Melissa Heagney June 29, 202

The world’s most liveable cities have a lot in common: great cultural experiences, a walkable environment, and healthcare and education options.

Many also have highly desirable property markets that boomed during the COVID-19 pandemic, as people looked to work from home.

Sam Murden 27 Jun 2022

Energy prices have quickly risen to be one of the major issues affecting homes across Australia, with the ongoing crisis now driving changes in how homeowners source their power.

New research conducted by Ray White has shown that an increasing number of homes are being advertised for sale with energy efficient features.

According to the analysis, terms like “solar”, “battery”, and “off-grid” all saw a significant increase in the 12 months to May 2020 and the 12 months to May 2022.

Solar was the most mentioned term used in Australian property advertisements, being used 79,860 times in 2020 to an increased 101,383 times in 2022.

Ray White chief economist Nerida Conisbee, who authored the report, says having an energy efficient home is becoming increasingly important for Australians looking to help play their part in combating climate change.

“The significant occurrence of this word is driven by significant take up of solar panels over a prolonged time period, at times boosted by generous government incentives,” Ms Conisbee said.

“The term that had the biggest uptick however was “battery”, increasing by 85 per cent over the two year time period. This reflects that solar panels are good for energy efficiency.”

The analysis results fall in line with the latest research from Finder, which illustrated how energy bill stress had jumped from 20 per cent in May to 28 per cent in June.

Finder’s Consumer Sentiment Tracker showed no reprieve in rising wholesale electricity prices coinciding with the demand for heating during the cold winter months.

According to Finder energy expert Mariam Gabaji, Australians are paying on average $322 on their quarterly electricity bill – a figure that could soon jump by as much as $63 in NSW over the next few months.

“Bills have already increased this year and it is only set to become a bigger problem for households across Australia. Rising energy prices and higher interest rates squeezing budgets, together with the winter energy surge could be the perfect storm,” Ms Gabaji said.

“Vulnerable households are doing what they can to offset the increases, but with prices forecast to spike even further there are little cost-saving measures left for them to try.”

According to recent figures released by Budget Direct detailing the cost of living in Sydney and comparing them to the rest of Australia, Sydneysiders pay less for their basic utilities than the national average.

Megan Neil 23 Jun 2022

Australian households have never been wealthier thanks to the pandemic surge in housing prices, with their overall wealth hitting a record $14.9 trillion.

But many Australians are starting to cut back on their spending where they can as the cost of living rises, while two major banks are now tipping there will be three super-sized interest rate hikes in a row.

Total household wealth in Australia rose by $173 billion or 1.2% to a record $14.9 trillion in the March quarter, Australian Bureau of Statistics data released on Thursday showed.

The average wealth per person also reached a record $574,807 – a rise of $3695 over the quarter but a massive $146,008 increase since the start of the pandemic.

ABS head of finance and wealth Katherine Keenan said residential property assets continued to drive increases in household wealth.

“While the pace of property price growth started to moderate, with falls in Sydney and Melbourne this quarter, other capital cities and regional areas rose, resulting in an overall rise in house prices of 1.9% nationally,” Ms Keenan said.

Household wealth or their net worth has jumped by 35.3% during the pandemic, with the strength of the housing market accounting for most of the growth since the March quarter 2020.

The ABS said residential property assets have risen by 39.9% since the start of the pandemic, while superannuation balances increased 22.5% as share markets gained ground.

CommSec chief economist Craig James said household wealth hit new highs at the end of March, underpinned by higher home prices.

“But that is likely to be as good as it is going to get for a while,” Mr James said.

“Home prices have started to ease, especially in Sydney and Melbourne. And share prices have eased sharply in the June quarter with the ASX 200 index down by around 13%.”

The ABS noted the 1.2% increase in household wealth in the March quarter this year was the lowest growth since the March quarter 2020.

While property prices rose during the quarter, superannuation balances dipped by 1.3% as heightened uncertainty in global share markets weighed on the value of overseas assets held through superannuation funds.

How Aussies are cutting back as cost of living rises

As the cost of living rises, new research by National Australia Bank shows Australians are prioritising spending on essentials and cutting back where they can.

One in two are switching to cheaper brands and shopping around for cheaper products, the survey of 2050 people found.

The report, released on Thursday, found 48% of people have been turning off electrical appliances and lights while 46% have cut down on car trips to save on petrol.

The report authors, NAB head of behavioural and industry economics Dean Pearson and associate director of economics Robert De Iure, said the amount of money a household needs to be able to afford the goods and services necessary to maintain their standard of living is steadily rising.

“Consumers are not only noticing price increases more (particularly when spending on groceries, transport and utilities), but are changing their spending and lifestyle patterns in an attempt to tackle them.”

Mr Pearson and Mr De Iure said many consumers are targeting non-essential spending, with about four in 10 cancelling or cutting back on spending on food delivery services like Uber Eats and Menulog and on entertainment like the cinema or theatre.

They said a significant number – about three in 10 – have also cancelled or cut back on subscriptions for newspapers, audio books and apps. A further one in four have cut back or cancelled gym or sports memberships and subscription streaming services like Foxtel, Netflix and Stan.

The report showed four in 10 people also cut back or stopped buying ‘micro treats’ like coffees, snacks and lunch, while the same number created or followed a budget and kept better track of their spending. 

The survey also found only one in 10 Australians have deliberately missed a rent or mortgage payment, a bill payment or opted to cut back on mortgage repayments or draw down equity on their loans.

NAB group executive for personal banking Rachel Slade acknowledged there are some individuals who may be feeling the cost-of-living pressures.

“When we look at our customers, as a whole they are in a really good position right now – in fact 70% are ahead on their mortgage payments, giving them financial flexibility,” Ms Slade said.

“We also know that having job security is critical to relieving household stress. The high rate of employment in Australia right now is doing a lot to put people at ease.”

More mega interest rate hikes expected

Westpac economists have now joined their NAB counterparts in predicting the Reserve Bank of Australia will deliver three consecutive super-sized interest rate rises.

After lifting the record-low cash rate by 25 basis points in May and by a super-sized 50 basis points in June, economists at all four major banks expect the RBA will hike the cash rate by 50 basis points again in July.

Westpac and NAB predict there will be a third lift of 50 basis points in August.

Westpac economists on Thursday lifted their forecast for the peak in the RBA’s tightening cycle from 2.35% to 2.6%, due to a more aggressive approach to rate hikes by the US Federal Reserve.

Westpac chief economist Bill Evans said the upward revision in the forecast terminal rate is likely to manifest as a 50 basis point increase in the cash rate at the RBA board’s August meeting.

“The August board meeting will respond to what is expected to be a very unsettling June quarter inflation report set to be released on July 27,” Mr Evans said.

“We expect headline inflation to lift 1.5% in the quarter taking annual inflation from 5.1% to 5.8%.”

Mr Evans noted the 2.6% forecast – expected to be reached in February – is broadly in line with RBA governor Philip Lowe’s comments that it is reasonable for the cash rate to get to 2.5% at some point.

In a speech on Tuesday, Mr Lowe said the RBA’s first increases in interest rates have not affected most people’s mortgage repayments that much because of the financial buffers built up during the pandemic.

“But as interest rates start to rise those buffers will be eaten into and given the fact that households have more debt than they used to, it will start to bite and we’re very conscious of that,” Mr Lowe said.

Mr Lowe also said the RBA now expects inflation to spike to around 7% in the December quarter before beginning to decline by early next year.

Mr Evans noted that about 60% of Australian mortgages are on floating rates, while a further 75% of the remaining fixed rate loans are set to mature by the end of 2023.

“Effectively 90% of mortgage borrowers are directly exposed to moves in the RBA cash rate over the next year and a half,” Mr Evans said.

“The rate affects borrowers and homeowners through multiple channels, including: the cash flow of existing borrowers; the capacity of prospective borrowers to obtain and service new loans; the wealth effect from associated adjustments in house prices; and via confidence effects.”

RBA and regulators watching impact of higher prices and rates

Australia’s financial regulators are monitoring the impact of rising interest rates on households and on the housing market.

The Council of Financial Regulators, chaired by Mr Lowe, discussed the issues at its regular quarterly meeting on Monday.

“Members considered how risks in the housing market might evolve as rising interest rates flow through to mortgage repayments and households’ borrowing capacity,” minutes of the meeting released on Thursday said.

“Housing market indicators suggest that activity has weakened in the major cities in recent months and housing price growth nationally has slowed, although housing lending is only just starting to ease.”

The council said it will be closely monitoring the effects of rising interest rates on the household sector.

“Members emphasised the additional resilience provided by the substantial housing equity and payment buffers built up by households since the onset of the pandemic.”

The RBA board is also closely watching how households adjust their spending in response to higher prices and interest rates, plus the impact of rate rises on the housing market.

Minutes of the board’s June meeting showed the board noted that housing prices had declined in some markets but remained more than 25% higher than before the pandemic, thereby supporting household wealth and spending.

“Further, many households had built up large financial buffers during the pandemic and the household saving rate was very high,” the minutes, released on Tuesday, said.

“The central scenario, which was conditioned on the assumption of further rate rises, was for strong household consumption growth over the remainder of the year.”

NSW Department of Planning and Environment 21.06.2022

First home buyers will be able to choose between an upfront payment or a smaller annual property tax under reforms that will help make home ownership achievable for more NSW residents.

The First Home Buyer Choice is part of an integrated multi-billion dollar housing package announced in the 2022-23 NSW Budget to deliver quality, accessible and affordable housing across NSW.

Premier Dominic Perrottet said one of the Government’s priorities is to make home ownership a reality for more NSW families.

“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” Mr Perrottet said.

“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent. Lifting home ownership is part of this Government’s efforts and ambition to help families who are feeling the squeeze.

“The First Home Buyer Choice will remove one of the largest upfront costs to buying a home and help deliver a brighter future for first home buyers.”

Treasurer Matt Kean said the NSW Government had allocated $728.6 million over the next four years to help first home buyers get a foot on the property ladder.

“We know that first home buyers are being forced to enter the property market later in life and this reform will make the property market more accessible for them,” Mr Kean said.

“It will mean more NSW residents will get into their first home at an earlier age and achieve the great Australian dream of home ownership.”

For a NSW household with the median income that saves 15 per cent of their income, stamp duty adds about two years to the time required to save the up-front costs of the median NSW dwelling.

The property tax option will be available for properties for up to $1.5 million, helping a broader group to become first home buyers. Together with existing first home buyer initiatives, the Government will offer support to about 97 per cent of all first home buyers, or about 55,000 people per year.

Under the new initiative, first home buyers who opt into the property tax will pay an annual property tax of $400 plus 0.3 per cent of the land value of the property.

Minister for Planning and Minister for Homes Anthony Roberts said the property tax option for first home buyers will help increase home ownership across NSW.

“The NSW Government is also looking at initiatives to help boost housing supply by cutting planning assessment timeframes, co-funding enabling infrastructure and investing in new and improved social housing,” Mr Roberts said.

“This Government will use every lever at its disposal – including tax, planning, supply, or working with the Commonwealth — to give more people in NSW the opportunity to own their own home.”

Legislation to establish the property tax will be introduced during the second half of 2022 with eligible first home buyers able to apply to opt into the property tax from 16 January 2023. For contracts exchanged in the period between enactment of the legislation and 15 January 2023, eligible first home buyers will be able to opt-in from 16 January 2023 and receive a refund of stamp duty already paid.

From 16 January 2023, eligible first home buyers who opt into the First Home Buyer Choice will not pay stamp duty on their purchase. The property will not be locked into the scheme if it is sold.

First home buyers will continue to be eligible to apply for full stamp duty exemption for properties up to $650,000. Stamp duty concessions remain in place for properties between $650,000 and $800,000.

For more information visit nsw.gov.au/initiative/first-home-buyer-choice.

Frasers Property Australia 17 Jun 2022

The best new residential developments are those embraced wholeheartedly by the community.

We sometimes take it for granted, but almost every built community across Australia was at one point merely lines on a drawing board.

Of course, communities are much more than physical structures or institutions — they’re a place where you feel you truly belong.

While established suburbs have had years for people to forge connections, for new communities to flourish, they need to get the ingredients right from day one.

The right formula doesn’t happen by accident. It takes a lot of groundwork and community engagement on behalf of the developers.

This effort wasn’t always seen as important, but is now highly valued and part of a bigger revolution in the process of how new communities are made.

Ways of old

For many years, many developers saw their role as simply getting on with the job of building new homes, leaving the rest up to local councils.

Many worked under a mindset to ‘design and defend’. They worried that by engaging with the community, they would only be throwing roadblocks in the approval path and damage commercial viability.

“(Developers) probably didn’t see it as an opportunity or something that was going to add value,” says David Mazzotta, senior community development manager, Frasers Property Australia.

Meanwhile, communities felt like they weren’t being listened to or respected.

“There’s something happening on their doorstep which is going to profoundly impact the way they live their life and they feel entitled to be able to have a say to what’s going on — and I don’t think communities felt that that was the case,” Mazzotta says.

Mazzotta says it became clear that a lack of engagement between developers and local communities served no one’s interests. Now, things have significantly changed.

Developers started to realise local knowledge was an untapped resource that could have a positive influence on their projects, says Brian Elton, founder of Elton Consulting.

Elton, who has more than 40 years of experience in urban planning, housing and social policy, says that engagement first started to be seen as a way of managing potential issues.

“It was a risk management issue, but (it became) much more than that — it was a way of getting really meaningful and quality input from people who knew their local place,” Elton says.

The smarter developers realised that by embracing the community they could start to understand the DNA of the place and the intricacies of the landscape, Elton explains.

“There was a growing awareness that it wasn’t to be feared, but in fact was a very proactive, useful tool – done well and done meaningfully and authentically – to create better places.”

Unique outcomes

Knowing the history of a development site can lead to designs that are truly unique to that location, Mazzotta says.

“What is the X-factor for that place? Why do people value that suburb? Why have they chosen to live there and not somewhere else? They’re the things that you really want to understand,” he says.

The location’s cultural heritage, such as its First Nations connection or industrial pastime, can inspire the choice of architecture, monuments, open spaces and more.

When this is done right, Elton says it leads to a feeling that the DNA of the surrounding community is already a part of the new development. 

“Importantly, if it’s a First Nations community, you can sense the interpretation of that rich social and cultural history in the place,” he says.

Plus, if you can get the local people to co-own what’s going to happen in their backyard, then they become champions of the community and might form a local committee for the development.

“That’s the ultimate outcome — to create social capital so the place is owned by the surrounding community and not imposed on it,” Elton says.

Putting talk into action 

Considering the views of the local community has been integral to the work Frasers Property Australia and Irongate Group are doing at the 24-hectare Bradmill cotton factory urban redevelopment in Yarraville, Melbourne.

Mazzotta says it will be “part of Yarraville and not apart from Yarraville” and the community has been keen to have input.

“The community engagement approach we’ve taken has been to understand Yarraville, to understand Bradmill’s place, and to understand people’s connection to Bradmill, to understand that migrant story and the different community’s place in that site.”

He’s hoping people who have not used the site for years will enjoy rediscovering it.

“The Bradmill site since the early fifties has provided employment for generations of people that have lived in that area. A lot of Greek families worked there; a lot of other migrant families worked there,” Mazzotta says.

“It means a lot to young people that live there now, but it also means a lot to people that are older that went to school nearby, whose parents may have worked there, or whose grandparents may have worked there.”

Frasers is taking the essence of those stories into the design, such as with street names that nod to the history, or having edible street trees such as olive trees.

“I’m hoping that connection with the site will engender people to go there and to visit it, perhaps even to buy it and to continue that sense of connection and ownership over it.”