Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<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/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

<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/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Mortgage Debt

<html><body>
The latest ratios of household finances highlight that the ratio of debt to disposable income is at a record high however, the value of household assets is also at a record high level.
With record low interest rates, the ratio of interest payments to disposable income is the lowest it has been since early 2003.
The ratio of household and housing debt to disposable incomes are each at historic highs of 186.3 percent and 133.8 percent respectively with the ratios increasing by 3.4 percent and 4.3 percent over the past year; 
Over the period from 1988 to 2015 standard variable mortgage rates have fallen dramatically and that has surely contributed to household’s preparedness to take on more debt.
<a href="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.11.34%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.11.34%20PM.png" alt="">
 
Over recent years the ratio of interest payments to disposable income has been falling with the ratios for households and housing now sitting at their lowest levels since 2003. The higher ratio of interest payments currently compare to 1988 when interest rates were substantially higher.
This is reflective of the much higher cost for household assets, particularly the cost of residential housing.
The data shows that although households have significant debt, particularly for housing, the value of the assets they hold is substantial. The ratio of household debt to disposable income is currently 186.3 percent however, the ratio of household assets to disposable income 862.8 percent, the highest it has ever been.
Similarly, the ratio of housing debt to disposable income is 133.8 percent however; the ratio of housing assets to disposable income is 471.3 percent.
What is interesting is that the ratio of household assets to disposable income is still lower than its previous peak in December 2007 at 476.2% percent, however, it is nudging back up towards its previous record high.
The value of household assets is significantly greater than the value of the debt. Based on this data, the ratio of household debt to assets is 21.6 percent and the ratio of housing debt to housing assets is 28.4 percent.
<a href="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.16.17%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.16.17%20PM.png" alt="">
 
Australian households are heavily indebted due largely to residential housing and while high; the value of the assets held is much greater than the debt. It’s important to consider that this is a national view.
Across different regions the ratios are likely to be substantially different. Furthermore, lower interest rates and a fairly strong labour market over recent decades have contributed to a willingness to borrow. Should either of these factors to change it could lead to a dramatic deterioration in the value of these assets while of course the debt would remain.
Importantly, mortgage arrears remain low and the Reserve Bank has reported that the typical mortgage holder is currently more than two years ahead on their mortgage repayments. This coupled with higher rates of household savings provide a potential buffer if unemployment were to rise sharply or interest rates began to increase.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
 
</body></html>

ckusher-ujnxiKuFQs

Household and housing debt reach new record highs: CoreLogic RP Data's Cameron Kusher

<html><body>
GUEST OBSERVER
Negative gearing is set for its biggest change in decades. Once considered the sacred cow of federal government policies, both major parties are proposing changes ahead of this year’s federal election.
The Labor party has already unveiled its policy, which involves only allowing negative gearing on new houses and cutting the generous 50% capital gains tax concession to 25%.
The Government has not confirmed its stance and has attacked Labor policy, but has crucially left its options open.
Less than 12 months ago, even considering changes to negative gearing was considered “unpopular” at best with then-Prime Minister Tony Abbott reassuring voters that there would be no changes to negative gearing.
Now, while neither the Liberal government or Labor opposition are keen to abolish negative gearing entirely as the Greens and some economists (most notably Saul Eslake) have proposed, both sides of politics are claiming they will “make the system fairer”.
<h2>So what has prompted this change?</h2>
First, a quick refresher on negative gearing. Gearing is the use of debt (such as a mortgage) to increase the amount of money that may be invested. Negative gearing occurs when the cost of this debt (for example, the interest charged) exceeds the income from the investment (like the rent).
Why would anyone want to incur a loss? The most widely promoted reason is because this net loss may be deducted against the investor’s taxable income, lowering their overall tax bill. This is clearly going to benefit those investors with higher incomes more than those with lower incomes. And, the statistics show that those with more to gain are more likely to take advantage of it:
 
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/111456/area14mp/image-20160215-22573-a6cfb3.png"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/111456/width668/image-20160215-22573-a6cfb3.png" alt=""></a>Proportion of tax filers with negatively geared investment properties by income band 'Better Tax', Tax Discussion Paper, Australian Government, March 2015
<div class="enlarge_hint"> </div>
 
There is a second benefit from the property investor’s perspective - the treatment of capital gains. When a capital gain on the investment asset is realised (it is sold), the investor gets a 50% discount on the capital gains tax.
For many years now, investment properties have been the most popular investment asset after the owner-occupied home and superannuation. Like any other investment, including shares, borrowers may take on debt to facilitate the property purchase. The benefits from negative gearing, combined with the perception of housing as a “safe” asset class with steady capital appreciation has fuelled the flow of investor capital into the market.
But now, with growing public awareness of the operation of negative gearing, its cost through missed tax revenue, and increasing housing affordability concerns, even those benefiting from negative gearing are questioning whether it is appropriate.
<h2>Comparing the alternatives</h2>
The Coalition government has been reluctant to commit to any policy changes, instead hinting at “capping” the amount of negative gearing benefit that may be claimed. In a way, this is a reinvention of the 2011 Gillard government proposal to target just the “wealthiest” investors who own portfolios of investment properties. We might expect to hear more details from Treasurer Scott Morrison in his Wednesday Press Club address.
The Labor party, by contrast, has made the first solid move. In so doing they have made negative gearing a major election issue and will force the government into presenting a real policy proposal, likely as part of the 2016-17 Budget.
The Bill Shorten-Chris Bowen policy announced over the weekend has been in the works since April 2015. If implemented, negative gearing would apply as usual to properties purchased prior to July 2017. After this date, however, investors would only be able to claim negative gearing against newly constructed investment properties.
<h2>But will it work?</h2>
The Government’s suggested approach would effectively create a “progressive negative gearing”. The tax rate increases (because the discount decreases) as income increases. While still lacking details, tackling the problem this way more reasonably considers the broad range of individuals who own investment properties, from teachers and nurses to the country’s most wealthy.
Labor argues that the asymmetry of its gearing policy between new and existing properties will divert investment to housing construction and boost the housing supply.
However, critics of the Labor proposal argue that it will trigger a rush of investors to the existing housing market prior to the July 2017 change, in turn reigniting a house price bubble.
Neither the opposition nor their critics are right and this is why:
<ul>
<li>
To truly benefit from a negative gearing investment strategy, the property buyer would be hoping to win on the capital gains side. For that to occur, property prices need to keep rising, yet that is exactly what the policy is hoping to contain. Savvy investors will know this and take their savvy dollars elsewhere.
</li>
<li>
If you still believe there will be a boom in 12 months time, the better strategy would be buy now (well, technically, when or if Labor are successful at the election) in order to sell to some sucker then.
</li>
</ul>
An even more critical flaw in the Labor proposal is the absence of strategy addressing when and where we will see this new housing supply.
Fundamentally, either approach makes housing a less attractive investment. In the short term investors will look to move their capital into other asset classes, primarily the stock market, which has been volatile.
It could take decades to see the broader implications of removing the incentive to invest in housing over other assets if existing property owners continue to benefit from “grandfathering” the current rules. Therein lies the flaw with arguing this policy change will also help to repair the federal budget (remembering the owner-occupier still makes their capital gains completely tax free).
Ultimately, the tide has turned politically on negative gearing. Whichever party sells their proposal best (alongside changes to superannuation and the GST) will be the election winner.
Danika Wright is lecturer in finance, University of Sydney and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/danika-wright-121868" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Sacred cow no more: what the proposed changes to negative gearing really mean

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Delinquency and default rates for Australian residential mortgage backed securities (RMBS) and asset backed securities (ABS) will rise slightly from their current low levels in 2016, due to slower economic growth and a rise in unemployment, says a recent report by Moody's Investor Service. 
The credit quality of the mortgage collateral for new RMBS issued in 2016 will deteriorate when compared with 2015, the report says, due to the inclusion of a greater proportion of riskier housing investment and interest-only (IO) loans and mortgages originated during a period of low interest rates and rapidly rising house prices.
The report noted investment and IO loans are riskier than owner-occupier and principal and interest (P&amp;I) loans because they have higher loan-to-value (LTV) ratios, a key default driver.
Additionally, IO loans amortise slower compared with P&amp;I loans, if at all, and therefore build equity at a slower rate, resulting in a higher loss upon default.
The analysts at Moody's also expect more RMBS deals to reduce their dependence on lenders' mortgage insurance (LMI) policies in 2016. 
Australian RMBS delinquencies and defaults will rise slightly from their current low levels in 2016, due to economic growth that will be below the long-term trend, an uptick in unemployment, and a slower pace for house price growth in some cities, it said.
Housing prices, particularly in Sydney and Melbourne, are expected to slow which will mean a slowdown in economic activity which will contribute to an increase in RMBS delinquencies and defaults in 2016, the note said.
Any weaker housing market also means borrowers at risk of default are less able to sell their houses quickly at prices sufficient to fulfil their repayment obligations.
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j.ballantyne1990-6AQqhLzZaK

Australia RMBS mortgage defaults to rise slightly in 2016: Moody's 

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<img src="/images/2015/11/4/Holdencapital_banner.jpg" alt="" width="622" height="131">
 SPONSORED POST
Most banks have long memories and it’s those past experiences, which in all probability resulted in the writing off of a bad debt, that tend to have a strong influence on the executives responsible for writing the banks lending policy.
One such area of contention is the issuing of second mortgages and in most cases the approach by banks is consistent, driven by those past bad experiences.
So while there are sound arguments as to why it might actually be in the banks interest to allow a second mortgage, most credit/risk manager default to a position that will not impact on their security position and it takes some very careful negotiations to convince them to do otherwise. So lets look at the reasons why they have those concerns.
The bank does not think the developer has enough money – as the saying goes “If you want it they won’t give it to you and if you don’t want it they throw it at you”. It is true in most regards, that when considering a project a bank wants to be working with a sponsor who has the ability to invest the full equity requirement, also referred to as ‘skin in the game’, and a capacity write a cheque in the event of any unforseen cost overruns.
However, many smart sponsors choose to use Other People’s Money (OPM), usually so that they can get the best return on their funds by investing across multiple opportunities. So it is very important that the financial strength and experience of the sponsor can be demonstrated to the bank even if it is not all to be committed to the project in question.
Utilising second mortgage funding in order to expand the number of projects they can undertake is a smart way for a sponsor to leverage their return on equity provided they can show an ability to meet any unforseen financial pressures along the way. It is critical to give the bank a clear understanding of why the second mortgage funding is being used but also provide statements of position, group cash flows and approved standby arrangements to support the sponsor’s ability to meet their ongoing commitments to the project in question.
The Bank does not want any potential impediments to it realising on its security – In the event that things go wrong during a development, the bank will in most instances look to recover its exposure by disposing of the security via a quick sale rather than undertaking a lengthy workout. Even in the case of a development project, banks do not want to ‘take control’ of a project unless absolutely necessary and will usually appoint a receiver or administrator to undertake the exercise of completing the development and sale as soon as practicable with the minimum of additional expenditure.
Their concern is that where there is a second mortgage in place (and dependant on the terms of any priority agreement in place), the potential exists for that mortgagee to frustrate the actions of the bank by arguing that those actions prejudice their security position. Alternatively, while there may be no default or cause for action on the banks part, the second mortgagee may decide to take action under its securities which forces the banks hand to either take its own action in priority to the second mortgage or pay out the second mortgagee in order to gain full control. Both of these scenarios played out during the GFC and previous market corrections, continuing to make all banks hesitant about transactions involving second mortgages.
One way to address these issues is to have a reputable second mortgage provider who the banks are comfortable with and trust not to take any extreme actions during the life of the project. Additionally, the banks will require the second mortgagee to sign a priority agreement which in effect cedes all of its rights to the first mortgagee while its debt exists, effectively preventing the second mortgagee taking any action that the first mortgagee does not want to occur.
Developers skin in the game – As previously mentioned, all financiers, be they first or second mortgage providers want to see that the developer has an appropriate amount of their own “risk” money in the project – the view being that the developer will be more likely to act in the right way if they have an appropriate amount of their own cash at risk in the project. The current view is that the developer must be providing at least 10% of the required capital stack in a project.
In the eyes of the banks, this is a different risk to having a capacity to meet your obligations as detailed previously. This is about ensuring that the customer is motivated to act quickly to deal with a problem that requires either financial or physical action when it occurs and their concern is that if the equity at risk is sourced via a second mortgage provider then:
There is less motivation for the sponsor to take the required action and they have no power to require the second mortgagee to act or input further equity.
In fact it is often the case that the second mortgagee is a passive syndicate of investors with limited ability to raise additional funds or make quick decisive decisions which leaves the bank having to deal with the problems associated with the projects but also having to be conscious of not acting in a way which is prejudicial to the interest of those investors which is a complication they do not relish.
In summary, banks tend to view all second mortgages as complicating transactions rather than adding value as their interests are not always aligned with those of the borrower and it is therefore a negotiating exercise that requires a complete understanding of the interests of both sides. At HoldenCAPITAL we are often required to obtain a senior banks consent to a second mortgagee position in order to get the best outcome for our client. We do this by clearly demonstrating the positives that the structure brings to the transaction and how the risks will be dealt with.
 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au" target="_blank">here</a>.
 
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firstname-zEygzUaHDN

Why the bank won't let you have a second mortgage

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The national Australian housing market is severely overpriced relative to all the fundamental measures of value: rental incomes, inflation, construction costs, household incomes and GDP.
That is the conclusion of LF Economics duo Lindsay David and Philip Soos who conclude debt-financed speculation as the major cause of the what they describe as "Australia’s largest housing bubble in the nation’s economic history."
"The media and industry has warned housing price growth will begin to moderate and fall, but the latest results from the debt accelerator, Speculative Index and Kavanagh-Putland Index, however, indicates annualised real price growth of 8.9% could remain steady over the course of the next couple of quarters, inflating the bubble further.
They noted nationwide real housing prices surged by 4.3% in 2015Q2, the single largest quarterly increase since 2009Q4.
<a href="/images/2015/10/21/Screen%20Shot%202015-10-21%20at%2012.35.41%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/21/Screen%20Shot%202015-10-21%20at%2012.35.41%20PM.png" alt="">
The duo calculate the price to income ratio has reached record highs in 2015Q2: houses (8.3x) and units (6.4x).
"Both historically and internationally, Australian dwelling prices are extremely expensive and unaffordable relative to household incomes," according to the LF Economics report titled Ahead of the Housing Curve,  written by Lindsay David and Philip Soos.
"Australia is catastrophically overleveraged in terms of private sector debt, particularly the household sector.
"Since 1996, housing prices have outpaced economic fundamentals such as inflation, household incomes, rents, construction costs and GDP, demonstrating the housing market is in the thrall of an asset bubble.
"Australia’s economic history indicates real estate bubbles developed during the 1830s, 1880s, 1920s, mid-1970s and late 1980s.
"Contrary to the analyses of the vested interests, the data overwhelmingly demonstrates Australia is in the midst of the largest housing bubble on record, both in terms of prices to rents and household incomes.
"The government, central bank (RBA), prudential regulator (APRA), FIRE sector (finance, insurance and real estate industries) and their economists predictably deny the existence of a housing bubble, believing a severe downturn in the housing market simply cannot occur.
"The usual arguments put forward are the same as those made everywhere else a housing bubble has occurred: prudent lending practices, deregulation of finance, recourse mortgages, dwelling shortages, restrictions on land supply, low nominal interest rates and inflation, population growth, demographic change and so on.
"Today, after centuries of asset bubbles, mainstream economists have yet to determine and define what they are, so debate on the matter is kept necessarily vague.
"Housing bubbles are poorly understood, if at all, on the basis of ‘irrational exuberance’ or ‘chasing capital gain’.
"No rational explanation can be made as to why housing prices have so radically departed from fundamental factors, most notably rental prices.
"The data strongly suggests the boom in real housing prices are not caused by any commensurate movement in economic fundamentals, but rather, debt-financed speculation as evidenced by the exponentially growing stock of mortgage debt.
<a href="/images/2015/10/21/Screen%20Shot%202015-10-21%20at%2012.37.53%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/21/Screen%20Shot%202015-10-21%20at%2012.37.53%20PM.png" alt="">
The report concludes there is greater awareness among policymakers and public of the housing bubble and its potential for wealth destruction.
"While there is more to say about Australia’s fascinating and quite dangerous economic experiment with financialisation and real estate speculation, the data and commentary in this report illustrates the long-term trends in the housing and debt markets, providing the necessary proof that a housing bubble does indeed exist and therefore represents a clear and present danger to the economy and banking system," the LF Economics report concluded.
For the full report from LF Economics, <a href="https://www.lfeconomics.com/news" target="_blank">click here</a>.
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Catastrophically overleveraged as Australia’s largest housing bubble in history continues: LF Economics

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Housing co-operatives should be seen as a priority for expansion to assist in addressing housing affordability, according to the Business Council of Co-operatives and Mutuals' (BCCM) submission into the inquiry into Home Ownership.
Housing co-operatives are key players in the range of responses needed to address Australia’s housing affordability crisis, affirmed BCCM. 
"A report by the Co-op has revealed that nearly eight in ten Australians aged between 19 and 29 are concerned about the level of mortgage debt they may face in their lifetime, and the prospect of ever being able to own a home.
"The current speculative model of housing ownership cannot deliver affordable housing for all. It is time to consider alternative ownership models and co- operative housing has proven to be a very significant opportunity for housing market reform. 
"Co-operative housing can either be provided as rental housing or based on a wide range of co- operative ownership models. In general, co-operative housing provides long term, secure and affordable housing for people on low to moderate incomes." 
Member participation directly reduces cooperative housing management costs, asserted BCCM in the submission to the House of Representatives Standing Committee on Economics. 
"Recent benchmarking demonstrates that co-operative housing is the most cost effective form of social housing program. Community Equity New South Wales (CENSW) has estimated that housing co- operatives produce savings over ten years per 1000 properties of $4.07 million in comparison with other social housing sectors.
"Seed funding needs to be provided to specialist housing co-operative centres that can function as a central resource agency for housing co-operative development. 
"The role of the resource agency would be to refine documentation for the various models, promote models to potential consumers and provide advice services to developing co-operatives. 
"Existing co-operative housing providers could be funded to expand their educative role. 
"Funding for this initiative could come from sources not limited to government but include stakeholders with an interest and commitment to the provision of affordable housing such as trade unions, customer owned banks, consumer-focused mutuals, consumer interest groups and member-owned super funds. 
"Rental co-operative programs could be further expanded by capital funds being made available to develop new stock or alternatively through the transfer of existing social housing stock. 
"A source for this funding could be through a combination of government seeding grants and commercial loans from financial institutions with an interest in developing new lending products in the housing loans market place. 
"Collaborative partnerships are also possible with co-operative and mutual capital investment partners ranging from financial mutuals (another form of Co-operative) or member-owned super funds to community development finance institutions. 
"Financial mutuals can also assist with affordable housing through the provision of affordable housing loans and a range of other consumer/member focused products. 
"The financial mutual sector is a significant player in the provision of affordable housing finance. It is driven by member needs and concern for the community and will continue to support affordable housing in all its forms. 
"Housing co-operatives are the quiet achievers in the housing sector. They have been highly successful in Australia and many other countries." 
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