Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Negative gearing

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A Reserve Bank memo written before the release of the Federal Opposition’s negative gearing policy raised concerns about the impact of changing negative gearing on renters.
The 2014 memo was released as part of an FOI request to a property industry lobby group.
In a section entitled “Potential negatives from changes that make negative gearing less attractive?”, the question is raised by the bank “Potential increase in rents?”.
The memo was cited as flagging that changing negative gearing would impact rents”, said Ken Morrison of the Property Council of Australia.
“This memo confirms that policy makers have real concerns about how renters would fare under policies that make negative gearing less effective."
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jonathanchancellor-7SQnKwU6yx

Rents could rise under negative gearing changes: property lobby group

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Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".
"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.
"And if they do, believe me it won't be a recession. It will be a depression."
Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. 
"Housing represents $6.5 trillion of the Australian people's wealth," he tells The Australian Financial Review. 
"It is so big and so many people are involved that even when that order of magnitude of change is obviously small compared to the stock market…its affects people.
"It becomes the new dinner party conversation.
"People feel poorer. 
"They buy less in the shops and people employ less and people are less willing to borrow money to start a business and suddenly that goes on.
"That is how markets work.
"The only way you deal with affordability in my view is first and foremost about supply…in a structural way.
"You cannot deal with affordability in a manageable way by de-stabilising the largest asset in the country."
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jchancellor-FAypfDUnLy

Labor negative gearing policy could cause recession or depression

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GUEST OBSERVER
The debate on negative gearing ahead of the budget and looming elections has only added to the confusion among property investors as the ultimate aim from buying property is to make money, not to lose.
It’s an outdated way of investing to focus solely on negative gearing to build a property portfolio.
To put things in perspective, Labor recently said if elected, it would restrict negative gearing deductions to only new property. The federal government opposes this, asserting that negative gearing should remain with caps being placed on its use.
All of this debate surrounding gearing and lending as the Budget looms has only highlighted the need for diversity in any property strategy. There are a lot of opportunities out there, people just need guidance.
It is important to tailor strategies on a case-by-case basis, rather than a blanket reliance on negative gearing and depreciation because any changes in circumstance, such as sudden unemployment, can turn the property into a burden.
The consulting firm says it employs a range of tactics on behalf of buyers, with opportunities including capital growth, high yield, cash-flow positive, add value, renovations, granny flats, developments and buying new or established properties in regional or capital cities.
We find this approach gives our clients the confidence to build a strong and balanced portfolio that is adaptable to changes and opportunities in the market. Regular portfolio stress checks are also important to ensure ultimate security.
In its first year, Crave has helped clients with property deals worth more than $55 million.
We just purchased a $325,000 property on behalf of a client, a corner block spanning over 790 square metres with rental return of $340 per week. They also have the opportunity to add a granny flat.
Another client recently landed a development block for $825,000, with similar properties now selling for $1 million.
Investors are also starting to look beyond local or usual purchase areas to areas that not only better suit their own financial situation but offer affordability and growth potential.
Now is the ideal time for home owners to check whether the impacts of recent government changes could increase the equity on their existing properties.
We are seeing a lot of opportunities being unlocked, with government rezoning key areas and adding infrastructure such as roads, transport and community facilities.
Debra Beck-Mewing is founder of consulting firm Crave Property Advisory and can be contacted <a href="https://www.craveproperty.com.au" target="_blank">here</a>.
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Negative gearing strategies outdated: Debra Beck-Mewing

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A majority of property investors would abandon property as an investment strategy if Labor’s negative gearing changes were brought in, according to the results of a survey across Queensland.
The survey of REIQ membership and its landlord clients found that 79 per cent of property investors would get out of property in such a scenario, said a media release.
REIQ Chairman Rob Honeycombe said the findings confirmed that changes to negative gearing would be disastrous for the Queensland property market.
“We now know for a fact that 79 per cent of respondents will get out of property and find an alternative investment strategy that works more effectively and yields a better return,” he said.
“That will have a crippling effect on house values and on the rental market, where the private rental market plays such a critical role in keeping rents affordable.” 
In a survey sent to more than 14,000 REIQ members and their investor clients, 38 per cent of respondents said a different asset class would be a more likely investment option if negative gearing benefits were removed from property. 
Almost 25 per cent said they were unlikely to move to shares.
“Mum and dad investors trust property as their investment strategy and that’s where they want to build their wealth. They believe it’s as safe as houses,” Honeycombe said.
“We know from this survey that removing negative gearing would smash rental affordability as investors, who provide rental accommodation for about a third of Queenslanders, sold their assets and adopted a new investment strategy.”
The Grattan Institute’s report suggested that two per cent of value would be wiped off housing values if negative gearing was curbed.
Honeycombe said that would represent around $130 billion in value, deleted instantly (based on CoreLogic estimates that residential real estate in Australia is valued at about $6 trillion). The impact of this on the broader economy would be far-reaching.
“The state government would lose a significant amount of revenue from stamp duty if people’s house values fell by two per cent, and the Grattan Institute is being very conservative with its estimate of two per cent.
“How does the state government feel about this massive loss to revenue? ABS data released yesterday reveals that revenue from property taxes at a local and state level have increased 70 per cent over the past nine years – representing an increase of $1.6 billion in council rates and $1 billion in stamp duty over the past nine years. "
Negative gearing would hit tax revenue and add to the strain on local council and state government budgets, with regional Queensland the biggest sufferer, the release said.
In addition, the government would also lose out on a range of taxes paid by associated service providers, such as the GST paid by the financial advisor, the accountant, and the real estate agent who facilitated the transactions.
“It’s a complicated web of interconnected policies and it’s virtually impossible to tweak just one without affecting everything,” said Honeycombe.
“Negative gearing plays an important role in the Queensland property market and any changes to it will be detrimental.” 
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Majority of investors to pull out of property if negative gearing removed

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Aussie John Symond has been back on 2GB with broadcaster Ross Greenwood to suggest that negative gearing should be left alone as the property market softens.
"At the moment things are tough enough, housing is propping up the economy," John said.
"I think you should leave it alone for the time being."
Symond says Labor's proposal would have a "terrible" impact on the existing housing markets.
"I think we're seeing a cooling taking place in the hot areas of Melbourne and Sydney, which has seen a levelling out," he said.
John suggests the market is starting to sort itself out, however he suggests that a potential oversupply of apartments in certain areas looks like it's started.
He also says that through Aussie Home Loans there is a softening, as people are starting to become more circumspect and more careful.
"Banks and lenders are being a lot more tough on investors and of course with all the talk of bubbles and all the rest of it it's scared off a lot of investors."
"So certainly the investor market which has really been driving credit growth has eased back significantly and that's now having an impact on softening prices," he said.
"Impending new housing starts coming on the market, off the plan is significant in a lot of areas that's going to impact the market for some time to come."
 
 
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Any negative gearing changes would be unwelcome in the softening market: Aussie John Symond

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GUEST OBSERVATION
If you’re looking to invest in property, it’s important to understand what gearing is and how you can use it to maximise the returns on your investment.
Gearing is where you borrow funds to invest in property, shares or other types of investments. It allows you to increase the amount you have to invest and offers a range of potential tax benefits.
What is negative gearing?
Negative gearing occurs when the expenses on your investment are higher than the income you receive. As your investment is making a loss, you may be able to offset your expenses against other income such as salary or wages, potentially reducing your tax.
For example, if your mortgage repayments and the costs of managing your investment property are more than the rent you receive from tenants, your property could be negatively geared.
In addition to taxation benefits, negative gearing offers an opportunity to make a long-term profit through capital gains—where the value of your property increases greater than the costs.
What is positive gearing?
Positive gearing is when the rent from your investment property is higher than costs such as loan repayments, interest, property maintenance and rates. It tends to happen at times when rental rates are high and interest rates are low.
Understanding the risks
Negative gearing can be more risky than positive gearing and is only recommended when capital gains are expected in the long-term. If the value of your property falls or interest rates increase, you may need to pay additional costs that aren’t covered by potential tax deductions.
Gearing is complicated and it’s best to talk to a financial planner and accountant for professional advice before making any long-term commitment.
Tax deductions on your investment property
There is a range of potential tax benefits available on your investment property.
Expenses you may be able to claim include:
<ul>
<li>Advertising for tenants</li>
<li>Insurance</li>
<li>Some legal expenses</li>
<li>Body corporate fees and charges</li>
<li>Property agent fees and commissions, as well as travel costs to inspect the property</li>
<li>Land tax</li>
<li>Capital works and decline in value of depreciating assets</li>
<li>Repairs and maintenance</li>
<li>Cleaning, pest control, gardening and lawn mowing</li>
<li>Council and water rates.</li>
</ul>
Some costs can be claimed immediately and others can be claimed as depreciation over a number of years. You’ll need to keep records of all expenses, plus legal records of property ownership for at least five years.
Visit the <a href="https://www.ato.gov.au/" target="_blank">Australian Tax Office (ATO)</a> for the latest information on what you can claim, or talk to your accountant for tax advice that’s specific to your situation.
For more information, <a href="https://www.commbank.com.au" target="_blank">click here</a>.
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po-LsXgBTHBmX

Property 101: Negative gearing and tax

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Other than renting, the most common way to get a roof over your head is to buy a home and live in it. Another way is to buy a home and rent it out, and then rent a similar home (buy, rent, rent). Thanks to the perverse nature of negative gearing, the buy, rent, rent strategy can be cheaper than the most obvious path of home ownership. How?
Consider a first home buyer considering a modest two bedroom, two bathroom unit in Ashfield in Sydney’s inner west for A$600,000.
Assuming the buyer has enough to afford a 20% deposit and initial transaction costs (legal fees and stamp duty, etc.), she may consider buying and living in it, or buying and investing and then renting a similar unit. She is able to borrow 80% of the unit’s value paying interest of 5% p.a (A$24,000 a year). The annual maintenance costs are A$6,000 (or 1%), deductible depreciation expenses are also A$6,000. A similar unit rents for A$450 per week. Her marginal tax rate is 34.5%. What is the cost to buy and live compared with buy, rent, rent?
The first home buyer’s housing cost is A$30,000 per year if she buys and lives in the unit, and A$25,653 per year for buy, rent, rent. This means she saves A$4,347 or 0.72% of the unit price with buy, rent, rent.
The saving is solely due to the negative gearing tax savings effect. The mortgage interest, maintenance and depreciation deductions are tax deductible when investing, but cannot be deducted when living in the unit. Without negative gearing there would be no tax savings and the first home buyer would not consider such a convoluted strategy.
From the calculations, we can also see that the bigger the negative gearing tax savings, the better it is to buy, rent, rent. Buying homes with lower rent, higher maintenance costs and higher depreciation allowances (eg. new developments) and being at a higher marginal tax rate increases the incentives to do so. There is also little incentive to pay off principal in the unit as the negative gearing strategy may be done almost perpetually and any savings invested (or spent) elsewhere.
On the other hand, once the property is positively geared (when net rent exceeds cost of ownership) it no longer becomes cheaper than to buy and live. This can happen if the buyer chooses to pay off the mortgage, earns increased rent or reduces maintenance and depreciation deductions.
When it comes to selling, there may be capital gains tax on the rental property although your own home is capital gains tax exempt. Non-financial factors are that the home buyer may have a preference to live in their own home rather than to rent, despite the buy, rent, rent savings. This may be from the greater flexibility to customise your own home or not having to deal with real estate agents.
Of course, in the example renting still remains the cheapest option, though if home ownership is the goal then with the perversion of negative gearing, buy, rent, rent remains a cost effective choice.
The above scenario is just one of the many ways that negative gearing distorts housing decisions. Those on high marginal tax rates (i.e. high income earners) have incentive to invest in multiple homes. This leads to incentives to borrow excessively to invest as the negative gearing tax savings effectively reduces the ownership costs to investors compared with home owners.
Furthermore this pushes housing prices up due to the increased demand from negative gearing. Compare this to a home owner who requires only one home and is restricted in the amount that they may borrow as they do not earn rent on the home as income.
Another effect is that new homes which tend to be of higher quality are more desirable to investors as they tend to have higher maintenance costs and depreciation deductions which increases tax savings. Home owners on the other other hand are unable to deduct such costs thereby making ownership of new homes more costly than to investors.
The sooner that negative gearing is removed, the quicker simple buying and living can be the norm.
This article is for educational purposes only and does not constitute financial or taxation advice.
Adrian Lee is senior lecturer in Finance, University of Technology Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/adrian-lee-94688" target="_blank">here</a>.
 
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Buy, rent, or do both: the perversion of negative gearing

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Prime Minister Malcolm Turnbull has written a blog disputing the Grattan Institute's report recommending significant changes to negative gearing that could save more than $5 billion a year.
"I have a great deal of respect for John Daley and the Grattan Institute, but on this occasion they have it wrong," <a href="https://www.malcolmturnbull.com.au/media/misconceptions-about-negative-gearing" target="_blank">Mr Turnbull wrote in a blog post on his website</a>.
"Unfortunately, the paper is littered with factually incorrect statements, claims that are unsupported by evidence and direct contradictions.
"And its economic analysis in many places leaves a lot to be desired."
"And its economic analysis in many places leaves a lot to be desired.
Malcolm Turnbull's then lists the following examples:
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The paper claims that negative gearing “goes beyond generally accepted principles for offsetting losses against gains”.  But this is factually incorrect.  The ability to deduct interest and other costs from personal exertion income has been a generally accepted principle in Australia’s tax system for more than a hundred years. While there are some exceptions to this principle, they have been strictly limited to instances of flagrant abuse (as was claimed to occur with ‘hobby farms’) or to situations where taxpayers might use losses to gain welfare benefits.
</li>
<li>
The paper argues that negative gearing and the CGT discount create significant distortions in the housing market, but then directly contradicts this when it says that changing them will have little impact.  Really?  How can changing the policies that Mr Daley says are supposed to create such huge distortions have no impact?
</li>
<li>
The paper argues that negative gearing benefits wealthier taxpayers. However, in countries which have adopted the ‘quarantining’ approach, the result has been to drive middle and low income earners out of the investment market, as they cannot afford to carry the loss-making periods when costs are high relative to rentals. In contrast, under both Daley’s proposal and Labor’s, wealthy Australians would continue to be able to deduct net rental losses from their other investment and property income. How can a change which would actually make the tax system more advantageous to those on higher incomes be fair? How will it improve wealth inequality when it will make it more difficult for those on lower incomes to build up wealth?
</li>
<li>
The paper ignores the fact that reducing the CGT discount to 25 per cent would give Australia the second highest CGT rate among comparable countries. While the paper claims this too would have no harmful impacts, that assertion is directly contrary to the evidence, which it systematically ignores.  
</li>
<li>
The paper also ignores the fact that under reasonable assumptions, if the CGT discount was reduced to 25 per cent, the effective tax rate on real capital gains would under reasonable assumptions be close to 70 per cent.  As a result, the paper dismisses, with little analysis, the important point that high rates of capital gains discourage entrepreneurial investment, whose returns generally come in the form of capital gains.    
</li>
<li>
Removing negative gearing would mean a tax increase for wage and salary earners and would affect incentives to work. The paper ignores these efficiency costs.
</li>
</ul>
 
Tax reform to target Australia’s distorting capital gains tax and negative gearing regimes could net the government A$5.3 billion in tax revenue per year, according to a new report from the Grattan Institute.
The report can be found <a href="https://grattan.edu.au/report/hot-property/" target="_blank">here</a>.
 
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Malcolm Turnbull blog disputing Grattan Institute negative gearing report

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Confidence in the residential building sector will be boosted by the Government’s announcement that it has out ruled out any change to the current negative gearing arrangements in the forthcoming May Budget, Wilhelm Harnisch from the Master Builders said. 
“The retention of negative gearing provisions for new and established homes is a long held policy by Master Builders and therefore Master Builders strongly backs today’s announcement,” he said. 
“The Prime Minister’s announcement means $8 billion of investment each year spent on renovation of private rental properties will continue and thereby boost economic growth and jobs for tradies,” Wilhelm Harnisch said. 
“Negative gearing underpins investment, largely by mums and dads, in private rental properties and plays a critical role by supplementing the shortage in public and social housing rental stock where there is a waiting list estimated to be around 200,000 households,” he said. 
“Master Builders in strongly backing today’s announcement is now looking to the major parties for sound policies that will tackle the structural barriers to housing affordability which is to increase the supply of new housing.
"Master Builders has called for national competition policy payments to state governments and local councils to implement targeted and permanent removal of the current unnecessary blockages that delay the supply of new housing and inflate the cost of new housing,” Wilhelm Harnisch said. 
“This is one of the key housing affordability reforms that Master Builders will be calling on both parties to deliver on for the next term of government,” Wilhelm Harnisch said. 
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MBA backs Coalition housing policy on negative gearing

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Tax reform to target Australia’s distorting capital gains tax and negative gearing regimes could net the government A$5.3 billion in tax revenue per year, according to a new report from the Grattan Institute.
<a href="https://grattan.edu.au/report/hot-property/" target="_blank">The report</a> recommends reducing the capital gains tax discount for individuals and trusts to 25 percent, and phasing in limits to negative gearing over 10 years.
“The case for reform is extremely strong and we do not think that this is likely to lead to a material crash in the housing market,” said the report’s author John Daley.
Daley and report co-author Danielle Wood have modelled the impact of their recommendation on house prices, rents and the rate of new housing development, estimating house prices would be 2 percent lower than otherwise.
Under their suggested tax changes people would no longer be able to write off losses from passive investments like housing against unrelated wage income.
“The only developed country we have found that lets you deduct the costs of interest and allows you to deduct it from your labour income apart from us is New Zealand,” Daley said.
Curtin Law School Associate Professor Helen Hodgson said the proposals were well balanced, based on sound evidence, and would improve the efficiency and fairness of the tax system.
She said the challenge was to claw back concessions without creating further distortions. “In that respect the Grattan Institute recommendations go further than those proposed by the Australian Labor Party.
“The ALP proposals allow existing negatively geared properties to remain deductible. This would have a lock in effect similar to the pre-CGT exemption from capital gains tax. Borrowers would be reluctant to sell their property and reinvest in other, potentially more productive, forms of investment.
The Labor Party proposal would reduce the capital gains tax discount to 25 percent and restrict negative gearing to new properties only.
Daley said this approach was likely to create a new distortion in the housing market.
“Essentially those new houses will be higher priced than the older houses and so you’ll get a distortion as investors disproportionately show up to the auctions for new housing and owner-occupiers disproportionately show up to the auctions for old housing. I’m not sure why we’d want to encourage that.”
Prime Minister Malcolm Turnbull has argued Labor’s proposal would deliver <a href="https://theconversation.com/negative-gearing-changes-wont-drive-all-investors-from-the-housing-market-heres-why-55505">“</a>massive shocks” to the residential housing market, removing all investors. Finance Minister Mathias Cormann has said it would drive down the value of established properties, and push up the cost of rental accommodation.
But Daley said given new housing supply was significantly restricted by planning rules rather than inadequate returns, it was unlikely there would be any material impact on supply or rents.
“As Commonwealth Bank CEO Ian Narev, who sits on a loan book of $400 billion has said, what keeps him awake at night is interest rates and unemployment rates, not negative gearing.”
Data from the Australia Tax Office shows negative gearing is more popular among taxpayers on higher incomes, and the Grattan Institute argues it largely benefits the wealthy.
<h4><a href="/images/2016/04/26/image-20160422-26970-mc5e3t.png" target="_blank">Click to enlarge</a></h4>
<img src="/images/2016/04/26/image-20160422-26970-mc5e3t.png" alt="">
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Taxable income is income after deductions, including rental loss deductions. ATO/Grattan Institute, Author provided
</h4>
Reforming the system would result in more funds instead flowing into equities, businesses and bank deposits.
“The current regime pushes people into property, it encourages them into much higher leverage than they would have otherwise, and that increases the volatility of the housing market and the vulnerability of the financial system,” Daley said.
 
Charis Palmer is deputy business editor, The Conversation, and can be contacted <a href="https://theconversation.com/au/team#charis-palmer" target="_blank">here</a>.
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