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The revolution in how new communities are made

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.”

 
CategoriesNews

Bleak outlook for renters is good news for investors

Michael Yardney 7 June 2022

It’s tough out there for tenants, with a shortage of available rental properties – both houses and apartments – and intense competition for the limited supply driving up prices around Australia.

And there’s no relief in sight.

According to Andrew Wilson’s My Housing Market, the already-low vacancy rates continued to fall over May, driving rents even higher.

The national weekly median asking house rent increased by 16.8 per cent over the past year to $537, with the May house vacancy rate steady at 1.2 per cent.

Wilson reported that vacancy rates for houses were at record low levels in Sydney, causing rentals to surge by 25.8 per cent over the year.

On the other hand, Brisbane continues to report the most affordable weekly house rents, but even these have increased by 7 per cent over the year.

Apartment rents also rising

Unit rentals have also recorded strong increases, with apartments rents up 16.1 per cent over the past year as decreasing housing rental affordability has forced many tenants to consider apartment living.

Why are rentals growing so strongly?

It all has to do with supply and demand.

At present, the competition for rental accommodation is high. Tenants have very little choice, with the number of available rentals trending lower, month by month.

Why is supply so limited?

It all started in 2017, when the Australian Prudential Regulation Authority (APRA) restricted funding to investors, meaning the number of investors providing rental accommodation decreased.

Then, during the pandemic era of 2020 and 2021, many investors sold up and, in general, owner-occupiers purchased their properties, further decreasing the stock of rental properties.

However, during this time, the average household size got smaller as many young renters fled share houses for the “safety” of one- or two-bedroom apartments.

And, more recently, with our borders reopening and tourism increasing, many properties that had been put into the long-term rental pool were listed back on Airbnb, thereby lowering the number of properties available for long-term tenants.

What’s ahead?

Rental demand doesn’t look likely to ease any time soon, particularly with our borders reopening and international students returning, filling the once-vacant CBD apartments.

Most immigrants coming to Australia rent for a few years until they get their bearings in their new homeland.

Also, many potential first home buyers will remain tenants for longer as inflation and the rising costs of living, including soaring rents, eat into their ability to save a deposit.

On the supply side, more investors are coming into the market, but the real challenge ahead is that building approvals for new apartment complexes are dropping.

And to make things worse, many of the apartment complexes on the drawing board will not get out of the ground because they are now unprofitable due to steep price increases and interest rate hikes at a time our housing markets are entering a correction phase.

So, while it’s a bleak time for tenants, property investors can look forward to rising rental returns. 

CategoriesNews

Brisbane breaks into global top 10 for fastest growing home prices

Sophie Foster 9 Jun 2022

Brisbane has cracked the global top 10 for the cities with the highest growth in property prices in the world, the only Australian capital to do so this year.

The Queensland capital squeezed in at 10 on the Knight Frank Global Residential Cities Index beating 140 cities worldwide, including all in Australasia, with its annual growth rate of 28.4 per cent.

The ranking was a massive jump on its position in Q1 last year when it ranked 89th worldwide, according to Knight Frank Australia head of residential research Michelle Ciesielski.

”It was inevitable Brisbane was one of Australia’s better performing cities given the relative value, recent population growth and outstanding lifestyle, as we’re also witnessing this trend with other smaller cities around the world,” Ms Ciesielski said.

“We saw Brisbane rise steeply up the ranking as a result of increased sales activity from east coast investors following the state border reopening, and more good quality homes strategically listed for sale given the increased competition in the buyer pool.”

Despite recent price surges, Ms Ciesielski expected Brisbane to continue to be attractive given current cost of living and household pressures.

“Australia’s three best performing cities for annual price growth at the end of Q1 2022 (Brisbane, Hobart and Adelaide) still have a $200,000 buffer between the median value of their city and Australia attracting first home buyers and investors from across the country,” she said.

Hobart ranked 12th globally with a 26 per cent rise, Adelaide was 14th (25.1 per cent), Darwin 23rd (19.9 per cent), and Canberra was in 26th position (18.4 per cent).

The biggest cities in Australia – Sydney (16.1 per cent growth) and Melbourne (9.2 per cent) – were ranked 31st and 66th respectively. The only Australia city on the index growing slower than Sydney and Melbourne was Perth (3.5 per cent) which ranked 121st.

City house prices rising at fastest rate since Q3 2004. Source: Knight Frank Global Residential Cities Index Q1 2022.

Asked if Brisbane was pricing itself out of its affordability advantage, Ms Ciesielski said “although we forecast all capital cities to trend back towards more sustainable levels of price growth by the end of 2022, Brisbane is likely to endure modest market sentiment as the official cash rate is repositioned to support the economy and the cost of living further impacts local households”.

She said significant government investment across Brisbane for transport, technology and amenity hubs would “not only draw more workers, but elevate the longevity in transforming as a global city”.

“The Olympics will place Brisbane and the surrounding areas on the world stage, not only for those already living in Australia, but those currently living abroad,” she said.

“Although Brisbane’s new housing pipeline is considerably lower than past years, the key developments earmarked around activity and transport hubs will transform the liveability of the city, as much as draw card of new job opportunities created.”

The Index found that despite the flight from cities during Covid-19, city house prices rose at their fastest rate since Q4 2004, up 11.5 per cent per annum on average.

Ms Ciesielski said Brisbane, Hobart and Adelaide attracted elevated population growth against the Australian average through 2021.

“This was felt most in the rental space, given many people moving to a new area tend to rent before making a purchase,” she said.

“Australia’s mainstream residential price performance has been heavily influenced by smaller cities and regional areas which have continued in 2022 to record solid price growth, due to the relocation of families and digital nomads to more affordable locations, investors returning to the market seeking a better rental yield and by others buying holiday homes for their retirement plans in the coming years.”

Knight Frank expected residential price growth in cities to slow this year but not plunge dramatically despite heightened uncertainty, rising taxes and more property market regulations (such as a ban on foreign buyers in Canada).

“We think a sudden shift to negative price growth is unlikely for most cities in 2022”, with any slowdowns tied economic growth, supply levels and employment, and the speed and scale of interest rates rises locally.

GLOBAL TOP 10 CITIES:

1 ISTANBUL 122.0%

2 ANKARA 111.7%

3 IZMIR 105.9%

4 HALIFAX 34.7%

5 PHOENIX 32.9%

6 MIAMI 29.7%

7 SAN DIEGO 29.1%

8 DALLAS 28.8%

9 HAMILTON 28.5%

10 BRISBANE 28.4%

* Ranked by annual % change (Q1 2021-Q1 2022)

(Source: Knight Frank Global Residential Cities Index, Q1 2022) 

 

CategoriesNews

Bunnings flags huge changes in wake of soaring house prices

News.com.au June 13, 2022

Bunnings is going to radically “reimagine” its business in a response to soaring house prices across Australia. 

Bunnings is going to radically “reimagine” its business in an attempt to target high-spending Gen Z Australians born between 1997 and 2012 — who have been shafted by an astronomical increase in house prices.

Home ownership in Australia is at lows not seen since the 1950s, posing a significant threat to the hardware giant which relies on customers wanting to make improvements to their dwellings.

Bunnings is clearly aware of this, and its chief executive Michael Schneider has vowed to transform the business to appeal to a younger generation — the majority of whom still live with their parents.

Speaking at the Global DIY Summit in Denmark, he said Bunnings would increasingly reach out to social media influencers and bloggers, as well as boosting its presence on YouTube and developing apps to help young people visualise their living spaces.

He appeared sympathetic to Gen Z Aussies who he said made up around 20 per cent of the population in the Asia-Pacific region, but had been smashed by a rising house prices and spending some of their most formative years in lockdown.

“We believe Gen Z have defined attitudes and preferences that will require a reimagining of the DIY shopping experience,” he said at the conference, according to the The Australian.

“Today, they are infrequent purchasers of DIY products, relative to the average DIYer. And while that’s probably not too surprising given most still live at home, it means there are fantastic opportunities to connect and engage and inspire them around all things DIY.”

Bunnings eyes huge opportunity

Bunnings’ push to appeal to a younger market comes as Gen Z and Millennials are swiftly becoming a force to be reckoned with when it comes to retail spending.

 

Research from Afterpay shows currently account for 36 per cent of the total retail spend in Australia stemming from those two generations alone — who are spending up to 7 per cent above pre-Covid levels.

It is anticipated that their share of retail spend will grow to 48 per cent by 2030, as more of Gen Z (currently aged 9-24) enter the workforce.

Home ownership is a key barrier to these generations being able to spend their disposable income at shops like Bunnings, as they have become increasingly frozen out of the housing market by over-inflated property prices.

Mr Schneider however said he believed that young Australians were still focused on buying a home.

“I say this because our research shows they are absolutely thinking about their future homes and, despite affordability challenges, they’re optimistic they will own a home one day,” he said. according to The Australian.

He said Bunnings would target social media influencers and platforms like YouTube to help Gen Z discover the Bunnings brand and be inspired about home projects.

“They want to source their DIY inspiration and discover products much in the same way as they curate their social media feeds and use other digital services,” he said. “For Bunnings that’s meant doing things a bit differently, seeking out social influencers and brands on social media, and thinking about apps to help visualise a space online, blogs and YouTube videos.”

Bunnings faces a new challenger

This all comes as a new challenger has vowed to take on Bunnings’ dominance in the DIY retail space with a huge range of home improvement products such as fans, lights, bathroom vanities, kitchen fixtures, and wallpaper, and much more to come.

Online furniture retailer Temple & Webster this month announced it was moving into the $26 billion DIY space with the launch of a new business called The Build, no doubt aiming to claim some of the renovators who would otherwise head to Bunnings.

The company said it will spend $10 million setting up The Build, with plans for an initial offering of 20,000 products across 39 categories.

Temple & Webster chief executive Mark Coulter said further categories including tools and building equipment will be added over the coming months.

“Australia is a country of home renovators, we love our homes, and we love making them more beautiful,” Mr Coulter said. 

“The Build by Temple & Webster is aimed at making home improvement jobs, big or small, easier, cheaper, and better.”

Having already carved out a foothold in the furniture space Mr Coulter said The Build aimed fill a gap in the online DIY market, which accounts for just 4 per cent of home improvement sales in Australia compared to 25 per cent in the UK. The company has its work cut out, as Bunnings currently accounts for about half of the Australian market. 

CategoriesNews

Could rising interest rates help mortgage holders get a better deal on their home loan?

Chloe Breitkreuz June 8, 2022

It may sound counterintuitive, but rising interest rates could help borrowers save on their mortgage repayments. 

While rising rates have meant some borrowers have seen an increase in their repayments, rate rises have also triggered competition in the lending market, which have created more interest-saving opportunities for borrowers. 

As the major banks passed on the full cash rate increase to customers in May, many non-major lenders chose not to pass on the rate hike, instead keeping their rates competitive in a bid to win market share. 

“Non-major banks have competed strongly to maintain a dominant position for refinances, with many major banks increasing fixed rate loans and tightening credit over the cash rate rise period,” says Mike Gill, head of research at PEXA.

“The non-major banks have been successful in winning more refinances than they have lost in all states so far in 2022.” 

Property refinances have continued to surge in 2022, with the volume of refinances across the country increasing 21.5 per cent over the past month, according to PEXA’s Refinance Index.

“Property owners are beginning to feel the crunch of higher cost of living due to inflation combined with rising interest rates,” says Gill. “This has motivated many to review their home loan and look for a better deal.” 

Following the RBA cash rate hikes of May and June, we’ll likely see the refinance boom sustain momentum, says Gill.

“Whilst we have seen refinancing levels increase in May, much of this has been driven by property owners who anticipated a rate rise,” he says.

“Noting it usually takes 1-2 months for consumers to complete a refinance, we expect to see the full effect of the May rate rise and subsequent rises in the coming months.” 

How much does it cost to refinance? 

While refinancing to a lower interest rate could help borrowers save on mortgage repayments, there are potential costs to consider.

Before deciding to refinance, it’s important to be aware of any leaving fees and to make sure the benefits of switching outweigh the costs, says Natalie Abel, senior home loan specialist at Domain Home Loans.

“You’ll generally be charged a discharge fee when you switch,” she says. “If you’re on a fixed rate, you could also be charged a break fee.” 

Lender discharge fees are typically charged to both variable and fixed-rate mortgage holders, and are usually between $150 and $400. 

On the other hand, break fees are typically only charged to fixed-rate mortgage holders and are dependent on multiple factors, including the time left on the fixed term, the amount left to be paid and how much interest rates have changed since the start of the fixed term. 

Borrowers may also be required to get their property valued in order to refinance, which could cost between $300 and $600. 

How long does it take to refinance? 

Depending on your situation and whether you choose to refinance with a new lender, it can take between four to six weeks to process and finalise a refinance application. 

But, being prepared to provide all the relevant documents and information to your lender or broker could help speed up the process, says Abel. 

A refinance application will generally require borrowers to provide proof of liabilities, employment and income, as well as their family and living situation, and sufficient identification. 

To help ensure a swift and smooth application process, it’s also important to be truthful about your property finance situation and personal circumstances, says Abel.

“If there’s something in your circumstances that has changed, like your employment or liabilities, just be upfront about it,” she says. “Proving everything upfront and having your documents ready to go is going to help speed up the process.”  

 

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