<p>One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.</p>

<p>Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.</p>

<p>The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.</p>

<p><img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" /></p>

<p>Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.</p>

<p>Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.</p>

<p>The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.</p>

<p>Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.</p>

<p>The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.</p>

<p>That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.</p>

<p>The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.</p>

<p>"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.</p>

<p><img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" /></p>

<p>Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.</p>

<p>The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.</p>

<p>The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.</p>

<p>According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.</p>

<p>The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.</p>

<p>A significant component of the proposal is the revitalisation of Blue Street Plaza.</p>

<p>The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.</p>

<p>Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.</p>

<p>Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.</p>

<p>Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.</p>

<p>Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.</p>

<p>The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.</p>

<p>Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.</p>

<p>&nbsp;</p>

<p>FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.</p>

<p>Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.</p>

<p>Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.</p>


Joel Robinson

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

<p>Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.</p>

<p>The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.</p>

<p>The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.</p>

<p>The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.</p>

<p><img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" /></p>

<p>The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;</p>

<p>PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.</p>

<p>The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.</p>

<p>Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.</p>

<p>"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.</p>

<p>Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.</p>

<p>A major focus of the design has been the public domain.</p>

<p>The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.</p>

<p>The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.</p>

<p data-end="239" data-start="66">Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.</p>

<p data-end="442" data-start="241">Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.</p>

<p data-end="661" data-start="444">Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.</p>

<p data-end="909" data-start="663">Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.</p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a></em></p>

<p data-end="1339" data-start="1019">Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.</p>

<p data-end="1339" data-start="1019">[smartcode_project:default project_id=30959 project_image_fid=292863]</p>

<p data-end="1398" data-start="1341">It has since quietly assembled its next wave of projects.</p>

<p data-end="1805" data-start="1400">Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.</p>

<p data-end="1805" data-start="1400">[smartcode_project:default project_id=152095 project_image_fid=373685]</p>

<p data-end="1991" data-start="1807">The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.</p>

<p data-end="2303" data-is-last-node="" data-is-only-node="" data-start="1993">Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.</p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a></em></p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a></em><br />
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

<p data-end="492" data-start="327">Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.</p>

<p data-end="843" data-start="497">At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.</p>

<p data-end="1109" data-start="848">The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.</p>

<p data-end="1109" data-start="848">[smartcode_project:default project_id=152022 project_image_fid=375528]</p>

<p>Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.</p>

<p>The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.</p>

<p>"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375531]</p>

<p>The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.</p>

<p>The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375524]</p>

<p>Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.</p>

<p>Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375530]</p>

<p>The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.</p>

<p>The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.</p>

<p>The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.</p>

<p>"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.</p>

<p>"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."</p>

<p>Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.</p>

<p>[smartcode_project_cta:default project_id=152022]</p>


Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

<p>Not all apartment amenities are immediately visible.</p>

<p>Swimming pools, gyms, rooftop terraces and residents' lounges have long featured on buyers' wishlists, but as the way Australians live has changed, so too have the features that make apartment living more convenient.</p>

<p>Increasingly, buyers are placing value on the practical aspects of day-to-day life. Fast internet, EV charging, secure bike storage, flexible workspaces and parcel management are becoming just as relevant as lifestyle amenities, reflecting changing habits and expectations.</p>

<p>Online shopping has been one of the biggest drivers of that shift.</p>

<p>Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally, making parcel deliveries a routine part of everyday life rather than an occasional convenience.</p>

<p>For apartment residents, however, receiving those deliveries isn't always straightforward.</p>

<p>Without someone home to accept a parcel, deliveries can be redirected to a nearby Post Office, left in building foyers or common areas, or require building management to temporarily store packages. As apartment living continues to grow across Australia's cities, parcel management has become an increasingly important consideration for both residents and developers.</p>

<p>Australia Post's Parcel Locker network is one response to that shift.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/KPZ9j5FRdsQ?si=Qztc1dNP3ZvEIUhb" title="YouTube video player" width="560"></iframe></p>

<p>Rather than relying on home delivery, eligible parcels can be directed to a nominated Parcel Locker, where they're securely stored until collected. Once a parcel arrives, residents receive a notification through the AusPost app or SMS and can retrieve it using a one-time code or QR code at a time that suits them.</p>

<p>The network has expanded to more than 1,500 locations nationwide, with Parcel Lockers positioned at Post Offices, shopping centres, supermarkets, transport hubs and, increasingly, within or alongside residential developments.</p>

<p>That growing presence reflects a broader change in how apartment buildings are being planned.</p>

<p>Developers are increasingly considering the operational side of apartment living alongside traditional lifestyle amenities. Just as secure mailrooms, bicycle storage and EV charging have become more common inclusions, parcel management is emerging as another feature that supports everyday convenience.</p>

<p>It also helps preserve the arrival experience within a building. Carefully designed lobbies and communal spaces can quickly become cluttered when deliveries accumulate, while secure parcel solutions reduce the likelihood of missed deliveries or parcels being left unattended.</p>

<p>For buyers comparing apartments, these everyday details are becoming part of the decision-making process.</p>

<p>Location, floorplans and finishes remain fundamental, but the features that simplify daily life are carrying greater weight than they once did. As online shopping continues to shape consumer behaviour, secure parcel delivery is increasingly becoming another amenity worth looking for.</p>


Parcel delivery is joining the apartment amenity checklist

<p data-end="471" data-start="164">Inca Property Group has lodged a State Significant Development Application (SSDA) for Dawn, a 53-apartment oceanfront development overlooking Mona Vale Beach.</p>

<p data-end="777" data-start="473">The proposal, at 35-39 Darley Street East, would replace an existing 18-apartment strata building with a new owner-occupier-focused development comprising 53 two and three-bedroom apartments, including nine affordable built-to-rent residences delivered under the State's infill affordable housing scheme.</p>

<p data-end="976" data-start="779">Positioned on a 2,679 sqm elevated site around 280 metres from Mona Vale Beach, the development has been designed to maximise panoramic ocean views while responding to the site's sloping topography.</p>

<p data-end="1119" data-start="978"><a href="https://www.apartments.com.au/developers/inca-property-group">Inca Property Group</a> Managing Director Josh Thompson said the State Significant pathway provided greater certainty for projects of this scale.</p>

<p data-end="1399" data-start="1121">"This State Significant pathway gives the team real certainty to progress <a href="https://www.apartments.com.au/new-apartments/dawn-35-39-darley-street-east-mona-vale-nsw-2103">Dawn</a> through to completion," Thompson said.</p>

<p data-end="1399" data-start="1121">"It allows us to acquire a one-off site, design it carefully and deliver the right offering for the suburb, assessed by the NSW Government's planning department."</p>

<p data-end="1605" data-start="1401">The project is one of the first developments in the area to be assessed under the NSW Government's Low and Mid-Rise Housing policy, with the site sitting on the edge of the policy's designated inner area.</p>

<p data-end="1852" data-start="1607">The proposal includes three basement levels providing 124 car spaces, alongside a range of resident amenities including a swimming pool, gym, sauna, wellness facilities and private plunge pools for selected ground-floor and penthouse apartments.</p>

<p data-end="1852" data-start="1607"><img alt="Dawn" data-entity-type="file" data-entity-uuid="fc1a1daf-0ce4-4f12-9076-b1fa553c7a91" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-21%20at%208.42.11%E2%80%AFAM.png?VersionId=4GZ9h.gpNkTljbxyAET8Jfhv51XUamDm" /></p>

<p data-end="2031" data-start="1854">Thompson said Dawn had been designed specifically for owner-occupiers and downsizers, a buyer profile that has driven demand across Inca's recent Upper North Shore developments.</p>

<p data-end="2299" data-start="2033">"The majority of buyers in our recent North Shore projects have been downsizers, and we are learning exactly what this market is looking for. Beyond the location itself, we have included resort-style amenities to deliver a genuine lifestyle offering," Thompson said.</p>

<p data-end="2588" data-start="2301">Located within walking distance of Mona Vale Beach, the town centre, Mona Vale Golf Club and the Royal Motor Yacht Club, Dawn represents Inca's first Northern Beaches project following the sell-out of Tara on Park in Waitara and Ellis Residences, currently under construction in St Ives.</p>

<p data-end="4143" data-start="3991">Construction will be undertaken by Inca's in-house construction arm, GOP Constructions.</p>

<p data-end="593" data-start="417">Dawn is the latest major apartment proposal for Mona Vale, with the suburb emerging as one of the key beneficiaries of the NSW Government's new Low and Mid-Rise Housing policy.</p>

<p data-end="789" data-start="598">New developer One Living, led by industry veteran Joseph Scuderi, recently secured a site on Mona Vale Road, on the border of Mona Vale and Pymble, where it is planning around 140 apartments.</p>

<p data-end="1053" data-start="794">IPM is also planning its third project in Mona Vale, significantly increasing the scale of its previous developments with an 82-apartment proposal at <a href="https://www.apartments.com.au/new-apartments/159-167-darley-street-west-mona-vale-nsw-2103">159-167 Darley Street West</a>, opposite Bayview Golf Course and less than 800 metres from Mona Vale town centre.</p>

<p data-end="4143" data-start="3991"><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/one-living-enters-sydneys-new-apartment-market-with-northern-beaches-site-acquisition">One Living enters Sydney's new apartment market with Northern Beaches site acquisition</a></em></p>

<p data-end="4143" data-start="3991"><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-ipm-plans-third-mona-vale-project">First look: IPM plans third Mona Vale project</a></em></p>


First look: Inca eyes Mona Vale with State Significant DA for Dawn apartments

Foreign Investment

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Property 101: Foreign resident capital gains withholding rules

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<p><span>GUEST OBSERVER</span></p>
<p><span>Proposals by the NSW government to make it harder for foreign investors to buy housing will only slow down housing supply. </span></p>
<p><span>The proposals by NS</span><span>W Treasury to impose a 1.5 percent surcharge on land tax on foreign investors in housing will be </span><span>a disincentive to invest in NSW.</span></p>
<p><span>It </span><span>seems that the aim is to match the surcharge in Victoria which will remove the point of </span><span>difference that NSW has.</span></p>
<p><span>The Sydney region needs 33,200 new homes a year according to the Department of Planning </span><span>but last financial year only 27,348 were built leaving a shortfall of nearly 6,000 homes. We must do all we can to boost housing supply and foreign investors have been contributing to this particularly through new apartments. To send a message that these investments are not wanted </span><span>in NSW can only reduce the flow of capital into new housing.</span></p>
<p><span>Foreign investors often help make development pro</span><span>jects become feasible by underpinning the </span><span>pre sales with up to 15% of purchases and this helps local purchasers buy into a viable project.</span></p>
<p><span>The argument for the surcharge seems to be to free up more housing for first home buyers by </span><span>reducing the number of purchasers but this can only lead to less new homes being built. With an undersupply already pushing prices up a further reduction in supply is likely to only increase home </span><span>prices.</span></p>
<p><span>There has been a slow</span><span>-down in housing approvals in NSW over the last 6 to 8 months and an additional tax on foreign investment in housing will only lead to a further slow-down. Already Sydney has the council amalgamations causing some concerns over planning and discussion about adding value capture levies to new development beginning to affect confidence in the </span><span>market so the possible extra levy on foreign investment will further erode industry confidence.</span></p>
<p><span><em>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" target="_blank">here</a>.</em></span></p>
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Foreign investment in housing helps with much needed supply: Urban Taskforce

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<p><span>The Chinese-led consortium still wants to buy the S.Kidman &amp; Co properties.</span></p>
<p><span>It is tipped to pull its recent $370 million bid which will then be resubmitted after the Federal election.</span></p>
<p><span>The consortium includes the listed Australian Rural Capital and Chinese group Dakang, which is owned by Pengxin and Shangahai CRED.</span></p>
<p><span>S.Kidman &amp; Co, which covers almost 11 million hectares of cattle stations.</span></p>
<p><span>The Northern Territory Chief Minister Adam Giles says the federal government needs a consistent policy on foreign investment or it risks missing "opportunities" for the country.</span></p>
<p><span>The Country Liberal Parry leader said he understood the reasons for the decision, but stressed the need to ensure there's consistency in how these matters are determined.</span></p>
<p><span>"I want to see a food policy developed for Australia that ensures Australia's food security and recognises the opportunities that exist to meet emerging demand from Asia's growing middle class," Mr Giles said in a statement.</span></p>
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Kidman offerees set to return after federal election

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<p>Foreign investors have been driving the industrial property market in Sydney over the 12 months to March 2016, accounting for 46 percent of industrial stock sales according to Savills.</p>
<p><span style="line-height: 1.3em;">The total dollar value </span>of<span style="line-height: 1.3em;"> these transactions came exceeds $865 million, according to the April industrial briefing from Savills.</span></p>
<p><span style="line-height: 1.3em;">According to the report, f</span><span style="line-height: 1.3em;">oreign investors are looking for </span>industrial<span style="line-height: 1.3em;"> property due to the typically high yielding and generally long lease expiry profiles attributed to these assets.</span></p>
<p>"<span style="line-height: 1.3em;">The fourth quarter of 2015 saw Singaporean giant M&amp;G Investments, increase its Australian real estate exposure, paying $79.75 million in November for two Sydney industrial properties, in Ingleburn and Erskine Park," the report said.</span><span style="line-height: 1.3em;"><br></span></p>
<p><a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.13.18%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.13.18%20PM.png" alt=""></p>
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mick.cee-iDmgDDAmu8

Foreign investors driving Sydney industrial market: Savills

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<p><span>GUEST OBSERVER</span></p>
<p><span>The Foreign Investment Review Board (FIRB) annual report includes updated figures on approvals of foreign purchases of Australian residential real estate. </span></p>
<p><span>The data is annual, dated and has been heavily criticised in the past as an inaccurate measure of the true level of foreign real estate purchases in Australia. </span></p>
<p><span>However, it is essentially the only information on the topic with any sort of consistent back history and is therefore a rare clue as to the size, growth and composition of demand from this segment.</span></p>
<p><a href="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.00.54%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.00.54%20AM.png" alt=""></span></p>
<p>For 2014-15, the aggregate figures show:</p>
<p><span style="line-height: 1.3em;">36.8k approvals for residential real estate purchases totalling $57.9bn, equivalent to 7.3% of total sales by number and 15.5% by value (note that the treatment of ‘developer off the plan’ approvals means this likely understates the number of properties purchased but overstates the value)</span></p>
<p><span style="line-height: 1.3em;">FIRB approvals are up 60-65% on 2013-14, very strong growth but slower than the 98% gain – i.e. doubling – in the previous year and the 150%+ surge in 2010-11.<br></span></p>
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<p><span style="line-height: 1.3em;"><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.02.35%20AM.png" alt=""></span></p>
<p>The FIRB figures are lower but in the same ‘ballpark’ as the other main estimate of foreign buyer demand – the NAB property survey, respondents to which have put the proportion of foreign demand for residential real estate at around 5% for existing and 15% for newly built dwellings.</p>
<p><a href="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.05.38%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.05.38%20AM.png" alt=""></p>
<p>The state breakdown of FIRB approvals shows:</p>
<p><span style="line-height: 1.3em;">Vic continues to be the dominant location for properties being purchased by foreign buyers – approvals imply foreign buyers accounted for around 14% of total sales by number and over 30% by value, the latter up 80%yr.</span></p>
<p><span style="line-height: 1.3em;">Qld saw particularly strong growth in 2014-15, the value of FIRB approvals jumping 180%yr, but is still a small share overall – 17% compared to NSW and Vic which combined accounted for 77% of FIRB approvals (by value).</span></p>
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<p><span style="line-height: 1.3em;"><img src="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.07.53%20AM.png" alt=""></span></p>
<p>More recent market data shows a sharp slowdown in turnover since mid-2015. With the number of domestic owner-occupier finance approvals rising over this period, other segments are clearly driving the slowdown. While lower domestic investor activity may be the main factor, some slowing in foreign buyer activity may also be contributing. </p>
<p><a href="/images/2016/04/11/Screen%20Shot%202016-04-12%20at%208.09.10%20AM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
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<p><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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FIRB residential approvals: Westpac's Matthew Hassan

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<div>It's almost becoming an annual tradition that the Treasury scrambles until 4.59pm on a Friday before pinging out the Foreign Investment Review Board (FIRB) Annual Report and nipping off for a few cold ones.</div>
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<div>And this year the finance team surely did not disappoint scrimmaging until mere moments before "schooner o'clock" on Friday before delivering the goods!</div>
<div> </div>
<div>Broadly as expected total foreign investment in Australia was very strong in FY2015, increasing by +16.3 percent to $194.6 billion, with real estate (both commercial and residential) the largest sector at $97 billion.</div>
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<div>The total number of real estate approvals increased from 23,428 to 37,347 in FY2015, mainly for new dwellings.</div>
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<div>Real estate approvals have more than tripled in only two years. Bazinga. </div>
<p><a href="/images/2016/04/11/FIRB1.jpg" target="_blank"> Click to enlarge</a></p>
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<div>Proposed investment in real estate soared to $96.9 billion, incorporating $36.2 billion of commercial real estate proposals.</div>
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<p><br><strong><span style="text-decoration: underline;">Foreign investment in residential real estate</span></strong></p>
<div>Proposed foreign investment in residential real estate ripped from $34.7 billion in FY2014 to $60.8 billion in FY2015, a level that could even not have been imagined only two years earlier.<span style="line-height: 1.3em;"> </span>
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<div>No proposals were rejected in FY2015 following three rejections in the preceding year, although 40 percent of approvals were granted with conditions attached, such as time periods for development or the requirement for temporary residents to sell should they depart Australia (approvals are filtered by specific questions, and therefore are to a large degree self-selecting).</div>
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<div>One divestment order was made in May 2015 by the FIRB, with an established $39 million residential Sydney property having been purchased illegally by a foreign company.</div>
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<div>Thereafter in May last year responsibility for divestment orders was assumed by the Australian Taxation Office (ATO), and a further 26 divestment orders were actioned.</div>
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<div>There was a massive 60 percent increase in the number of residential real estate approvals, with about 80 percent of those approvals for purchases of under $1 million in value (i.e. apartments).</div>
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<div>The bulk of this monster increase in foreign investment related to new real estate, including developer off the plan purchases, meaning that in aggregate foreign investors accounted for nearly 60 percent of all new residential construction.</div>
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<div><span><strong><span style="text-decoration: underline;">China's rise</span></strong></span></div>
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<div><span>The value of total FIRB approvals for China has increased by around 68 per cent since the prior year and accounted for around 33 per cent of the total value of approvals by foreign country in FY2015.</span></div>
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<div><span>Approvals for all Chinese investment in real estate, incorporating residential and commercial investment, all but doubled to $24.3 billion.</span></div>
<p><a href="/images/2016/04/11/FIRB4.jpg" target="_blank">Click to enlarge</a></p>
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<div>Finally, Melbourne retained its crown as the king of foreign investment in terms of residential real estate, reflecting the huge volumes of residential construction in that city, with Sydney comfortably  bopped into second place.</div>
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<div>There was also enormous foreign investment in vacant land in Victoria at $3.4 billion, far exceeding the $1 billion seen in New South Wales, for example.</div>
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<div>The above having been said, Queensland saw far larger increases in foreign residential real estate investment in percentage terms.</div>
<p><a href="/images/2016/04/11/FIRB5.jpg" target="_blank"> Click to enlarge</a></p>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>Foreign investment in Australian residential real estate is something of a double-edged sword.</div>
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<div>It is abundantly clear that foreign investors became more active in the purchase of new dwellings in FY2015, and monumentally so, with most of that foreign interest coming from China.</div>
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<div>Foreign investment has thus been a crucial factor in the strength of this residential construction boom, accounting for more than half of the investment in new dwellings, helping in turn to keep rental growth subdued.  </div>
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<div>On the flip side, foreign developers in Sydney have shown a willingness on occasion to pay prices for development opportunities far in excess of what locals are generally prepared to pay, putting significant upwards pressure on land values.</div>
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<div>Whether this can level of investment in new dwellings can be sustained is less clear as the residential construction cycle passes its peak imminently.</div>
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<div>Clearly there is vast foreign interest in Australian property from China, and it seems reasonable to me to suggest that any holes in the FIRB Annual Report are likely to be errors of omission rather than errors of commission.</div>
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<div>As such, the above information acts as a useful indicator, but it may not be complete.</div>
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<div>With immigration now rising again, the share of overseas born Aussies at a 120 year high, and as the number of international students in Australia skyrockets, the potential pathways for foreign capital to ultimately find its way into established residential property markets are multiplying, particularly in the largest capital cities.<br><br>A final thought or question for you - what percentage share of these new apartments bought by investors from the Chinese mainland ever make it to the local rental market?</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

FIRB real estate approvals triple in two years: Pete Wargent

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<p>GUEST OBSERVER</p>
<p>Australia needs a fair foreign investment policy that offers Australians equal opportunities.</p>
<p>For foreign investors, Australia is a desirable country because of its stable economy, favourable weather conditions and proximity to Asia. Furthermore, 2016 will be the year international developers take centre stage in Sydney – more than in previous years.</p>
<p>There are many other factors at play that make Australia so desirable and, for investors, there is less red tape and fewer restrictions on how many properties they can buy. </p>
<p>In contrast, in China, for example, each province has different rules and regulations, with some provinces only allowing residents to purchase a maximum of two properties. </p>
<p>The International Monetary Fund says that China has the most expensive property in the world. The median house price in Beijing is believed to be 20 times the annual household disposable income, so it’s understandable that they’re looking elsewhere. Sydney and Melbourne represent good value by comparison.</p>
<p>The number of Chinese investors in Australia might fall in Australia within the next 2-3 years and that Indian investors will make Australia their first port of call.</p>
<p>In my opinion, we will start to see Chinese investors possibly fading away from the Australian market depending on their slowing economy in the next few years, and will see a genuine emergence of buyers from India.  They will find it attractive for the very same reasons the Chinese do.</p>
<p>Land and property sales data suggests that foreign investors are now getting in on the process earlier to close the loop.</p>
<p>Many sites have been snapped up by international developers and the reality is that we can’t stop it from happening, not in this global economy. In saying that, it’s only fair, right and appropriate that Australian residents have, at the very least, equal opportunity.</p>
<p>Australian residents should be looked after; they shouldn’t be at a disadvantage to foreign nationals.</p>
<p>Safeguarding the interests of Australian residents should not be confused with being xenophobic, as they’re two very different things. We should still openly invite foreign investment, I just believe that it should come with more restriction and regulation. I was born in Britain so this isn’t a jingoistic standpoint, I merely want to see the same rules be applied to anyone buying in Australia irrespective of where they are from.</p>
<p>Conflicting information about the current market is making it confusing for Australian investors struggling to keep up.</p>
<p>As far as I can tell, there aren’t any accurate numbers available on the extent to which foreign investment is impacting the local investor community and house prices. Significant research is needed. As a real estate head with years of experience in the Australian market, I myself am having difficulty comprehending the situation, so what chance does the average layperson have?</p>
<p><strong>Five solutions for a fair foreign investment policy that gives Australians equal opportunities:</strong></p>
<p><strong>1. Introduction of a levy.</strong> </p>
<p>I absolutely advocate the introduction of a levy.  Last year the government introduced a tax for overseas investors, but in my opinion, this should be increased.  Australian residents are forced to pay for extras such as stamp duty when they buy property and I believe overseas investors should have to pay even more.</p>
<p><strong>2. Placing a cap on the number of properties sold to overseas investors.</strong> </p>
<p>We should regulate the number of properties on Australian soil that are sold to overseas investors:</p>
<p>It’s a bit of a mockery if Chinese investors can only buy two properties in some of their own provinces, but they can come to Australia and can buy 10. It doesn’t matter where investors are coming from – and they’re coming from all over the globe – it’s about looking after the interests of the Australian people.  </p>
<p><strong>3. Clean money assessment.</strong></p>
<p> A handful of high-profile and high-net cases last year were intentionally made public to oust some illegal transactions happening and spook off unscrupulous investors, and Douglas believes that many more could have gone unnoticed. </p>
<p>These homes were just the tip of the iceberg and my question is, what about the rest of the iceberg? Do we have any idea how big it is? We know that illegal transactions are taking place because of these cases, and that these acquisitions by foreign investors breach regulations. There is a strong suggestion that this is regularly taking place in the upper echelon of the Sydney and Melbourne markets.</p>
<p>We need to take a harder look into where the money is coming from, as there has been some suggestion that it’s not always clean. The UK government, for example, has implemented money laundering checks and Australia should be doing the same.</p>
<p><strong>4. Financing rules around the acquisition process.</strong> </p>
<p>As is currently stands, financing is not fair for the local investor. We know that a Chinese financial institution based in Australia offers zero deposit home loans for Chinese investors purchasing Australian property. Here, under new macroprudential guidelines, we have Australian residents now required to pay a 20 per cent deposit on a property whilst international buyers can completely circumnavigate the system. It’s ludicrous, all buyers should be on a level playing field in the process and financial aspect.</p>
<p><strong>5. Percentage of developments must be sold to Australian residents.</strong></p>
<p>Up until 2008, developers had to sell a portion of properties to Australian residents. This lifted in the GFC but it’s my view that we should re-establish it and place a limit on how many investments they can buy. I heard that last year only 10-15 per cent of off-the-plan developments in Sydney and Melbourne were sold to overseas investors, but that conflicts with other reliable reports, saying that it was closer to 40 per cent.</p>
<p>It’s increasingly common for foreign investors to buy and develop or redevelop, then sell property on Australian soil off-shore or to international investors without Australian residents even getting a look in.  We need to look at the vulnerability of our market – does selling too much to overseas investors make us become vulnerable to factors outside of our control?</p>
<p><em><span>DOUGLAS DRISCOLL</span> is CEO of real estate agency <a href="https://www.starrpartners.com.au/" target="_blank">Starr Partners</a>.</em></p>
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douglasdriscoll-EkfdEjJSsC

Foreign investment impact on local market worsens

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<p><span>The Treasurer Scott Morrison has announced that he ordered the sale of eight more properties due to more breaches in foreign investment ownership laws.</span></p>
<p><span>The owners had come from Malaysia, Taiwan, the United States, India, Canada and China. </span></p>
<p><span>The newest enforced sales takes the tally to 27 properties that the federal government have ordered to be sold, totalling around $75 million in value. <a href="/news/australian-buyer-lola-wang-li-emerges-with-villa-del-mare-the-39-million-point-piper-firb-home"><span>Villa del Mare in Point Piper</span></a> sold last year at $39 million being the headline one. </span></p>
<p><span>Queensland took the brunt of the latest divestiture orders with properties in Eight Mile Plans, Park Ridge, Robertson and Crestmead all being forced to sell.</span></p>
<p><span>There was one property from Windsor, New South Wales and three from Victoria on Morrison's hit list, the most expensive being 35-37 Regent Street in Mount Waverley which was purchased for $5.1 million without permission, and resold under the amnesty at $6 million late last year.</span></p>
<p><span><a href="https://www.realestate.com.au/property-house-vic-mount+waverley-119802483" target="_blank">The four bedroom home is one of Mount Waverley's largest land holdings</a></span><span> over 4097 sqm and features a tennis court, swimming pool and pool house with sauna, was briefly owned by a Malaysian.</span></p>
<p>It was advertised as having the potential for redevelopment into multiple townhouses. <a href="/news">CoreLogic RP Data puts the house price median at $1.2 million</a>.</p>
<p><span>Morrison said that the tax office are now looking after investigations into illegal purchases and still have 800 cases to look in to.</span></p>
<p><span>He also said the government amnesty period meant the owners of the eight properties would escape criminal charges.</span></p>
<p><span>"The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules.</span></p>
<p><span>"Under the reduced penalty period announced in May, the investors linked to the eight properties now have 12 months to sell the properties, rather than the normal three month period, and will not be referred for criminal prosecution," he said.</span></p>
<p><span>Fines of up to $135,000 or three years imprisonment can be enforced for individuals and $675,000 can be imposed for companies.</span></p>
<p>The Mt Waverley foreign buyers are understood to have come forward under an amnesty period between May and November, so were not referred for prosecution.</p>
<p>The homes forced back to market in the Brisbane and Logan suburbs of Eight Mile Plains, Park Ridge, Robertson and Crestmead were priced from $780,000 to $250,000. In Melbourne the Blackburn property was valued at $525,000 and in Carlton at $215,000 and in Windsor, outside Sydney a $518,000 property.</p>
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jrobinson-rf4aSBido9

Treasurer orders foreigners to sell Mt Waverley property

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<p><span>Knight Frank have noted from 1 December 2015, all foreign investors must now pay a fee before their foreign investment application will be processed and stricter penalties have been ramped up by the Australian Taxation Office for those who breach the rules.</span></p>
<p><span>Overview</span></p>
<p><span>The current Australian foreign investment framework for residential property is designed to generate new housing supply. The construction of new houses and apartments is aimed to increase the opportunity for people to purchase, as well as, stimulate economic activity with the employment of builders and suppliers. </span></p>
<p><span>The recent changes introduced by the Federal Government are designed not to deter foreign investment into Australia, rather ensure the current rules that limit foreign investment in established dwellings are enforced.</span></p>
<p><span>Until this time, there has been poor policing by the small team at the Foreign Investment Review Board (FIRB) resulting in limited penalties imposed on those who breach the rules. For a long time, the framework was undermined due to poor data collection, along with a lack of audit, compliance and enforcement.</span></p>
<p><span>Given no fees were collected on application, it made it quite difficult for the FIRB to justify committing more Australian tax-payer resources, despite the number of foreign investment applicants growing almost three- fold over the course of 2013-14.</span></p>
<p><span>Over the same time, residential property prices rose significantly in many suburbs across the country. As a result, the Australian public became increasingly concerned that the influx of foreign purchasers were having a direct impact on mainstream (established) house prices.</span></p>
<p><span>This placed pressure on the now former Treasurer, Hon Joe Hockey MP, to provide clarification on the role foreign investment plays in residential property.</span></p>
<p><span>On the 19 March 2014, he commissioned a study to be undertaken by the House of Representatives Standing Committee on Economics. After a lengthy and comprehensive eight month inquiry, the House Economics Committee found that the current foreign investment structure should be retained but made 12 practical recommendations to ensure there is better compliance within the existing framework. </span></p>
<p><span>A consultation process followed with the public and key industry bodies. It was proposed that all property administration functions were transferred to the Australian Taxation Office (ATO). The ATO was seen to be well-placed to utilise it’s data-matching systems to identify possible breaches with an increase in penalties. </span></p>
<p><span>The Government then introduced the legislation into Parliament in the Spring sitting. It was slated in late November 2015 with the changes taking effect from 1 December 2015.</span></p>
<p><span>Current rules for foreign investors</span></p>
<p><span>The current rules around foreign </span><span style="line-height: 1.3em;">investment in residential property aims to direct investment into new housing, increasing the housing supply and support local economic activity. All foreign persons, that is temporary residents and non-residents, can apply to purchase vacant residential land for development and newly constructed dwellings in Australia.</span></p>
<p><span>Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, temporary residents can apply to purchase one established dwelling to use as their residence while they live in Australia, although on the condition the property is sold when it ceases to be their principle place of residence. </span></p>
<p><span>FOREIGN INVESTOR APPLICATION FEES NOW APPLICABLE</span></p>
<ul>
<li><span>Applicants will pay a fee to the ATO before their foreign investment application is processed.</span></li>
<li><span>The fees apply for each application and is uncapped if the property is valued over AUD$1 million.</span></li>
<li><span>If an application falls into a number of categories, the category with the highest fee would apply.</span></li>
<li><span>The fee on application does not provide any assurance of securing the property. </span></li>
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<p><span>ENHANCED COMPLIANCE AND ENFORCEMENT </span></p>
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<span style="line-height: 1.3em;">The Government has provided $47.5 million over four years to the </span><span style="line-height: 1.3em;">ATO to improve compliance and strengthen the enforcement of the rules.</span>
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<span style="line-height: 1.3em;">The ATO has the capacity to cover more than 600 million transactions annually through its data-matching programs. The ATO matches its own taxpayer data with a variety of third party sources, including FIRB, </span><span style="line-height: 1.3em;">immigration, AUSTRAC, banking data and state and territory land title data.</span>
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<li><span style="line-height: 1.3em;">Suspected breaches are then followed up by around 50 investigative compliance officers.</span></li>
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<span style="line-height: 1.3em;">Investors who have breached the rules risk being identified by the ATO as part of its compliance activities. </span><span style="line-height: 1.3em;">These investors may then face criminal and/or civil prosecution. </span>
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<p><span>REVISED PENALTIES FOR BREACHING THE FOREIGN INVESTMENT RULES </span></p>
<p><span>The Australian Federal Government is increasing the existing criminal penalties and introducing new civil pecuniary penalties for those who breach the foreign investment rules. For more detailed information please refer to the FIRB website www.firb.gov.au. </span></p>
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<p><span>Penalty Regime for Foreign Investors, Residential Property </span></p>
<p><span>Under Foreign Acquisitions and Takeovers Legislation Amendment Bill 201 </span></p>
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<p><span>NEW APPLICATION FEES AND PENALTIES FOR DEVELOPERS </span></p>
<p><span>Property developers can apply for a new dwelling exemption certificate to sell new dwellings in a development of 50 or more residences to foreign investors. </span><span>The fee for a new dwelling exemption certificate for a developer is AUD$25,000 upfront, with a reconciliation of properties sold to foreign persons based on the above rates. </span></p>
<p><span>The Government has tightened the rules around the use of new dwellings exemption certificates by </span><span>limiting the value of all apartments that can be bought by a single foreign investor to $3 million in the one development. </span><span>If foreign investors want to purchase apartments above this value, they will have to seek individual approval. </span></p>
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Property 101: Foreign investment divestiture fines in Australia

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<p>GUEST OBSERVER</p>
<p>There have been many articles recently by those in the industry claiming there is a massive issue with housing affordability for first home buyers. More often than not, foreign investors are the target of this fury.</p>
<p>Often these articles quote the alarmist figures of first home buyers numbers (as a % of all dwellings financed) dropping from the long-term average of 22% to just 12%.</p>
<p>Issues such as reduced affordability and foreign investment are often touted as the reasons for this drop-off in first home buyer activity. </p>
<p>Unfortunately, for those espousing this propaganda, the figures are simply incorrect.</p>
<p>Way back in February 2015, the ABS announced that there was an issue with the data.</p>
<p>“An investigation by the ABS has identified that the data on first home buyers are under-reported, as some lenders have only reported loans to first home buyers who have also received a First Home Owner Grant.”</p>
<p>Now, quite clearly, this fails to capture first home buyers that do not utilise the grant, do not qualify for the grant, or who choose to purchase a property that is not eligible to receive a grant. Quite simply, this statistic is a completely inadequate indicator of first home buyer activity.</p>
<p>Yet, it continues to be quoted by those that either don’t understand the information or who choose to use this statistic to further their own cause regardless.</p>
<p>In June 2015 the RBA submission to the Inquiry into Home Ownership stated the following:</p>
<p>“Housing ‘affordability’, measured as the share of average household income required to service a loan on a median-priced dwelling, has continued to cycle between 20 and 30 per cent, and is currently well below previous peaks.”</p>
<p>The vast majority of first home buyers purchase well below the median price and in many instances can purchase with as little as 5% deposit or with the support of family, no deposit at all.</p>
<p>Some would argue, that there has never been a better time for First Home Buyers to enter the market.</p>
<p>But, are they simply being outbid by Foreign Investors at auction as is often claimed?</p>
<p>Well, the Foreign Investment Review Board clearly states that Foreign Investors can only purchase:</p>
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<li>A New Dwelling</li>
<li>Vacant Land</li>
<li>An Established Dwelling To Demolish &amp; Redevelop</li>
</ul>
<p>I don’t think it’s too much of a stretch to rule first home buyers out of the latter category, so, the only competition that first home buyers face is when purchasing brand new dwellings or off the plan.</p>
<p>The majority of these are offered at a fixed price by the developer and rarely go to auction, so, again, the implied issue of first home buyers being outbid at auction is again a long bow to draw.</p>
<p>Historically, first home buyers purchase older or smaller properties in locations they can afford and work their way up the property ladder over a number of years to achieve their dream property. This is often achieved through a process of increasing income with age and experience and a build-up of equity-either manufactured through renovations or naturally as part of the property cycle.</p>
<p>I would suggest that you listen very closely to those that are claiming there are so many issues with housing affordability for first home buyers and question not only their motives, but, the so-called facts they use to support these claims.</p>
<p><em>Paul Bevan is senior advisor at Dream Financial Services and can be contacted <a href="https://www.dreamfinancial.com.au/about" target="_blank">here</a>.</em></p>
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