Brisbane-based developer <a href="https://www.apartments.com.au/developers/azure">Azure</a> is has been greenlit for its $115 million residential project within the Gold Coast Health and Knowledge Precinct in Southport

Following the acquisition of the site at <a href="https://www.apartments.com.au/new-townhouses/1-clarke-street-southport-qld-4215">1 Clarke Street</a> in October 2025 with development application Lodgement in January 2026, Azure has been granted approval for the 114 terraces which will form the final stage of the wider Lumina development.

“It’s a fantastic milestone for us to receive the green light on our second Gold Coast project,” said Trent Keirnan, Founder of Azure.

“The Gold Coast continues to evolve, with demand for considered, high-quality residences at an all-time high. This project has been thoughtfully shaped to respond to that demand.

“We’ve worked closely with Economic Development Queensland to bring this project forward, and the collaboration has been both proactive and highly considered. Their shared commitment to quality housing outcomes has enabled a streamlined approvals process and a strong result for the precinct.”&nbsp;

Appealing to a wide demographic, the project will deliver a range of two- and three-storey designs comprising a collection of three-bedroom terrace homes as well as one- and two-bedroom apartment-style residences. The designs by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>&nbsp;focus on&nbsp;“urban coastalism”.

Residents will have access to an array of lifestyle amenities, including a resort-style pool with multiple lounging zones and landscaped gardens.

The residential offering will support the thriving Health and Knowledge Precinct, which includes Griffith University, Gold Coast University Hospital, Gold Coast Private Hospital and the new RDX Lumina and Proxima Towers, which are home to a range of health, education and research tenancies, including a 200-place childcare centre.

Azure aims for an off-market release for the project in the third quarter of this year, at the same time as construction is anticipated to start.

Joel Robinson

Azure approved for new townhouse development in Southport

Fortis has secured approval for a 57-room hotel at Richmond Square, marking another milestone in the delivery of the $330 million mixed-use precinct in Melbourne's inner east.

The hotel will occupy Levels 1 and 2 of Carmine House and forms part of Fortis' vision for Richmond Square, a precinct that will bring together apartments, hospitality, wellness and lifestyle offerings between Richmond and Cremorne.

Once complete, <a href="https://www.apartments.com.au/new-apartments/richmond-square-1-wiltshire-street-richmond-vic-3121">Richmond Square</a> will comprise 107 residences across Wiltshire House and Carmine House, alongside the hotel, hospitality venues, wellness facilities and a range of services aimed at both residents and visitors.

[smartcode_project:default project_id=13181 project_image_fid=348529]

The approval adds another layer to what Fortis is creating at Richmond Square, as developers increasingly look beyond standalone apartment buildings and towards mixed-use precincts that provide amenity and activation beyond the front door.

Jordan Winada, Head of Acquisitions (Commercial) Victoria at Fortis, said the approval was an important step in delivering the broader vision for the project.

"Richmond Square has always been about creating a destination rather than simply delivering residential apartments," Winada said.

"As buyer expectations continue to evolve, we're seeing increasing demand for developments that offer convenience, connection and access to high-quality experiences and amenity as part of everyday life.

"The hotel approval allows us to further realise that vision and create a precinct where residential living is complemented by hospitality, services and amenity in a way that is rarely seen in Melbourne's CBD and city fringe."

[smartcode_project:default project_id=13181 project_image_fid=348530]

The hotel will also support a range of optional services for residents of Carmine House, including housekeeping and linen refresh programs, laundry and dry-cleaning services, in-residence food and beverage delivery, grocery and pantry stocking services, and concierge assistance.

The approval comes as owner-occupiers continue to dominate Australia's new apartment market, with buyers increasingly seeking developments that offer convenience, flexibility and lifestyle amenity alongside their homes.

Winada said buyers are now placing greater emphasis on the broader precinct and surrounding amenity when making purchasing decisions.

"Residential amenity is no longer limited to what sits within an apartment building. Buyers are increasingly assessing the broader lifestyle ecosystem surrounding their home and the ways in which a precinct can support their day-to-day needs.

"Richmond Square has been designed to provide that experience through a carefully curated mix of residential, hospitality and lifestyle offerings that work together to create a more connected way of living."

[smartcode_project:default project_id=13181 project_image_fid=348534]

The hotel is expected to open in early 2027, with the operator to be announced later this year.

Further hospitality, retail and lifestyle tenants are also expected to be revealed in the coming months as Fortis continues to shape the offering at Richmond Square.

[smartcode_project_cta:default project_id=13181]

Fortis approved for hotel component of Richmond Square precinct

Having successfully expanded into a new region with its Caloundra apartment development, Sunset by Dusk Group, growing South East Queensland developer Dusk Group is again venturing into new territory.

The developer has lodged plans for a 70-apartment project in the Moreton Bay region, to be known as <a href="https://www.apartments.com.au/new-apartments/sunrise-on-sutton-25-sutton-street-redcliffe-qld-4020">Sunrise on Sutton</a>, named after its prime Sutton Street location, just one street back from Suttons Beach.

<img alt="Sutton" data-entity-type="file" data-entity-uuid="88a9f9ee-6ace-47f5-a0c6-8fb134b27e98" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-15%20at%209.20.42%E2%80%AFAM.png?VersionId=iMXmJ7_BNZAmCt.jjupMSLdV_Qa9zJAK" />

Dusk Group Directors Huw Feeney and Anthony Short seized the opportunity to acquire the near-1,800 sqm amalgamated corner site at Sutton and Ella Streets for their first project in the area.

They have again enlisted MAS Architecture Studio, the architects behind Sunset by Dusk, to design the new eight-storey development.

The building will comprise a mix of one, two and three-bedroom apartments and has been designed to maximise views towards Suttons Beach, Margate Beach and Moreton Bay.

Pending approvals, the project could launch before the end of the year.

<img alt="Dusk" data-entity-type="file" data-entity-uuid="90c0c26c-096c-4ceb-8c58-f8303aea542f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-15%20at%209.20.49%E2%80%AFAM.png?VersionId=nw8bqQtpOrf5nA95tuYhtqdB59YUzmO0" />

The development will provide 111 car parking spaces and 40 bicycle spaces.

Positioned within walking distance of Suttons Beach, Bluewater Square, Redcliffe Hospital and the Redcliffe Paceway, the development will sit within one of the peninsula's increasingly urbanised coastal pockets.

Redcliffe's new apartment market remains exceptionally tight, with Gardner Vaughan Group's One Redcliffe currently the only new apartment development actively being marketed in the beachside suburb.

It's another beach-focused development for Dusk Group, who has seen considerable success at its Caloundra apartment development, <a href="https://www.apartments.com.au/new-apartments/sunset-by-dusk-group-caloundra-5-7-bombala-terrace-caloundra-qld-4551">Sunset by Dusk Group</a>.

Over 80 per cent of the 36 apartments have sold ahead of its early 2027 completion.

&nbsp;

First look: Dusk Group targets Suttons Beach precinct with 70-apartment Redcliffe proposal

Leading Brisbane developer <a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group (CPG)</a> has completed and settled $450 million worth of apartments at Monarch Residences in Toowong, marking one of Brisbane’s most significant and prestigious riverfront residential completions in recent years.

The final apartment at Monarch sold at auction on the 30th May for $4.1m.&nbsp;

The milestone has been marked at a ribbon-cutting ceremony at <a href="https://www.apartments.com.au/buildings/monarch-residences-toowong-600-coronation-drive-toowong-qld-4066">Monarch Residences</a>, with Cr Penny Wolff highlighting the importance of completing major residential projects to boost the city’s much-needed housing supply.

The 224 apartments, delivered across two 15-level towers, are now officially in the hands of owners, including Brisbane downsizers, families and professionals who have traded traditional houses for apartment living. The completion underscores sustained demand for absolute riverfront living in Brisbane’s inner west.

<img alt="$450M Monarch Residences sells out as Brisbane riverfront demand surges" data-entity-type="file" data-entity-uuid="56ae05e9-092f-41f0-98a1-a10984fdd171" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ROBNN_MONARCHLAUNCHEVENT-131.jpg?VersionId=p76J6weGZqseNrE6aOAjmAHUah.y65Gd" />

Monarch Residences was planned and delivered over four years on a 1.2-hectare parcel with more than 130 metres of direct frontage to the Brisbane River, occupying one of the last remaining true riverfront sites of its scale and orientation within close proximity to the CBD. The site has been transformed from an underutilised, derelict block of land, into a thriving residential precinct with Middenbury House at its centre.&nbsp;

Consolidated Properties Group CEO and Chairman Don O’Rorke says the project’s completion represents the culmination of years of careful planning, design collaboration, market conviction and outstanding team delivery.

“We announced Monarch Residences in late 2021 and it’s been one of the most strongly received residential projects in our 45-year history,” Mr O’Rorke said.

"We are incredibly grateful to the outstanding team who helped bring Monarch Residences to life. A special thank you to Hutchinson Builders and their hardworking labour force for delivering a development of exceptional quality that our residents will be proud to call home for many years to come.

“Brisbane City Council and Titles Queensland also played a huge role in getting residents into their homes early through the pilot programs they ran to speed up the approval processes. They understand the challenges of the housing industry and are doing something about it.”&nbsp;

[smartcode_project:default project_id=113455 project_image_fid=211466]

Consolidated Properties Group Head of Residential, James MacGinley said Monarch Residences showed what could be achieved when private industry and government worked together to deliver new housing for Brisbane.

“Monarch Residences has delivered more than 200 new apartments in Brisbane’s inner-west at a time when additional housing supply is critically important,” MacGinley said.

“It’s fantastic to see residents now moving into this landmark riverfront development, which reflects the strength of collaboration between Council and the project team throughout delivery.

“All government agencies played a significant hand in achieving a fast-tracked outcome for Monarch Residences with Brisbane City Council, Urban Utilities, Energex and Titles Queensland assisted to remove hurdles to achieve settlements.”

[smartcode_project:default project_id=113455 project_image_fid=302326]

With Monarch Residences now complete, CPG has launched River Living, a bespoke on-site property management service designed to enhance the resident experience. The service will support all future CPG residential projects, including the recently announced <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> in Yeerongpilly and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a> in Newstead.

The completion also marks the opening of a prized leasing opportunity at the heritage-listed Middenbury House, built in 1865 and which has been carefully restored and integrated into the broader masterplan.&nbsp;

CPG said the adaptive reuse of the landmark riverfront residence presents an opportunity to introduce a complementary boutique tenancy that respects the site’s historic significance while activating the riverfront frontage.

[smartcode_project:default project_id=113455 project_image_fid=211495]

Colliers Director of Residential Andrew Scriven said the move-in phase highlights continued demand for completed premium riverfront apartments in Brisbane.

“Residents are now experiencing firsthand the scale, craftsmanship and irreplaceable riverfront position that Monarch offers,” Scriven said.

“Opportunities to secure a brand-new, completed residence on Brisbane’s absolute riverfront are exceptionally rare. Combined with the proven track record of Consolidated Properties Group and Hutchinson Builders, combined with a design vision brought to life by some of Australia’s leading architects and designers, Monarch represents a unique opportunity to purchase a home of enduring quality and prestige.”

Monarch Residences was designed in collaboration with Melbourne-based architect Wardle Studio, alongside leading national practice Cottee Parker, with construction delivered by Hutchinson Builders.

[smartcode_project_cta:default project_id=113455]

Consolidated Properties Group sells out Monarch Residences as Brisbane riverfront demand surges

An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.

The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.

The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.

Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" />

It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.

The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." />

Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.

&nbsp;

At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" />

The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.

The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.

Rebel had secured approval for the concept plans late last year.

First look: HSN, Rebel, advances Woolloomooloo precinct plans

Robert Simeon

<html><body>
For some very strange reason property commentators are struggling to differentiate between the investor property market and the household property market. 
Treasurer Joe Hockey was right when he commented this week: “It is just an easy mantra for international commentators and for analysts based overseas to say ‘well there’s a housing bubble emerging in Australia’; it is a rather lazy analysis because fundamentally we don’t have enough supply to meet demand.” 
I have been saying this for the best part of 12 months now, given the figures provided are a bundle of property sales where the demographic markets are not broken down – simply because they are lazy and you get a meatier headline by using the bundle method.
During the global financial crisis (GFC) we kept hearing the ongoing reference to “green shoots” emerging where today some are attempting to decimate the Australian real estate industry. Many forget that the Australian real estate industry is directly one of the largest employers in Australia and there is a very strong argument that it is playing a major role in keeping our economy buoyant.
I don’t really buy the argument about the low interest rates although in five years’ time we in all probability will see distress sales as the cash rate moves up and home buyers come out of their fixed periods – that is inevitable and should not be used as some sort of shock therapy. Many are forgetting that the Australian banks borrow a substantial amount from overseas so when the cost of lending increases it won’t be the Reserve Bank of Australia (RBA) dictating the rates rather the banks will be increasing regardless of the cash rate setting. 
With the ‘Big Four’ banks holding 80% of Australia’s mortgage book they won’t be waiting for guidance from the RBA – they’ve done it before and they will do it again. Although mysteriously the commentators have the RBA front and centre whilst constantly missing the big picture. The cash rate might well remain at 2.50%, but we miss the point that the lenders are hedged to their funding costs which are not determined by the RBA.
To put Joe Hockey’s ‘lazy analysis’ theory to the test this week I went back through Mosman House sales from 2000 to 2014 which shows a very interesting story given Mosman has approximately 4,800 houses and semis.
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="72">
Year
</td>
<td valign="top" width="98">
Number of Sale
</td>
<td valign="top" width="140">
Total Volume Sold
</td>
<td valign="top" width="307">
Average House Price
</td>
</tr>
<tr>
<td valign="top" width="72">
2000
</td>
<td valign="top" width="98">
325
</td>
<td valign="top" width="140">
$471,065,300
</td>
<td valign="top" width="307">
$1,449,429
</td>
</tr>
<tr>
<td valign="top" width="72">
2001
</td>
<td valign="top" width="98">
381
</td>
<td valign="top" width="140">
$650,971,860
</td>
<td valign="top" width="307">
$1,708,588
</td>
</tr>
<tr>
<td valign="top" width="72">
2002
</td>
<td valign="top" width="98">
408
 
</td>
<td valign="top" width="140">
Could not use these figures as they are 3 times the average
</td>
<td valign="top" width="307">
 
</td>
</tr>
<tr>
<td valign="top" width="72">
2003
</td>
<td valign="top" width="98">
371
</td>
<td valign="top" width="140">
$842,768,432
</td>
<td valign="top" width="307">
$2,271,613
</td>
</tr>
<tr>
<td valign="top" width="72">
2004
</td>
<td valign="top" width="98">
307
</td>
<td valign="top" width="140">
$653,170,490
</td>
<td valign="top" width="307">
$2,127,591
</td>
</tr>
<tr>
<td valign="top" width="72">
2005
</td>
<td valign="top" width="98">
304
</td>
<td valign="top" width="140">
$714,776,000
</td>
<td valign="top" width="307">
$2,351,237
</td>
</tr>
<tr>
<td valign="top" width="72">
2006
</td>
<td valign="top" width="98">
394
</td>
<td valign="top" width="140">
$965,744,130
</td>
<td valign="top" width="307">
$2,451,127
</td>
</tr>
<tr>
<td valign="top" width="72">
2007
</td>
<td valign="top" width="98">
408
</td>
<td valign="top" width="140">
$1,170,279,387
</td>
<td valign="top" width="307">
$2,868,333
</td>
</tr>
<tr>
<td valign="top" width="72">
GFC
</td>
<td valign="top" width="98">
 
</td>
<td valign="top" width="140">
 
</td>
<td valign="top" width="307">
 
</td>
</tr>
<tr>
<td valign="top" width="72">
2008
</td>
<td valign="top" width="98">
217
</td>
<td valign="top" width="140">
$731,805,612
</td>
<td valign="top" width="307">
$2,700,390
</td>
</tr>
<tr>
<td valign="top" width="72">
2009
</td>
<td valign="top" width="98">
306
</td>
<td valign="top" width="140">
$778,113,751
</td>
<td valign="top" width="307">
$2,542,855
</td>
</tr>
<tr>
<td valign="top" width="72">
2010
</td>
<td valign="top" width="98">
340
</td>
<td valign="top" width="140">
$932,342,149
</td>
<td valign="top" width="307">
$2,742,183
</td>
</tr>
<tr>
<td valign="top" width="72">
End of GFC
</td>
<td valign="top" width="98">
 
</td>
<td valign="top" width="140">
 
</td>
<td valign="top" width="307">
 
</td>
</tr>
<tr>
<td valign="top" width="72">
2011
</td>
<td valign="top" width="98">
285
</td>
<td valign="top" width="140">
$814,681,792
</td>
<td valign="top" width="307">
$2,868,598
</td>
</tr>
<tr>
<td valign="top" width="72">
2012
</td>
<td valign="top" width="98">
384
</td>
<td valign="top" width="140">
$1,064,397,721
</td>
<td valign="top" width="307">
$2,771,869
</td>
</tr>
<tr>
<td valign="top" width="72">
2013
</td>
<td valign="top" width="98">
373
</td>
<td valign="top" width="140">
$1,033,783,221
</td>
<td valign="top" width="307">
$2,771,537
</td>
</tr>
<tr>
<td valign="top" width="72">
2014*
</td>
<td valign="top" width="98">
196
</td>
<td valign="top" width="140">
$616,615,916
</td>
<td valign="top" width="307">
$3,146,000
</td>
</tr>
</tbody></table>
*Denotes we are two thirds of the way through the selling year and stock levels are well down on previous years – so try explaining that “bubble”?
Sources:Australian Property Monitors and RWM Research
<a href="https://www.rwm.com.au/files/2014/09/16-09-2014-11-41-51-AM.jpg"><img class="aligncenter size-full wp-image-153741" src="https://www.rwm.com.au/files/2014/09/16-09-2014-11-41-51-AM.jpg" alt="16-09-2014 11-41-51 AM" width="658" height="311"></a>
Another reason as to why we have a strong property market is that rental vacancy rates in the Sydney 0 to 10 kilometre range can’t get above 2% yet we forget that twenty years ago they sat between 3.50% and 4.00%. Back in those days landlords were offering one month’s free rent to entice tenants. It needs to be pointed out that the problem we have is on the supply side, which is why I don’t see the slightest problem with this niche market.
The problem is misinformation and yes some markets have reached unprecedented record prices, which in time as interest rates correct property values adjust accordingly based wholly on demand. The interesting part in this is when the property markets are in decline the purchasers decline too, despite the fact that the markets are what we call a buyers’ market. We are currently in a vendors’ market where the buyers are happy to pay over and above the market value.
Real estate has always been a long-term hold, so for the vast majority what prices do is not really a major concern. There are clear patterns evolving where the majority now are not trading up given from a cost basis analysis it makes more sense to renovate – which is exactly what we are seeing today. In the case of Mosman if you take the present 14 year average of yearly house sales in Mosman, we get 321, so the average number of owners selling each year equates to 6.7%. Based on that data an enormous number of house owners would have to find themselves in very serious financial trouble to see the “Mosman Bubble” burst.
Those are the cold facts.
</body></html>

robertsimeon-hRNTwJyXkQ

The cold hard facts about Australia's red hot property market

<html><body>
Without a doubt it’s one of the most confused and manipulated demographics within the Australian economy – yet year in and year out we have commentators both here and afar trying to solve this puzzle. 
What is clear is that very few can solve this puzzle given they quickly get lost deep in the permutations of the mathematics by focusing too much on theory and not enough on the practice.
Bubbles, booms and bonanza – and yet for some strange reason they have this creative ability to conjure this monumental market disintegration creating this almighty property Armageddon. 
This week, I was particularly interested to read commentary from Fabienne Michaux, head of Standard &amp; Poor’s Rating Service Australia and New Zealand. In particular: “One of the peculiarities of the Australian system is our huge reliance on foreign debt and most of that is channeled through the banking system.”
“Although the rise in house prices didn’t look like a speculative bubble the market is certainly looking fully priced and possibly a little overpriced, particularly in Sydney and Melbourne which account for such a large percentage of the national stock.” 
Finally, an assessment that I totally agree with, “fully priced and possibly a little overpriced”.
When the Murray inquiry is released later this year, many of the answers to solving the Australian property Rubik’s Cube will be answered – all that remains to be seen is whether or not the Abbott government will act on the findings. 
The major problem for Australian property is that the governments ignore the problems preferring to feed from these highly profitable property ”rivers of gold” – which is keeping the governments’ heads above water due to the ongoing taxes. Capital gains tax, land tax, stamp duty, rates – the list keeps going on.
GST was introduced by the Howard government on 1 July 2000, replacing the previous federal wholesale sales tax system and designed to phase out a number of various state and territory government taxes, duties and levies such as banking taxes and stamp duty. Well hello!!  We still have them today despite the promise that they would be removed. Actually, on the property side these taxes have mysteriously been increased since the GST was introduced.
Back in 2010 when the Henry tax review was handed down the Treasurer Wayne Swan responded that “Labor would never reduce the existing tax concessions on negative gearing and capital gains tax”. What we were seeing back then was an approximate 20% rise in house prices over that year where it was obvious from the report that tax breaks were inflating house prices. At the time former New South Wales auditor – general commented: “It doesn’t do Australia any good to have a government which, when they see these rational arguments from a very well experienced team, give it three minutes’ thought and then just ditch it.”
<a href="https://www.rwm.com.au/files/2014/09/10-09-2014-1-31-59-PM.jpg"><img class="aligncenter size-full wp-image-143882" src="https://www.rwm.com.au/files/2014/09/10-09-2014-1-31-59-PM.jpg" alt="10-09-2014 1-31-59 PM" width="681" height="394"></a>
If we are to try and solve this Australian property Rubik’s Cube the next inquiry Mr Murray should be given is does Australia need middle and third tier governments? The problem here is the governments rely totally on the multitude of taxes which keeps them in jobs so that on retirement they can collect a handsome pension. Making such a decision like those contained within the Henry tax review would be committing some type of political treason.
You very simply can’t solve the problem when the politicians who make the decisions have a clear vested interest of self-preservation. This can’t be solved until such time as Canberra admits that we have a problem – despite reports confirming that change is needed, the preferred option is to then ignore it, which is confirmed when you see that the Abbott government does not even have a Housing Minister.
<a href="https://www.rwm.com.au/files/2014/09/8-09-2014-2-25-50-PM.jpg"><img class="aligncenter size-full wp-image-143883" src="https://www.rwm.com.au/files/2014/09/8-09-2014-2-25-50-PM.jpg" alt="8-09-2014 2-25-50 PM" width="632" height="278"></a>
So let’s just think about this and how we can possibly solve this dilemma? Imagine the Liberals and Labor offering bipartisan support for the creation of (let’s get creative and call it) the Australian Economic Master Plan (AEMP). So let’s appoint David Murray as the chairperson, then appoint another nine pre-eminent business people to join this committee to actually closely investigate and then recommend what such a AEMP should look like, what needs to be implemented and what needs to be removed, which let’s say may take 12 months to determine. That would leave twelve 12 to discuss, then it is presented at the next federal election by referendum.
The problem previously has been that these conversations were quickly placed in the too – hard basket (for political reasons). It’s clearly time now to remove the politics by listening to what a totally independent body recommend – that way we just may solve the Australian real estate Rubik’s Cube.
Whatever the case we at least need to start this conversation – as it’s long overdue.
</body></html>

Bubbles, booms and bonanza – Solving the Australian property Rubik's Cube

<html><body>
Spare a thought for property writers in Australia; it has become increasingly obvious that the pressure of having little to write about is taking its toll.
The cash rate together with the inner workings of Australia’s Reserve Bank (RBA) has always remained a fascination for many, although with the next rate rise possibly not until sometime in 2016 – a new search for a property headline has begun in earnest.
Enter the rise and rise of the ‘property bubble’ – although I am quite sure in my 30 years of working in the real estate industry, I am mystified. I have never seen a ‘property bubble’, although I have seen plenty of booms. When a bubble bursts it simply disappears so what can we then expect with a ‘property bubble’? The simple truth when I advance this line of questioning is "well you know what I mean". Well, sorry I don’t, because there is no such thing as a ‘property bubble’ and if you knew anything about the intricacies of property machinations you wouldn’t be writing that in the first place.
We need to go back to find where this recent illusion otherwise known as a ‘property bubble’ emerged from. It has made cameo appearances for over a decade now in Australia despite never bursting. Australia’s mortgage market currently sits at around the $1.3 trillion mark with the Big Four banks holding approximately 80% of the book value. The Murray financial system inquiry has created plenty of argy bargy between the RBA, the Australian Bankers’ Association and the smaller lending institutions as to exactly what is the best practice that Australia needs to adopt – the final recommendations will be delivered to the federal government in November this year.
We can’t ignore Lindsay David’s thought ‘bubbles’ either, who recently penned a book Australia: Boom to Bust, where he warns that Australia has three shaky pillars which he believes are all in a state of collapse – real estate, resources and our banks.
No housing bubble, is the big bank economists’ conclusion which is exactly where I sit given collectively when you have 80% market share their internal data would provide them with the most accurate positioning – over those who are simply speculating.
To further this train of thought I looked at <a href="https://www.roymorgan.com/" target="_blank">Roy Morgan Research</a> who are constantly drilling down and probing the Australian property markets.
<img src="https://www.rwm.com.au/files/2014/08/27-08-2014-4-15-20-PM.jpg" alt="27-08-2014 4-15-20 PM">
"In July the satisfaction level of the personal customers of the banks remained close to the record high of 82.2% set in June, falling only marginally to 82.1%."
If the borrowers were having problems with their lenders the approval ratings would be plummeting not increasing. Although we need to put this into greater perspective – given there are too many property commentators distorting the truth – their anger and resentment is at an unprecedented level.
<img src="https://www.rwm.com.au/files/2014/08/27-08-2014-4-22-33-PM.jpg" alt="27-08-2014 4-22-33 PM">
Back to Roy Morgan Research – “Over the last four years the number of investment loans in Australia has grown by 37% compared to an increase of only 4% in the number of owner occupier loans. In 2010, just under a million (954,000) Australians [aged] 18 plus had an investment property loan compared to 1.31 million as at March 2014. This growth represents an increase of 37%. Over the same period the number of Australians with an owner – occupied home loan increased from 4.66 million to 4.83 million, an increase of only 4%.”
Based on this information the ‘property bubble’ must be our Baby Boomers running amok by boosting their self-managed superannuation funds care of a very generous federal government who encourage investment in Australian properties by offering substantial tax relief via negative gearing. Then of course we must not forget that old chestnut that Australian property holdings can be approximately divided into thirds – one third rent, the next third own with a mortgage and the final third own without a mortgage.
As recent sales have clearly proven there is no shortage of people wanting to invest in Australian real estate – both local and overseas. So then apply the 'KISS theory' (keep it simple stupid) – when you see an oversupply of properties on the market then market conditions are moving from a vendor to a buyers’ market.
RWM Research started recording the number of properties on the market weekly back in mid-2011, so it’s interesting to see what the highest number of properties on the market since then have been:
<ul>
<li>Mosman Houses – 168 on 10 November 2011. Today 69.</li>
<li>Mosman Apartments – 138 on 10 November 2011. Today 51.</li>
<li>Cremorne Houses – 24 on 16 December 2011. Today eight.</li>
<li>Cremorne Apartments – 44 on 3 November 2011. Today 15.</li>
<li>Neutral Bay Houses – 22 on 1 March 2012. Today five.</li>
<li>Neutral Bay Apartments – 101 on 17 November 2011. Today 31.</li>
</ul>
It is very clear that based on the current numbers the banks should have absolutely no concerns given it is very clear that what we have today is very much a vendors market.
</body></html>

 For my next trick: The great property 'bubble' illusion

<html><body>
It’s hardly surprising that the Reserve Bank of Australia (RBA) decided to park the cash rate indefinitely, given the complexities associated with Australia’s fascination of owning real estate. 
When one looks closely at the RBA data, our household debt has now climbed to a record $1.870 trillion. Its cause has certainly not been assisted by the avalanche of "<a href="/expert-insights/autopilot-investing-a-major-problem-for-the-property-market">autopilot investors</a>" which led the RBA to announce this week that it has concerns about ‘significant’ uncertainty.
Of great concern globally, is that all the central banks presently have their respective cash rates parked at close to zero which has resulted in even greater debt, even though growth keeps trending well below expectations. It is becoming quite clear that those who subscribed to the modern theory that short-term pain would be exceeded by significant long-term gains, have been proved wrong. When growth is trending at below expectation levels, so too are wages, which is why Australia has a ‘significant’ problem. It reminds me of the saying: 'After all, life is really simple, we ourselves create the circumstances that complicate it.'
Once upon a time cash was king – today, debt is king. If you cast your minds back to last year when RBA governor Glenn Stevens addressed the Wall Street Journal he said recession in Australia has a “more or less” 100% probability; only timing is uncertain. It has become clear that a record low cash rate for many has become a 'fool's gold'. Having said that, the money lending market has expanded to unprecedented levels with Coles and Woolworths the latest to apply for entry into the home lending markets.
When one looks a bit deeper into the demographic property markets (over bundling them all together to hide the weak performers) the top end markets have clearly demonstrated a much more cautious outlook. Without a doubt they were the hardest hit during the global financial crisis (GFC) although this time around they are throwing caution to the wind.
I would not be alone by saying the eagerly awaited detailed release of the Murray financial system will make for riveting reading given it is the first inquiry in over 17 years for the property industry – which is absolutely ridiculous. It’s already been announced that the former CBA chief wants to “leave his mark” by setting stringent lending guidelines as against the current format of the 'Big Four' banks boasting who has the greatest market share in Australian property – combined they hold nearly 80% of the overall debt.
<img src="/images/2014/08/25/simeon%20aug%2025%20one.jpg" alt="">
When the RBA does decide to raise the cash rate there will be a tsunami of bad debt which explains the latest RBA decision to park the Australian property market (for the time being). Globally the property markets are cactus – Alan Kohler wrote a great piece this week – '<a href="https://www.businessspectator.com.au/article/2014/8/18/global-financial-crisis/world-must-inflate-or-bust-australia-mustnt-join" target="_blank" title="The world must inflate or bust; Australia mustn’t join in.">The world must inflate or bust; Australia mustn’t join in</a>'. “The world’s central banks are overly trying to increase inflation because it’s the only realistic solution for the world’s (still) excessive debt, and the Reserve Bank of Australia will soon have to decide whether to join in or bear down on inflation with relatively higher interest rates.”
“A central banker on one panel noted that, in his view, too much is being asked of monetary policy; the main thing that low interest rates and quantitative easing are producing at the moment is more risk taking by financial institutions.
“That’s the problem with too much debt: the only easy solution is more debt, which is no solution at all.”
I have never been a fan of mortgagee in possession sales as they clearly demonstrate a panic mentality which inevitably results in heartbreak together with considerable capital losses. Having worked through the boom of the late 80s and then the “recession we had to have” in the early 1990s, we don’t appear to have learnt much.
I would prefer to see when a home owner is deemed to be in financial difficulty that the property (principal place of residence only) is placed into quarantine for five years. When the property value recovers only then is it sold – with the parties deciding (depending on the circumstances) if it is mutually agreed that it be rented out over that period. If this were to happen maybe then a home loan may be scrutinised much more closely – as against what we are seeing and reading today.
In a perfect world the authorities would make such an announcement sooner rather than when the proverbial hits the fan.
The lending institutions could make the landing a lot softer when and if a recession eventuates.
</body></html>

With the RBA's help, debt has become king

<html><body>
It’s actually quite embarrassing to read some property market commentaries, given that some believe a market crash would be a service to the Australian economy.
There is a significant problem in that commentators are struggling to identify the difference between an investor and a home buyer – for example NSW real estate investors now make-up approximately 50% of the Australian property investor market. This is what happens when you have a record low cash rate and a share market that still has “mum and dad” investors sceptical – hence real estate has become the preferred investment vehicle.
The International Monetary Fund (IMF) recently reported that Australia (based on income ratios) had the third most overvalued property market in Quarter 4, 2013. So we need to analyse the cause much more closely.It’s very hard to go past negative gearing. A recent IMF report revealed that three countries that strongly favoured negative gearing investment – Australia, New Zealand and Canada – were all ranked in the top four most overvalued real estate markets globally.
For the majority closely watching the property markets, the major problem is that we are seeing “autopilot investing” where investors simply follow trends and jump straight in without the required due diligence. With so much being written about “that” inevitable crash, there very well may be a soft landing as the demographic market under the greatest scrutiny is the investor market – which must not be confused as the home market.
When Australia introduced its capital gains tax back on September 20, 1985 (yes, 30 years ago next year) there were calls that this would decimate the investment markets, which turned out to be not the case. If you look at the property market now approximately 90% of the market would attract capital gains tax. Any changes to negative gearing legislation would be retrospective (as all previous taxes were) so the current investors would qualify, so that is one redeeming factor.
<a href="https://www.rwm.com.au/files/2014/08/12-08-2014-3-48-17-PM.jpg"><img class="aligncenter size-full wp-image-104645" src="https://www.rwm.com.au/files/2014/08/12-08-2014-3-48-17-PM.jpg" alt="12-08-2014 3-48-17 PM" width="632" height="276"></a>
With the Murray Financial System Inquiry now all but complete, many will anxiously await the handing down of the tax white paper where it is all but guaranteed that negative gearing and capital gains tax will be front and centre. In fairness, most would agree that this white paper is not before time, although we also must remember that investing in Australian real estate is also part of our culture unlike so many other countries where renting is the preferred option.
You can’t keep comparing the Australian real estate markets to the USA given it was well documented that a major contributor to the global financial crisis (GFC) was subprime, where the lenders had absolutely no recourse, compared to Australia where the lenders recover/bankrupt the respective parties in the event of serious default. It should also be remembered that during the GFC, <a href="/news">Mosman</a> was identified as the number one contender for the highest delinquencies – yet it turned out to record one of Australia’s lowest delinquency rates.
We have also seen (for those bothering to apply) the Foreign Investment Review Board (FIRB) record for the past three quarters to March unprecedented approvals which surged 93%. A problem is this is mistakenly confused with the home markets where the traditional markets would struggle to get a bronze medal (if such an award existed) given the top end markets are still struggling. The Asian buyers have now come to the realisation that they paid over the odds so again we are seeing more caution from that demographic.
If you look closely at the home market over the past two months in the majority of instances the stock levels have been at all-time lows, which is hardly a sign of a bubble. We expect this to change as we enter spring where we expect to see a much stronger home market, although the definition of strong still remains to be determined.
We can expect to hear how that little bubble has again evolved into a massive tsunami – where an impending property collapse is just moments away. Of course there is just the one problem with that analogy, home owners follow their demographic property markets closer than many give them credit for.  Only when you start to see supply reaching unprecedented levels would you have a justifiable reason for concern.
When I hear someone discussing the “tsunami bubble” I always respond: why is not reflected with current supply levels? Naturally, the response is that all property owners are on “autopilot ignore”. This obviously must be the case, although they quickly forget that whenever a real estate agent makes a sale they are letter-boxing that demographic market almost immediately – so that destroys that argument.
The only things holding back the home market is that “autopilot owners” aren’t that impressed with the prices so they’re staying put (for the moment). What happens next is anyone’s guess.
</body></html>

"Autopilot investing" a major problem for the property market

<html><body>
It’s always refreshing to read an intelligent report, so when the Centre for Independent Studies released <a href="https://www.cis.org.au/images/stories/issue-analysis/ia146.pdf" target="_blank" title="Eight Housing Affordability Myths">Eight Housing Affordability Myths</a> by Dr Stephen Kirchner, we finally got to see why Australia’s housing debate is long overdue.
The only problem that comes from such a precise paper is that it will require government intervention which, as most would agree, is where the problems start. They just don’t get it – if they did, we would not have the glaring problems that we see today. Some of the interesting points raised are:
<ul>
<li>Housing consumption and investment are both taxed and subsidised by all levels of government. The net effect of these taxes and subsidies on housing affordability is difficult to determine as it depends on the benchmarks used to assess what is taxed and what is subsidised.</li>
<li>Housing affordability is a relative rather than an absolute concept and there is no unique way of measuring housing affordability.</li>
<li>Much commentary on housing markets focuses on dramatic, ‘short-term’ changes in house prices, failing to put these changes into ‘long-term’ context.</li>
<li>The supply of new land for housing has declined over the last decade, with the average number of lots produced in the five largest capital cities declining by 21%.</li>
<li>The long-run increase in the price of new land for housing is indicative of the failure of state governments to increase land supply to accommodate rising demand for new housing.</li>
<li>A fundamental principle of economics is that if you tax something more heavily you will get less of it. This principle is well understood in relation to markets in goods and services, but it is often forgotten in relation to housing.</li>
</ul>
Some will argue that today, we are seeing two very clear markets; namely the principal place of residence and the investment market which in Melbourne and Sydney has gone berserk.
More confusing, is that we keep reading reports that consumer confidence is in a downward spiral even though investors are in an absolute feeding frenzy for off the plan properties and to such an extent, that they will pay over and above the asking prices.
Now let’s bring out those conspiracy theories. It is clear that since the global financial crisis (GFC) that the mum and dad investors have stayed well clear of the share market and will continue to do so simply because they don’t trust it. This massive investor shift is now driving property values upwards and creating an unprecedented financial burden on the federal government in terms of negative gearing subsidies and Australia is just one of a few developed countries that allows negative gearing.
<a href="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg"><img class="aligncenter size-full wp-image-57102" src="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM1.jpg" alt="3-07-2014 3-44-05 PM" width="683" height="252"></a>
<a href="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg"><img class="aligncenter size-full wp-image-57104" src="https://www.rwm.com.au/files/2014/07/10-07-2014-9-33-53-AM.jpg" alt="10-07-2014 9-33-53 AM" width="630" height="312"></a>
Today, 1.2 million negatively gear with the Australian Tax Office statistics revealing that property investors claimed $13.2 billion in losses in 2010/11 which was up from $10.1 billion the year before.
Given the huge run on investment property over the last few years it will be frightening to see what the negative gearing figures are for 2012/13 and 2013/14. <a href="https://www.businessspectator.com.au/article/2014/7/9/australian-news/why-negative-gearing-australias-biggest-policy-failure" target="_blank" title="Why negative gearing is Australia’s biggest policy failure ">Why negative gearing is Australia’s biggest policy failure </a>– “It is difficult to find a government policy that has been less successful at meeting its objectives than negative gearing on residential property. But unfortunately that is the nature of housing policy in Australia, where sound policies are ignored in favour of policies that encourage speculation, reduce home ownership and redistribute wealth towards the already affluent.”
Negative gearing by property investors reduced personal income tax revenue in Australia by $600 million in the 2001-02 tax year, $3.9 billion in 2004-05 and $13.2 billion in 2010-11 – so this itself leaves a pretty good clue as to how popular it has become. Negative gearing was introduced back in July 1985 and many argue that today, it is no longer relevant. Investors have taken the first home buyers out of the market and they can’t compete as it is not a level playing field.
<a href="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg"><img class="aligncenter size-full wp-image-57106" src="https://www.rwm.com.au/files/2014/07/9-07-2014-4-11-47-PM.jpg" alt="9-07-2014 4-11-47 PM" width="573" height="345"></a>
Then you have the foreign investors where an inquiry is currently underway, although the only way to really see what is happening is to extrapolate the relevant stamp duty records and cross pollinate this data – every sale in Australia pays stamp duty although for some strange reason this point has been missed by the inquiry. This data is readily available – although I doubt it will ever see the light of day.
So the debate should be “what benefit is negative gearing to the Australian economy when nearly all the other advanced economies don’t permit it”. Australian property markets would be decimated if it was abolished and would take the banks with them given the significant borrowings on each investment property which are crucial to maximise the negative gearing subsidies.
When the government brought in the GST in July 2000, this immediately brought about the decline of property developers as they had to pay the 10% GST on the construction costs. Maybe a possible answer is to remove the GST on construction, to see more construction which will increase employment and off-set this by scaling back negative gearing subsidies. In the long-term, this would lower property prices more particularly in the property investment sector. Or, do you place a limit on the number of investment properties allowed that can qualify for negative gearing subsidies?
Now we need to see a politician brave to start this conversation. Better still the Abbott government might even decide that they now need a Housing Minister.
</body></html>

Why Australia urgently needs a housing debate

<html><body>
There goes another financial year where for all intents and purposes profits should have been up and back to pre-global financial crisis (GFC) levels.
Some a step further by posting all time record profits given their respective graduation from the GFC together with the valuable lessons learned, which were then adopted then executed.
Having said that we should closely look at <a href="/expert-insights/finance/the-reserve-bank-s-four-prevailing-views-on-the-property-market-glenn-stevens">the Reserve Bank’s four prevailing views on the property market </a>as each and every point raised is not just a concern but more of a forecast which in all probability will eventuate.
The most important message from Glenn Stevens is aimed squarely at property investors: “Investors should take care in the Sydney market, which is the main area where a large increase in borrowing has been occurring. The total value of credit approvals for investor loans in New South Wales was about 130% higher than in 2008, and it is the investor segment where there has been evidence of some increased level in lending with loan to value ratios above 80%.”
Now whilst we are on this subject in many ways the investor demographic in Sydney to me is like one big Ponzi scheme.
This week we saw headlines like “Sydney property market posts new figures showing a 15.4% growth over the financial year”. Whilst to a degree this may be correct the methodology is false, misleading and entirely wrong as the method is based on the median (middle) price where real estate in Australia is the only country which uses this calculation method.
Firstly, Sydney at a guess is made up of over 700 suburbs – so by throwing in the wealthiest suburbs that recorded $30 million and $40 million sales with suburbs which record $300,000 and $400,000 sales, it’s pretty clear this methodology is flawed to such an extent it implies false conclusions.
The debt trap is what Glenn Stevens is alluding to and those unsuspecting highly geared investors thinking 15% growth are badly advised where, depending on their gearing, they could find themselves in all sorts of trouble.
Real estate is not that hard to calculate so long as you know what are the correct numbers you should be calculating when it comes to reading and understanding a demographic market. The only way this can be done correctly is to look at individual markets such as a particular suburb – I will use my specialist market, <a href="/news">Mosman</a>, which has approximately 4,800 houses.
Next you need to ascertain how many houses are on the market each week where this week there are 63 houses, last week 74 houses and twelve months ago there were 63 houses for sale. Next work out how many houses sell each year:
<ul>
<li>2011/12  – 297 houses sold for a total value of $829,747,992. Average price $2,793,764</li>
<li>2012/13 – 306 houses sold for a total value of $846,621,000. Average price $2,766,735</li>
<li>2013/14 – 365* houses sold for a total value of $1,045,514,637. Average price $2,864,424</li>
</ul>
*These figures will get higher as more properties settle and the sales data becomes available.
Before the GFC the Mosman market was running at full steam when it cracked the $1 billion mark in value sales so we are now back at near full strength based on current market conditions. Also, when the market is running at capacity it usually trades at ten per cent of the total stock 4,800 houses equals 480 sales per year. Over the period of the GFC the numbers of houses sold dropped back to between five per cent (240 houses) and seven per cent (336 houses).
The problem is that the vast majority shoot from the hip when making these investment decisions over those who actually study the relevant data, although they will all admit their decision was data driven.
<a href="https://www.rwm.com.au/files/2014/07/25-06-2014-1-22-43-PM.jpg"><img class="aligncenter size-full wp-image-47338" src="https://www.rwm.com.au/files/2014/07/25-06-2014-1-22-43-PM.jpg" alt="25-06-2014 1-22-43 PM" width="625" height="288"></a>
Source: The Economist's <a href="https://www.economistinsights.com/sites/default/files/Decisive%20Action%20-%20How%20businesses%20make%20decisions.pdf" target="_blank">Decisive Action: How businesses make decisions and how they could do it better</a> via Forbes. 
Recently, I read this interesting piece – <a href="https://www.forbes.com/sites/rogerdooley/2014/06/12/clueless/" target="_blank" title="Are you the one executive out of ten who isn’t clueless?">Are you the one executive out of 10 who isn’t clueless?</a> 
It’s interesting to compare to what happens in real estate given so few fully analyse real estate markets comprehensively. Also, one can’t rule out being persuaded by false and incorrect data given the majority of investors in real estate would be fixated on graphs like this one.
<a href="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM.jpg"><img class="aligncenter size-full wp-image-47340" src="https://www.rwm.com.au/files/2014/07/3-07-2014-3-44-05-PM.jpg" alt="3-07-2014 3-44-05 PM" width="683" height="252"></a>
Naturally, so long as our economy keeps performing above expectations then there is nothing to worry about however, when I read this yesterday: <a href="https://www.businessspectator.com.au/article/2014/7/3/international-news/setting-stage-lights-europes-second-crisis" target="_blank" title="Setting the stage lights for Europe’s second crisis">Setting the stage lights for Europe’s second crisis</a>. The lessons from the GFC resonate strongly – pay down debt.
</body></html>

Sydney's investor demographic is like one big Ponzi scheme

<html><body>
There is certainly a strong argument against the way in which data is delivered in Australia, given the choice is to bundle data collected as this paints a worse positioning – such as “Sydney house prices” where this data is totally irrelevant.
If all the Sydney house price data were to be broken down into the 18 regions (which should happen) then the data would hardly raise an eyebrow given it would identify minimal changes. Having said that, it would not create a headline as profound as “Sydney house prices” which further explains why defective data is often the preferred weapon of choice in mainstream media.
Last week I wrote <a href="/expert-insights/we-need-to-consider-different-interest-rates-for-different-sectors-of-the-market">why the Reserve Bank of Australia (RBA) should be trialling different cash rates</a> across Australia given we have some demographic markets booming and others in serious decline. Which gets one thinking on how the RBA managed before we had today’s available technology to produce such amazing data.
RP Data produced this week one of the most amazing data releases that the Australian real estate industry has ever before seen - a quarterly assessment of realised gross profit based on dwelling re-sales over the March quarter of 2014, released June 2014.
“Over the first quarter of 2014 RP Data recorded 64,518 residential property re-sales nationally. The gross value of the losses associated with these loss making re-sales totalled $381.1 million. Conversely, 90.2% of all March 2014 quarter re-sales recorded a gross profit relative to their original purchase price. The gross profit from these re-sales equated to $12.2 billion.”
<a href="https://www.rwm.com.au/files/2014/06/26-06-2014-10-34-57-AM.jpg"><img class="aligncenter size-full wp-image-37608" src="https://www.rwm.com.au/files/2014/06/26-06-2014-10-34-57-AM.jpg" alt="26-06-2014 10-34-57 AM" width="624" height="299"></a>
Source: RP Data.
“Lifestyle regions continue to show the largest proportion of loss making re-sales, particularly within the unit markets as opposed to the detached housing markets. Queensland’s Wide Bay region has recorded the largest proportion of loss making re-sales with 30.6% of all March 2014 quarter re-sales transacting at a price lower than what the home was purchased for. It is important to note that while loss making re-sales remain a high proportion of the market, in many of these regions the proportion of these sales is now trending lower.”
It would be fascinating to see what would happen if an area such as Wide Bay had a much lower cash rate that would further entice buyer interest?
<a href="https://www.rwm.com.au/files/2014/06/26-06-2014-10-37-51-AM.jpg"><img class="aligncenter size-full wp-image-37609" src="https://www.rwm.com.au/files/2014/06/26-06-2014-10-37-51-AM.jpg" alt="26-06-2014 10-37-51 AM" width="650" height="292"></a>
Source: RP Data.
Again,  we see Sydney listed on its own despite it having approximately 18 regions, so I don’t exactly understand why Sydney is not broken down into regions. If you are searching to buy a home nobody types in Sydney as their keyword search. It would be even easier to break this data down further by postcode results which would then deliver exacting data results.
Just in the last week we have seen Darling Square in Sydney sell out, which is an amazing result given it is a 40 storey tower so 357 apartments selling in just a few hours is unprecedented.
Then again, just a few months ago the first stage of the Barangaroo development also sold 159 apartments in a few hours – and it should be remembered these all sold at the asking price. One must wonder, just what effect the House of Representatives inquiry into foreign investment of Australian residential real estate played in these sales as it continues to unveil massive loopholes. Already it has been revealed that the Foreign Investment Review Board has failed to police those properties purchased by temporary residents who must sell within three months of departing Australia. Like hello, why would you sell when there is no watchdog?
Then a senior Bureau of Statistics official revealed this week they read trade magazines and newspapers to keep on top of the amount of foreign investment in Australia’s residential property. The sad reality is that the government has absolutely no idea what is happening here, although every sale in Australia attracts stamp duty, so they are yet to work out how to collate this data even though the answer sits directly in front of them – our data dummies.
Given this is happening via many loopholes, there is absolutely nothing the Australian government can do until they pass legislation which puts an end to these practices. In the meantime the inquiry continues and, as many of us predicted well before, foreign investors have clearly outsmarted the Australian government. If proven correct, one can safely assume there will be a buying spree if, and when, the government decides to act on this.
NSW and Victorian governments recording record stamp duty receipts obviously flew well under their radars – although not for property observers.
The data is clearly there although for some strange reason when it comes to analysing data we are seeing plenty of dummies.
</body></html>

Australians are treated like dummies when it comes to data

<html><body>
Has the time come that the current methodology of real estate in Australia (which is seriously flawed) is ripe for demolition and an entirely different business model should be built to replace what we have today?
Let’s imagine a massive jigsaw puzzle scattered across the floor and we’re trying to make some semblance of this mess.
Let’s start on the basis that currently in Australia one third rent, the next third own with a mortgage and the final third own their home without a mortgage. Now, the Australian real estate market consists of thousands upon thousands of niche markets, yet for some strange reason under the Reserve Bank of Australia those with mortgages all share the same cash rate despite some of these markets booming and other markets posting negative capital growth.
Is it not time to be seriously looking at different cash rates based on the different niche market performances? For example, the Sydney residential market is overheated and should be paying a higher cash rate to slow the markets down; this would then avoid the inevitable crash in some of its niche markets. Why aren’t we looking at a model that would test some markets to see if such an example could work, after all we have a few thousand we could choose from?
Why does the rest of the world apply a tax on the profits, although Australia opts for a system where no tax is paid? Would it not make sense to see interest payments and improvements tax deductible if they looked at such a model? Why are home owners hit with stamp duty when this was supposed to be axed when GST was introduced in 2000 and why are there not concessions on stamp duty after a home owner pays their first stamp duty? Why do the state and territory governments offer first home buyer grants when it would make far better sense to offer a lower interest rate? When a home owner falls into financial difficulties, why don’t we have a distress rate until the owner (and the market) sees better times?
Back in the recession of the early 1990s we saw carnage with mortgagee-in-possessions only to see prices restored in just a few years. The losses incurred by home owners and the banks could have easily been avoided if it had been agreed to adopt a more patient approach where every party would have been much better off.
Given we now live in a society where thanks to the computer/technology age we have much simpler and clearer data we can have much more accurate positioning that enable us to see the bigger picture.
We are getting a clearer picture of overseas’ buyers using vast loopholes to purchase Australian property, yet the governments have done nothing about this for years. Every sale of real estate in Australia pays stamp duty so why are these details not being extrapolated to get a precise position on what is happening to Australian real estate? Why does this need to be handled (badly) by the federal government when it would make more sense that the state governments took this responsibility over?
Of course, such discussions are like opening Pandora’s Box however, we really need to start a conversation where hopefully rational ideas will evolve and grow.
We are witnessing massive infrastructure spends across Australia with the states and territories selling off assets simply because they are in a poor financial position, which brings us back to why this entire process is broken. These assets should be purchased by the Future Fund as a custodian until the relevant states and territories can buy them back.
The problem in Australia is that we have significantly broken systems that require a total overhaul although it’s becoming quite clear the preferred methodology is more like buying a home then selling when everyone says you must sell first – then buy.
I’m not sure about you, but I would love to see alternate real estate models for Australia and a test case of separate cash rates for different markets would be a fascinating experiment based solely on the performance of an individual niche market.
What remains to be seen is how many Australians believe the entire property system requires overhauling? When I see the NSW government announce a higher than expected $1 billion stamp duty windfall the pennies really do start to drop.
</body></html>

We need to consider different interest rates for different sectors of the market

<html><body>
As stories go, there won’t be many bigger this year than the offshore investors who appear to be buying Australian real estate without Foreign Investment Review Board (FIRB) approval.
Back in March 2014 I wrote: <a href="/expert-insights/investing/the-end-of-the-great-chinese-property-splurge">The end of the great Chinese property splurge?</a>. This was gathering momentum as I heard that the federal government was about to announce an inquiry headed by federal MP Kelly O’Dwyer – probing offshore sales in Australia. In fairness I have watched this for quite a few years now and it was just not adding up – well not until now anyway.
The House of Representatives economic committee report has suggested that lawyers and relatives have been provided a passageway that bypasses FIRB approval as foreign investors believe the $85,000 fine for such a breach is simply the “cost of doing business in Australia”. It should be noted that since 2010 there have been no prosecutions, which is understandable as prior to this inquiry the government had absolutely no idea that this new Australian real estate acquisition method actually existed, let alone had become widespread.
Over the past 48 hours we are starting to get a clearer picture –<a href="/news/firb-powerless-to-identify-or-stop-illegal-residential-purchases-as-chinese-investment-surges"> FIRB powerless to identify or stop illegal residential purchasers, as Chinese investment surges.</a> 
This is not the first time the federal government has been found wanting. I remember back in the early 1990s when the Australian Taxation Office (ATO) wrote to every real estate agency in Australia demanding a comprehensive list of every landlord transaction, rents received, tenants names, full disbursements together with every sale we had made dating back five years (the government back then was then moving into the computer era.)
There are a number of interesting points that I have observed in recent times; the first of which is that each and every property enquiry is actually home-grown. The suggestion that Chinese buyers are looking at China’s largest international property website <a href="https://list.juwai.com/?ag_kwid=504-3-1d922c23cb56ad27.0b2639f826f4bfa3&amp;gclid=CjgKEAjwn-WcBRD61NHM-uqDrm4SJADrP4tPf9IcWh5ZVBKDht7Df4L3GWPa66SNUdaaWJ-tGCWYC_D_BwE" target="_blank" title="Juwai">Juwai</a> simply does not stack-up. We have been paid subscribers to the Juwai website for a few years now and have never yet received a single enquiry – I have also spoken to a number of other agents/agencies who all say the very same.
To try and put this into perspective it’s vital we look at exactly what’s happening here given some agencies have spruiked that such an overseas market exists when the vast majority all confirm the actual contact comes from residents here in Australia – via the Australian property portals. I am yet to speak to an agent who has received an enquiry from a Chinese property portal so that should dispel that myth of where vendors should be redirecting advertising monies.
Another factor that requires consideration is that earlier in 2014 the Canadian government immediately axed its 28 year old visa scheme designed to attract wealthy foreigners to the country. Maybe it’s just a coincidence. However, Treasury advised the Inquiry that there is currently a surge in applications – 10,244 in the nine months to March 2014, compared with 6,567 in the entire 2012/13 year. When you’re buying a multimillion dollar home a fine of just $85,000 is insignificant when one looks at the big picture.
Given these recent revelations, many would now argue the fine should be a proportion of the purchase price, should the Abbott government decide to act on these revelations.
<a href="https://www.rwm.com.au/files/2014/06/12-06-2014-11-38-49-AM.jpg"><img class="aligncenter size-full wp-image-21002" src="https://www.rwm.com.au/files/2014/06/12-06-2014-11-38-49-AM.jpg" alt="12-06-2014 11-38-49 AM" width="567" height="357"></a>
Yesterday the International Monetary Fund (IMF) announced that Australian house prices are among the top five most expensive in the world. This leads me to another observation.
Following “the recession we had to have” in the early 1990s we saw the emergence of a powerhouse new business model that drove our property markets through to the global financial crisis (GFC) – namely merchant banks.
Over the period of the GFC top-end property values dropped by up to 30% given the bankers were effectively removed from the property markets. In the interim we did see an accelerated entry into the prestige property markets by the mining fraternity albeit quick. The banks have re-calibrated and back into a better space in terms of profitability although there is serious doubt they will again dominate these markets again.
It has become very clear that the emerging new player in our top-end property markets has been the Chinese and up until now we all believed this was through the correct government channels. No doubt the vast majority did follow this process, but following what has been revealed in this inquiry the government now must fully investigate this matter.
I don’t believe the overseas investors are the main reason why we have seen a total collapse of first home buyers in Australia. Whilst they are an obvious contributing factor, we are forgetting that we are seeing unprecedented low interest rates where local and overseas investors have taken full control of this market demographic.
With governments across Australia now focused on building new infrastructure it is imperative that as a result of this inquiry a full investigation is launched immediately, as infrastructure drives property markets.
Last week the Premier Mike Baird announced that next week’s NSW budget will reveal a billion dollar plan to <a href="https://www.dailytelegraph.com.au/newslocal/north-shore/nsw-premier-mike-baird-confirms-a-military-rd-tunnel-is-the-best-solution-to-daily-traffic-woes-for-sydneys-north/story-fngr8h9d-1226950408944" target="_blank">overhaul Spit and Military Roads</a>. Now nothing has happened to these areas since they started construction on the Spit Bridge in 1952. The northern beaches are easily the most under-valued prime real estate in Australia because of this antiquated transport system. A vastly improved transport infrastructure would in all probability see top-end property prices potentially escalate by as much as fifty (50)%.
Based on this announcement this is the next Sydney boom area so it would be nice to see that those investing into these markets are 100% approved by the Australian government.
</body></html>

Robert Simeon

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Robert Simeon

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News