Part two of the government’s stalled housing legislation finally passed federal parliament on Thursday. The Build to Rent tax reform bill aims to boost investment in apartment blocks designed and constructed for rental occupancy and retained in single ownership.
Other than as purpose-built student accommodation, this form of development remains rare in Australia.
At the same time, Build to Rent does not inherently contribute to affordable housing.
At least in its initial form in Australia, it is typically a “premium product”, mainly in well-connected locations and targeted at moderate to high income earners.
And it might suck construction activity away from other projects too!
Oh, for some joined up thinking!
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This week is Asbestos Awareness Week in Australia. Asbestos Awareness Week provides an important reminder as we head into end of year period when people may be looking to undertake renovation or DIY work on older properties and the need to be vigilant in managing safety on site.
If you’re working on homes built before 1990, you need to assume asbestos could be present in elements such as cladding, eave sheets, electrical switchboards, internal linings and even in pipework, roofing and floor underlays.
It is vital to engage a licensed assessor for inspection and testing, and if asbestos is found, ensure it’s removed by a licensed professional.
Check out out YouTube Channel where we feature Gill’s research into the whole asbestos scandal. https://www.youtube.com/watch?v=cocjr_xgqDI&list=PLBY81JyA5KYW_5nJ_rkFMjLpR5Be_ctHj
4,000 people are dying each and every year across Australia from exposure to Asbestos, a process which can take many years from initial exposure, as I know from personal experience, as my wife Gill died from exposure.
We launched Asbestos Awareness Australia, a charity to raise awareness and to campaign for reform. Unfortunately politicians do not want to touch this live rail, despite one in three homes containing asbestos, the fact we continue to import board containing Asbestos and the rising number of deaths from exposure among women.
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Last week, yet another building and construction firm hit the wall, collapsing into liquidation owing $5.7m straddling two different states and territories, leading to a “domino effect” impacting 130 projects and 80 staff members.
This is part of the continuing litany of failure, as data from the Australian Securities & Investments Commission (ASIC) shows that a total of 1,245 companies were declared insolvent in May alone.
This is 44% higher than the same period in 2023 and 122% higher than in May 2022. It is also the highest number of insolvencies in a single month since ASIC started reporting this data in 1999. The surge in insolvencies was driven by the construction sector, which recorded 313 insolvencies in May – a record for this cycle.
This is an object lesson for anyone considering contracting with the building and construction firm of any size; do your own due diligence! It also presents another barrier to the Albanese government’s target of building 1.2 million homes in five years—a level of construction that Australia has never achieved before, despite record activity compared with other countries and over 5% of people working in the sector.
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Today’s post is brought to you by Ribbon Property Consultants.
Yesterday the ABS released the latest data on dwellings approved and they fell 0.3 per cent in April, after a 2.7 per cent rise in March, according to the seasonally adjusted data after just 13,078 new homes were signed off for construction.
Looing at the mix, Approvals for private houses fell 1.6 per cent. While approvals for private sector dwellings excluding houses also fell 1.1 per cent in April in seasonally adjusted terms.
In the year to April, just 163,493 new dwelling permits were issued, a level which has been broadly consistent since December as surging home building costs and elevated interest rates batter construction activity. The annual result was vastly outpaced by population growth over the same period, which soared by 626,871 mostly due to surging net migration levels. From July 1, Labor is targeting the construction of 1.2 million well-located homes over five years, requiring a 12 month rolling average of 240,000 new homes.
Aprils figure is well short of the 20,000 homes that need to be constructed each month if the country is to hit the federal government’s target of building 1.2 million new homes in the space of five years, starting in July.
So the chronic housing supply issue will remain a problem and put upward pressure on home prices and rents, leading to higher inflation, and so higher interest rates for longer.
So unless things change, the gap between the supply of dwellings and meeting demand will continue to grow, driving home prices and rents higher, and pushing inflation higher which leads to higher interest rates and mortgage costs.
Step one should be to trim migration meaningfully back to bring the supply and demand back into better balance, remembering that on capita we are still currently building MORE dwellings than other western countries, as I discussed with Tarric Brooker recently. There is a strategic path to tackle the issues we face, but it seems to be politically impossible so more people will struggle to find a place to live – something which should be a basic human right, and a priority for Government.
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Another outing with our property insider Edwin Almeida, as we kick around the latest news and data across the Australian Property market.
Can you believe the theoretical housing announcables? Where is demand for property really coming from? What is the story of overseas purchasers?
Plus, we look at the latest numbers, and Edwin was a tip for the week!
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Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on [email protected] & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
In this weeks rumble, we deep dive into property auctions, which will make agents cry, and also look at the smoke and mirrors in the media. Plus Dusty and Evan wreck Edwin’s studio, as well as discussing some eating advice!
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The truth is that recent high rise construction in many Australian cities, are riddled with defects, and someone needs to pay for rectification. This surge in high-rise apartment construction happened as building certification was privatised, costs cut and poorly trained workers employed.
As a result, we have a litany of increased building flaws and quality concerns, such as cracked foundations, water leaks, balcony defects, and flammable cladding. According to the NSW Building Commission strata survey, more than half of newly registered buildings since 2016 had at least one significant issue that will cost an average of $331,829 to correct.
The Strata Community Association NSW found that waterproofing was the most common major issue, followed by fire safety. It also discovered that around one out of every ten buildings had structural and enclosure difficulties, such as roof or facade flaws.
Examples include Sydney’s Opal and Mascot Towers, which were evacuated due to extensive cracking.
Building regulation consultant Bronwyn Weir cautioned that an “enormous” problem had developed whereby “thousands and thousands of apartments have serious defects in their buildings”. “Some of these buildings could potentially be a write-off. We have what is now you know, a systemic failure that is quite difficult to unravel”, she said.
Engineer Leith Dawes warned that purchasing an off-the-plan apartment in Australia had degraded into a game of “Russian roulette” because of the numerous building faults that are frequently overlooked.
Similar structural problems have been uncovered across Melbourne, including leaking buildings, mould, and faulty balconies, Canberra, Gold Coast and many other areas too.
These problems have cost owners and taxpayers millions of dollars to rectify. But the problems are widespread, and many individual property owners are caught in the crossfire.
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Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
The ABS released data on the total number of dwellings approved in February recently. They say that despite growth in private houses in the month, the total number of dwellings approved fell 1.9 per cent in February (seasonally adjusted), after a 2.5 per cent fall in January. The trend estimate for total dwellings approved fell 3.0%, following a 2.7% January decrease. Specifically, approvals for private sector dwellings excluding houses fell 24.9 per cent in February in seasonally adjusted terms, driven by a fall in the number of approved large apartment projects. In contrast, approvals for private houses rose 10.7 per cent in February.
This continues to confirm the massive gap between the Government aspiration of 1.2 million new homes over the next 5 years. On a straight-line basis, this translates to a target of 240,000 each year – which by the way is still way under the number needed to house the surging migrants and fill existing shortfalls.
So why not tackle the root cause issue here, too high migration? Entrepreneur Dick Smith fears today’s young people will have no savings and be forced to live in Chinese-style high-rise apartments unless immigration is urgently slashed, according to an article in the Daily Mail.
The veteran businessman and philanthropist says they need to understand the connection between a surging population and climate change. The entrepreneur, who turned 80 last month, fears homes with a backyard in Australia’s capital cities will no longer exist by 2050.
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State and Federal Governments have been marked with a massive “fail” in their half-hearted attempts to show they are really committed to increasing housing supply. Of course, the demand side issues of too high migration, and too lose lending are conveniently sidestepped, as big Australia and banks’ profits rule.
But according to a recent AFR piece, the supply of new homes will crash to the lowest level in over a decade by 2026, worsening housing and rental affordability, and leaving the federal government far short of its goal to build 1.2 million homes by mid-2029.
Across capital cities, 79,000 new homes will be finished in 2026, a drop of 26 per cent compared with last year due to planning bottlenecks, labour shortages and soaring material costs.
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Property owners from Sydney’s infamous, evacuated and faulty Mascot Towers development have until March 20th to react to the NSW government’s multi-tier approach to compensation.
The 132 residential and nine commercial owners of the inner-south apartment block have a chance to walk away from the legal and financial nightmare since the towers were evacuated in June 2019 due to structural cracking.
But owners will lose hundreds of thousands of thousands of dollars if they choose to sell their defect-riddled apartments.
There will also be two support packages available to both owner-occupiers and investors, as long as they meet the means-tested criteria.
But owner occupiers and property investors are in different lanes. And the approach tabled could also have ramifications for owners of apartments in other faulty buildings. This is significant, given that up to half of all new units built could have “serious” defects.
But it also shows how the NSW Government are separating property investors from owners, arguing that investors are taking a commercial risk, and potentially can offset losses from other investments.
Clearly there are no winners here, other than perhaps the original developers, but more broadly this is another warning to anyone considering buying into a high-rise development, either off the plan, or in a subsequent sale purchase. With limited Government capacity to solve the problem, many risk losing hard cash, remember Caveat Emptor, Let the Buyer Beware!
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