Projects Review Edition 23, 2021
Cover Photo Walmer – 649 Victoria Street, Abbotsford
Contents 1
A Word From the Directors
2 Spotlight 3 - 5
Current Projects
6 - 7
The Architects and Designers behind 'The Springfield'
8 - 9
The Property Market - Now and Into the Future
10 - 15
Get to Know Your Buyers
16
Half of Australian homes will be cheaper to buy than rent over the next decade
17 - 19
Owners Corporations - Significant changes on the way for developers
20
Signing documents electronically in 2021 - an update for developers
21
Australians increasingly searching for properties in higher price brackets
22 - 23
Crunch time for Australia's apartment construction is a wake up call for governments
Projects
Past Projects
3 Candela – 40 Upper Heidelberg Road, Ivanhoe
24
Botanica – 488 Barkers Road, Hawthorn East
3 Two Eighty Waverley - 280 Waverley Road, Malvern East 3 Gladstone - 37 Gladstone Avenue, Armadale
25
Highmont – 3 James Street, Bayswater
26
Rose & Bird – 14 Adori Place, Maribyrnong
27
Custom – 20 Station Street, Highett
4 Walmer - 649 Victoria Street, Richmond/Abbotsford 4 Contour - 250 Wattletree Road Malvern 4 Alma Village - 244 Alma Road, Caulfield North 5 Rostrevor Parade - 97 Rostrevor Parade, Month Albert North
Contributors 6 - 7
Article 1 - Written by Daivid Lee, Director at K2LD
8 - 9
Article 2 - Written by Milijana Bojic, Senior Relationship Manager - Property at Westpac
10 - 15
Article 3 - Written by REA Group
16
Article 4 - Written by Daniel Johnson, News Editor at Elite Agent
17 - 19
Article 5 - Written by Nick Sparks, Partner at Maddocks
20
Article 6 - Written by Nick Sparks, Partner at Maddocks
21
Article 7 - Written by news.com.au
22 - 23
Article 8 - Written by Property Council of Australia
+ 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 For those who have been around the property market
the wealth belt of metropolitan Melbourne, then a few
for a while, you will know that property values move up,
thousand dollars designed to incentivise a buyer will
down and, at times sideways.
make no difference to a developer’s larger issue of
We all want to buy low and sell at a peak, however
profit retention.
the buyers for our end product factor in other
From 10th of January this year, when Marshall White
considerations such as cheap money, high liquidity and
Projects opened again for business, we have helped,
the luxury of choice. Right now, at best, they are only
on average, two people per day own an off the plan
getting two out of three.
property at an average sale price of just over $1.13
Vendors and purchasers alike know by now, that with a significant reduction in planning approvals over the last twelve months, the supply required to meet current demand is just not there. We read with interest an opinion piece published by the AFR (8 June) by columnist Karen Maley titled ‘Property Boom Risks Grow As Buyers Go All In’. Ms. Maley refers to the time honored tradition of awaiting APRA to step in and calm a fervid housing market. Key indicators, such as Melbourne's 5% rise in property prices over
million. Interestingly, this is only slightly higher than the same period in 2020 at an average of $1.107 million. Yes, it is project dependent but the level of buyer demand across all sections of the market (empty nesters, first homebuyers and investors) only remains on par with last year. So why the difference? Why were we having to conduct over five buyer appointments last year to close out a sale and why has the ratio of appointments to deals improved to one in three so far for 2021?
the last 12 months, seem tepid when compared with
Interest rates are the same, a buyer’s liquidity may have
Sydney’s 11.2 % increase during the same period.
only slightly improved, however our deliberate shift in
Darwin, however, is almost that double again at 20.3%!
educating an off the plan buyer before asking them to
In Victoria the jump in new home lending for the month
buy has shown substantial dividends.
of April was a substantial 3.7%, a sure indicator that
We all aim for marketing initiatives with cut through,
starry eyed young couples are today worrying more
however, eDM’s on sustainability, buyer guarantees, it’s
about FOMO than COVID.
cheaper to buy than rent, why buy new and the benefits
The question is, of course, do these continuous gains in residential prices allow a developer to charge a consumer more for an off the plan product at any stage of a campaign? Will a project launched, at a higher rate per sqm, still slow the rate of sales thereby increasing
of buying off the plan (there’s a distinct difference) educate a buyer – knowledge breeds confidence and confidence leads to action. PS If you ever see an eDM from us with the banner of “Developer Says Sell” then you know we’ve jumped the shark!
your cost per sale and extended days on market?
If you want to prepare buyers to make a decision, then
Or can we get back to the good old days where we
educate them. Provide them with all of the information
benchmarked stages of most sale campaigns (namely
they need/that’s important to them before asking them
halfway through a campaign or even at financial close)
to buy. Frequency builds trust. Only then can you ask
then trigger an increase in the price of unsold stock?
them to own any off the plan property that you are
The State Government’s recent initiative to waive
selling.
full stamp duty for any completed product that has
We’re always happy to hear from new clients who need
remained empty for twelve months post completion
advice
(and who can afford to do that?) obviously has nil impact on completed stock outside the CBD. If you are carrying finished product for a year or more, within
Mark & Leonard
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
1
Spotlight
Liam Adey
Ross Hams
Dean McMurray
Sales Executive
Director
Sales Consultant
Personable, positive and hardworking, Liam strives toward helping people achieve their off the plan purchasing requirements.
A new breed of real estate agent, his intellect, market knowledge, passion and dedication impresses both new and existing clients who are rewarded with his uncanny ability to consistently negotiate hundreds of sales a year whether on or off market with local and international clientele.
An excellent communicator, Dean’s dedication and initiative have shown him to be one of real estate’s most promising young agents. Dean brings a fresh approach and steadfast enthusiasm to his role at Marshall White Projects. Client satisfaction is of the utmost importance to Dean and he strives to ensure contented clients as they transition into their new home.
Maintaining open channels of communication, Liam easily develops a natural rapport with his buyers. Liam finds the development industry to be incredibly rewarding as it revolves around making connections with people and perfectly suits his positive mindset. Combined with his strict time management, perfectionist nature and a refined attention to detail, Liam is well suited to his role at Marshall White projects. Active by nature and a big believer in the value of physical fitness and a healthy social life, Liam divides his free time between playing basketball, spending time with his friends and supporting his beloved Hawks.
2
Specialising in projects throughout Melbourne, each year he successfully sells in excess of $100 million worth of property. Ross has managed the sales campaigns for some of Australia’s most successful residential apartment and townhouse developers. Displaying an intimate understanding of consumer trends Ross utilises this knowledge advising clients on how to create a superior product to suit the ever changing buyer demands. In his spare time, Ross enjoys spending time down the coast with his wife Jo and three kids and supporting his beloved Cleveland Cavaliers and Melbourne United.
Dean has a substantial understanding of the complexities of real estate and an unparalleled work ethic. With experience from previous careers in retail and construction under his belt, Dean’s personality is engaging and dynamic, with an unwavering commitment to exceptional outcomes for his clients. An early riser up at 5am most mornings, Dean is a big believer in the importance of personal fitness to maintain his competitive edge. Dean supports the charity World Vision and relishes spending time at the beach, playing golf and following AFL.
Project
Candela 40 Upper Heidelberg Road, Ivanhoe
Project
Two Eighty Waverley 280 Waverley Road, Malvern East
3
Project
Project
649 Victoria Street, Abbotsford
250 Wattletree Road, Malvern
Walmer
Project
Alma Village 244 Alma Road, Caulfield North
4
Contour
Project
Project
97 Rostrevor Parade, Month Albert North
487 Whitehorse Road, Balwyn
Rostrevor Parade
Soligo
Project
Gladstone 37 Gladstone Avenue, Armadale
5
The Architects and Designers behind 'The Springfield' Written by David Lee, Director, K2LD, 03 9667 5400, www.k2ld.com
As an architect and designer of “The Springfield”, why did you choose to live in your own development?
People say that is it complex living in something you have designed. Do you agree?
Firstly, I thought that the location and the project in general was without doubt one of the best I have ever been involved in .
Yes I agree it’s often complex. It’s often also confronting when you have to consider that what you’ve designed many times before in your head may not successfully translate into bricks and mortar.
It’s of a scale that’s undeniably intimate , yet still creates a sense of community. I’ve built my business by standing by our designs and by also demonstrating to clients and customers the importance of us following right the way through from concept to occupation . Being part of the design process with many of 'The Springfield' purchasers, I then decided to live amongst a community who clearly shared the same excitement as initially shown by our design team and so join people who dream similar dreams to me I also wanted to experience what it would be like to live in “The Springfield” throughout the seasons of Melbourne and to feel firsthand the quality of living in such a coveted location whilst experiencing all the senses such as light , mood, feelings and sounds.
What were your expectations of the home? We designed these apartments with the belief that they would cater to the same lifestyle requirements of that offered by larger family home. I’ve always lived in an environment surrounded by a lush landscape and It was also important to me to be able to entertain my immediate and extended family (and furry friends) and at the same time feel secure . People I bring into my new home need to feel comfortable whilst allowing me the space to pursue multiple interests or just simple pleasures such as cooking and reading out on my landscape terrace.
6
K2LD
It’s helped greatly (for “The Springfield” and others) for me to personally address any purchaser concerns and challenges before I moved into my apartment . I’ve learnt that the small things will collectively add up and enhance your own personal enjoyment and your apartments functionality . Items such as where you hang your kitchen towel to how natural ventilation occurs within your own space become more evident. As an architect you can never be 100 % certain how functional any plan will be unless you then experience it firsthand. This then validates the good aspects of your design whilst also challenging you to consider other alternatives for the next project . There is no doubt that this experience has made me a better designer , architect and more empathetic to the people I meet each day . People sharing the same journey along a similar path as me.
What were your learnings from this journey and what are you most proud of? If the opportunity allows I highly recommend any architect to live in their own development. It makes you confront the very things that make you both a better person and practitioner.
How will Springfield help you with your next design? As a design team , we’ve learnt to focus on the small things and to look at what enjoyable living actually means, to look past the mere aesthetics. Our experience through COVID has truly emphasised the need to consider space and to focus on the end-user. Listen to both their needs and wants for everyday living and then everyone wins.
I find now that I’m my own greatest critic whilst less reliant on others to provide me feedback (constructive or otherwise). The other powerful learning is for me is to trust my own instincts as a designer – issues such as town planning , natural light, depth of apartments, terrace dimensions, apartment size and adequate setbacks for landscaping and adjacency to the neighbours can all be worked through if you learn from each and every project. Proper and complementary landscaping for a development has proven to have strong links to mental health and I was especially proud as to how we could knit together the architecture and extensive landscaping for “The Springfield” . This not only benefits the residents but the Toorak neighbourhood in general. I’m especially excited to see our gardens morphologically change as Melbourne’s seasons roll through.
K2LD
7
The Property Market Now and Into the Future Written by Milijana Bojic, Senior Relationship Manager – Property, Westpac, 0481 918 317, www.westpac.com.au
As always, speculation continues about the residual property market in Australia and since the onset of the pandemic we have seen wild claims about the market from predictions of 30% drops in values across the board to 20% increases.
Despite all the noise, housing markets are positively fizzing right now. Demand’s riding high, buyers battling it out over a shrinking pool of properties and driving some eye-catching price rises. The March 2021 quarter saw a 5.6% jump across the major capital cities, the March month alone posting the biggest gain in 32 years. Sydney dwelling prices rose a staggering 3.7% - putting on well over $1,000 a day for the median priced dwelling. Aside from the strength of price gains in recent months, the most striking aspect has been the breadth of the upturn – most of the 90-odd detailed sub-markets we track recording gains running at a doubledigit annualised growth pace and none recording declines. This is very rare in the history of Australian property cycles which more usually see a few markets ‘sit it out’ when prices are on the move. Turning back to housing, all aspects of the market are now showing outright strength. Turnover nationally is nearly 30% above its preCOVID peak and prices are 8.5% above their pre-COVID highs, pushing new record levels in most markets. Dwelling approvals are also booming, led by a massive surge in detached house construction, particularly in smaller capital cities and regional areas. While some of that is a policy-related pull-forward, the near-term outlook for activity is very strong. Presently, we generally consider the risk in this market to be easing, as approvals and new starts slowed completion to a level comparable to needs. The inner city housed significant numbers of foreign students, as illustrated by the surge in vacancy to double digit levels through 2020. Developers seemed to all but desert any new projects in 2020 and units in projects being marketed fell to only 1,247 (from 10,000 in 2018). Thankfully the crash in property prices that that was predicted by many did not eventuate and excellent sales results have been achieved since Melbourne’s third lockdown ended up November. The question is how attractive Melbourne will be once borders are open, given continuous lockdowns as well a potentially weaker economy as a result of continued uncertainty. The impact on the market from closed borders to migrants will continue to be significant until they re-open. Unit approvals are very low, sitting at 2012 level whereas house approvals are at a high. The 4,509 units due for completion by mid 2021 is around 7.7% of existing stock and although there will be some owner occupied, if placed on the rental market will add to competition and already high vacancy rates. The risk of further price and rental falls is very high over the short term due to a lack of students and short term residents who absorb investor grade stock. Future supply for the product remains active through to 2024, with 3,583 high rise under construction and due to complete in 2H 2020, 3,933 in 2021, 3,563 in 2022, 594 in 2023 and 2,187 in 2024.
8
Westpac
Excess stock remains a concern with Melbourne’s rental vacancy rate shooting higher to over 6% – a level comparable to the dark days of Perth’s extended correction, however houses vs units contrast is notable with just 2.9mths of stock available for houses but 4.4mths for units. Australia’s population growth slowed dramatically as migration stopped during last year’s COVID lockdown. That in turn means new building, which is currently being boosted substantially by the HomeBuilder scheme, is expected to run ahead of populationdriven requirements – we are likely to see over 180,000 dwelling completions this year while ‘underlying demand’ over 2020-22 tracking around 80,000 a year at best. For now, this does not appear to be a major issue, partly because much of the nation is coming off an even longer period of underbuilding (Sydney and Melbourne high rise being notable exceptions). There appears to be a distinct lack of quality accommodation as we’re spending more time in our homes requiring more space, functional layout and access to lifestyle amenity
Historically CCR population was forecast to grow at 6.1%, or 8,200 a year to 2021, which would have absorbed much of the above supply as DEWLP forecast a need for 4,048 dwellings per annum 2021. In summary, unit pre-sale market is lifting for the right product but still slow while completed residual stock is selling well. Land values are expected to hold with overall values continuing to rise through to 2023. Westpac Senior Economic Matthew Hassan believes that while we remain bullish on Australia’s housing outlook, we pace is expected to slow down. The general pattern of dwelling price cycles often sees strong bursts followed by an extended period of flattening. Historically these moderations have usually been in response to interest rate increases. While that will not be a factor this time, we still expect the boom to run out of steam and prudential measures come into frame in 2022. If you would like further information or insights on asset types and locations please reach out. We continue to support development in Victoria and look forward to discussing your project finance.
Westpac
9
Get to know your buyers Understand them and build long lasting relationships
10
realestate.com.au
Who’s buying property? Buyers come in all shapes and sizes. Understanding the types of buyers will help you communicate effectively and efficiently, leading you to build solid relationships with them.
3,401,774 Australians are intending to purchase property Gender
Type of buyer 30% First Home Buyers 58% Male 42% Female
42% Subsequent Home Buyers
19% Investors
43%
49%
67%
61%
are looking for a home loan
have children living in the home
are considering a new property
are considering an established property
Household Income
$112k Avg Household Income
Age range
28%
15%
28%
22%
11%
33%
29%
16%
Under $70,000
$70,000$99,999
$100,000$149,999
$150,000+
Under 25
25-34
35-44
45-54
39 Avg age
7%
55-64
5%
65+
3 Source: REA 2020 Property Seeker Survey | An online survey of 6700 Australians conducted in realestate.com.au December 2020
11
What types of buyers are there? There are three different types of buyers: First Home Buyers, Subsequent Home Buyers who already own a property and are looking to upsize or downsize and Investors.
First Home Buyers
~1.0m
40%
have children living in the home
32
years old
Property type considering
Average household income
$ $$
Average age
Household composition
# of Australians 18+
~$97K
67%
58%
new
established Gender
30%
53%
% of looking to buy
41%
59%
male
female
looking for a home loan
Subsequent Home Buyers
~1.4m
52%
have children living in the home
Average household income
$ $$
Average age
Household composition
# of Australians 18+
~$132K
42 years old
Property type considering
66%
64%
new
established Gender
42% % of looking to buy
46%
67%
33%
male
female
looking for a home loan
4 Source: REA 2020 Property Seeker Survey | An online survey of 6700 Australians conducted in December 2020
12
realestate.com.au
What types of buyers are there? (cont.) Investors
~0.6m
54%
have children living in the home
Average household income
$ $$
Average age
Household composition
# of Australians 18+
~$142K
39
years old
Property type considering
66%
54%
new
established
Gender
19% % of looking to buy
60%
60%
40%
male
female
looking for a home loan
5 Source: REA 2020 Property Seeker Survey | An online survey of 6700 Australians conducted in December 2020
realestate.com.au
13
What’s motivating them to buy? There are many reasons why individuals, couples or families are motivated to buy property. Current market conditions - mostly low interest rates - are prompting 46% of buyers to consider purchasing a property. Government grants and schemes are also playing a role in influencing First Home Buyers to take the plunge.
Market (46%)
Lifestage (41%)
Financial (31%)
Lifestyle (27%)
Career (22%)
12% starting a family
17% wealth creation
27% sought a lifestyle change
8% retired
10% change in property values
11% children growing up
10% had a salary increase
7% starting career
9% Government schemes/grants
10% moving out of home
6% received inheritance
6% starting with new employer
9% access to home builder grant
9% moving in with partner/spouse
2% had a salary decrease
4% changed jobs with current employers
8% saw a house they liked
8% having more children
6% new land release/ development
7% change in relationship status
24% low interest rates
5% agent contacted
3% children moving out
3% lost their jobs
higher for First Home Buyers
higher for Subsequent Home Buyers higher for Investors
Compared to other buyer types, First Home Buyers are more likely to be motivated by starting a family, moving out of home and government grants/schemes.
6 Source: REA 2020 Property Seeker Survey | An online survey of 6700 Australians conducted in December 2020
14
realestate.com.au
Where are buyers going for information? With so much information readily available, buyers turn to a number of different sources to guide them through the process.
95%
52%
34%
27%
15%
online resources e.g. websites/ apps and social media pages
agents or agent collateral
print resources e.g. newspapers and magazines
other professionals e.g. mortgage brokers, property valuers, builders
family and friends
Compared to other buyer types, First Home Buyers are more likely to use online resources during the decision making process.
Which websites are they visiting? 88% of buyers who use online resources use property websites and apps. Top 5 websites & apps
61% realestate.com.au
45%
26%
21%
14%
Domain
Agent sites
realestateVIEW
First Home Buyers are more likely to use realestate.com.au and Domain.
Buyers use realestate.com.au 1.4x more than Domain.
Google searches are likely to lead buyers to property websites or apps.
10 Source: REA 2020 Property Seeker Survey | An online survey of 6700 Australians conducted in December 2020
realestate.com.au
15
Half of Australian homes will be cheaper to buy than rent over the next decade. Writen by Daniel Johnson, News Editor, Elite Agent, 1300 601 099, www.eliteagent.com
More Homebuyers Entering the Market According to the report, low borrowing rates have attracted homebuyers into the market over the past year, with analysis suggesting it is cheaper to buy about 57 per cent of dwellings across Australia. This figure jumps to 75 per cent when looking at units only. Buying conditions are particularly favourable outside of New South Wales and Victoria, with more than 80 per cent of houses, and almost all units, estimated to be cheaper to buy than rent. The Northern Territory was the leading state or territory market where it was estimated it would be cheaper to buy than rent over the next 10 years. A massive 99.1 per cent of dwellings would be cheaper to purchase than rent over the next decade in the NT.
A new report by REA Group has revealed more than half of homes will be cheaper to buy than rent over the next decade, based on current prices.
In Queensland, it would be cheaper to purchase than rent 89.2 per cent of dwellings, followed by Tasmania, on 85 per cent. In Western Australia, 81 per cent of dwellings would be cheaper to buy than rent over the coming decade, compared to 79.8 per cent of properties in South Australia.
The REA Insights Buy or Rent Report has analysed the cost to buy and rent in suburbs across Australia to identify which areas represent better value to buy in and the areas where it is cheaper to rent. The report reveals that more than half of homes will be cheaper to buy than rent over the next 10 years, at current prices. It notes price growth is likely to remain strong as buyers take advantage of current market conditions, while rent growth will likely remain slow, particularly outside of Sydney and Melbourne. REA Group Economist and REA Insights Buy or Rent Report author Paul Ryan said the report findings pointed to continued strong housing price growth, particularly outside Sydney and Melbourne. “Price growth has been strong and is likely to remain strong,” Mr Ryan said. “Many regions have hit all-time price records so it’s understandable that many people would be surprised to hear that it’s still more affordable to buy in more places than it is to rent. REA Insights Buy or Rent Report is the latest in a suite of new reports from REA Insights combining proprietary data to deliver market intelligence to support customers and consumers in making the most informed property decisions.
16
Elite Agent
Owners Corporations - Significant changes on the way for developers. Written by Nick Sparks, Partner, Maddocks, 03 9258 3523, www.maddocks.com.au
What’s happened?
Is there are carve out?
After a long and storied journey through the Victorian Parliament, the Owners Corporations and Other Acts Amendment Act 2021 (Vic) (OC Amendment Act) has finally been enacted and received Royal Assent in February 2021.
Before the OC Amendment Act was passed, a carve out for hotel and resort management contracts relating to hotels, resorts and serviced apartment complexes was incorporated. As a result, the 3 year limit does not apply to those types of contracts. For more information, see our recent eAlert on this issue.
The OC Amendment Act changes the Owners Corporations Act 2006 (Vic), the Subdivision Act 1988 (Vic) and the Retirement Villages Act 1986 (Vic). The changes will come into effect on 1 December 2021, unless proclaimed earlier. Setting up the most appropriate owners corporation structure in developments has become increasingly complex in recent times, particularly with a greater number of mixed use projects involving not only traditional residential apartments, but also a variety of other product ranging from serviced apartments and hotels to retail, office, childcare, independent living units and beyond. The OC Amendment Act adds further layers of complexity, and developers need to understand the impacts of the changes on their duties to the owners corporations they create.
How does the OC Amendment Act impact developers? Some of the main changes include: 1.
Certain contracts are limited to 3 years
2.
Certain terms are prohibited from inclusion in contracts of appointment of managers of owners corporations
3.
New requirements for the first meeting of the owners corporation
4.
New five tier system of owners corporations
What other types of contracts are excluded from the 3 year limit? The amendments do not appear to capture: •
contracts entered into by a third party, who is not the Developer, that relate to the owners corporation; or
•
contracts entered into by the Developer which do not benefit the Developer – such as where the contract benefits a third party.
Therefore, contracts entered into by the owners corporation and a related entity of the Developer would, on one reading of the OC Amendment Act, not be limited to 3 years. However, a developer should be mindful of its overarching statutory duty to act in good faith towards the owners corporations it creates, and the case law around Developers being caught burdening owners corporations with onerous contracts. Make sure you seek advice on the best structure and the nature of the documentation to be entered into.
Contract of appointment of manager of owners corporation. Which terms can’t be included in a contract of appointment?
Certain contracts limited to three years. Which contracts are limited?
Certain terms may not be included in a contract of appointment of a manager of an owners corporation. Examples of such terms are those that:
The term of an appointment of a manager of an owners corporation is limited to 3 years.
•
permit the manager to renew the contract at the manager’s option;
Also limited to 3 years are other contracts that:
•
provide for the automatic renewal of the contract if the owners corporation fails to give notice of its intention not to renew;
•
restrict the ability of the owners corporation to refuse consent to an assignment of the contract to another manager.
•
are entered into by the applicant for registration of the plan of subdivision (Developer)
•
relate to the owners corporation; and
•
benefit the Developer.
Maddocks
17
First meeting of owners corporation. New disclosure obligation. At the first meeting of the owners corporation, the Developer must disclose: •
its relationship with the manager of the owners corporation;
Tier
Meaning
Tier 1
More than 100 occupiable lots (and not a services only owners corporation)
Tier 2
51 to 100 occupiable lots (and not a services only owners corporation)
Tier 3
10 to 50 occupiable lots (and not a services only owners corporation)
Tier 4
3 to 9 occupiable lots (and not a services only owners corporation)
Tier 5
2 lot subdivision or a services only owners corporation
and •
any immediate or future financial transactions that will, or will foreseeably, arise out of the relationship with the manager; and
•
any specific benefits which flow to the applicant as a result of that relationship.
Limitation on appointment of Developer as manager. The Developer or an associate of the Developer may not be appointed as manager of the owners corporation. However, it is worth noting that the expression ‘associate’ in the OC Amendment Act is fairly narrow and does not expressly include a related body corporate (although arguably an agent of the applicant which is included in the expression ‘associate’ could be). If you are considering appointing an entity that is related in some way to the Developer, make sure you seek advice on the nature of that corporate relationship and the terms of the OC Amendment Act.
18
What are the implications of the five tier system? Larger owners corporations will be subject to a greater number of requirements and smaller owners corporations subject to less regulation about the following: •
committees
•
financial statements
•
audits of financial statements
•
maintenance plans and funds.
For example, the OC Amendment Act makes it compulsory for tier 1 and 2 owners corporations to prepare and approve a maintenance plan. Transitional provisions state that a tier 1 owners corporation has 12 months after the commencement of the changes to prepare and approve the maintenance plan. A tier 2 owners corporation has 24 months to do so. Tier 3, 4 and 5 owners corporations may prepare maintenance plans, but it is not compulsory.
Consider owners corporation structuring early As many developers are aware, setting up the most appropriate owners corporation structure is not an exercise to be left to the last minute. Conceptualising the most appropriate structure, and considering disclosure obligations to prospective purchasers, at the outset of a project is critical to allow the vision for the development to be realised. Equally important is how that structure is then documented and put in place when the plan registers and the owners corporation is created. The OC Amendment Act adds further layers of complexity to navigate. Our team can help you steer through the legal risks and requirements.
Maddocks
19
Australians increasingly searching for properties in higher price brackets. Written by news.com.au ,www.news.com.au
Australians are adapting to the hot property market, with one figure showing how much property prices are actually increasing.
Melbourne
Australians looking for a new house are increasingly searching for properties in higher price brackets with almost half of Sydney buyers looking to spend more than $1.5 million.
Only 26 per cent of searches were made for properties worth $750,000 or less compared to 46 per cent in 2019, according to the data.
There’s been an explosion in property prices across the country this year with many home buyers pushed to the upper limits of their budgets to secure a property.
“The supply of homes valued under $750,000 is reducing,” REA Group economic research director Cameron Kusher said.
CoreLogic’s home value index for all properties shows Sydney prices have grown by 11.66 per cent year-on-year, Melbourne by 5.43 per cent, Brisbane (including Gold Coast) by 12.44 per cent, Adelaide by 11.98 and Perth by 8.40 per cent. Figures released last week showed categories of all housing in Sydney grew by three per cent in May — one of the largest monthly rises on record. The median price of a house in the Harbour City is now $1.186 million, while the median unit price is $782,000, according to CoreLogic. Prices have climbed 10 per cent since January. Realestate.com.au figures now show home buyers are adjusting their expectations and searching for properties at higher prices.
Sydney Almost half of Sydney home buyers on realestate.com.au are now looking to spend more than $1.5 million on their next property. An analysis of search activity found the most searched price bracket on the website is more than a million dollars.
Realestate.com.au data shows over half of online searches in April were for homes worth between a maximum of $1 million and $1.5 million. Almost a quarter of searches were for properties valued up to $1.5 million, a 5 per cent increase over three years.
The Real Estate Institute of Victoria revealed exclusively to the Herald Sun in April that Melbourne’s median house price had exceeded $1 million in the first three months of 2021. This figure took into account houses sold from January 1 to March 31.
Tasmania There has been a substantial rise in the number of potential buyers in Tasmania searching in the $750,000 and $1 million price brackets over the past three years. While the $500,000 range remains Tasmania’s largest price bracket, the interest in this range has dipped significantly. In April 2019, 18 per cent of home searches were in the $750,000 bracket, but in April 2021 that percentage has shot up to 29 per cent, or almost one-third of all searches. In the $1 million range, searches have grown from 9 per cent up to 16 per cent. Meanwhile, the $500,000 range represented 56 per cent of searches in 2019 but has receded to 43 per cent this year.
About 43 per cent of all Sydney buyers of a house or apartment are now looking to spend over $1.5 million — double the national average and 16 per cent more than the next best capital, Melbourne.
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news.com.au
Crunch time for Australia's apartment construction is a wake up call for governments. Written by Property Council of Australia, www.propertycouncil.com.au
The Property Council of Australia is calling for coordinated state government efforts to reduce international investor surcharges, stimulate apartment construction and improve planning to avoid a looming apartment supply crunch across Australia’s largest housing markets.
Construction jobs at risk Property Council Chief Executive, Ken Morrison, said that the reduction in building activity would see the loss of 30,000 construction jobs across Melbourne, Sydney, Brisbane and Perth in the next few years. “Apartment construction is a critical component of Australia’s future housing supply and a vital job-creator for our economy,” Mr Morrison said. “While approval numbers are increasing, they mask a decline in construction activity that will lead us to a severe structural undersupply by 2024.” “Without changes in policy, our apartment building industry will shed 30,000 direct jobs and produce $5.9bn less in housing assets over the next four years.”
2024 supply crunch needs government action this year Welcome stimulus in the detached housing sector, such as HomeBuilder, and modest apartment stimulus efforts by some state governments have not moved the dial for apartments and surcharges on international investment remain a major handbrake for many potential projects. “Over recent years we’ve seen a proliferation of new taxes and regulations across Australia that have been a handbrake on investment and directly impacted our levels of apartment supply,” Mr Morrison said.
Property Council of Australia
21
The Property Council report outlines actions for government to take to avert job losses in the apartment sector, including: •
Providing relief from foreign buyer surcharges.
•
Accelerating planning approvals.
•
Extending off-the-plan apartment stamp duty concessions.
•
Removing land tax barriers to build to rent projects, and
•
Abandoning Victoria’s new “Windfall Gains Tax.”
Mr Morrison said that with 3 to 5 years between project inception and completion it was imperative that governments act now to boost apartment investment and avoid a supply crunch in 2024. “This is a wake up call for governments as our biggest apartment markets will welcome growing numbers of people once COVIDsafe immigration inevitably returns. “Governments can unlock a wave of new investment by removing recent property tax hikes and overseas investor surcharges,” Mr Morrison said. “International buyers and build to rent investors will be key to the next generation of projects and further opportunities exist to encourage these investors through planning system improvements and stamp duty relief.” Without government action to boost apartment supply, the Property Council is warning of significant apartment price and rent increases across Australia’s major cities.
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Property Council of Australia
Signing documents electronically in 2021 – an update for developers. Written by Nick Sparks, Partner, Maddocks, 03 9258 3523, www.maddocks.com.au
The practical difficulties of being unable to physically work together during COVID-19 brought a number of changes to enable parties to execute documents electronically. Unfortunately, for companies some of these changes have now expired.
What does this mean for developers? Any documents which companies sign under section 127 of the Act should not be signed electronically but instead by: •
two directors or a director and company secretary
•
with wet-ink signatures
•
on the same physical paper counterpart.
•
This applies to all deeds and agreements including leases, deeds of cancellation, deeds of variation and section 173 agreements.
However, any documents (including deeds and agreements) which a company signs under power of attorney in Victoria may continue to be signed electronically with remote witnessing still permitted. For example, if a deed of variation was signed under a power of attorney (rather than two directors under section 127) then that deed can still be signed electronically. All Maddocks eContracts can still be signed electronically in the usual way.
What does this mean for purchasers and tenants? The detail The Federal parliament enacted legislation during COVID-19 which modified the Corporations Act 2001 (Act) to allow companies to execute documents pursuant to section 127 of the Act: •
Electronically, by either two directors or a director and company secretary
•
Split execution (different signatures on different counterparts).
For individuals purchasing or leasing land, they can sign electronically in the usual way. They can also sign other documents (for example, deeds of variation and cancellation) electronically. For companies purchasing or leasing land they will need to sign documents with wet ink (i.e. paper) in accordance with the above, unless they are signing under power of attorney (in which case they can sign electronically).
This legislation, the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination No. 3), expired on 21 March 2021. This means that from 22 March 2021, companies can no longer rely on Determination No. 3 for electronic or split execution of documents by company officers under section 127 of the Act. The Determination has not been further extended at the time of writing. There is legislation before the Federal parliament to, in essence, make the COVID temporary measures permanent, however that has now stalled in the Senate and will not be back before parliament until either May 2021 (if the relevant committee has completed its work by then) or August 2021. Note that the regulations allowing individuals to sign electronically are still in force and are not affected.
Maddocks
23
Past Project Profile
Botanica 488 Barkers Road, Hawthorn East
Price Range $1,780,000 - $1,995,000
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Target
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
3 Bed, 2 Bath
7
88
219.9
$8,562
$1,882,143
5 Bed, 3 Bath
1
12
230.0
$8,565
$1,970,000
Past Project Profile
Highmont 3 James Street, Bayswater
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
2 Bed, 2 Bath
18
100
134.1
$3,966
$535,833
Price Range $495,000 - $585,000
25
Past Project Profile
Rose & Bird 14 Adori Place, Maribyrnong
Price Range $737,500 - $895,000
26
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
3 Bed, 2 Bath + PR
13
34
159.3
$5,430
$863,615
4 Bed, 3 Bath
21
55
171.6
$5,133
$881,190
4 Bed, 2 Bath + PR
4
11
160.9
$5,499
$884,625
Past Project Profile
Custom 20 Station Street, Highett
Apartment Type
No.
% of Total
Average Size per m2
Average Price per m2
Average Price
1 Bed, 1 Bath
2
5
53.0
$7,896
$418,500
2 Bed, 1 Bath
1
3
65.0
$8,262
$537,000
2 Bed, 2 Bath
29
76
76.6
$8,116
$620,931
3 Bed, 2 Bath
6
16
104.8
$8,374
$878,667
Price Range $410,000 - $979,000
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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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