A new 25-storey apartment tower proposed for Mercer Street would push Geelong’s western gateway skyline higher, with Morphy Birrell Property Group lodging plans for a project directly beside one of the city’s most significant heritage streetscapes.

The <a href="https://www.apartments.com.au/architects/fk-australia">FK</a>-designed development at <a href="https://www.apartments.com.au/new-apartments/65-67-mercer-street-geelong-vic-3220">65-67 Mercer Street</a> has now been referred to Victoria’s Planning Minister. The site sits opposite the Geelong rail corridor and immediately south of the heritage-listed St Peter and Paul’s Catholic Church and Ashby Hall precinct.

Rather than compete with the neighbouring ecclesiastical buildings, the proposal adopts a sculpted podium intended to reference the materiality and scale of the heritage context. Planning documents note the design draws cues from the “dark stone brick” church and surrounding masonry buildings, while the tower above transitions into a softer, curved form oriented toward Corio Bay and the Geelong waterfront.

<img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="b797d10c-d4a6-47af-b8df-1aeaa3b382be" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/public%20square.png?VersionId=QGIpcz1x1hKB6lQLl2iobyHqb6PS2Ztc" />

The development forms “Stage 5” of Morphy Birrell Property Group’s broader Mercer Street precinct strategy, following the completion of the 21-storey Miramar tower on Cavendish Street and several additional approved redevelopment stages nearby. Planning consultants Ratio said the proposal “represents an exemplary development outcome” aligned with the strategic ambitions for Central Geelong’s continued urban renewal.

The mixed-use project would replace an existing low-rise commercial building and surface parking area on the 3,320 sqm corner site. FK’s urban context report describes the proposal as a residential development comprising apartments, resident amenities, commercial space, and integrated landscaping positioned to maximise bay views and northern sunlight access.

Renders show a deeply articulated tower with curved balconies stepping above a lower masonry podium that frames a landscaped forecourt facing Mercer Street. The design intentionally preserves sightlines toward the adjacent church buildings, with the podium scaled to reinforce the heritage edge before the tower recedes upward.

<img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="2bdca91e-66f7-4ac7-8baa-2f93bd5b564e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/geelong%20site.png?VersionId=QOhbino4ZgzKYw5dW3QE14E.2yq.Sv87" />

The planning report highlights the site’s strategic location within 400 metres of key Geelong destinations including Cunningham Pier, the Geelong Station precinct, Deakin University, and the convention centre. Bus services run directly along Mercer Street, while the Corio Bay foreshore sits around 100 metres north of the site.

The proposal arrives amid accelerating redevelopment across central Geelong, where planning policy continues to encourage higher-density housing close to transport infrastructure and the waterfront. Mercer Street in particular has emerged as a focal point for taller apartment development due to its proximity to Geelong Station, the bay, and major civic infrastructure.

Joel Robinson

Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct

Development giant&nbsp;<a href="https://www.apartments.com.au/developers/hamton">Hamton</a> and joint venture partner Hostplus have revealed the next residential stage of their $3 billion Moonee Valley Park masterplan, lodging plans for 512 more apartments within the precinct on surplus racecourse land at 110 Wilson Street, Moonee Ponds.

The proposed development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/trackside-house-110-wilson-street-moonee-ponds-vic-3039">Trackside Gardens</a>&nbsp;in the planning application, follows the <a href="https://www.apartments.com.au/news/vic/first-look-exclusive-hamton-and-hostplus-reveal-sixth-stage-of-moonee-valley-park-masterplan">recent unveiling of the sixth-stage Cox Place Precinct</a> and continues the long-running transformation of the Moonee Valley Racecourse into one of Melbourne’s largest urban renewal projects.

Positioned on the north-eastern edge of the racecourse adjacent to CityLink, Trackside Gardens will comprise three residential buildings rising between 61.8 metres and 86.4 metres within a heavily landscaped precinct shaped by Hamton’s Nature Based Cities framework.

The project forms part of the broader Moonee Valley Park redevelopment being delivered by Hamton, Hostplus and the Moonee Valley Racing Club, which is reshaping the 40-hectare racecourse site into a mixed-use neighbourhood with housing, retail, commercial space, hotels, parkland and community infrastructure.

Trackside Gardens sits separately to the recently proposed Cox Place Precinct, a five-building stage comprising around 1,100 residences, two build-to-rent buildings, two build-to-sell towers, retail, office space, and a hotel overlooking the racetrack. Together, the projects continue to accelerate housing delivery across the precinct.

<img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="5fc1941e-52d3-41c6-abc4-0f13fe8ae5ea" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/DA%20Edits%20%281%29.png?VersionId=7qwRHq5dcvXWNot2hNOgoQhN2GIWudNK" />

Designed by <a href="https://www.apartments.com.au/architects/dko-architecture">DKO Architecture</a> with landscape architecture by Tract, Trackside Gardens has been conceived as a botanical-style residential precinct prioritising canopy planting, communal green space, and vertical landscaping.

“The architectural vision for the proposed development centres around buildings in a botanical park setting that champions the important role of nature,” the planning submission states.

“The proposal incorporates principles of biophilic design, with landscape and environmentally sustainable development influencing the ultimate design response of the buildings and prioritising the ground plane to ensure a high amenity for both occupants and visitors.”&nbsp;

Trackside Gardens will deliver 512 apartments across the three buildings, alongside 518 basement car spaces and 523 bicycle spaces. Around 20 per cent affordable housing is proposed across the broader North East Precinct, equating to around 158 dwellings.&nbsp;

The affordable housing component will be concentrated within the Wilson East building, while the remaining apartments are expected to be delivered as build-to-sell residences.

Trackside Gardens has been designed around Hamton’s Nature Based Cities initiative, founded by Executive Chair Paul Hameister OAM in partnership with the University of Melbourne, Urbis, Ark Resources and Tract. The initiative promotes integrating higher-density urban development with significant biodiversity, tree canopy and landscape outcomes.

<img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="89353449-7b3c-42fd-8fd8-8bf64a5ef80f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_4.png?VersionId=X8jRt0P2L7fIWjLhfX6gPknXToXIBeLj" />

A comprehensive landscape strategy would introduce deep soil planting, vertical greening, communal gardens, and new pedestrian links throughout the site.

Planning documents state the development is targeting a 5 Star Green Star Buildings rating, a 7.5-star average NatHERS rating, and “Exemplary” Nature Based Cities certification.&nbsp;

The proposal joins an expanding pipeline of approved and proposed buildings within Moonee Valley Park, including the recently launched Eveline apartments and the approved Grandstand North and South towers.

Hamton has increasingly focused on precinct-scale, nature-led communities across Melbourne’s middle-ring suburbs, with projects spanning Hawthorn, Kew, and Moonee Ponds.

Hampton unveils Trackside Gardens, latest stage of $3 billion Moonee Valley Park masterplan

The Paul Gedoun-led <a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Group</a> has achieved another milestone in its $1 billion transformation of Rainbow Bay on the southern Gold Coast with the completion of the company’s third project in four years, the $160 million <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a> residences.

Delivered by <a href="https://www.apartments.com.au/builders/hutchinson-builders">Hutchinson Builders</a> and designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker Architects</a>, Esprit buyers have now moved into the 94 apartments across two interconnected buildings at 217-227 Boundary Street.

The successful settlement of Esprit marks another astounding chapter in the S&amp;S story, which launched its highly successful Flow apartments three years ago and created its own ultra-luxury branded fingerprint on an area craving new luxury residences.

Most early purchasers have secured gains of well over $1 million since the project launched in 2021.&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172129]

S&amp;S Projects Founding Director Paul Gedoun said the completion of Esprit reflects sustained demand for premium apartments in tightly held coastal locations.&nbsp; 
&nbsp;&nbsp; &nbsp; 
“Esprit has attracted buyers seeking a combination of quality design, considered amenity and a location that is becoming increasingly difficult to replicate,” said Gedoun.

“We identified some years ago that Rainbow Bay is a unique market where supply of luxury residences is limited, and we see the settlements in Esprit further underpinning this thinking - that for both owner-occupiers and investors.”&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172174]

A key feature of the development is ‘Club Esprit’, a 1,000sqm residents-only rooftop level combining wellness and recreation, believed to be a first for the Gold Coast, and which is fast becoming a signature of the S&amp;S brand.

Positioned to capture views across Snapper Rocks, Rainbow Bay and the Tweed River, the rooftop includes a 25-metre lap pool, gym, yoga lawn, sauna and steam facilities, ice bath, private dining spaces, outdoor cinema and landscaped areas for residents.&nbsp;

<a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a> Director Jayde Pezet, who led the sales campaign for Esprit and S&amp;S’s Flow and Awaken apartments, said the project’s performance reflects both the strength of the product and the depth of demand for premium apartments on the southern Gold Coast.&nbsp;

“In some cases, we’ve seen values double since launch, which is a clear reflection of how tightly held Rainbow Bay has become and the level of demand for well-executed projects in this market,” said Pezet.&nbsp;

“Buyers recognised early what S&amp;S Projects was delivering here, and that conviction has been rewarded as the project has progressed towards completion.”&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=214819]

Esprit offers a mix of two- three and four-bedroom apartments and sits within walking distance of the beachfront, cafés and local amenities, reinforcing its appeal as both a lifestyle and investment destination.

The project is the third completed by S&amp;S Projects in Rainbow Bay, following Flow Residences and Awaken Residences, which together have contributed to the suburb’s emergence as one of the Gold Coast’s most sought-after coastal pockets. &nbsp;

S&amp;S Projects is continuing its investment in the area with Radia, a $215 million development currently under construction.&nbsp;

[smartcode_project:default project_id=102921 project_image_fid=172175]

Gedoun said the completion of Esprit signals continued confidence in the southern Gold Coast market.&nbsp;

“We’ve seen strong interest in well-located, high-quality apartments, particularly in areas where future development opportunities are limited."

“That’s been a key factor in the performance of Esprit and the broader Rainbow Bay market”.

[smartcode_project_cta:default project_id=102921]

Owners move in as Esprit completes at Rainbow Bay

Few developers can boast a portfolio across South East Queensland's luxury markets quite like <a href="https://www.apartments.com.au/developers/mosaic-property-group">Mosaic Property Group</a>.

The builder-developer, founded in 2004 by Managing Director Brook Monahan, has projects in planning, on the market, and under construction, from Burleigh Heads and Broadbeach to Kangaroo Point and South Brisbane.

With a pipeline exceeding $2 billion, Mosaic remains highly selective when it comes to development sites, having spent years refining its strategy around feasibility research and product planning. The group is set to continue growing into 2026 and beyond.

In Brisbane, Mosaic currently has three projects in the market. It is in the final release stage at <a href="https://www.apartments.com.au/new-apartments/the-bedford-by-mosaic-16-30-prospect-street-kangaroo-point-qld-4169">The Bedford</a> in Kangaroo Point, which is approaching complete sellout ahead of its late 2027 completion.

[smartcode_project:default project_id=134792 project_image_fid=328123]

Designed in collaboration with <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, The Bedford comprises 128 two- and three-bedroom residences. A selection of ultra-luxury Masterpiece Series Skyhomes, positioned across the top levels, offer expansive floor plans and sweeping views of the river and city.

High-end inclusions, such as natural stone benchtops, bespoke cabinetry, and Miele appliances, feature throughout all apartments, alongside the Rooftop Recreation &amp; Retreat Sky Terrace. This includes a resort-style pool with sun deck and loungers, spa, cold plunge pool, sauna, steam room, private dining room with a full kitchen, residents' lounge, multiple barbeque and relaxation zones, an outdoor viewing deck, and landscaped gardens with water features, all oriented to sweeping city and river views.

A gym with indoor and outdoor zones, and a golf simulator, further enhances recreational choice within the building.

[smartcode_project:default project_id=134792 project_image_fid=328119]

A defining feature of the development is its integrated mixed-use component, which will deliver Kangaroo Point's first major supermarket, alongside a café and liquor store, bringing long-awaited convenience to the peninsula.

Monahan says The Bedford represents the culmination of a near-decade-long journey, after first identifying the A-grade Prospect Street site in 2016. While they came close to acquiring it at the time, the site was ultimately purchased by Woolworths' development arm, Fabcot. The opportunity resurfaced in 2024 when the site, vacant for nearly three decades, was brought back to market.

Monahan says Mosaic projects often begin years before any formal plans are drawn. Their new South Brisbane development is no exception, with the site first earmarked in 2018.

"We aren't opportunistic," Monahan says. "Every site purchase is carefully considered. As seen with Kangaroo Point and South Brisbane, it can take years to eventuate. There are sites we're looking at now that we may not secure for several years."

[smartcode_project:default project_id=141711 project_image_fid=353495]

A similar story unfolded at <a href="https://www.apartments.com.au/new-apartments/the-carter-by-mosaic-77-linton-street-kangaroo-point-qld-4169">The Carter</a> in Kangaroo Point, opposite The Gabba. Like The Bedford, it is also approaching sellout of its 125 two- and three-bedroom apartments. The majority of sales are attributed to returning customers and referrals, with a balanced mix of investors and a strong majority of owner-occupiers.

BDA Architecture was again engaged to design the 22-storey building, which will feature a suite of wellness and lifestyle amenities, including a golf simulator and cinema, a commercial-grade gym, and a rooftop recreation level with a pool, steam room, sauna, cold plunge, teppanyaki bar, private dining spaces, and landscaped terraces.

Construction is on track for completion in mid-2027.

[smartcode_project:default project_id=151614 project_image_fid=362759]

Mosaic's latest offering is its most ambitious yet, boasting a rare, north-facing riverfront position on Montague Road in South Brisbane.

<a href="https://www.apartments.com.au/new-apartments/the-riversdale-by-mosaic-south-brisbane-91-montague-road-south-brisbane-qld-4101">The Riversdale by Mosaic</a> is a 39-storey tower comprising just over 200 residences and Masterpiece Series Sky Homes. Designed in partnership with Bureau Proberts, it will feature nearly 3,000 sqm of genuine, internationally benchmarked six-star, hotel-style amenities, including a wellness precinct, pool, gym, massage and treatment rooms, cinema, golf simulator, and extensive outdoor dining areas across a two-level rooftop deck.

Early works are underway, with full construction expected to commence in the second half of 2026, and an anticipated late 2029 completion.

[smartcode_project:default project_id=151614 project_image_fid=362759]

Since 2012 alone, Mosaic has completed more than $2 billion in projects and is set to deliver another $2 billion worth of developments, comprising hundreds of luxury apartments, each defined by Mosaic's signature standards of quality, detail, and delivery.

"We never arrive, there is no finish line," says Monahan. "Our ambition is to keep evolving what luxury means, creating design- and lifestyle-led residences in incredible locations, places people genuinely aspire to and want to live, homes that are loved deeply and endure long beyond their moment."

Mosaic's Midas Touch

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> (Urban) has broken ground at Keira Place, its new major mixed-use residential precinct in the heart of Wollongong CBD.

Held at 120-122 Smith Street, the groundbreaking marked the commencement of construction on Stage 1 of <a href="https://www.apartments.com.au/new-apartments/keira-place-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, with the opening of the new display suite. 
&nbsp; 
Keira Place is a State Significant Development that will deliver new housing supply, affordable homes and inclusive living options within walking distance of Wollongong’s CBD, coastline, transport, hospital and education precincts.

[smartcode_project:default project_id=144442 project_image_fid=369868] 
&nbsp; 
Stage 1 is now under construction and will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, along with activated ground-floor retail and commercial space. 
&nbsp; 
Urban Co-CEO Patrick Elias said the groundbreaking represented a significant milestone for Wollongong and reflected Urban’s long-term commitment to regional cities.

“Today’s groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong’s city centre,” Elias said. 
&nbsp; 
“Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection.”

[smartcode_project:default project_id=144442 project_image_fid=369869] 
&nbsp; 
Hon. Paul Scully MP, Minister for Planning and Public Spaces, Member for Wollongong said Keira Place is exactly the kind of development Wollongong needs – delivering new homes close to transport, employment and services, while supporting the continued growth and renewal of the CBD.

"This project reflects the Minns Labor Government's commitment to increasing housing supply in well-located areas." 
&nbsp; 
Wollongong Lord Mayor Cr Tania Brown said Keira Place would deliver lasting community benefits for the city. 
&nbsp; 
"Keira Place is a welcome addition to Wollongong's CBD delivering new housing, affordable homes and activated street-level spaces that will benefit our community for years to come," Brown said. 
&nbsp; 
"Urban Property Group's investment reflects the confidence that quality developers have in Wollongong's future, and I look forward to seeing this precinct come to life."

[smartcode_project:default project_id=144442 project_image_fid=369867] 
&nbsp; 
Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a>, with interiors by <a href="https://www.apartments.com.au/interior-designers/dko">DKO,</a> Keira Place prioritises liveability and long-term performance, with landscaped shared spaces, generous apartment layouts and a pedestrian-friendly streetscape along Smith Street. 
&nbsp; 
Residents will have access to landscaped podium areas, communal rooftop amenities with views to Mount Keira and the Wollongong skyline, and convenient ground-level retail.

The development will have 10-year Latent Defects Insurance by Resilience Insurance.

[smartcode_project_cta:default project_id=144442]

Groundbreaking marks start of construction at Keira Place in Wollongong CBD

John Edwards

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GUEST OBSERVATION
The Reserve Bank’s recent decision to introduce an interest rate reduction is a strong indication that there are changes brewing for Australia’s property market.
To fully understand how this rate cut will affect our housing markets, I think it’s essential to firstly understand how they have performed over the last 12 months. My research shows that there has definitely been some ‘winners and losers’ in the state comparisons.
The clear winner of the housing market battle is Sydney, which has documented a 16.78% annual growth rate from the period of December 2013 to December 2014. Performing equally as well in the unit market with an annual growth of 12.90%. By all accounts, what we have just witnessed is one of the largest boom periods in Sydney’s housing market history.
Taking this into consideration - along with its strong annual economic growth throughout 2014 that saw its state final demand increase by 3.5% - it is clear to see why people who are looking to enter the housing market would choose New South Wales. This compares to Western Australia, for example, whose economy is arguable in recession with its state final demand falling in the last three reported quarters.
This aside, when we take a deeper look at the Sydney market we uncover some unfavourable facts, including:
<ol start="1">
<li>The ABS’ latest reported commencements in new housing currently sits at 4,082 dwellings above the median commencement rate of the last five years. 
</li>
<li>New housing approvals, as last reported by the ABS, are running at 2,591 dwellings above the five year median. 
</li>
<li>Population growth, as last reported by the ABS, is slowing and currently running at 1,728 people below the five year median. 
</li>
<li>Residex estimates that there are currently some 7,000 dwellings surplus to need. 
</li>
<li>Unemployment is increasing, and is likely to increase a little more than was anticipated, given the lower crude oil prices and a consequential likely reduction in employment in the LNG development and exploration area.</li>
</ol>
These observations suggest that the Sydney market is heading into considerably oversupplied territory, which could lead to some significant corrections. In fact, analysis right across Australia indicates that there is a national stock overhang, and in many states it is significant.
So what does this all mean in a situation where interest rates have decreased?
We can anticipate that the interest rate decrease is likely to stimulate the markets, so house prices will probably move forward from here, with the lending control of the major banks hopefully keeping the markets from overheating.
But is this a good outcome for the property market? My simple answer is… no!
While it may be good in the short-term for existing house owners, throughout my three decades of monitoring house price growth, I can confirm that each period of growth always ends with a number of people who bought close to the top of the market getting burned due to their excessive leverage. 
I issue a warning to all, and that is that we have passed the top of a normal growth period, and we are now about to have the market further stimulated. This will take the growth into unchartered waters where affordability will be worse than we have previously seen.
If you are an investor wanting to get into the market, take care and make sure you don’t pay a premium for any purchase you make, especially if you are buying new units.
John Edwards is a consulting analyst for <a href="https://www.onthehouse.com.au/" target="_blank">Onthehouse.com.au</a>.
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jedwards-8kHM8GNY6d

The interest rate cut was a bad outcome for the property market: John Edwards

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GUEST OBSERVATION
Negative gearing is currently a hot topic, with opinions clashing across the net.
Whenever an investor benefit is considered being removed, it is important to remember that under the surface the benefit could actually be more important to the end user of the asset.
If you were to reduce the investor return or benefit for any kind of asset, the investor has two options. Firstly, they could exit the market and no longer provide the resource, placing funds in another asset class. Or alternatively, they could increase the cost of providing the asset to maintain the level of return they wish to achieve.
Either way, the impact of both options is ultimately the same, rentals increase due to landlord rental increases or rental increases due to tenant competition for the same property due to low levels of rental stock availability.
All asset sectors should be treated equally to maintain a balanced marketplace – this includes shares, property, and so on. Investors must always make decisions based on quality and return prospects, not on benefits that are available as a consequence of some sort of government incentive.
There is currently nothing to stop investors negatively gearing their share portfolios and achieving the same effect as investing in the property market. Therefore, in essence, removal of negative gearing from the property market alone would create a market distortion.
Notwithstanding all the above, what one can’t do is enter a transaction with the main objective of reducing your tax liability. This would in fact be in contrary to the provision of Part IVA of the tax act - the section that deals with tax avoidance.
Equally, if you are entering the transaction on the basis that you will make profits from capital gains and not rental returns, you are in effect in the business of trading in property and therefore not entitled to the capital gains tax benefits.
Negative gearing has now been around for so long and so widely accepted that many will believe that there are no constraints as to its use. Hence, it is very likely that there are many people with significant claimed tax deductions that could be lost and if the Tax Commissioner reviewed their tax returns. The impact on many of these people would be very catastrophic.
So what should happen? The government should have the Commissioner clarify the position by having him issue a general tax ruling/advice. The advice should indicate that:
<ul>
<li>Transactions which are geared beyond a level which causes tax losses annually for an unreasonable period of time (say five years) will be subjected to review and where there is evidence of tax avoidance then the provisions of Part IVA of the act will be applied. </li>
<li>Where an investment property is sold and if at no time during a reasonable pre-sale period did the rental income exceed the interest and other deductions, the tax office would consider the transaction was a purchased for the purpose of trading in residential property and hence the capital gains tax benefit of only having to pay tax on 50% of the gain would not be available. Equally in this situation the tax office alternatively may seek to disallow deductions claimed and take action under Part IVA of the act.</li>
</ul>
Undoubtedly our tax lawyers will find numerous very technical reasons to suggest the ruling/advice is inappropriate. However, in reality the ruling/advice would simply put the nation on alert and create a level of risk for the majority which would cause negative gearing to be used as it was intended and avoid any need to remove it totally.
This is a simple and effective solution that could be implemented very easy and not require any legislative changes. It would allow the Taxation Commissioner to look at existing property transactions as they’re being sold.
Overall, I do believe that negative gearing is necessary. It is a subsidiary in favour of the lower income earners who are renting as it encourages the provision of stock for these people. However, there are increasingly cases where it is being allowed by federal government authorities when it should not be, and this is distorting the market, causing higher house prices and making it harder for first time buyers.
John Edwards is consulting analyst for <a href="https://www.Onthehouse.com.au" target="_blank">Onthehouse.com.au</a> and founder of <a href="https://www.residex.com.au/" target="_blank">Residex</a>.
If you are looking for a more in depth analysis of John's property research, you can find this in the <a href="https://investors.onthehouse.com.au/" target="_blank">Investor Centre</a> at <a href="https://www.onthehouse.com.au/" target="_blank">Onthehouse.com.au</a>.
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It's not just investors who benefit from negative gearing

<html><body>
If Sydney’s growth continued at the high levels being seen before, then it could have been the beginning of bubble conditions and price drops, according to Residex’s John Edwards.
Discussing new research from Onthehouse that noted residential capital growth rates for May were at lower levels that expected, Edwards expressed his relief.
“With any luck, the statistics will continue on this new trend of lower rates of growth over the next few months. Housing markets, particularly Sydney, were moving to a “boom” like performance,” said Edwards.
“This was dangerous and could have led to a “bubble” and a severe correction if it continued. The slowing of the market at this point in time suggests that we are going to avoid this outcome. Having said this, the Sydney market is still overvalued and in reality too expensive,” he said.
In many areas across Australia, <a href="/news/brisbane-catching-up-but-overvalued-sydney-still-strongest-of-the-capital-cities-onthehouses-john-edwards">houses and units experienced negative growth rates for the month</a> – although overall national house growth was recorded at 0.36% in May. This compares to 1.71% in the last quarter. Units dropped nationally by 0.23%, compared to 1.17% growth over the quarter.
In Sydney, house growth was subdued at 0.24%, but remains 17.42% up over the last 12 months. House values in Melbourne dropped 0.03%, although still clocked in 9.45% growth over 12 months.
In fact, over the month, Country Western Australia recorded the highest house price growth rate with a 2.38% result. Perth, however, had the biggest house price decline, with a 1.9% fall.
In the Northern Territory, units grew the most by 1.53%, with unit values falling the most in Country Tasmania, by 2.73%.
These figures have Edwards a little more comfortable that growth rates will be subdued in the future.
“The data from May is not sufficient on its own to confirm that this lower rate of growth is about to be a new feature, but my best guess is that this will in fact be the case,” he said.
He also notes the Sydney unit market is likely passed its peak, with 2.81% growth for the quarter ending May.
House and land may not be quite at this point.
However, it is not as clear that the house and land market has arrived at the same position. 
“The Sydney house and land assets are more often traded via the auction market and hence clearance rates are potentially a lead indicator for this sector. In recent weeks, auction clearance rates in Sydney have been softer – our calculations indicate that the Sydney clearance rate was 68% for the week ending 14 June. This figure suggests a market that is now slowing.”
Turn the page for the full details of house and unit price movements across Australia.
<hr class="system-pagebreak">
<img src="/images/2014/06/19/residex-june-19-one.jpg" alt="">
Source: Onthehouse.com.au
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jduke-EHk3XBmHkn

Sydney market overvalued, with “bubble” potential: John Edwards

<html><body>
GUEST OBSERVATION
Our federal budget is due to be delivered on Tuesday 13 May, 2014 and we are being repeatedly told that there has to be significant cuts to expenditure. Our state budgets will be delivered soon after that date.
In essence it is time for governments to deliver something which is new and helpful to maintain and increase housing stock, but at the same time does not simply drive housing prices higher. This definitely rules out changes to negative gearing as its removal would simply reduce investor activity and available housing stock.
There are two outcomes in our housing markets that are needed:
1. Ensure there is an increase in Australian citizen investment in new housing stock; and
2. Increase the number of first home owners in the market.
The first, in my view, is a state issue
Most of us will have family or friends who have been trying to buy a home and failed because they have been out bid by a cashed-up foreign buyer. One has to ask whether foreign buyers should have equal rights as Australian citizens. I suspect not. That is not to say that foreign buyers are not necessary in our markets, rather they are simply investing in a low risk, very attractive country and for that benefit they should have to pay some type of premium.
Altering our land tax regime would enable us to charge this premium from foreign investors and potentially decrease their activity without necessarily decreasing supply of new stock. This can be done by increasing the land tax payable by non-Australian citizens who own property in our country and at the same time, decrease the rate of land tax charged on property owned by Australian citizens, with all property purchased in the future and currently held, being subjected to these changes. Obviously, the amount of these alterations will need to be modelled and the changes would need to be phased in.
The consequence is clear. Foreign investment activity would be marginally reduced (depending on the altered tax rate applicable to them) and the lower tax rates for Australian citizens should cause increased investment activity by this group. It should also mean that the first home owner may have a better chance of competing when buying.
The second, in my view, is a federal government matter
The first home owner has been forced out of the market simply as a consequence of rising house prices and the consequent level of income needed to support a home loan.
In essence we need to organise things so this group – and everyone buying a property to live in – has adequate cash flow to meet the high home loan repayments. This will particularly be the case when interest rates increase in the medium term.
A relatively simple change to the capital gains tax (CGT) legislation is required.
This change would allow home owners to claim interest deductions on their home loan repayments where they elect to be subject to normal capital gains tax on the profit they make on any future sale of the property. In essence they exchange the right to have their home exempt from capital gains tax in exchange for the right to immediately reduce their taxable income by the interest they are paying on their home loan.
Being brutally honest given the government’s current budget problems they should simply just phase in the removal of the capital gains tax exemption on the family home all together and automatically provide first home owners who buy a new home with the right to claim interest deductions. Politically this might be better for government than altering pension rights and health benefits etc.
Allowing buyers to elect to claim interest as a deduction would mean an improved annual cash flow which will help to make housing more affordable. What is the cash benefit? Well assume someone has a loan of $400,000 and has a tax rate of 22% then the annual benefit at current interest rates would be in the order of $5,000 per annum or roughly about $100 per week.
The impact of this proposal on borrowers as interest rates increase should also not be overlooked. That is, deductibility means that interest rate increases will not have as large a negative impact on our first home owner as they would otherwise. As interest rates increase their deductions increase and their tax liability is reduced. Hence as interest rates rise, defaults on home loans are likely to also be lower.
There needs to be some detailed modelling to work out a progressive phasing in and potentially define a percentage of the interest cost on the home loan that would be allowed to be deductible. Once this is done then a reasonably solid estimate of the cost to the federal budget could be identified.
From any logical perspective, a combination of subjecting all of our owner occupied housing to a form of capital gains tax and allowing our first home owners to access interest tax deductions, does have merit. And provided it is structured in a manner which does not drive housing prices higher, it will also make housing affordable for the next generation.
The negative which could be seen as a benefit by some, is that it would encourage home owners to limit their trading activity in their own home. That is, a home owner would potentially be less inclined to use their home as trading stock and instead use it as a mechanism for wealth generation by buying with the intent of selling following renovation.
In the short-term we are going to be asked to accept some difficult decisions and perhaps the above, implemented carefully by government could potentially soften the perceived blow.
John Edwards is consulting analyst for <a href="https://www.onthehouse.com.au/" target="_blank" rel="nofollow">Onthehouse.com.au</a> and founder of <a href="https://www.residex.com.au/" target="_blank" rel="nofollow">Residex</a>.
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Two brave budget decisions that would benefit tomorrow’s generation

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New research released this morning from Residex, the research arm for Onthehouse, has listed 10 suburbs for expected house growth and a further 10 for unit growth that they believe will perform over the next five years.
Property market growth, overall, is expected to be steady over 2014, however some areas, particularly those in the inner ring, will potentially prove lucrative.
<blockquote>
The findings show promising areas in every capital city's inner ring for investors.
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John Edwards, founder of Residex, said that the findings show promising areas in every capital city's inner ring for investors.
“We are expecting to see Sydney and Melbourne’s growth rates slowdown in the next six months and in other national markets next year. Although inner ring areas often fall into the least affordable class compared to their suburban neighbours, the data indicates there are still opportunities for savvy investors, in the right suburbs," he said.
“From a national perspective, I’m expecting to see commentary from the RBA later this year that will affect consumer sentiment and again moderate growth. This will mean changes in the recent strong national growth trends. Property investors will need to be cautious about which suburbs they invest in – particularly in inner city areas, which will deliver a very mixed range of returns."
He also noted that stable growth "never occurs in a linear way", with a fall expected to be seen in growth numbers by the end of the year, with two to three years of minimal to zero growth. By 2018, strong growth is expected to re-emerge, along with the results of the suburbs below to 2019.
Overall, units are predicted to bring in lower returns than houses should. Inner ring suburbs will bring an average of 4% to 8% over the next five years, with Melbourne dominating the top five.
“Melbourne is defying past predictions. My feeling is that there is an oversupply of property, especially units, but demand is currently being propped up by three main factors: property developers are managing their units well; international buyers are supporting new unit sales; and higher public confidence is being driven by factors like good clearance rates at auction," Edwards said.
“Anybody buying property over the next 12 months needs to be aware of the growth patterns, now more than ever it is important to do solid research around the market to back up your decisions with data and insight.”
See over page for the top predicted growth suburbs
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<img src="/images/2014/04/14/edwards%20april%2014%20one.png" alt="">
Source: Residex/Onthehouse 
What are your thoughts on these suburbs' growth potential? 
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John Edwards

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