The Victorian Government has secured the passage of the Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026, introducing a suite of reforms aimed at improving consumer protection and confidence in the apartment market.

Resilience Insurance, Australia’s leading Latent Defects Insurance (LDI) provider, has welcomed the move.

The LDI elements of the Bill passed with bipartisan support and now moves to the Legislative Council where debate and passage are expected later this month. It represents a significant milestone in the national shift toward stronger, longer-term protection for apartment buyers.&nbsp;

The reform would deliver practical benefits across the housing system. Apartment owners will have stronger protection if major defects emerge, developers and builders will have a clearer quality framework to work within, and the State will reduce the risk of serious building failures becoming a long-term financial and social burden for households, communities and government.&nbsp;

LDI helps support apartment delivery while providing stronger protection for buyers and encouraging better construction outcomes.&nbsp;

Resilience LDI provides apartment owners with 10 years of insurance-backed cover for major structural defects from completion, with direct claim access to the insurer. This means owners are not required to first pursue developers or builders through costly legal action before accessing protection.&nbsp;

Resilience Insurance has been operating in Australia since 2022 and has already insured hundreds of development projects covering many thousands of apartments across Australia.&nbsp;

At approximately 1.8 per cent of build cost, it is a cost-competitive alternative to the traditional two per cent Strata Bond, bond while delivering significantly broader and longer protection.&nbsp;

“The Victorian Lower House vote shows that reforms like this succeed when they are practical, evidence-based and supported by industry," says Corey Nugent, CEO of Resilience Insurance.

"Victoria is moving quickly on a reform that will make a real difference for apartment buyers, while supporting better building outcomes and greater confidence in apartment delivery.

“This is step one. We look forward to the Bill completing its passage through the Legislative Council and to working with government and industry to implement the framework effectively.”&nbsp;

Fast Facts: What is Resilience LDI?&nbsp;

<ul>
	<li>Resilience Latent Defects Insurance (LDI): Covers major structural defects for 10 years from completion.&nbsp;</li>
	<li>Consumer-first: Direct claim access, no need for lengthy legal action.&nbsp;</li>
	<li>Cost advantage: At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.&nbsp;</li>
	<li>Market leader: Resilience Insurance is the first approved LDI provider in NSW.</li>
</ul>

The Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 has passed the Victorian Lower House, putting Victoria on track to become the first state to legislate an industry workable LDI framework as a formal alternative to the Strata Building bond. 

Joel Robinson

10-year Latent Defects Insurance for new apartment buyers set to land in Victoria

Just a few months after acquiring a prime Broadbeach site on the corner of First Avenue and Surf Parade, family-run developer <a href="https://www.apartments.com.au/developers/raptis">Raptis</a> has filed fresh plans for a new apartment development.

Raptis is seeking to deliver a <a href="https://www.apartments.com.au/new-apartments/17-19-first-avenue-broadbeach-qld-4217">29-storey tower with 73 apartments</a> on the 818 sqm site. It will be the developer's seventh project in the suburb, as they are approaching completion of The Sterling on George Avenue.

There will be a pool, barbecue and outdoor dining area, residents lounge and dining, sauna and steam room, gym, and a Yoga and Pilates studio.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="b554da3f-7344-49aa-b1c9-44cf459af0d7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%2010.41.45%E2%80%AFAM.png?VersionId=zzjWu1iO1wnuYv4EV4fyOyf5nSXjGYut" />

Raptis Joint Managing Director, Evan Raptis, says they remain&nbsp;committed to developing quality infill sites across the Gold Coast in the lead-up to the 2032 Brisbane Olympics.

"This project continues our long track record of delivery in Broadbeach, and we look forward to bringing another premium development to this thriving precinct."

The announcement follows strong delivery momentum for Raptis, with The Sterling Broadbeach nearing completion and construction well underway on the final stage of the Waterpoint community adjacent to Harbour Town. The developer's continued investment in the Gold Coast reflects confidence in the region's apartment market fundamentals, underpinned by sustained Southeast Queensland population growth.&nbsp;

The outlook for the region is further bolstered by infrastructure investment tied to the Brisbane 2032 Olympic Games, which is expected to drive continued economic and population growth across the SEQ corridor.&nbsp;

Subject to a favourable response from Gold Coast City Council, construction on the new First Avenue tower is targeted to commence before the end of 2026.&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/it-s-all-in-the-family-four-decades-later-raptis-continues-to-shape-the-gold-coast-skyline">It’s all in the family: Four decades later, Raptis continues to shape the Gold Coast skyline</a>

Read more: <a href="https://www.apartments.com.au/news/qld/raptis-secures-prime-surf-parade-site-for-next-broadbeach-apartment-development">Raptis secures prime Surf Parade site for next Broadbeach apartment development</a> 
&nbsp;

Gold Coast developer brings seventh Broadbeach project to market, targeting construction commencement before year end

First look: Raptis lodges plans for new 29-storey Broadbeach tower 

Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368853]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available.

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

First look: S&S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street

Budget

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The Tax Office has illustrated why the budget clamped down on property investors on depreciation.
They have cited landlords having inflated deductions as much as 1000 percent.
The budget included a measure restricting depreciation deductions which will raise $260 million in the next four years.
"The ATO has actively monitored this area over many years," an ATO spokesman told The Australian Financial Review.
"During this time we have identified a number of issues relating to inflated valuations of depreciable assets in rental properties."
The spokesman said that one of the ATOs concerns was the use of the "new for old" method, which effectively values assets at new prices even if they are years old.
The ATO gave one example of a landlord who had valued the equipment in their property by 600 percent to 1000 percent.
"We have seen one depreciation schedule for a 40-year old property where a reasonable market valuation would have been in the range of $3,000 to $5,000 but the depreciating assets were valued at $32,753," the spokesman said.
Under the new measures from July 1, 2017, the government will limit plant and equipment depreciation deductions to outlays actually incurred by investors in residential properties.
They will not be able to depreciate equipment that was already installed when they acquired the property.
Plant and equipment items are usually deemed as mechanical fixtures such as dishwashers, door closers and ceiling fans.
Negative geared landlords have no obligation to work out whether an item had already been written off in whole or part by the previous owner.
It was difficult for the ATO to check up.
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j.ballantyne1990-6AQqhLzZaK

ATO says overclaiming triggered costly depreciation budget changes

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GUEST OBSERVER
As expected, a range of housing policy measures were introduced in the Budget, including but not limited to:
-National Affordable Housing Agreement providing $1.3 billion of funding per annum to the States to help meet supply targets;
-A $1 billion National Housing Infrastructure Facility;
-A new suburb for Melbourne, with 6,000 homes to be unlocked 10km from the CBD at Maribyrnong (which is not an easy thing to say late at night);
-Managed Investment Trusts to invest in affordable housing, with a 60 per cent capital gains tax discount to invest in this sector;
-Extension of homelessness funding to the States;
-Encouraging downsizing by allowing a non-concessional contribution to made into superannuation for the over 65s up to $300,000;
-First home buyers will be allowed to save for a deposit by salary sacrificing into their superannuation account, though contributions will be capped at just $30,000 per person, and $15,000 per year;
-A Foreign Investment Levy of at least $5,000 on all future foreign investors who fail to either occupy or lease their property for at least six months each year; and
-A reinstated requirement that prevents developers from selling more than 50 per cent of new developments to foreign investors.
There were other measures too, including increasing APRA's powers to control the non-ADI sector, zoning reform, and land release.
Each of these points deserves detailed market analysis in its own right, but today I'll just take a look at the least well understood new policy, which I believe will be significant. 
Negative gearing sideswiped
Instead of quarantining negative gearing deductions to new dwellings as proposed by the Australian Labor Party (ALP), the Treasurer has targeted the following areas of deductions prospectively:
Travel expenses will now be disallowed for investment properties, which is mildly annoying for landlords with plans for investment properties at Port Douglas - there is no longer an incentive for politicians to buy an investment home in their favourite holiday destinations! - but broadly a sensible move which improves the integrity of negative gearing legislation. 
More pertinently, for investment properties bought after 7.30pm yesterday, the Government will also limit previously generous plant and equipment depreciation deductions to only those expenses directly incurred by investors.
<a href="https://www.propertyobserver.com.au/images/2017/05/14/NG.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/14/NG.jpg" alt="">
What this means
Firstly this is a cruel impact for the Quantity Surveyor industry, hundreds or perhaps thousands of whom will wake up today only to discover they have very little to do. These businesses will need to pivot immediately towards new and commercial properties, though competition here will be fierce.
As for investors, going forward landlords purchasing established property will only be able to claim plant and equipment depreciation deductions on assets they have purchased themselves, while buyers of newly constructed dwellings will still be able to make a depreciation claim on plant and equipment. 
Landlords will still be able to claim deductions on the construction component (Division 43, for the building's structure) of the dwelling over 40 years for properties built after September 1987.
The ruling is evidently designed to restrict 'double-dipping' whereby multiple claimants received deductions on the residual value of the existing assets, such as air conditioning, heaters, carpets, televisions, dishwashers, alarm systems, hot water systems, and so on. 
In practical terms, about half of deductions would typically have been claimed for plant and equipment items on established property in the first year of claim, though this really depends upon the age and type of dwelling in question.  
Copied below are just a few examples of Sydney properties bought about a decade ago. As you can see with plant depreciation disallowed on established properties the difference to deductions in the early years of ownership would have been quite substantial, though there is no impact of landlords already in the market.
<a href="https://www.propertyobserver.com.au/images/2017/05/14/DEDUCT2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/14/DEDUCT2.jpg" alt="">
Data compiled by MCG Quantity Surveyors showed that their average claim for depreciation deductions was $9,138, up to half of which was typically for plant and equipment deductions. 
For new individual Mum-and Dad investors - which is most of the landlord market - this is a fairly significant change to tax legislation. 
Market impacts
As always investors will try to find a way around the rules, such as by purchasing chattels off-contract, though presumably the tax office would scope out such a move through an ATO Interpretative Decision (ID) if the practice became widespread.
Overall, it may become more tax-efficient to purchase older style properties in order to renovate them, though for properties built before 1987 the building works component would already be fully depreciated over 40 years. 
Somewhat ironically these changes will may create a divide between the perceived value of new and established properties in the eyes of investors, effectively creating a 'second-hand market' (which is what the Treasurer previously accused the ALP of doing with its own negative gearing proposals). 
Some domestic investors may be inclined to steer clear of new properties for this reason, in turn hurting building approvals and dwelling starts, at least while the dust settles.  
Ultimately what these changes will mean is that rental returns on established property in the lowest-yielding cities of Sydney and Melbourne will have to increase in aggregate, either through higher rents or through lower prices (or, most likely, a combination of the two).
I'll take a look at the wider impact of the Budget next up. 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>.
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pwargent-M4siyDbqQY

Budget takes sideswipe at negative gearing: Pete Wargent

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The federal budget has taken positive steps toward infrastructure commitment by the government, but it still is a missed opportunity to capitalise on low bond rates and a triple-A credit rating, according to a senior industry executive.
Megan Motto, chief executive of built-environment body Consult Australia, welcomed the direction of the 2017/2018 Federal Budget but declared it a missed opportunity to capitalise on historic low borrowing rates.
Consult Australia represents 49,000 consulting firms in the built environment.
The government plans to spend $75 billion on development and upgrade of infrastructure, which includes a potential buy-out of the Snowy Hydro scheme from the states. Also included is a $20 billion rail line upgrade.
Major projects like Snowy Hydro, Inland Rail, a National Rail Program, and Western Sydney Airport, all point to a government that understands the long-term nature of infrastructure projects. But real spend on infrastructure delivery would fall as share of GDP from 25.5% to 25.2% in 2020-21, Motto said. 
Yet, “historically low bond rates and a triple-A credit rating means it has never been a better time to borrow, to take on more good debt,” Motto said.
 “This is an Infrastructure Budget 1.0 that begs for an Infrastructure Budget 2.0 to better connect the strong sense of direction to implementation and the opportunity for Australia to maintain future economic growth,” said Motto.
“This was a budget big on planning for longer-term infrastructure dividends.” 
“It recognised infrastructure as a tool to increase productivity, the importance of business case development to get the right projects off the ground, and the role of government in being able to drive economic growth.
“Over $14 billion of direct government equity in major infrastructure delivery and financing agencies,” she said.
But Motto added that “in the short term there is a sense of missed opportunity”.
Motto also lamented the foreign worker levy for businesses that will make it harder for them to bring in skills needed to deliver Australia’s infrastructure agenda.
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Budget fails to capitalise on historic low borrowing rates

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Developers who aim projects at foreign investors are facing bleak times under the Budget package.
New developments will be subject to a 50 percent cap on foreign investment off the plan sale approvals to “safeguard the opportunity for Australian buyers to purchase”.
The new regulation applies only to developments with at least 50 units. 
The current level is 100 percent after the Rudd government lifted it from 50 percent during the global financial crisis.
"We will restore the requirement that prevents developers from selling more than 50 percent of new developments to foreign investor," the Treasurer said. 
Meanwhile, foreign investors in residential real estate will be slapped with a “ghost tax” if they leave their properties empty or not available for rent for at least six months of the year.
The annual charge will be equivalent to the foreign investment application fee which was paid at the time of application and will work out to at $5000 plus annually.
The measure is expected to net $20 million in revenue over the next four years.
Earlier in February Property Observer published an article by Robert Simeon where the agent suggested the need to reverse the off-the-plan ratio back to 50 percent from 100 percent to overseas buyers. 
"We are now going into the ninth year of 100 percent and the only clear impact we are seeing is that foreign investors have become a most dominant player," he wrote.
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Reins tightened for developers aiming projects at foreign investors in 2017 Budget

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GUEST OBSERVER
The Federal Government has achieved a good balance between encouraging more housing supply as well as policies that make housing more affordable.
Federal Treasurer, Scott Morrison, has carefully balanced the need to boost housing supply with policy levers that make housing more affordable in this year’s budget.
To unlock housing supply the budget allocates $1 billion for critical infrastructure along with $70 billion for transport infrastructure while working with the states to reform planning systems to speed up development.
To encourage more affordable housing the budget has lifted the Capital Gains tax discount to 60 percent where private investment is made in affordable housing.
This will be a real incentive for the development industry to invest in this area particularly if the bond aggregator through the National Housing Finance and Investment Corporation is available to the private sector.
The proposal to have Managed Investment Trusts to develop affordable housing to hold for rent for more than ten years is another positive move.
The proposal to encourage older people to downsize from large houses through allowing up to $300,000 from the sale of a house to be invested in a superannuation fund is a good way to facilitate this process.
By not overacting in the areas of negative gearing and the potential to reduce capital gains tax reductions on property, the Government has clearly understood the sensitivities in the role of investors in maintaining a viable rental housing market.
To pull policy levers in an aggressive manor could lead to a devaluation in the main asset that many families rely on in their own home.
The establishment of the Western Sydney Airport Corporation with funding of $5.3 billion to drive this important game changer project for Sydney is important in maintaining the momentum for this giant project.
The allocation of $1.7 billion through the Asset Recycling Fund to the Sydney Metro project will help progress this important infrastructure that will underpin where new urban development can be located in metropolitan Sydney.”
We are impressed with the careful balance the federal budget has achieved between stimulating much needed housing supply while developing policies that help with housing affordability.
As indicated in the budget papers the state governments will now need to reform their planning systems to ensure more homes are built more quickly for Australian families.
The Federal Government in working with the states on planning reform must question why New South Wales standards for apartments are so much higher than those in other states.
The well-meaning but expensive standards in the NSW Apartment Design Guide are adding around $100,000 to the cost of an average apartment above that of other states.
The Urban Taskforce is keen to work with the federal and state governments to achieve reforms to planning systems that can speed up development.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI">here</a>.
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jchancellor-FAypfDUnLy

2017 Budget a good balance for housing supply and affordability: Chris Johnson

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Young first home buyers willing to save are the big Budget winners thanks to a simple superannuation top-up scheme that offers generous tax breaks.
The Budget also offers the elderly an incentive to down-size homes with tax breaks too.
Treasurer Scott Morrison has shown no restraint on taxing foreigners either – which is a big revenue earner.
And Aussie investors will lose travel expense claims when they inspect their investment property interstate. This measure will save about $200 million annually.
The headline housing measure kicks in from July 1 when the first-home buyer can salary sacrifice into their super account above their already hefty compulsory contribution.
For Sydney buyers, there’s an issue with the low cap as The First Home Super Savers Scheme limits total contribution to $30,000 per person or $60,000 a couple, so the bank of mum and dad will still be needed to get anything close to Sydney’s median $990,000 house or $740,000 unit.
Regular super contributions remain off limits. But certainly it’s better than money in the bank, as Treasurer Scott Morrison calculates most will accelerate savings by 30 percent.
The measure will cost the government about $65 million annually. The downsizing incentive is calculated to cost about $10 million annually, with a delayed 2018 start.
Unfortunately, this mean it would be premature to expect a flood of five bedroom houses hitting the market any time soon.
Taxing foreigners in many ways is the revenue treat in the Budget, which could turn them away.
Capturing the $5000 plus annual tax on vacant properties owned by foreigners – the so-called ghost home tax – will be tricky. Though they could start by looking at the lights off in Haymarket.
This article was first published in the Daily Telegraph.
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Super idea in 2017 Budget for first home buyers

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The Real Estate Institute of Australia has applauded announcements made in the 2017 Budget to address housing supply and affordability.
Malcolm Gunning, president, REIA said he is pleased that the Government reiterated that it will not remove or limit negative gearing or change the capital gains tax as this would increase the tax burden on Australians trying to provide a future for their families.
“The boost to infrastructure spending, measures to improve housing supply, the extension of small business concessions, and the retention of the current negative gearing as well as CGT arrangements for taxation of property investments will help ensure that the property sector remains an important contributor to economic growth,”  he said.
"This recognises that the current arrangements increase the supply of housing for our growing population, keep rents affordable and ease the burden on social housing.
“With home ownership in Australia declining and first homebuyers finding it increasingly difficult to enter the housing market, allowing first homebuyers to build deposits with superannuation through voluntary contributions is welcome.
“Whilst REIA has advocated for a more aggressive approach to bridging the deposit gap by allowing first homebuyers access to existing balances in superannuation accounts the Government’s initiative will reduce the time taken to save for a deposit by around 25 percent.
“The change in the threshold for foreign resident capital gains tax withholding to $750,000 from the current $2 million is not welcome and could be considered misguided as most foreign investors buy higher valued properties in Sydney and Melbourne and to a lesser extent in Brisbane.
“It is more red tape and not necessary. With the median house price of $743,776 across Australia this will mean most properties will be subject to this requirement and results in more work for sales agents and conveyancers and depending on the workload this presents for the ATO may even delay settlements.
“With forecasts of moderate growth, an improvement in the unemployment rate, inflation well within the RBA’s target zone, the Budget is welcome news for home owners, prospective buyers and renters."
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2017 Budget welcome news for home owners, prospective buyers and renters: REIA 

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GUEST OBSERVER
For the first time in some years we expect better estimates of the coming year’s deficit, due to higher commodity prices.
Infrastructure investment plans, including a new Sydney airport and a major national rail project, SME tax cuts and education spending are expected to be the budget highlights.
Rates Strategy: After years of disappointment, the budget should be welcomed by bond investors as it is set to confirm 2016/17 as the peak of government debt issuance
Revenue gets a boost from higher commodity prices.
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It has finally arrived. After a run of budgets when the Treasurer of the day has had to announce that the underlying budget deficit was larger than expected, this year we expect a modest improvement. 
Rising commodity prices have been the main source of support, as the bounce is expected to have delivered additional tax revenue. However, this positive effect has been partly offset by weaker-than-expected wages growth, relative to the projections in the May 2016 budget, making the overall improvement only modest. 
The projected budget deficit is expected to be AUD25bn (1.4% of GDP) in 2017/18 (estimated at AUD28.7bn in December 2016 and AUD26.1bn in May 2016). However, much depends on the government’s assumptions about commodity prices, which we expect to be cautious. As a result, we expect the projected return to budget surplus still will not be forecast to arrive until 2020/21, as previously forecast.
<a href="https://www.propertyobserver.com.au/images/2017/05/04/Screen%20Shot%202017-05-04%20at%201.40.40%20PM.png" target="_blank">Click to enlarge</a>
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The key policy initiatives in the budget (due to be handed down on 9 May 2017) are expected to be plans for infrastructure investment, including a second airport in Sydney and a new inland rail from Brisbane to Melbourne, a corporate tax cut for small and medium-sized businesses and a boost to education spending. The Treasurer has also announced that, for the first time, the budget will separately report debt that is earmarked for infrastructure from that used for recurrent spending. 
With Standard &amp; Poor’s putting Australia on ‘negative outlook’ for its triple-A sovereign rating in July 2016, a key question is whether Australia will get downgraded. With the budget set to look a bit better, an improving nominal economy and signs of some budget reform, we doubt a downgrade will arrive next week. 
Our new onshore AUD/NZ rates/FX strategist, Tom Nash, expects the budget to be positive for long-dated government bonds (ACGBs). Even allowing for the infrastructure spend, 2016/17 should mark peak ACGB issuance. 
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A rare improvement in the budget outlook 
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Largely thanks to continued strength in commodity prices, we expect the forecast budget deficit for 2017/18 will look slightly better than previously estimated. This would be a marked contrast to Australia’s recent budget history, which since 2009 has featured consistent downward revisions to the budget balance and the predicted return to surplus being pushed ever farther into the future. 
There was some rare good news in the December 2016 mid-year fiscal update, when the forecast 2016/17 deficit was revised a touch lower from AUD37.1bn to AUD36.5bn, in response to the lift in commodity prices seen during late 2016. However, the commodity-related boost was expected to be temporary and the projected deficits beyond 2016/17 were expected to be larger than previously forecast (Chart 1). 
Since the mid-year update, the strength in commodity prices has proven to be more sustained, especially for iron ore. Although iron ore prices have dipped in recent weeks from over USD90/t to around USD66/t, the mid-year fiscal update assumed a decline from USD68/t at the time to USD55/t by Q3 2017. 
Although the assumptions underlying the new budget estimates are expected to once again assume that commodity prices will revert to a lower level, they will probably be a little more optimistic than those used in December. This should deliver a stronger nominal growth outlook and, in turn, better revenue projections (Charts 2, 3 and 4). 
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As a rule of thumb, a 1 percent increase in nominal GDP lifts government revenue by around AUD3bn. The mid-year update assumed nominal growth of 5.75 percent in 2016-17 and 3.75% in 2017-18. While the former is not much different from our own expectation of around 6 percent, we see scope for the 2017-18 forecast to be revised up to 5.25 percent or above thanks to the continued strength in commodity prices and a likely upward revision to the real GDP growth outlook (Table 5). 
<a href="https://www.propertyobserver.com.au/images/2017/05/04/Screen%20Shot%202017-05-04%20at%201.41.43%20PM.png" target="_blank">Click to enlarge</a>
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Key expected policy initiatives provide signs of fiscal reform 
For some time now, the clarion call in our research has been for fiscal policymakers to focus on tax reform and infrastructure investment. As we have pointed out previously, Australia’s new growth engine is exporting services to Asia, including education and tourism, and if Australia is to remain competitive in services exports, better urban infrastructure is needed (see Australia’s broadening economic links to China, 8 November 2016). At the same time, we have noted that Australia’s tax system has become more dependent on taxes that distort economic behaviour, such as corporate and personal income taxes, and that reform of the tax system is needed. 
This budget is expected to show some progress on these fronts, although more reform is needed over time. Key initiatives are expected to include:
The government is set to announce that a new government-funded company will be set up to build a second airport in Sydney at Badgery’s Creek at an expected cost of A$5-6 billion. A new inland rail line from Melbourne to Brisbane is also set to be announced, at a cost of A$10-12 billion. These projects are expected to be off the government’s balance sheet, much as the National Broadband Network was funded in earlier years.
<a href="https://www.propertyobserver.com.au/images/2017/05/04/Screen%20Shot%202017-05-04%20at%201.42.46%20PM.png" target="_blank">Click to enlarge</a>
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The Treasurer, Scott Morrison, has announced that the budget will also, for the first time, split its accounting of new government debt into that used for capital spending, such as infrastructure, and current spending, such as public sector wages. This is a positive development that should allow a clearer assessment of government spending that is investing in future growth prospects and that which is being used for current consumption.
The government is expected to announce a significant boost to spending on primary and secondary education, of around A$19 billion over the next decade (figures as report by the Australian Financial Review on 3 May 2017), adopting an adjusted version of the opposition Labor Party’s previous proposal for a ‘needs-based’ funding model.
Tax cuts for small and medium-sized businesses have already been passed by both houses of parliament, but will be part of the budget. Businesses with less than A$50 million in turnover will see the company tax rate cut from 30% to 25% by 2026/27, with the reductions phased in at different rates for businesses of different sizes. The budget is expected to contain a proposal to broaden this to every company by 2026/27.
A range of previously proposed budget measures that have not passed through parliament will also be scrapped. These include cuts to Medicare proposed in the lead-up to the 2016 election as well as cuts to education and welfare spending. These are set to reduce budget savings by around A$8 billion. 
Structural budget deficit remains a challenge
Although the stronger commodity price story, along with some fiscal consolidation measures, are expected to make the budget bottom line look a little better, Australia still faces many years of sizable budget deficits. This is because the deficit is structural, not cyclical. That is, the deficit is not the result of temporarily weak conditions in the economy – and so an improvement in economic conditions cannot be relied upon to return the budget to balance (Chart 6).
Interestingly, the Australian Treasury estimates that the structural deficit has been consistently larger than the actual underlying cash balance over the past decade, despite below-trend economic growth. This is mainly driven by the large, budget-positive impact of high commodity prices outweighing the smaller, budget-negative impact of weak GDP growth.
The precise estimates of the structural balance are highly uncertain, as they rely on assumptions about the size of the output gap and the long-run level of the terms of trade. For instance, the IMF’s estimates suggest that Australia’s structural deficit has not been as large as the actual deficit. Nonetheless, regardless of its size, it seems clear that Australia does have a significant structural deficit and that an improvement in cyclical factors alone will not be enough to restore a balanced budget over the long term. Changes to fiscal settings will be needed.
A rating downgrade is unlikely at this stage
Despite ongoing budget deficits (both actual and structural), we do not expect Australia to lose its AAA credit rating. In an international context, Australia’s fiscal position is still strong; in particular, net debt remains low, although it has risen significantly since 2008 (Charts 7 and 8).
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With the budget deficit currently around 2 percent of GDP, and expected to narrow further in 2017/18, the government’s debt-to-GDP ratio is also close to stabilising.
The key factors that have been of concern to the major rating agencies have been: a lack of fiscal reform, due to political constraints; Australia’s persistent current account deficit; and high household debt levels, making balance sheets more vulnerable.
The key catalyst for Standard &amp; Poor’s putting Australia on ‘negative outlook’ for its triple-A rating in July 2016, was the close Federal election result and the rating agency’s expectation that this reduced the likelihood of ‘forceful’ fiscal action need to get the budget back to surplus. Since then, commodity prices have lifted, supporting tax revenues, and there are some signs that fiscal reform may be moving the right direction, albeit slowly.
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The current account deficit has also narrowed significantly, due to the recent lift in commodity prices, the ongoing rise in commodity exports as new capacity comes on line and continued growth in services exports (Chart 9).
Household debt has continued to rise and is at high levels, which is expected to be a continued point of focus for the rating agencies. At the same time, the prudential regulator, in a coordinated approach with the central bank, has been tightening its prudential settings to reduce the risk entering the financial system.
Rates Strategy: A bullish budget for bonds
After years of disappointment, the 2017/18 Budget is set to be positive for Australian Commonwealth Government Bonds (ACGBs) as it will likely confirm that bond issuance has peaked and fiscal consolidation is back on track. We have previously highlighted fiscal policy as one of the structural factors underpinning our bullish stance on the long-end of the curve (see ‘AUD Rates: Cheap enough’, 30 March 2017).
The Treasury is likely to confirm FY16/17 as the peak for ACGB issuance, despite uncertainty over the funding of infrastructure projects. Mid-year Treasury projections imply a sizeable 24% decline in gross issuance in FY17/18 (to AUD78bn), and a larger 43% decline in net issuance (to AUD44bn) compared to the current fiscal year. We present an alternative scenario in Table 10 that assumes that all of the announced infrastructure spending is funded by debt as well as incorporating our economics team’s estimate of improved revenues. Total bond supply is c.AUD10bn higher over the projection period under this scenario but 2016/17 remains the peak. 
While the duration of new ACGB supply is likely to stay high (the weighted average maturity has been 10.6yrs this fiscal year compared to 7.6yrs five years prior) we expect it to be well absorbed. The recent uptick in bid-cover ratios (Chart 11) as well as a continued gradual rise in offshore bond holdings implies a steady demand for duration.
With fiscal consolidation on track, HSBC’s base case is that this budget will not prompt any of the major credit rating agencies to downgrade Australia’s AAA credit rating. Importantly, an improved revenue outlook should give rating agencies more confidence that the public debt-to- GDP ratio stabilises in the near term and declines over the medium term as net bond issuance drops below 2% of GDP (Chart 12).
Australia’s Triple-A rating is positive for bonds primarily because politicians’ commitment to maintaining it encourages strict fiscal discipline. Reflecting this, Australia has the largest underlying fiscal consolidation embedded over the medium term among developed economies, based on the IMF’s standardized methodology (Chart 13). The pricing of credit risk premium is a secondary consideration for ACGBs given there is no real mechanical flow impact associated with a rating downgrade from AAA to AA and arguably yields already reflect a lower rating/ higher degree of sovereign credit risk (e.g. Australian sovereign CDS spreads already trade above the AAA average). 
<a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. 
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Better budget should protect rating: HSBC's Paul Bloxham

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<img src="https://counter.theconversation.edu.au/content/76944/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The government shouldn't cave to WA's calls for a change to the way GST is divvied out. The current system has served Australia well.
Treasurer Scott Morrison has acceded to pressure from his Western Australian colleagues in announcing another review of the way GST is divided up among the states and territories. But the current system shouldn’t be tossed aside just because the WA government was unable to control its spending.
Australia has long gone much further than other federations in seeking to “equalise” the way state and territory governments provide public services to their citizens. That’s one of the principal reasons why the disparity in living standards between Tasmania (Australia’s poorest state) and WA (our richest), is a lot less than that between, say, Mississippi and Massachusetts in the United States or even Mecklenburg-Vorpommern and Bavaria in Germany.
The Grants Commission was established in 1933, this is the body that decides how much GST revenue the states get in our current system. Since its establishment right up until the year 2000, WA has been the main beneficiary of “horizontal fiscal equalisation”(HFE).
That’s the principle that GST is assigned by. It assumes each state and territory should be making an equal effort to raise revenue from its own sources and by being equally efficient in its spending, to provide the same range and quality of public services as every other state or territory.
However, since the early 2000s, WA has become Australia’s richest state. This is the result not of any particular effort on the part of successive WA state governments, but rather of China’s almost insatiable appetite for the iron ore with which WA has been uncommonly endowed.
Over the five years to 2014-15, WA’s per capita gross product (what it produced) averaged almost 50 percent above that of Australia as a whole. This is a margin without precedent in Australia’s history.
This enabled WA to raise far more revenue per head of population than it, or any other part of Australia, had been able to in the past. This is also why in recent years WA’s share of the revenue from the GST has fallen to such a low level, relative to its share of Australia’s population.
Between 2005-06 and 2015-16, WA’s share of the revenue from the GST fell by about A$2 billion, from A$3.8 billion to A$1.8 billion. But its revenue from mineral royalties rose by almost A$3 billion over the same period, from A$1.2 billion to A$4.1 billion.
Despite the sharp decline in its share of GST revenues, the WA government’s total revenue per head of population in 2015-16 was just A$67 (or 0.7 percent) below the average for all states and territories. By contrast, by 2015-16 the WA government was spending over A$1,000 (or 10.5 percent) more per head of population on “operating expenses”, than the average of all states and territories.
WA’s present fiscal woes are the result not of a flawed system of distributing revenue from the GST among the states and territories, but rather of its inability to control its own spending.
Although an equal per capita distribution of GST revenues has become commonly used as a benchmark by government for assessing redistribution, it’s never been generally accepted that GST revenues should be distributed on an equal per capita basis.
Neither the federal government, nor the states and territories, allocate their spending programs on an equal per capita basis. Nor do they collect revenue in that way. There is no reason why an equal per capita distribution of GST revenues should be regarded as some kind of desirable norm.
As you can see in the chart below, if you did allocate GST in equal per capita, according to my calculations Queensland, the North Territory, South Australia and Tasmania would lose millions. But it would give Victoria, NSW and WA more of the GST revenue.
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It would be akin to reducing the top rate of personal income tax, paid by those earning more than $180,000 per annum and raising the bottom rate, paid by those earning less than $37,000 per annum, to the same figure.
Allocating GST per capita like this is not based on need or any policy and is quite abitrary.
The questions in the terms of reference, that the Treasurer has given to the Productivity Commission, were answered almost five years ago by a similar inquiry. This was conducted by former NSW Premier Nick Greiner and former Victorian Premier John Brumby, together with Adelaide businessman Bruce Carter.
Even though these state premiers had voiced the same concerns as the current government about the way GST is distributed, their inquiry recommended against any radical changes. They found many of concerns about the current system turned out to be overstated.
And, contrary to the Treasurer’s insinuation that “the current approach of horizontal fiscal equalisation creates disincentives for reform”, the previous inquiry concluded there was not enough evidence of efficiency losses in the economy.
I doubt that the Productivity Commission will find differently. There is room, to be sure, to make the Grants Commission’s procedures less complex and more transparent. But the principle which has underpinned the Grants Commission’s recommendations for more than 80 years has served Australia well, and shouldn’t be tossed aside merely to salve the self-inflicted wounds of Australia’s richest state.
 
Saul Eslake is vice-chancellor’s Fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
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WA’s economic mismanagement is not a reason to review how the GST is carved up: Saul Eslake

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Who'd have thought downsizing and the issue of empty bedrooms in suburbia will soon become a red hot 2017 Federal Budget issue.
Its because the government is looking at proposals to encourage ageing homeowners to downsize to free up more affordable stock for young families.
The likely May budget package was first floated two years ago by Scott Morrison when he was social services minister.
It is hoped breaking down a few barriers will encourage older Australians to down­size homes, thereby releasing more stock to the market and also unlocking billions in capital.
The government has advice from the Productivity Commission that estimates 15 per cent of older Australians want to move.
But seemingly not until the government addresses one of the big impediments on why they stay in large homes long after their children have left. 
After selling their home the elderly can lose some of their part-pensions under the asset test. 
The latest thinking is that some of the windfall sale proceeds pocketed after selling could be quarantined from the assets test.
There's also prospective exemptions coming to the $1.6 million cap on tax-free super retirement funds, and the $100,000 annual cap on non-concessional contributions.
Research from the Centre for Independent Studies (CIS), says some 80 per cent of retirees own their home with the overwhelming majority having no mortgage, so their prospect of surplus funds is real.
The CIS estimate the amazing value of pensioner home equity at $625bn - which is around a third of the countries' superannuation savings pool. 
Scott Morrison won't force older Australians to move house, given the emotional and ­financial investment in family homes, but incentives could free up an estimated 50,000 properties a year.
His focus will be on removing disincentives along with measures to boost the supply of enticing over-55s housing.
Obviously there's more than just these impediments as I recently noted stamp duty is a barrier, but that is a matter for the states since stamp duty didn't disappear after Canberra introduced the gst.
It will be interesting whether the package addresses the big difference in house prices - and prospect of easier surpluses - across Australia. CoreLogic puts Sydney's median house price at $895,000, compared with $680,000 in Melbourne, $635,000 in Canberra, $530,000 in Darwin, $520,000 in Brisbane, $500,000 in Perth, $455,000 in Adelaide and $383,000 in Hobart.
The Property Council of Australia calculates there are 530,000 seniors who receive the full-rate age pension, who are aged over 75 and own their homes exempt from the asset test. If they sell, these seniors lose $3 a fortnight for every $1000 of assets over the asset test threshold, which is $250,000 for singles and $375,000 for couples, and higher for non-home owners.
Exempting $100,000 of the house sale proceeds from the asset test would encourage about 17,000 house sales annually, the PCA suggested, rising to 50,000 houses if the exemption was $200,000.
 This article first appeared in the Daily Telegraph.
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