer Funded – Some financiers require the developer to finance the GST payable on the development costs from their own resources. Progress claims are funded from the loan facility on a “net of GST” basis and the developer is required to ‘top up’ the payments to the builder/creditors for the GST portion and then claim the GST refund back to their own account. In these cases the developer will need to allow a cash reserve from their capital contribution sufficient to fund 10% of the first two months estimated project costs. The GST refund claims then reimburse the cash reserve to provide for future GST outlays.
 GST Funded by a separate overdraft facility – Some financiers will provide an overdraft facility specifically for the purposes of covering the GST commitment, which is separate from the construction facility. They will require an undertaking that the developer will claim the GST back on a monthly cycle and have the GST refund electronically credited to the nominated account. The overdraft is secured by the project security but financiers differ in the LVR and LCR calculation – some require it to be covered within their maximum tolerances where others will allow it ‘outside’ of their calculations of the key ratios, acknowledging the ‘self-liquidating’ nature of the facility.
GST Funded within the Project Finance Facility – Some financiers allow a ‘self-liquidating’ cost line within the project funding categories to cover GST – this is basically a cash flow utilisation of the project financing facility limit. The financier will allow the first two months claims to be GST inclusive but from month 3 onwards the progress claim allowable will be adjusted for the GST refund that should have been received by the developer from the claim two months previously. The developer still needs to manage their cash flow to account for the ‘ins and outs’ over a 3-month cycle.   The optimum outcome from a developer’s perspective is to be provided with a GST overdraft facility that is excluded from the financiers calculations of its key ratios but it is important to understand your financiers preference up front when finalising your funding.
 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.  
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firstname-zEygzUaHDN

Don't forget your GST obligations when arranging your project finance: HoldenCAPITAL

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SPONSORED POST
Banks will fund a deal if it fits their parameters
We often hear people say, “we can just go to our local bank and get this funded, it ticks all the boxes”.  Really!
Recently the big banks tightened up their criteria such as pre-sale requirements, sponsor experience/balance sheet strength and other general criteria required to be satisfied by property investors and developers. They are doing this for a number of reasons but the principal driver is a requirement to reduce their total investor loan growth to below the Australian Prudential Regulation Authorities requirement of 10% p.a.. As a result we are now seeing that they are very selective in which projects they will fund.
Even if a project does “tick all the boxes”, the bank might still not be interested in funding it, with factors such as existing exposure to the sector/local market/client and a preference to improve their risk profile by applying a “best of breed” approach, means that your deal may not measure up even if you are dealing with your long term house bank. 
Knowing what the banks appetite is for various types of project is a key advantage and in some instances we have actually re-packaged a deal and presented it back to the client’s existing bank in a way we KNOW they would like to see it and successfully obtained an approval after it was previously turned down.
In our experience it is all about presenting the deal in the right way, knowing who in the bank is the decision maker and how far to push the boundaries or not as the case may be.
Banks guide valuers in their instructions to engineer an outcome
We see no evidence of this in the market place. In fact we always get the bank to give us a list of their preferred valuers and we then encourage our clients to contact these valuers and engage with them to get a feel for the valuer’s understanding of the specific location and product. 
Yes, some valuers might be better to deal with than others, but overall we see no influence from the banks when they instruct the valuers. They simply want to know if the project works and want to use a valuer who they know will give them an honest no nonsense opinion.
Getting Pre-Sales will be a quick process 
This is probably the single most unpredictable component of any Development Project at the moment, particularly in terms of the time required.  Many of our clients see the market appearing to accept similar product and are confident that they too can quickly achieve the required pre-sale hurdle.  However, in practice we see that the process of securing the sales is only half the battle, with the time and resources required to get those sales to conform to the bank’s pre-sale requirements often grossly underestimated. 
Some of the key bank requirements we are seeing at the moment are:
<ul>
<li>
Sales need to be unconditional in all respects
</li>
<li>NO more than 10% to 15% foreign sales</li>
<li>NO more than 10% sales to related parties</li>
<li>Minimum of 10% deposit strictly applied</li>
<li>A cap on interstate investor sales</li>
<li>A requirement for local sales to prove demand and pricing acceptance rather than a reliance on interstate investors.</li>
</ul>
All banks are the same 
This is a very interesting point of view; all banks are certainly not the same.  Even between the 4 major banks the differences are significant, with some of the more interesting ones being:
<ul>
<li>One major bank has for the present significantly reduced its appetite for Construction Finance and is currently not taking on new to bank projects/developers limiting its lending to its established existing clients.</li>
<li>Official pre-sale requirements are ranging from 110% to as low as 60% debt cover between the remaining major banks</li>
<li>Only one of the major banks will still entertain a Loan to Cost Ratio of up to 80%.  If you want to get the others to do this, then you will need to understand what other criteria they will want to see before they will consider this.</li>
<li>Only two of the majors have any appetite for syndicated deals, where the major sponsor has less that 5% of the equity in the deal. So again, if you are looking at making your equity work efficiently across a number of projects, you will need help to secure the right major bank funding.</li>
</ul>
It will cost me more to use a broker
At first glance this might be appear to be the case, but our experience is that our clients almost always save money by using our services. 
A well-positioned broker who deals with many different lenders on a daily basis will be able to advise you on which lender has the best appetite for your style of project. 
More importantly, by knowing who to speak to within the bank and where to push and where not to push the their lending parameters, a well informed broker will help you get your project out of the ground sooner and will save the relevant opportunity cost that goes hand in hand with ‘getting started and moving on to the next one’ sooner.
Just like the best Developers use the best town planners to negotiate the best possible planning outcome on their behalf, so the best Developers also use the best brokers to structure their construction finance to secure the best possible financial outcome.
This article was written by Dan Holden of HoldenCAPITAL, who are Queensland’s largest project finance firm.
To discuss your project finance requirement please call (07) 3171 4200 or <a href="https://www.holdencapital.com.au/" target="_blank">click here.</a>
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Construction finance myths: HoldenCAPITAL

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Westpac will raise its home lending rates by 20 basis points to help boost its capital reserves. 
The surprise move lifts mortgage rates on residential property by 20 basis points, for owner occupiers and property investors.
The new rates will take effect from November 20.
The country's second biggest bank will increase headline owner-occupier rates to 5.68%, and investor rates to 5.95%.
Chief executive Brian Hartzer said the capital raising places its capital ratio "within the top quartile of banks globally".
"Capital raised responds to changes in mortgage risk weights that will increase the amount of capital required to be held against mortgages by more than 50%, with the increased regulatory required to be applied from July 1, 2016," the bank statement said.
The increase in mortgage rates would also help meet the capital requirements, it said. 
UBS and Merrill Lynch are handling the capital raising for the bank. The changes apply only to Westpac-branded loans, not St George, Bank of Melbourne or BankSA.
The Australian Financial Review's Chanticleer columnist Tony Boyd wrote Westpac's decision to share the pain of higher capital charges with shareholders and home loan borrowers will "deliver a big jolt to the economy - and fend off a potential hedge fund attack."
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Westpac to raise home loan rates for all by 20 basis points in November

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Property developers in areas with strong apartment supply had faced more difficulty in obtaining finance, the ANZ’s head of Australia, Mark Whelan has confirmed.
The lender had dialled down its appetite to ­finance property developers, he told The Australian.
"Six months ago, eight months ago some of the development ­finance deals we were seeing were probably too aggressive for us so we stepped away from it (over) the terms and conditions and pricing.
"Even as I look outside my office in Brisbane, there are a lot of cranes that I can count and they vary from stuff that’s been sold off the plan, pretty much to foreign buyers, to top-end stuff and my experience tells me we need to be judicious.”
His comments come after Stockland chief Mark Steinert noted last week that “a lot of the supply that potentially could cause a problem is not going to be built this cycle because developers won’t get the funding”.
“(It’s) correct," Mark Whelan said.
"I can tell you now when one of the majors stopped doing some lending in the commercial space in NSW recently, some of those deals came back to market — we’d said no to them six months prior,” he said.
There were reports in August that Commonwealth Bank had tightened developer lending standards.
“If you sit down here in the (Melbourne) Docklands … and it gets to eight o’clock at night, there’s not many lights on in some of these apartment buildings so it’s a bit concerning. But we’ve been very cautious with some of those ­commercial developments for a long time.”
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ANZ wary on developer financing in high supply capital city locations

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GUEST OBSERVER
As lenders seek to wind back their level of investment lending, competition in the owner occupied space has started to heat up. 
Many lenders were starting to offer some “very competitive” owner occupied home loans in a bid to pick up more of this business. 
Over the past few months, many of Australia’s lenders have made significant changes to their investment product pricing and policy in a bid to curb their level of investment lending growth. 
But just because many of Australia’s lenders are actively trying to reduce their level of investment activity, doesn’t mean to say they are not hungry for business – quite the opposite.
Australia’s lenders are just as hungry for business as they ever were and because the Australian Prudential Regulation Authority has told them to limit their level of investment lending growth, the lenders have been forced to turn their attention to owner occupiers.
Many of Australia’s lenders are currently offering owner occupied borrowers a raft of incentives including, interest rate discounts, cash back offers and fee waivers. 
In the 20 years I have worked in financial services, I have never seen the level of lender competition we are witnessing now. Regardless of whether people are looking to buy a home or refinance their current property, they can be guaranteed of securing an incredibly competitive home loan deal.
For those borrowers who have been in the same home loan product for a while, now may be a good time for them to give their mortgage a much needed spring clean. A good de-clutter never goes astray and often borrowers uncover financial aspects of their life that need some reassessment or to be changed altogether. 
Borrowers who give their home loan a spring clean may realise that they are in the perfect position to refinance their mortgage.
Refinancing may allow borrowers to repay their home loan sooner and ultimately achieve their next financial goal sooner. 
Further, refinancing can be a great way for borrowers to lower their mortgage repayments, consolidate their debt and even access equity in their home.”
John Flavell is chief executive officer <a href="https://www.mortgagechoice.com.au/" target="_blank">Mortgage Choice</a>.
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