Projects Review Edition 22, 2021
•
The Melbourne suburbs with the largest price gap between houses and units
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Legal Update: The Owners Corporations Act amendments are now law
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Better Apartment Design Standards Review
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What has 2020 meant for city fringe development opportunities?
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Australian house prices on the upswing again – seven things to bear in mind about the Australian property market
Cover Photo Walmer – 649 Victoria Street, Abbotsford
Contents 1
A Word From the Directors
2 Spotlight 3 - 5
Current Projects
6 - 7
The Melbourne suburbs with the largest price gap between houses and units
8 - 10
Legal Update: The Owners Corporations Act amendments are now law
11 - 12
Better Apartment Design Standards Review
13
What has 2020 meant for city fringe development opportunities?
14 - 17
Australian house prices on the upswing again – seven things to bear in mind about the Australian property market
Projects
Past Projects
3 Botanica – 488 Barkers Road, Hawthorn East
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Hazel Hawthorn – 368 Auburn Road, Hawthorn
3 Carrington Hill – 101 Carrington Road, Box Hill
19
Lothian St - 141 Arden Street, North Melbourne
4 Chapel Park – 220 Chapel Road, Keysborough
20
Anderson Park – 585 Burke Road, Camberwell
4 Ascot Place – 9 Newsom Street, Ascot Vale
21
1975 – 1975 Malvern Road, Malvern East
4 Chevron One – 38 Stanhill Drive, Surfers Paradise 5 Walmer – 649 Victoria Street, Abbotsford 5 Cascade – 40 Whitehorse Road, Blackburn 5 Soligo – 487 Whitehorse Road, Balwyn
Contributors 6 - 7
Article 1 - Written by Rachel Wells, Domain
8 - 10
Article 2 – Written by Phillip Leaman, Principal, Tisher Liner FC
11 - 12
Article 3 – Written by Robert Carletti, FastTract
13
Article 4 – Written by Will Leaf, Managing Director, Ewert Leaf
14 - 17
Article 4 – Written by Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital
+ 61 3 9822 9999 1111 High Street, Armadale VIC 3143
Disclaimer: Information provided is believed to be accurate as at the date of printing, no responsibility is taken for any errors or omissions. It is your responsibility to obtain independent, professional advice. Every effort is made to provide accurate and complete information in Marshall White’s (trading as Marshall White Projects) technical and regulatory newsletters. However, Marshall White cannot guarantee that there will be no errors. Marshall White and its contributors to the newsletter make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the newsletters and expressly disclaims liability for errors and omissions in the contents of this newsletters. Neither does Marshall White and its contributors to the newsletter assume any legal liability for any direct, indirect or any other loss or damage of any kind for the accuracy, completeness, or usefulness of any information, product, or process disclosed herein, and do not represent that the use of such information, product, or process would not infringe on privately owned rights.
A Word From the Directors Last year the end of the second lockdown unexpectedly brought a silver lining to Boroondara. The name of this storm was Hazel, a name you normally associate with an elderly relative giving you $5 inside a Christmas card each year, however for the seventeen people who purchased all of these 2 and 3 bedroom apartments in only twenty-six days from launching, it meant a whole lot more. So the question is, our avid and loyal readers, how come this project at 368 Auburn Road, Hawthorn moved through to a sell out in days and not weeks, months or even years as is often the case! In summary, the following occurred; 1. You have to buy the site right (the old adage of the monies made when you buy, not when you sell has never been more true), so paying $ 5 million back in June 2018 seems good today. 2. You have to find to an architect with an established following. Given buyers often seek security for an off the plan sale it's all about branding. Front of mind recognition from the product they want to buy is everything . 3. The product mix of eight, two bedroom apartments and nine, three bedrooms accorded with market demand. How do we know? Because both types sold down evenly from the start through to the very end. See our development summary on page 14 for additional info on sizes and rates etc .. 4. Don’t rely solely on the architect (or the design team) to get the floorplans right. Our input into the plans, creating separation between the two bedrooms provided a functionality not often seen from long, oblong shaped blocks. The fact that only four of the seventeen purchaser’s paid for variations, again goes against the trend where typically 63% of all owner occupiers will add at least something towards their own taste & design.
5. The collateral needs to be competitive with the best your competition’s offering in the same market. If you’re aiming for a blended rate of $ 10,818 throughout the building, then the renders and collateral need to match those values. Remember that’s all the buyer make a judgment call on when it comes to proceeding or not. 6. Prices need to accord with market. Its tempting to raise prices mid-way through a campaign (bring back 2017) or even start at a higher level and “give it a go” . Word of mouth from early sales, a reduced investment in media, pulling out your money earlier and grabbing other development opportunities more than make up for not going for a price rise. 7. Even the simplest (see basic) onsite displays are usually cost prohibited for boutique developments of this size. If you are going to appoint a Project Marketer, you then need to carefully consider the environment they’re bringing a buyer into . Again, is it indicative of what you are trying to sell? 8. And of course, you need a team who knows what they are doing. Do they have an off the plan database, a residential database and crucially understand the timing and frequency for reaching out to both residential and off the plan purchasers. Seven of the seventeen apartments sold at Hazel were cross referred by other Marshall White project sales people, other than the lead agent responsible for selling the project. Now of course we hear you cry ‘get me one of those’! It’s not easy. A November release for Hazel also benefited from the pent up demand following two months of a Victorian lockdown, however it was also time spent getting Hazel right that saw it launched only once (and well) . But you have to start somewhere, so picking up the phone and calling us to discuss your permitted (or unpermitted) site is always a good start. Talk to you soon
Leonard Teplin Director
Mark Dayman Director
T: 03 9832 1191 M: 0402 431 657 leonard.teplin@marshallwhite.com.au
T: 03 9832 1193 M: 0409 342 462 mark.dayman@marshallwhite.com.au
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Spotlight
Mark Dayman
Leonard Teplin
Ranko Cvjeticanin
Director
Director
Director
Since the creation of Marshall White Projects in 2013, Mark has lead a dedicated project marketing team that has sold literally thousands of new ‘off the plan’ apartments or townhouses. He has a wealth of knowledge and experience accumulated in nearly 30 years in the industry.
Having grown up in South Africa and then spent several years in Portugal, Leonard has developed an instinctive appreciation for the diversity of inner Melbourne communities and housing styles.
With over twenty years of real estate experience, Ranko has a proven track record of achieving outstanding sales results in the industry. During this time period, Ranko has seen substantial change in the real estate profession but his professional approach to every facet of every transaction hasn’t wavered.
“The opportunity to be involved in every aspect of a sales and marketing campaign means that I can take full ownership of helping our clients achieve the best yield, not just the best price with reduced days on market. In the end it’s all about giving our developer clients a competitive edge in the selling process.” In his spare time, Mark enjoys spending time down at the coast with his wife Sam and four daughters and supporting his beloved Adelaide Crows.
Known for his ability to create sales at the highest level, over the last decade Leonard has been involved in some of Melbourne’s most iconic and successful off the plan residential developments. Leonard’s extensive experience in the real estate industry and particular expertise in the inner urban residential property market, has seen him in demand with some of Australia’s largest public and private companies. His strength in establishing a global agent and referral partner network has set him apart, connected to the best developers and builders in Melbourne. Leonard enjoys managing his clients projects from inception to completion. Leonard enjoys many interests including sport, history and travel. Leonard also enjoys fund-raising activities with both Marshall White and his wife Leisa.
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Part of the project development team at Marshall White, Ranko’s natural positive energy and enthusiasm and ability to relate to people from all walks of life has been invaluable. His genuine integrity and personal service style quickly makes clients feel at ease. Balance has always been and continues to be crucial to Ranko’s consistency throughout his career. Away from the office he spends time with his son and family and he is dedicated to keeping fit and physically active.
Project
Botanica 488 Barkers Road, Hawthorn East
Project
Carrington Hill 101 Carrington Road, Box Hill
3
Project
Project
Chapel Park
Ascot Place
220 Chapel Road, Keysborough
9 Newsom Street, Ascot Vale
Project
Chevron One 38 Stanhill Drive, Surfers Paradise
4
Project
Project
Walmer
Cascade
649 Victoria Street, Abbotsford
40 Whitehorse Road, Blackburn
Project
Soligo 487 Whitehorse Road, Balwyn
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The Melbourne suburbs with the largest price gap between houses and units Written by Rachel Wells, Domain, www.domain.com.au
The price gap between Melbourne houses and units has widened over the past year, and experts expect it will grow further while international borders remain closed and immigration is at a standstill. Melbourne’s median house price – which hit a record high of $936,073 in the December quarter – is now 64 per cent higher than the unit median of $569,677, which also reached a new high in December, according to the latest Domain House Price Report. In some of Melbourne’s most affluent suburbs, the price gap between houses and units is far greater. In Toorak, for example, it will cost $3.2 million to upgrade from an apartment to a house and in Brighton, you would need to find an additional $1.9 million to upsize to a house.
Suburb
Median house price
Median unit price
Gap between houses and units
Toorak
$4,181,250
$950,000
$3,231,250
Brighton
$2,872,500
$970,000
$1,902,500
Malvern
$2,364,000
$660,000
$1,704,000
Balwyn
$2,180,000
$630,000
$1,550,000
Hawthorn
$2,102,000
$603,500
$1,498,500
Kew
$2,180,000
$734,900
$1,445,100
Hawthorn East
$1,995,000
$630,000
$1,365,000
Glen Iris
$2,050,000
$687,250
$1,362,750
Elsternwick
$1,993,075
$661,000
$1,332,075
Armadale
$1,935,000
$618,000
$1,317,000
Embed this table
edging marginally higher,” Dr Powell says.
Buyer’s advocates and real estate agents say the widening gap between houses and units, which largely reflects a decline in investor activity in the city’s apartment market, presents a good opportunity to buy, especially for owner-occupiers, who aren’t relying on rental income to help pay the mortgage.
“I think that gap will continue to creep higher as we continue to see house prices increase at a greater rate than units … I think the pandemic is playing into that in part because we are seeing that shift away from higher density living,” she says.
Prior to the pandemic, unit prices were growing at a faster rate than houses, with 12.2 per cent growth over 2019, compared to 8.7 per cent for houses.
Buyer’s advocate Cate Bakos says if you are looking to buy an apartment for yourself, “then now is a great time to buy because the disparity between housing and units hasn’t been this wide in some time”.
However, last year Melbourne houses outperformed units, with house prices growing by 3.9 per cent in 2020, compared to apartments, which grew by 2.5 per cent. In the last three months of last year, house prices increased by 5.3 per cent, compared to 4.4 per cent for units.
“There is a real window of opportunity while we don’t have international students arriving or money coming in from the mainland, because investor appetite is low, there is reduced competition, motivated vendors and even some discounting,” she says.
Domain senior research analyst Nicola Powell says she expects the gap between houses and units to continue to grow this year on the back of the pandemic, which has led to an increase in remote working and seen many inner-city dwellers seek out bigger homes in the suburbs or in regional areas.
However, with vacancy rates soaring in many inner-city locations and suburbs close to universities, due to the drop in international students and new immigrants, Ms Bakos says buying an apartment as an investment can be risky in some areas.
“We are seeing houses outperform units in Melbourne and prices for houses growing at a faster rate than for units and so that price gap is
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Top 10 suburbs with the biggest price gaps between house and units:
Domain
“The bad news is that, until we get overseas students returning, these places will remain out of favour and prices will remain low, so buying one for short-term gain is not a good idea,” she says.
“We’re seeing a much greater demand for houses and land. I think because of COVID, people are just wanting a bit more space and a bit more land,” he says. Mr Johnstone said the widening price gap, which saw house prices grow by 18.2 per cent in 2020, compared to just 0.1 per cent for units, was also being impacted by the “enormous supply” of apartments coming on to the market in the bayside area. “If you want to buy an apartment bayside there is an enormous amount of choice but when it comes to houses, we are seeing a shortage of stock and that is pushing up house prices,” he says.
compromise that property’s ability to grow in value, such as buying in an oversupplied area or in a poorly built development. “Buyers should be looking for smaller developments with less than 50 or, even better, less than 20 apartments, that are primarily owneroccupied rather than investor stock. They should also be keeping away from areas where there is an oversupply of apartments and be aware of any planning proposals that will lead to further development and higher density,” she says. “It all comes down to property selection and knowing what is going to not just hold its value but grow in value over time.”
Miriam Sandkuhler, CEO and property advocate at Property Mavens, says the current low appetite among investors for apartments in many inner-city areas does provide a good opportunity for some buyers, as long as they “cherry pick” the right kind of apartment. “Melbourne has seen an oversupply of apartments in some areas, particularly in inner Melbourne,” she says. “And if you search for apartments in the CBD, for example, right now, there are hundreds and hundreds of apartments for sale. “But, to be honest, there’s a lot of rubbish out there. There’s a lot of poorly built investment stock that doesn’t make a good home, so buyers really have to cherry-pick and know what attributes will
Domain
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Legal Update: The Owners Corporations Act amendments are now law Written by Phillip Leaman, Principal, Tisher Liner FC, 03 8600 9333, www.tlfc.com.au
The Owners Corporations and Other Acts Amendment Act 2021 has now passed Victorian Parliament and will take effect from 1 December 2021. Expert Owners Corporations lawyers, Tisher Liner FC Law, explain the changes to the Owners Corporations Act 2006.
What does the Act try to achieve? The Act amends the Owners Corporations Act 2006 as follows: 1.
to provide for five tiers of owners corporations that allow for the degree of regulation of owners corporations to be based on the number of occupiable lots; and
2.
to remove the requirement for owners corporations to have a common seal; and
3.
to allow owners corporations to levy fees to cover the premiums for reinstatement and replacement insurance or for any excess amount on an insurance claim; and
4.
to allow owners corporations to dispose of goods abandoned on the common property; and
5.
to provide for what may be disclosed at the first meeting of an owners corporation; and
6.
to amend the duties of members of committees and subcommittees of owners corporations; and
7.
to further restrict the circumstances in which a person with a criminal record may be registered as the manager of an owners corporation; and
8.
to insert new duties of managers of owners corporations relating to contracts for goods or services, money held on behalf of owners corporations on trust and the obligation to disclose beneficial relationships with suppliers of goods or services; and
9.
to provide for owners corporations incorporated in respect of land used or to be used for the purposes of a retirement village; and
10. to empower VCAT to make orders— - that authorise lot owners to commence, prosecute, defend or discontinue any proceeding on behalf of owners corporations; or - to require lot owners to pay the reasonable costs of owners corporations; and 11.
to amend the Subdivision Act 1988— - to specify how lot liability and lot entitlement must be allocated; and - to require an initial owner to engage a surveyor to set out the initial allocation of lot liability and lot entitlement.
What are the new tiers? Owners Corporations will have different obligations depending on what tier they are in. The tiers are:
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Tisher Liner FC
Tier
Number of Lots
Tier 1
More than 100SS
Tier 2
51 to 100
Tier 3
10 to 50
Tier 4
Tier 5
3 to 9
2 lot subdivision or services only owners corporation (regardless of number of lots)
How will this improve life for Lot owners?
Developers and appointments of managers and contracts
Some of the changes include:
Developers will be restricted in engaging managers and entering into contracts at the first annual general meeting. Contracts can only be entered into for a maximum period of 3 years subject to hotel and resort management contracts.
Exemptions for Tier 5 OCs Tier 5 OCs will be exempt from compliance from a range of provisions of the Act to ensure that its operation can be more streamlined. Services only owners corporations will also be exempt from compliance with a range of measures including not having to have a chairperson or secretary or provide OC certificates. Making it easier to execute documents OCs no longer need a common seal if they don’t want one. Documents can be signed by two lot owners authorised by the OC. OC’s need to resolve by ordinary resolution that a common seal is no longer required and can be destroyed. Water Confirming that if water falls on common property, it is deemed to be part of the common property allowing lot owners to take action against an Owners Corporation for flows of water from common property.
Developers and their initial obligations Developers who hold on to the majority of lots after the plan of subdivision is registered must now comply with such obligations for 10 years not 5 years. Initial owners (and their associates) must not be appointed as the manager of the Owners Corporation or vote on resolutions in respect to defects. They must not also designate as a private lot what normally would be common property or services or receive any payment from the manager of the owners corporation in relation to the manager’s contract of appointment. Managers may pass interim resolutions The Act will allow managers to pass interim resolutions on some matters where if no lot owner is present at the meeting ensuring that managers can ensure that owners corporations can function. A common example of this might be the manager resolving to obtain insurance in circumstances where insurance is about to expire. Interim resolutions
Legal Proceedings Legal proceedings for claims up to $100,000 can now proceed when the Owners Corporation resolves to do so by ordinary resolution. Currently, a special resolution is required to issue proceedings (other than for levy recovery or breach of rules). The changes will make it easier to issue proceedings, particularly when there are Owners Corporations with a large number of lot owners who may be disinterested in any action. Benefit Principle can apply to Annual Fees Annual fees can be charged to lot owners on the benefit principle if (a) the owners corporation has incurred additional costs arising from the particular use of the lot by the lot owner; and (b) an annual fee set on the basis of the lot liability of the lot owner would not adequately take account of those additional costs. Insurance Costs Owners corporations can pass on insurance excess to individual lots owners in certain circumstances. Audits Tier one owners corporations must audit their financial statements and tier two owners corporations must have their financial statements reviewed by a CPA or Public accountant.
If a general meeting of an owners corporation has a quorum and the special resolution is not passed with the requisite number of votes, but there is no votes against the resolution, then the resolution will be taken to be an interim resolution. This will make it easier for larger owners corporations to make decisions where there are large numbers of lot owners who don’t turn up to meetings. Committees Committees must have no more than 7 members unless there is an ordinary resolution which increases that to 12 members. Managers Contracts of appointments for managers must not include certain prescribed terms such as: •
making an owners corporation convene a general meeting or pass a special resolution to revoke the manager’s appointment;
•
allowing the manager to renew the contract of appointment at the manager’s option;
•
automatic renewal of contracts;
•
specifying the terms of notice before termination to exceed 3 months for tier one and tier two owners corporations or one month for all other tiers.
Maintenance Plans Tier one and two owners corporations must prepare and approve a maintenance plan. Removal of Goods Owners Corporations now have a process for removing and disposing of goods on common property.
Tisher Liner FC
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Adding additional obligations for Managers to:
Occupiers and Guests
•
Occupiers will be responsible for a guests’ behaviour.
take reasonable steps to ensure that any goods or services procured by the manager on behalf of the owners corporation are procured at competitive prices and on competitive terms; and
•
not exert pressure on any member of the owners corporation in order to influence the outcome of a vote or election held by the owners corporation; and
•
before a contract is entered into for the supply of goods or services to an owners corporation under which a manager is entitled to receive a commission, payment or other benefit, must give written notice to the chairperson of the owners corporation disclosing the commission, payment or other benefit in accordance with section 122B.”.
•
holding money in separate bank accounts (unless otherwise agreed) and provide copies of financial statements of bank accounts on request by an owners corporation.
•
disclosing beneficial relationships or commissions, payments or other benefits with or from suppliers.
Rules An owners corporation may make rules in respect of proposed works to renovate or alter the external appearance of a lot—
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•
to protect the quiet enjoyment of all other lots and the common property during those works; and
•
to protect the structural integrity of any building on the plan of subdivision from those works; and
•
to ensure the market value of any other lot does not decrease as a result of those works.
•
Rules in general cannot be oppressive to, unfairly prejudicial to or unfairly discriminates against, a lot owner or an occupier of a lot.
Tisher Liner FC
VCAT Orders VCAT will be able to order a lot owner to pay the Owners Corporation costs incurred in recovering unpaid amounts from the lot owner (other than costs in the proceeding). This is to clarify that the section does not affect the power of the Tribunal to award costs under Section 109 of the Victorian Civil and Administrative Tribunal Act 1998. Lot owners may bring, defend, discontinue an action on behalf an Owners Corporation where a special resolution or ordinary resolution has not passed and they make application to the Tribunal. It is then up to a lot owner to prove to the Tribunal why the lot owner should not be permitted to take the action. Summary The amendments attempt to make Owners Corporations easier to operate, particularly where there are large number of lot owners who are not interested in taking part in the owners corporation. It also tries to bring some formality to the obligations of managers and to stamp out the practice by some managers of secretly profiting from owners corporations without full disclosure. Whilst the amendments might not go as far as some would have liked, they do help to bridge the gap and address some of the key concerns that lot owners have had difficulty with under the current legislative regime. Of note, lot owners will be pleased with their ability to have additional protections from initial developer owners as well as the ability to institute legal proceedings against builders when there are building defects by interim special resolutions.
Better Apartment Design Standards Review Written by Robert Carletti, Tract, 03 9429 6133, www.tract.com.au
As a part of the Victorian Labor Government’s election in 2018, there was a commitment made to improve the external amenity of apartment buildings through reforms to the Better Apartment Design Standards (BADS).
Balcony Size – A reduction in the area and dimension requirements for balconies where they face north or south. Balconies for buildings greater than 40m in height – Deletion of the requirement to provide balconies for buildings over 40m / 13 storeys, but a new requirement for an equivalent space to be provided as additional internal space within the living area or bedrooms.
Communal open space – Required for developments with 10 or
The changes focussed on the requirements around open spaces, landscaping and the integration of buildings into their external environment and extensive consultation took place during 2019.
more dwellings (currently required for 40 or more dwellings). The space is to include landscaping (canopy trees and productive gardens) as well as space for entertainment, leisure and recreation. There is an allowance for some of the communal space to be provided indoors.
Building Quality – Insertion of a new Standard that requires an assessment of the quality and durability of building materials. A list of ‘preferred’ materials has also been provided in the accompanying guidelines.
After being on the backburner during the height of the COVID-19 pandemic in Victoria, the draft revised Standards and accompanying Guidelines (BADS 2.0) were released over the weekend. They are proposed to take effect sometime this year. At this stage, it is unclear whether these have been released for further comment, or if the drafts will become part of the Victoria Planning Provisions. What are the Changes? Whilst the changes are generally consistent with what was tabled during the consultation phases, there are a number of surprises, particularly in relation to balconies. The proposed changes are summarised as follows:
Tract
Landscaping – Revisions to the requirement for deep soil canopy tree planting, with the notable deletion of the allowance to provide an ‘equivalent canopy cover’ where deep soil canopy tree planting cannot be provided. Instead, more extensive guidelines are provided as to how planter boxes can be deemed as deep soil canopy tree planting.
Wind Assessment – Requirement for a wind assessment to be prepared for buildings of 5 storeys of higher (assessed under Clause 58).
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Comments
Whats Missing?
The changes will no doubt provide increased amenity to future
Given the growth of apartment typologies in recent years, it is no wonder that there has been such a substantial focus on improving the amenity of these buildings. However, it seems odd that in this time there have been no meaningful updates to ResCode. It is becoming increasingly clear that there is a disconnect between the BADS and ResCode Standards, with ResCode now falling behind in the assessment of overall internal amenity. What makes these buildings different from apartments that doesn’t require high quality building materials, or areas of communal open space for resident use?
residents of apartment buildings – although it is not yet known if these revisions are practical, or if they will have unreasonable cost implications. Without a doubt, the biggest surprise is the reduction to balcony sizes. This is particularly surprising given the media discourse during the COVID-19 lockdowns about the importance of access to open space. Having said this, the amended balcony sizes seek to ensure that there is a good level of daylight to living areas providing a more nuanced consideration of apartment amenity. This is a welcome change noting the many apartments which have struggled to achieve the BESS requirements for daylight levels where access to light has been compromised by balcony depth. The removal of the balcony requirement for buildings over 13 storeys / 40m (with this space to instead be provided internally) is a practical amendment. It recognises the limited usability of balconies at this height (and of the oft-seen alternative of winter gardens). The added requirements regarding the durability of quality of materials (particularly off the back of the cladding crisis) is also a constructive change that will ensure better longevity of buildings. With respect to deep soil planting, the deletion of the alternative to provide an ‘equivalent canopy cover’ will present a challenge on constrained sites or where large basements are provided. The ‘equivalent canopy cover’ previously provided a recognition that many sites (for instance, those in a commercial context) did not need to provide extensive tree planting. Time will also tell whether the planter box requirements outlined (where the deep soil planting cannot be used) can be achieved, particularly given the typical locations communal space is often provided (such as on rooftops).
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Tract
It is also interesting that the variations that apply where BADS and ResCode standards are applied to public and social housing developments (via the recent introduction of Clauses 52.20 and 53.20 – the ‘Big Housing Build’ clauses) have not made it into BADS 2.0. For example, there is a recognition in the Big Housing Build clauses that it is appropriate to provide higher front fencing for up to 30% of a site frontage where secluded private open space is provided in a front yard. This has been ‘common practice’ for townhouse and apartment developments in recent years (albeit not recognised in the scheme), yet has not been included in this amendment, despite appearing to be a common sense change. There are also a number of missed opportunities in relation to clarifying ambiguity, including whether the minimum ‘depth’ for living areas in apartments is intended to read as a minimum dimension. Overall, it is positive that DEWLP have committed to ongoing monitoring of the BADs provisions and that there is a desire to listen to industry feedback as these Standards are applied in the ‘real world’. The changes are also a step in the right direction, however it would be beneficial to further review and refine some of the potentially problematic changes.
What has 2020 meant for city fringe development opportunities? Written by Will Leaf, Managing Director, Ewert Leaf, 03 9686 2100, www.ewertleaf.com.au
The ever-shifting commercial property landscape has changed once again. The disruption to the sector by the Covid-19 pandemic has both designers and developers trying to understand the fluctuating supply and demand flow, and the effect that it may have on commercial development and tenancy leasing. There have been a number of studies conducted recently about the new trends in workplace and living, which highlight the downsizing of corporate office space by up to 30% to offer more flexible and remote working opportunities for their staff. The driving factors of this, which are long standing ideas centred around wellbeing and a desire for flexibility, have not changed. However, due to the pandemic, the rate at which commercial developments must shift to accommodate them has been accelerated beyond current market offerings. Companies who lease these spaces are now seeing the opportunity to downsize and reduce rental stress by adopting a digitised workforce and shorter-term co-working office space.
away with a commercially sustainable development, but we also provide the community with a site developed in a considered and appropriate way, which can have a long-term positive impact on city health. So, what does this mean for future development in these areas? Our research has shown that the best way to develop these city fringe sites is through flexible layouts, large floorplates for an agile workforce, and a shift towards co-working spaces. Ultimately, office workers value a space where they can gather when necessary, get away from the distractions of the home office with a flexible focus space and have the flexibility to work in smaller, movable teams. The ‘not office’ office. Pallas House (pictured) is perfectly positioned in South Melbourne to perform on these client and user desires. It is one of many spaces where we are now exploring this new commercial typology. In this new world, it is up to us as designers, developers and creative thinkers to shape a better future, for both our cities and its residents.
This emerging trend also affects the commercial viability of city fringe developments. Designers and developers must now shift their focus from the tradition office floor plate or mixed-use development to produce feasible solutions that satisfy the changing market. New and changing commercial spaces of city fringe sites will see designers and developers working together to rethink these opportunities and explore satellite offices for large corporates. To ensure Ewert Leaf are best prepared for this evolution, we have been revaluating our approach and skill base. With the recent addition of notable workplace designer Peter Geyer to the team, we are now looking to how, as a design practice, we can utilise a wider array of skills and references to meet new market demand. This coupled with our Innovation lab, Eli, allows us to bring innovation, data and statistics into all facets of the design process. While not an activity traditionally engaged in by architectural practices, we believe it is vital to explore this information before we even begin to look at conventional design. Our first steps onto this new terrain have shown us how critical this type of deep analysis is to the fabric of our cityscape, particularly considering the current climate. As architects, our clients look to us to understand how best to approach a project and use all tools at our disposal to achieve the best possible outcome. Our thorough investigative design style has already proven to be of substantial benefit within our practice. Recently we undertook a demographical study of a site and the surrounding suburbs to understand how our client might best develop in the area. We uncovered that the site was very well placed to leverage the trend of corporate downsizing and flexible working arrangements and we were able to propose a compelling solution. The benefit of this analysis is twofold. Not only do our clients come
Ewert Leaf
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Australian house prices on the upswing again – seven things to bear in mind about the Australian property market Written by Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital, www.ampcapital.com
Introduction After a 2.8% dip around mid-last year in response to the pandemic,
FOMO (fear of missing out) have swamped the negative impact of
average capital city home prices are rising again. Put simply - record
higher unemployment, a collapse in immigration and weak rental
low mortgage rates, multiple government home buyer incentives,
markets in Sydney and Melbourne. So, we are in yet another cyclical
government income support measures, pent up demand from the
upswing in property prices. So, where to from here? But first to
lockdowns, bank mortgage payment holidays, activity associated
provide some perspective, there are seven key things worth bearing
with a desire to “escape from the city” and an emerging element of
in mind regarding the Australian property market.
Average capital city home prices on the rise again
First – it remains expensive
Second – house prices go up and down
• According to the 2020 Demographia Housing Affordability
A common property myth is that prices only ever go up. But this
Survey, the median multiple of house prices to income is 5.9 times
is not so. Real Sydney house prices (ie, after inflation) fell 36% in
in Australia versus 3.6 in the US and 4.5 in the UK. In Sydney, it’s 11
1934-35, 32% in 1937-41, 41% in 1942-43, 12% in 1947-48, 14% in 1951-
times and Melbourne is 9.5 times.
53, 12% in 1961-62 and 22% in 1974-77. In nominal terms based on
• The ratios of house prices to incomes and rents versus their longterm averages are at the high end of OECD countries – all of which have low interest rates too! See the next chart. • The surge in prices relative to incomes has seen the ratio of household debt to income rise 5-fold over the last 30 years, taking it from the low end of OECD countries to the high end.
14
AMP Capital
CoreLogic data, Sydney dwelling prices fell 25% in 1980-83, 10% in 1989-91, 8% in 2004-06, 7% in 2008-09, 3% in 2011-12, 3% in 2015-16 and 15% in 2017-19.
Third – talk of mortgage stress remains overstated There is no denying housing affordability is poor, debt is high and
share of income fall to their lowest since the mid-1980s – has helped.
some households are suffering significant mortgage stress. But
In the absence of an unexpected renewed economic downturn, it’s
most borrowers appear to be able to service their mortgages. The
hard to see much rise in distressed sales. It’s also easy to see from
share by value of housing loans on bank payment holidays has
this chart, when combined with home buyer incentives, why home
collapsed from 11% in May to just 2.4% in December. And the collapse
borrowing and buying is surging again.
in mortgage rates – that has seen household interest payments as a
Australian housing is expenive relative to income and rents
Fourth – the Australian property market has been in a long-term bull market since the mid-1990s A common property myth is that prices only ever go up. But this
and WW2. This was followed by the post war immigration boom
is not so. Real Sydney house prices (ie, after inflation) fell 36% in
that ended with high rates in the 1970s. The latest long-term boom
1934-35, 32% in 1937-41, 41% in 1942-43, 12% in 1947-48, 14% in 1951-
started in the mid-1990s. The key drivers of this boom have been
53, 12% in 1961-62 and 22% in 1974-77. In nominal terms based on
easier access to debt and the shift from high to low interest rates
CoreLogic data, Sydney dwelling prices fell 25% in 1980-83, 10% in
(with mortgage rates dropping from around 17% in the late 1980s to
1989-91, 8% in 2004-06, 7% in 2008-09, 3% in 2011-12, 3% in 2015-16
around 2-4% now) which allowed Australians to pay each other more
and 15% in 2017-19. Looking back over the last 100 years, the first
for property and from about 15 years ago a chronic undersupply of
long term boom was in the 1920s and ended with the Depression
property. The latter can be seen in the next chart.
Home construction versus population growth
AMP Capital
15
Annual population growth surged from around 2005 but the supply
housing went from cheap to expensive and stayed there over the
of dwellings did not start to catch up until around 2015, which
last 25 years. Other countries have had low rates and tax breaks for
led to a chronic undersupply of housing. This combined with low
property but far cheaper property because it’s been better supplied.
interest rates and easier access to debt explains why Australian
Australian residential property prices - the great catch up?
Fifth – we may be getter closer to the end of the long-term bull
Sixth –
market in property
“escape from the city” will have a big impact
It may still have a way to go, but the two key drivers of the long-term
The pandemic has seen a profound shift in how office workers do
property boom may be getting close to the end. First, interest rates
work. In particular, the work from home phenomenon is likely to
are at or close to the bottom with the RBA now resorting to extreme
remain, albeit not five days a week for all. This means less need
measures to get inflation back up – which should ultimately mean
to live close to work and a greater focus on lifestyle, which means
higher interest rates. Second, the chronic under supply of property
greater demand for houses relative to units and in outer suburbs,
may be starting to fade thanks to the unit building boom since 2015,
smaller cities and regional areas.
the hit to immigration and home building incentives which are likely to keep home building high for the next 12 months. As evident in the last chart, supply is likely to remain strong this year and next, but population growth has collapsed & could take years to recover. This may take some pressure off house prices on a 3-5 year view.
Finally – the national property market is highly diverse
catch up to Sydney and Melbourne. The surge in immigration played a big role in the outperformance of Sydney and Melbourne into 2017
While it’s common to refer to “the Australian property market,” in
and this is now going into reverse as other cities and regional centres
reality there is significant divergence between cities. This was clearly
are benefitting from the “escape from the city” phenomenon. The
evident over the last decade with Sydney and Melbourne booming
divergence is also evident in residential vacancy rates that have
up until 2017, Perth and Darwin falling sharply after the mining boom
been rising in Sydney and Melbourne, reflecting increased unit
and the other capital cities and regional property generally seeing
supply and the collapse in immigration, but falling in other cities.
modest gains. See the next chart. Right now, Perth and Darwin
This in turn points to upwards pressure on rents and property values
are only just starting to recover and there is potential for Brisbane,
in other cities relative to Sydney & Melbourne.
Adelaide, Hobart, Canberra and regional dwelling prices to play
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AMP Capital
Big in divergence in vacancy rates
So where to now for residential property prices? Australian home prices are likely to continue rising over the next
property are all likely to see strong price gains helped along by
two years thanks to record low mortgage rates and the recovery in
the “escape from the city” phenomenon and less exposure to
the economy, with the latter offsetting the phasing down of income
immigration. Expect average price gains of around 10% in Adelaide,
support measures and bank payment holidays. Housing finance
Brisbane, Perth, Hobart, Canberra and Darwin in addition to regional
is running around record levels and auction clearance rates are at
areas.
levels consistent with strong price gains.
The broader economy is unlikely to justify rate hikes until around
As a result, average capital city home prices are expected to rise by
2023, but if the property market continues to hot up as expected,
5-10% this year and next. While first home buyer incentives are likely
causing financial stability concerns for the RBA, a tightening in
to be reduced, investor interest is expected to pick up and fill the
lending standards is likely next year which should start to slow
gap.
things down and eventually the bottoming of the long-term interest
However, the outlook is divergent. The hit to immigration is likely to constrain inner city Sydney and Melbourne as well as unit demand
rate cycle and the shift to oversupply may take pressure off prices, but that’s a while off yet.
but outer suburban areas, houses, the smaller cities and regional
AMP Capital
17
Past Project Profile
Hazel Hawthorn 368 Auburn Road, Hawthorn
Price Range $775,000 - $1,635,000
18
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
2 Bed, 2 Bath
8
47
81.8
$10,280
$839,875
3 Bed, 2 Bath
9
53
117.4
$11,164
$1,312,778
Past Project Profile
Lothian St 141 Arden Street, North Melbourne
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
2 Bed, 1 Bath
1
13
102.0
$8.824
$900,000
3 Bed, 2 Bath + PR
7
87
271.3
$8,915
$1,933,333
Price Range $900,000 - $2,100,000
19
Past Project Profile
Anderson Park 585 Burke Road, Camberwell
Price Range $487,500 - $1,615,000
20
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
1 Bed, 1 Bath
1
2
54
$9,250
$499,500
2 Bed, 2 Bath
18
41
78
$9,997
$779,778
2 Bed, 2 Bath + Flexi
13
30
80.8
$10,080
$814,192
3 Bed, 2 Bath
8
18
113.1
$10,917
$1,235,000
3 Bed, 2 Bath + PR
1
2
144
$10,521
$1,515,000
3 Bed, 2 Bath + Flexi
1
2
150
$10,367
$1,555,000
3 Bed, 2 Bath + PR and Flexi
2
5
156
$10,641
$1,660,000
Past Project Profile
1975 1975 Malvern Road, Malvern East
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
3 Bed, 3 Bath + PR
5
56
191.0
$6,584
$1,257,100
4 Bed, 3 Bath + PR
4
44
215.8
$6,711
$1,447,500
Price Range $1,299,500 - $1,545,000
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Celebrating over 150 Successful Sell Outs Since the inception of Marshall White Projects in 2013 we’ve attempted to provide a insight into the ever changing world of property development by sharing the hard earnt lessons of those in the field and generous enough to share their experiences for the betterment of their peers. Marshall White Projects has evolved as a team, maturing in a market where buyers learn to expect more than ever before whilst developers must work harder to achieve the same results. They say knowledge is power, so we invite you to click on the button below and enjoy the resource of our first publication through to today.
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