The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Tax Laws

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Amendments being pushed through by Revenue Minister Kelly O’Dwyer will deny property and share investors the special low small business company tax rate.
The changes seek to prohibit firms that earn 80 per cent or more of their revenue from passive or investment income from claiming the lower tax rate. Tax experts say it will only add another layer to the complexity of the tax system and highlight avoidance opportunities.
O’Dwyer said the government’s decision to cut the tax rate for small companies was not intended for passive investment companies.
“The Turnbull government is committed to lower taxes on business because we want to see them invest and grow,” she said. “These amendments will provide greater clarity about who qualifies for the lower company tax rate.”
The legislation would mean companies that have a blend of investment and conventional business activities will have to carefully structure them for tax purposes.
Tax Institute senior tax counsel, Bob Deutsch was quoted by The Australian as saying that the new two-tiered company tax system would raise issues about which rate to apply in what circumstances.
“There may be questions about whether it is appropriate, for example, for all rent to be classified as passive income for this purpose. At a broader level, the need for a policy decision of this type highlights the inevitable complexity arising from a two-tier corporate tax rate system,” Professor Deutsch said.
Director of the Australian ­National University’s Tax and Transfer Policy Institute, Miranda Stewart, said the draft legislation introduced a concept to tax law of “base rate passive entity income”.
“Previously only those who worked in technical areas would have had to deal with concepts like this, but now small businesses and their advisers will have to come to grips with it,” she was quoted by The Australian.
“We now have another boundary line between predominantly passive income and active business income.”
KPMG tax partner Grant Wardell Johnson said it had long been obvious as soon as the low small business tax rate was announced that there would be problems with whether a company with passive investment income was “carrying on a business”.
“The government found it hard to accept that in political terms,” he said. “I welcome the government’s move to establish a ‘bright line’ test.”
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jonathanchancellor-7SQnKwU6yx

Property investors to miss out on low tax rate in new legislation push

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The new financial year has started with a slew of new or amended taxes, rules, grants and concessions, related to property, especially for foreign investors.
Federal changes  
<ul>
<li>First home buyers will be able to access specific voluntary contributions made in to superannuation after 1 July 2017. The voluntary contributions will be accessible by individuals from 1 July 2018. </li>
<li>There is a cap of $15,000 per year on the contribution to superannuation and a total of $30,000 can be contributed to the super fund. </li>
<li>Foreign tax residents will be charged a higher Capital Gains Tax withholding rate of 12.5%, up from 10%, and a reduced CGT withholding threshold of $750,000 (down from $2 million).</li>
<li>ATO will disallow deductions for travel expenses relating to inspecting, maintaining, or collecting rent for a residential rental property.</li>
<li>The major banks CBA, Westpac, NAB, ANZ and Macquarie will be charged a levy that is expected to add raise more than $6 billion and it is anticipated that there will be flow on increases in home and commercial lending rates.</li>
<li>In addition to these federal tax changes, there are state tax changes as well that will come into force from July 1.</li>
</ul>
NSW
<ul>
<li>The biggest changes are stamp duty concessions in NSW, with the tax abolished for first home buyers on existing and new properties up to $650,000 while discounts apply for properties up to $800,000. The First Home Owners grant is also available to new homes up to $600,000.</li>
<li>Also, only FHBs benefit with concession on residential off-the-plan purchases, getting up to 12 months to pay.</li>
<li>Application fees for foreign purchases of residential properties worth less than $10 million will also rise by 10 percent on the current fees.</li>
<li>In addition, vacancy taxes kick in for unoccupied properties more than six months. The charge will be equivalent to the relevant foreign investment application fee imposed on the property at the time it was bought by the foreign investor.</li>
</ul>
VICTORIA
<ul>
<li>First-home buyers in the city can get a $10,000 First Home Owner Grant but the state has incentivised buying in regional Victoria with a doubling of the grant.</li>
<li>Stamp duty abolished for first-home buyers for homes up to $600,000 and reduced for homes priced up to $750,000.</li>
<li>Victoria also launched a ‘Homes for Victorians’ pilot scheme where the state will co-purchase the home with the state government</li>
<li>For off-the-plan concessions, only first home buyers who entered into contracts from 1 July 2017 will be eligible.</li>
<li>The existing stamp duty exemption for transfers of properties between spouses will be removed (but the existing stamp duty exemption applicable to transfers of principal places of residence between spouses, and transfers following a relationship breakdown, will remain).</li>
<li>The state also announced earlier this year a vacancy tax to charge investors who leave their properties vacant for a length of time as a means to increase supply.</li>
</ul>
ACT
<ul>
<li>The ACT has also announced a land tax on vacant properties from July 2018.</li>
<li>Meanwhile, there will a rate rise of 7 percent on average from what the  government collects for Canberra homes. Unit rates will rise by an even higher 19 percent the coming financial year as the government changes the way it calculates rates for apartments and units. However, there is a $100 rebate to unit and apartment owners.</li>
</ul>
QUEENSLAND
<ul>
<li>In Queensland there will be a 1.5% surcharge for absentee payers of land tax, applying to land holdings of $350,000 or higher in addition to other land tax payable (does not apply to Queensland residents but anticipated to impact on property investment), according to a blog on Queensland Economic Advocacy Solutions (QEAS).</li>
<li>The state has also completely cut stamp duty on first-home buyer purchases of $600,000 or less and reduced it for homes priced up to $750,000.</li>
<li>To assist first home buyers entering the housing market, the Queensland First Home Owners’ Grant is being temporarily increased from $15,000 to $20,000 for contracts on newly constructed homes entered into between 1 July 2017 and 31 December 2017.  </li>
</ul>
NT
<ul>
<li>There’s an increase in the maximum stamp duty rate (from 5.45 percent to 5.95 percent) for conveyances, including landholder duty, for contracts signed on or after 1 July 2017 where the dutiable value is $3 million or more but less than $5 million, the rate is 5.75 percent of the dutiable value and where the dutiable value is $5m or more, the rate is 5.95 percent of the dutiable value, the eliteagent.com.au reported citing KPMG.</li>
<li>Meanwhile, first home buyers will see stamp duty abolished on purchases of homes up to $500,000, while discounts would be applied for properties up to $650,000, on established homes. </li>
</ul>
TASMANIA
<ul>
<li>The fee for issuing a Land Tax Search certificate will increase from $11.47 to $11.62 from 1 July 2017.</li>
<li>The first home owner grant of $20,000 has been extended one year from 1 July 2017 to 30 June 2018.</li>
<li>The Tasmanian government announced partial duty relief for most types of house and land package purchases, through amendments to be made to section 19(2) of the Duties Act 2001 which come into effect on 1 July. These are mostly to do with calculations as they relate to improvements, the Elite Agent said citing the state Treasury and Finance department.</li>
</ul>
SOUTH AUSTRALIA 
<ul>
<li>Foreign investors have been slugged with a 4 percent conveyance duty surcharge on residential properties from 1 Jan 2018.</li>
<li>Stamp duty concessions of $15,500 for off the plan apartments have got a one-year extension.</li>
<li>Further, first homebuyers who purchase off-the-plan could be entitled to more than $40,000 in assistance under state government measures to stimulate jobs and activity in the building industry. People who have previously owned a home will be eligible to receive up to $25,500.</li>
<li>In a reprieve to investors, there will be no land tax for five years if they buy eligible off-the-plan apartments.</li>
<li>A new $10,000 pre-construction grant for the next three months for off the plan apartments in buildings yet to be built is being introduced.</li>
</ul>
 WA
<ul>
<li>First home buyers will see their grant being slashed to $10,000 from the current $15,000. </li>
<li>First home buyers purchasing a new or established home will continue to be exempt from duty on homes valued up to $430,000 or vacant land valued up to $300,000, and to receive a concessional rate of duty on homes valued up to $530,000 or vacant land valued up to $400,000.</li>
</ul>
In addition, there are other changes as well. 
The National Housing and Homelessness Agreement (NHHA) will replace the National Affordable Housing Agreement (NAHA) from 1 July 2018 and will combine funding currently allocated under the National Affordable Housing Specific Purpose Payment (NAHSPP) and the National Partnership Agreement on Homelessness (NPAH).
The NHHA will target jurisdiction-specific priorities including supply targets, planning and zoning reforms and renewal of public housing stock while also supporting the delivery of frontline homelessness services. Funding for both the housing and homelessness sectors will be ongoing and indexed.
 
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Foreign investors to feel the heat most from July 1 tax changes

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GUEST OBSERVER
All Australians should be able to retire with dignity and decent living standards, states the recently released superannuation report of the Committee for Economic Development of Australia (CEDA).
CEDA’s report is commendable. And although I agree with most of its recommendations, including what the purpose of super should be, how retirement income products dealing with longevity risk should be developed and how super tax laws should be made more equitable, I have one serious misgiving: I do not believe active employees should be able to use their super funds to invest in owner-occupied housing.
The American 401(k) system (also a defined contribution model like Australian super) provides a cautionary tale on the damage caused by what’s known as pre-retirement leakage. Unlike Australia, it is fairly easy for US workers to access their 401(k) retirement accounts during active employment. Even prior to preservation age, which is 59<a href="https://www.propertyobserver.com.au/"></a>½ in the US, individuals are able to use their workplace retirement accounts for a number of purposes, both with and without tax consequences.
For instance, the US tax code allows individuals under specified circumstances to take loans against the value of their retirement funds without tax penalty. Although such funds are required to be secured and paid back like any other commercial loan, studies show many employees are never able to restore the money to their 401(k) accounts. Not only does this lead to diminished pension pots, it also means there will be less money upon which interest or investment returns can build on in the long-term.
The US 401(k) system also permits employees to take hardship distributions for a number of reasons, including purchasing of a first home, university education and medical expenses. In these circumstances, not only does the individual not face any tax penalties for the withdrawal (except for having to pay ordinary income tax), they are also not required to pay back the money to their account.
Finally, employees can take money out of their 401(k) accounts if they “really” want. What I mean is, absent even an authorised loan or hardship distribution, employees before preservation age can withdraw funds from their retirement accounts. We call this “expensive money” because both a 10% excise tax and 20% employer withholding of funds apply. In the end, these employees receive 70 cents in the dollar for withdrawing money prematurely from their retirement account.
Such leakage in the US causes a significant erosion of assets in retirement - approximately 1.5% of retirement plan assets “leak” out every year. This can potentially lead to a reduction in total retirement assets of 20% to 25% over an employee’s working years, according to experts.
<h2>Remember the role of super</h2>
I do not disagree with the CEDA report that housing makes a critical contribution to sustaining living standards and helping to address elderly poverty. Needless to say, there should be a multipronged federal government response to the spectre of increasing poverty in old age because of the lack of home ownership. Many useful suggestions are made in the CEDA report in this regard.
But using super, even if only for first-time home buyers, should not be the answer. Indeed, CEDA agrees with much of the recent Financial System Inquiry report (the Murray report), which concludes that super legislation should state explicitly and clearly that its purpose is to provide retirement income.
While increasing home ownership for younger workers is an admirable policy prescription, it is not consistent with the retirement income focus of super. Allowing workers to use their super funds to buy homes means there will be much less money in the pension pot to grow over time to provide the necessary retirement income.
And the harm is ongoing. Making such a change would lead to a further constrained supply of housing, meaning more money chasing the increasingly limited stock of property, tending to drive home prices up even further.
Of course, when, not if, the housing market crashes, much of the super savings tied into such property will also be lost. This problem stems from a lack of diversification in one’s retirement portfolio through an over-investment in the family home. The consequent lack of investment diversification among asset classes means super is less likely to be able to survive future shocks to the Australian economic system.
The lesson from the United States is clear: pre-retirement leakage from super should be permitted only under the most exceptional of circumstances. Even for the very best of reasons, like first-time home ownership, Canberra should prevent super fund leakage during active employment to ensure the primary objective of super: retirement income adequacy.
Paul Secunda is senior Fulbright Scholar in Law (Labour and Super) at University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/paul-secunda-187662" target="_blank">here.</a>
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Developments

New apartments

New townhouses

News