DECEMBER 2017: ANZ Finds Foreign Buyers own 400,000 AUSTRALIAN HOMES

HOW can we know the REAL NUMBERS concealed by the ONSHORE PROXY laundering the foreign money in our Real Estate?

This report is as close as we can find to the TRUTH for the percentage of foreign buying of our Real Estate …

-the Morrison Government has exempted the Real Estate Sector from any liability with money laundering October 2018

Note the bank’s finding that the “foreign demand” has been an important contributor to the recent construction boom never mind that it is this foreign intervention with an increasing role in Our Real Estate Market that has locked out a whole Cohort of Australians!

WHY has the bank based its analysis on outdated FIRB numbers from 1995 – 1996?

That is when the rot set in with the Howard Government when China’s Middle Class was embraced by changes to our immigration policy to offer “flexible citizenship” in return for investing in property and education …

KEY POINTS:

-most foreign activity in new housing in 2015 – 16 was in Victoria; overseas purchasers accounted for 25 – 35 per cent of new builds sold

-ANZ estimated the share in Queensland was between 25 and 35 per cent

-in New South Wales it was 15 – 20 per cent

WHY does our Government allow 20 – 35 per cent or more of our domestic housing market to be purchased by foreigners?  Besides the real percentage?

THAT is a large share of the Australian HOUSING Market denied the Australian First Home Buyer, every Australian home buyer

THE SUB TEXT … THE FACT that we are not told the TRUTH

THIS is about the whole setup … it is spurious …

 

Real estate: ANZ finds foreign buyers own up to 400,000 Australian homes

 

UPDATED 7 DECEMBER 2017

Artist's impression of the 'Greenland' apartment complex being built in Sydney's CBD.PHOTO: Chinese property developers have been active in Australia to cater to growing demand from that country. (BVN Donovan Hill)

 

ANZ bank has found that foreign demand has been an important contributor to Australia’s recent construction boom and is playing an increasing role in the real estate market.

Key points:

  • Foreign investors purchased up to 60,000 Australian dwellings in 2015-16, about 13 per cent of all residential property sold
  • Up to 25 per cent of newly built homes, mainly apartments, were sold to foreign investors
  • Between 2.5-4pc of Australian homes are owned by people who are not citizens or permanent residents

The bank’s study, drawing on Reserve Bank research, estimated that foreign investors purchased between 35,000 and 60,000 dwellings in Australia in 2015-2016.

That would mean foreign buyers accounted for between 7-13 per cent of all Australian property transactions, with that proportion obviously much higher in certain locations popular with overseas investors and lower in other parts of the country.

Using FIRB data and a set of assumptions, ANZ estimated that foreign investors bought between 30,000–50,000 new dwellings in 2015–16, representing between 15 and 25 per cent of newly-constructed dwellings.

“Foreign demand is clearly one of the drivers of the strength in our dwelling investment profile,” ANZ senior economist Daniel Gradwell noted.

“If this demand were to dry up suddenly, Australia’s construction pipeline would likely be notably weaker than currently expected.”

The bank concluded that, if foreigners are buying around 25 per cent of new apartments, this suggests around 80 per cent of foreign purchases are apartments and the remaining 20 per cent are houses, with an average price of $620,000 nationwide for 2015-16.

ANZ’s conclusions have been reached after analysis of Reserve Bank and Foreign Investment Review Board (FIRB) data.

The bank has assumed that 30-50 per cent of FIRB approvals result in property purchases.

Foreign owners hold up to 4pc of Australian housing

While foreign buyers make up a significant share of new home purchases, they represent a lower share of total market activity at between 7-13 per cent of turnover.

While this suggests foreigners have not been the primary driver of property price growth in recent years, they have had an impact.

 

“The purchase of 7–13 per cent of total sales each year is not as significant as the share of new construction,” Mr Gradwell observed.

“So the impact on overall prices is likely to be less than the impact on construction.”

ANZ also estimates that foreigners own between 2.5 per cent and 4 per cent of Australia’s housing stock which is significant, especially considering that the current rate of foreign buyer activity is much stronger than in the past.

However, Mr Gradwell said it would probably take a significant exodus of foreign owners to cause a substantial home price fall.

“Around 5 per cent of Australia’s housing stock is bought and sold each year,” he wrote.

“This means that only a large shock, causing a high share of foreign owners to sell their Australian property, would be significant enough to drive sale prices lower.”

The bank cautions that this analysis is based on Foreign Investment Review Board numbers dating back to 1995- 1996.

 

The wide range of estimates reflects uncertainty about the extent to which foreign buyer approvals convert to actual purchases.

FIRB data shows that in 2015–16, 40,100 property purchases by foreign buyers were approved, valued at $72.4 billion.

Foreign purchases have risen sharply in recent years, led by Chinese purchasers, with the value of approvals granted in 2015–16 three-and-a-half times greater than just five years ago.

On ANZ’s estimates of absolute numbers, most foreign activity in new housing in 2015–16 was in Victoria, where overseas purchasers accounted for 25-35 per cent of new builds sold.

But the share could be higher in Queensland, where ANZ estimated it was between 25 and 35 per cent.

In New South Wales it was 15–20 per cent.

SOURCE:  https://www.abc.net.au/news/2017-12-07/anz-finds-foreign-buyers-may-own-4pc-of-australia27s-homes/9236774

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HOUSING INDUSTRY INSIDER John Symond & Others wallow in Negative Gearing Rent Stories …

COMMUNITY ACTION ALLIANCE FOR NSW (CAAN) …

VIEW CAAN Website for these Reports which refute that Labor’s changes to negative gearing “… could tip Australia into recession”.  

These reports refute the BIG HOOHA from the Housing Industry Insiders alleging an economic downturn:

-Negative Gearing Report finds housing less affordable now than at height of the boom

 -Fact Check: Negative gearing used most by higher income earners

 -Josh Frydenberg wallows in Negative Gearing rent lies

And how Frydenberg’s claim that Labor’s policy would magically force up rents is a bald faced lie.

 

 

Negative gearing changes ‘could tip Australia into recession’, warns John Symond

WEDNESDAY 12 DECEMBER 2018

 

A number of housing industry insiders have issued a warning about curbing negative gearing, with mortgage company boss “Aussie John” Symond saying “it could tip Australia into recession”.

Key points:

  • Labor’s rule change would not affect people who are currently negatively gearing properties
  • The UBS’s chief economist said he was worried about the effect the change would have on the economy
  • But some argue negative gearing “is very important for someone who is just starting out”

Labor promised if they won the next federal election they would reform negative gearing so it only applied to investors buying new properties.

The idea, first pitched by Labor leader Bill Shorten before the last federal election, is that this would give first home buyers more opportunity to get into the housing market.

“We will put the great Australian dream back within the reach of the working and middle class Australians who have been priced out of the housing market for too long,” Mr Shorten said in 2016.

*Labor’s rule change would not affect people who are currently negatively gearing investment properties.

But Mr Symond, the founder and non-executive chairman of Aussie Home Loans, said caution was required.

“You’ve got to treat negative gearing very carefully and do your homework to work out what the ramifications will be,” he told 7.30.

 

Chief economist at UBS George Tharenou also said he was worried about the effect the change would have on the economy.

“My concern would be that if you were to make a material change to tax policy at the same time as banks are tightening lending standards, it could exacerbate what’s already a downturn into something more serious,” he said.

 

Head of Asia Pacific research at data company CoreLogic Tim Lawless said the proposed changes would result in less investment in the housing market.

“We could see more investment demand funnelled into new housing, but of course we know that buying into a new housing market is fundamentally higher risk than buying into the established market,” he said.

“New housing quite often has a long settlement period, particularly if you are buying into the apartment sector. Anything can happen between when you sign your contract and go to settle.”

Labor is also proposing to halve the capital gains tax exemption from 50 per cent to 25 per cent. This means when investment properties are sold, 75 per cent of the profit would be taxable.

Who benefits from negative gearing

CAAN VIEW this Website for -Josh Frydenberg wallows in Negative Gearing rent lies

Embedded video

Josh Frydenberg

@JoshFrydenberg

If you own your own property – under Labor’s plan, it will be worth less.

If you rent your own home – under Labor’s policy, you will pay more.

Only the Coalition can be trusted to keep your taxes low & keep the economy strong.

There is much debate over what effect the proposed tax changes would have on a housing market already facing its worst downturn since the GFC.

CAAN:  JOSH’s Negative Gearing Rent Lies:

“It’s simple. If you own your own property, under Labor’s policy it will be worth less. If you rent your home under Labor’s policy you will pay more,” Treasurer Josh Frydenberg said in a social media post last month.

Almost 1.3 million Australians own a negatively geared investment property, and more than half of negative gearers earn less than $80,000.

According to Mr Frydenberg, among those using negative gearing “are 58,000 teachers, 41,000 nurses and 20,000 police and emergency services”.

But it is the wealthy who benefit the most. The top 20 per cent of those negatively gearing get 53 per cent of the benefit, according to the Grattan Institute.

“Negative gearing provides an opportunity for all taxpayers to reduce their income and incentivises them to invest in property, but the benefits of those gains have been relatively concentrated,” Mr Tharenou said.

“Higher-income people pay more tax and that’s the way the system works — the more tax you pay, the more tax you save. So the benefits were always going to be skewed towards higher-income households.”

In 2016, the Coalition’s campaign against Labor’s changes suggested rents went up when negative gearing was briefly abolished on rental properties by the Hawke-Keating government in 1985.

Rents did rise in Sydney and Perth, but it was not clear that removing negative gearing was to blame.

“I don’t think the ’85 period really gives us any context of what may happen with negative gearing removal now, simply because it was such a short period of time,” Mr Lawless said.

“It takes a lot longer for rental markets to respond to changes in supply, it doesn’t happen instantly.”

What is negative gearing?

 

Negative gearing has been available in Australia for much of the last century, but only widely used by property investors since the 1980s.

It enables investors to deduct property expenses from their taxable income where they add up to more than is earned from rent. Deductions can include interest payments on a loan, necessary maintenance and depreciation on a property’s value.

For example, say you earn $100,000 annually and pay a bit less than $25,000 in tax per year.

You buy an investment property which earns $50,000 a year in rent. If your interest payments on that property are around $60,000 a year, you can deduct the difference of $10,000 from your taxable income.

Which means your taxable income would drop down to $90,000, which would reduce your yearly tax bill to roughly $21,000.

While you are still not out in front, you do get $4,000 back in your pocket.

Happy to see negative gearing removed

 

Kathy Ran bought her home in 1988 and paid it off in five years. Now she negatively gears an investment property, but supports Labor’s planned changes.

“I would be in favour of it getting removed even though I benefit from it, because I see how difficult it is to get into the property market for people who aren’t already in it,” Ms Ran said.

“It’s not all nurses, and it’s not all police officers who are investors. What the negative gearing tax breaks allow that small proportion to do is get everybody to pay for their losses, so I don’t think that’s fair.

Ms Ran said she would like to see a more level playing field.

“I’d like to see more first home buyers get into the market, and I’d like to be able to visit my children and my grandchildren in their own homes.

“I want the future generations not to have to rely on the bank of mum and dad to be able to get into the property market.”

‘It’s important for the middle class’

 

Couple Alex and Emily Truong are against changing the negative gearing rules.

They earn about $150,000 a year between them and live in a rental while they rent out the house they own.

“Having negative gearing just allows us to save enough money that little bit quicker,” Mr Truong said.

The couple is saving to buy more property.

“I think negative gearing is very important for someone who is starting out,” Ms Truong said.

“Sometimes the extra $5,000-$6,000 to minimise your tax could help you go further.

“I think it’s important for the middle class, like us, working very hard, trying to have a better future for our children.”

Watch part three of 7.30’s housing special tonight on ABC TV and iview.

SOURCE:  https://www.abc.net.au/news/2018-12-12/housing-industry-insiders-issue-negative-gearing-warning/10602484?fbclid=IwAR3ClZrBefGjHMFePCNWV8ocj5gsl5F-0b4LEpGgfSOK5erf943wLH9jR7g

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HOUSE OF CARDS … What is the future of Australia’s housing market?

What is the future of Australia’s housing market?

Posted 
Updated 
VIEW VIDEO

For years it seemed that property prices would rise for ever. But not any more. We are now in what the Reserve Bank governor has called “uncharted territory”, where property prices are falling in our two biggest cities, even though unemployment is stable and the economy is growing.

Transcript

CAAN’s TAKE ON ‘HOUSE OF CARDS’ … And what was missing from this report which looked at the rules making it harder for Australians to get a loan …

 

 

 

 

CAAN’S TAKE ON ‘HOUSE OF CARDS’ AND WHAT WE FOUND WAS MISSING FROM THIS REPORT SO FAR …

This report looked at the rules making it harder for Australians to get a loan

WHY is it that the Morrison Government is not rewriting its policies that have created the PONZI HOUSING SCHEME rather than continue to punish a Whole Cohort of aspiring Australian First Home Buyers locked out of the Australian Housing Market

AUSTRALIANS are constrained by domestic circumstances unlike the Chinese who are not constrained

WHAT are the sources of their funds

With no Anti-Money Laundering Legislation for the Real Estate Sector enforced in Australia for more than a decade, and as recently as October 2018 this sector was made exempt from any liability, how can the sources of these foreign buyers be uncovered

They are not verified, and yet they can buy whatever they wish

The fees and surcharges are ‘coffee money’ to these people whereas Stamp Duty, for example, is a lot of money for Australians to find … to the Chinese buyer it is of very little consequence with so many of Ultra High Wealth and High Wealth …

THE current fall from Chinese buyers has been due to the controls rendered by the Chinese Government putting a stop to funds leaving China rather than the Australian Government fees and charges which are ‘coffee money’ to these people

WHY should a person who has no connection with Australia be able to turn up here and buy whatever they like

WHERE is the reasoning behind that

OTHER THAN it is a STING contrived by the Developer Lobby and associated Property Sector

We found this report ‘ANZ finds foreign buyers own up to 400,000 Australian homes’

DECEMBER 2017

FOREIGN purchases have risen sharply in recent years, led by Chinese purchasers, with the value of approvals granted in 2015–16 three-and-a-half times greater than just five years ago.

On ANZ’s estimates of absolute numbers …

-most foreign activity in new housing in 2015–16 was in Victoria, where overseas purchasers accounted for 25-35 per cent of new builds sold

-but the share could be higher in Queensland, where ANZ estimated it was between 25 and 35 per cent

-in New South Wales it was 15–20 per cent

OF COURSE that does not take account of the properties purchased through an ONSHORE PROXY …

OBVIOUSLY the real percentage is much higher

WHY does our Government allow 20 – 35 per cent or more of our domestic housing market to be purchased by foreigners

THAT is a big slice of the Australian HOUSING Market taken away from the Australian First Home Buyer, every Australian home buyer

IS this just pure greed

IS there another Agenda here

THE SUB TEXT …

THE FACT that we are not told the TRUTH

THIS is about the whole setup … it is spurious … it is FAKE

THE TRUTH here was washed over;  it has been sanitized, put through a cleansing process …

WAS it also obvious to you that ‘the majority’ of foreign buyers and/or their Proxy were absent from the house auction shown in this programme

WHERE is the public opinion

WE are prevented from knowing what is going on … that is the real rub

WHY are we prevented from having a strong opinion about the fact that Australians want a Society, but where these people do not appear to want to being a part of our community; but to being a part of a sub culture

We don’t have that direction from our Government happening here in Australia

THESE PEOPLE are being vertically integrated into Communities

-using their own developers

-builders

-their own communities within Precincts

-setting up their own Colonies … that is not what we are about in Australia

YET  we are doing nothing about it … it comes under Multiculturalism

AUSTRALIA will have a fractured Society

DO they intend being a part of this community

THEY are physically here but in every other aspect they are not

IS this Australia or somewhere else

 

TO FIND OUT MORE ABOUT THE LOSS OF HOUSING AFFORDABILITY WITH AUSTRALIANS LOCKED OUT VIEW …

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LOOKS LIKE the DEVELOPER LOBBY is wielding its Power & Influence to Push for more than 12-Room Boarding House Developments

COMMUNITY ACTION ALLIANCE FOR NSW (CAAN) …

LET’s Hope the “HOUSE OF CARDS” will be the Final Nail in the Coffin!

IT is evident the demand for “boarding houses” has been created by LNP policies and the Property Sector with the sell-off of Public Housing, high rentals due to the competition for housing from overseas …

ONCE AGAIN this sector is bulldozing community rights of those residing in R2 Zones with changes allowing for Boarding Houses Nextdoor!

Developers are angered by the proposal to reduce these developments to 12 rooms, and to increase the car parking from 0.2 spaces per room to 0.5 spaces.

ALERT for Residents the exhibition period for the policy closes on 19 December; the community has to have their say before this date!

Greedy developers are looking at boarding houses as an alternative to unit development … another “medium-density” threat …

PROPOSED ROOM CAP FOR SOME NSW BOARDING HOUSES ‘MAY BE THE NAIL IN THE COFFIN’ FOR THESE DEVELOPMENTS

December 10, 2018

This boarding house site at Edgeware Road, Enmore, is zoned R2 for low density residential. Photo: Supplied

 

The NSW government’s proposed cap on the number of rooms for some new boarding houses could drastically reduce the number of these developments, while hiking up the prices of already approved sites, industry experts say.

The government is considering a limit of 12 rooms per boarding house site in areas zoned R2 for low-density residential use.

A spokesperson from the Department of Planning and Environment told Commercial Real Estate that the draft reforms applied to all sites in that zoning. This would mean that a 2000-square-metre site would be facing the same cap as a 300-square-metre site, for example.

There could be fewer boarding rooms, like ones in this Rockdale property, hitting the market if the new chances go through. Photo: SuppliedThere could be fewer rooms in boarding houses – such as those in this Rockdale property (above), hitting the market if the new changes go through. Photo: Supplied

 

“The proposed rule regarding the maximum number of rooms per site (12) relates to all dwellings within a residential R2 zone, regardless of size,” he said.

“This proposal has been made in response to concerns from the community and councils about the impact of some boarding house developments on the amenity and character in low-density residential zones.”

The spokesperson said the exhibition period for the policy would close on December 19 and that the community was encouraged to have their say before this date.

“Once submissions have been received they will be reviewed before a determination is made.”

Savills Australia’s Nick Tuxworth said the prices for sites already approved for boarding house development would rise if the limit became reality, but conversely sites without existing consent would be tougher to sell.

“I think that DA-approved boarding house sites in R2 (zoning) are obviously going to be in more demand – anything approved, it’s going to keep going up in value,” he said.

The R2-zoned property at 154 Wellbank Street, North Strathfield, is approved for a 25-studio boarding house and is on the market for $3.25 million. Photo: SuppliedThe R2-zoned property at 154 Wellbank Street, North Strathfield, is approved for a 25-studio boarding house and is on the market for $3.25 million. Photo: Supplied

Mr Tuxworth said that it would also deter people from buying a house and obtaining a development approval for property investment.

“It will have an effect, because a lot of people are buying homes and getting DAs on them, that’s definitely going to slow things down as people aren’t going to get that uplift that you could get six months ago,” he said.

“There’s not going to be as many boarding houses, it’ll definitely put a halt to people trying to get DAs through on (low density-zoned homes).”

And a cooling residential market was helping the boarding house market, Mr Tuxworth said.

“The market’s never been stronger for boarding house (sites). I think a lot of developers are looking to get in safer options, like boarding houses, and steering clear of unit developments. That’s a less risky strategy for a lot of people,” he said.

The new proposal comes months after changes were brought in – in mid-2018 – which lifted the car parking quota for new boarding houses in NSW from 0.2 spaces per room to 0.5 spaces. Developers have argued that adding more car parking would make projects financially unfeasible.

Colliers International’s James Cowan said that the proposed new rules would deliver another blow to boarding-house development and said his clients had already raised concerns with him.

“These new rules may be the nail in the coffin for boarding house sites given the car parking quotas already introduced,” he said.

“Despite Sydney requiring circa 330,000 new residential dwellings by 2028 and a housing affordability crisis on our hands, fiscal measures have been created to slow down development and decrease supply, which in turn is likely to artificially increase house pricing – the opposite of what we are trying to achieve.”

Mr Cowan said that it would likely “dramatically decrease developer appetite” for boarding houses.

“Developers require scale to make these sites work and providing a room cap of 12 will limit activity,” he said.

The head of the property development lobby group The Urban Taskforce, Chris Johnson, said the new changes, if enforced, would “make boarding houses unfeasible in many areas of Sydney where more affordable housing is desperately needed”.

 

SOURCE:  https://www.commercialrealestate.com.au/news/proposed-room-cap-for-some-nsw-boarding-houses-may-be-the-nail-in-the-coffin-for-these-developments/?utm_campaign=strap-masthead&utm_source=smh&utm_medium=link&utm_content=pos4&ref=pos1

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HOUSE OF CARDS

 

COMMUNITY ACTION ALLIANCE FOR NSW (CAAN) …

THE HOUSING PONZI … THE HOUSE OF CARDS … THANKS TO AUSTRALIA’S

‘BEST ECONOMIC MANAGERS’ ….

Reserve Bank deputy governor Guy Debelle says.

The hope now is that the downturn in house prices can be contained.

“The worst-case scenario for Australia is that the downturn in house prices starts to feed back to the real economy and you get unemployment increasing and interest rate cuts don’t do very much,” he says.

“Under that scenario you could see house prices down by 20 to 30 per cent. But that is really a relatively low probability.

“Everything has to go wrong, but the chance of that is going up by the day.

“That’s the concern for me: it’s generally not accepted … that the probability of a very bad scenario right now is real.”

CAAN … all the more reason for the Federal Government to enforce the second tranche of the Anti-Money Laundering Legislation for the Real Estate Sector … to ensure there is no repeat of this Predicament!

House of cards

7.30

MONDAY 10 DECEMBER 2018

The tide is turning on Australia’s $7.6-trillion property market.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

“The likelihood of Australia facing the longest housing downturn in history has increased,” says UBS chief economist George Tharenou.

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”

Yearly change in median dwelling value

  • SYDNEY

    2018

    2008

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  • MELBOURNE

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  • BRISBANE

    2018

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  • PERTH

    2018

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  • ADELAIDE

    2018

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  • HOBART

    2018

    2008

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  • CANBERRA

    2018

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  • DARWIN

    2018

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These maps capture the highs and lows of capital city house prices over the past decade.

In particular, they show how rapidly property fortunes have shifted in Sydney and Melbourne, where about 60 per cent of the country’s property transactions take place.

In Sydney, the current downturn is both sharper and more widespread than the two most recent slumps. And the record decline of 9.6 per cent in 1989–91 is almost certain to be surpassed.

The property market is down 9.5 per cent since its peak in July 2017 and some economists are predicting a likely price drop of at least 15 per cent.

In Melbourne, the current downturn is yet to mirror the intensity of the 2008–09 slump but the maps show it has already spread further.

Experts warn that while Melbourne may be faring slightly better than Sydney — home prices in Melbourne are down 5.8 per cent since the peak in November 2017 — it’s following a similar trajectory, albeit four months behind.

“If we look at Sydney, it’s falling pretty much across the board … The rate of the current decline is generally much faster than many of the other periods we’ve seen,” says Cameron Kusher, head of research for Australia at CoreLogic.

“In Melbourne you can see that in 2018 the falls have been largely in those areas closer to the city and it’s slowly creeping out to the more affordable suburban areas.”

Kusher says he “wouldn’t be surprised” if Melbourne’s current decline deepened to the 10 per cent fall of the global financial crisis.

“In Melbourne, we’ve not gone quite as deep as the financial crisis yet but… it’s certainly gathering pace.”

It’s different this time

Historically, downturns in house prices have been driven by rises in interest rates or unanticipated shocks such as the global financial crisis.

This time the downturn is being driven by credit tightening intended to cool a hot investor market.

Housing market declines since 1980

Each line represents a downturn.
(Longer line = longer downturn; steeper line = steeper downturn)

  • ALL
  • SYDNEY
  • MELBOURNE
  • BRISBANE
  • PERTH
  • ADELAIDE
  • HOBART
  • CANBERRA
  • DARWIN

In 2014 the banking regulator, the Australian Prudential Regulation Authority (APRA) asked the banks not to increase their proportion of investor loans by more than 10 per cent a year. This year it began winding back this limitation.

Then in 2017 APRA targeted interest-only loans, telling the banks they couldn’t have more than 30 per cent of such loans on their books.

The final report of the banking royal commission isn’t due until next year, but its dramatic hearings have had an additional chilling effect on the banks’ willingness to lend.

The Guptas are among the investors such moves are aimed at. They embraced Australia’s property market obsession when they moved to Melbourne from Dubai in 1990 and now own more than 30 properties between them.

  (Family group photo)

 

“I call it generational wealth … so, yes, I might have a few properties. Dad might have a few properties. You know Mum’s got a few properties. Even Grandma’s got a couple up her sleeve right now,” Goro Gupta says.

“For us, it’s a never-ending thing.”

Except for many property owners, the dream run has already ended.

Mark and Samantha Burgess took a double hit from tougher lending conditions and falling property values when they bought a Sydney apartment off the plan in 2016.

The couple were initially told they needed a 10 per cent deposit on a $1.6 million purchase. But when it came time to settle in August this year, the bank asked for a 20 per cent deposit on a property now valued at $300,000 less.

 

“We were on the verge of losing the deposit and losing the property,” Mark Burgess says.

Tough times for investors are unlikely to garner sympathy from a growing number of Australians who will never have the means to buy their own home, let alone amass a property portfolio.

But Tharenou warns the downturn could spread and if it does, there’s no easy way out.

“The main driver of the correction this time is a credit tightening … and the problem is, I just can’t see what reverses that quickly,” he says.

“It would take a major reversal of policy decisions by the Government and the regulators to try to attempt to re-inflate the housing market and at the moment that’s not the case.”

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After years of record high prices, 66 council areas have become the first in Sydney and Melbourne in six years to join the list of neighbourhoods where property values have passed their peaks.

Home prices in 473 of Australia’s 545 local government areas (LGAs) — more than four in five — have fallen from record highs.

The chart below shows how far each LGA has fallen from its peak (specifically, the percentage decrease from that council area’s record high).

The longer the line, the bigger the fall.

Enter your suburb or postcode
  • NSW
  • VIC
  • QLD
  • WA
  • SA
  • TAS
  • NT

-70%-60%-50%-40%-30%-20%-10%0%

 

Among the 25 capital city areas that have slid the furthest, Sydney’s Hunters Hill is the only one outside Perth or Darwin.

Property prices in Hunters Hill have fallen by 14.9 per cent since their peak in July 2017 — one of the sharpest declines of any capital city area.

Ryde (-13.6 per cent since August 2017) and Hornsby (-13.1 per cent since October 2017), also in Sydney’s northern suburbs, recorded similarly precipitous declines.

The other capital city LGAs recording falls of a similar magnitude have been in downturn for at least four years.

Boroondara posted the largest fall of Melbourne’s capital city LGAs, with a decline of 11.6 per cent since its peak in August 2017. It is followed by Bayside (-9.9 per cent since October 2017), Manningham (-9.1% since October 2017) and Whitehorse (-9.1% since January 2018).

But the LGAs tumbling furthest from their market peaks — some plummeting more than 50 per cent — are outside capital cities, mostly in outback WA.

“In WA and Queensland it’s all about the mining towns where you’ve seen large falls; in Perth we’ve seen some pretty large falls too.

“But in NSW, some of the larger declines have been in the heart of Sydney and that’s now filtering out to areas such as Newcastle and Wollongong,” Kusher says.

“In Victoria, the largest declines have been in some of the high value areas. The regional markets are actually holding up better at this stage.”

The million-dollar club is finally shrinking

VIEW:

 

The number of postcodes with a median property price of at least $1 million has fallen for the first time in six years.

At the market’s peak in October 2017, 157 postcodes (the vast majority in Sydney) belonged to Australia’s “million-dollar club” — five times as many as in 2012.

By October this year, property prices in 118 of those postcodes had declined, including 21 where the median value dropped below $1 million. Six new postcodes joined the club in 2018.

 

It’s a far cry from the previous five years, when an average of 25 postcodes a year joined the club. Only two — 3125 (Burwood, Vic) and 2079 (Mount Colah) — dropped out over the five-year period.

It’s another symptom of the tougher lending conditions at the heart of the current downturn.

“In Sydney the slowdown really started at the top end of the market because it became difficult to access credit … Credit tightening has a bigger impact at the higher end of the market,” Kusher says.

“But now we’re starting to see the weakness flow into the lower end of the market.”

The worst-case scenario

With about 55 per cent of the wealth of Australians tied up in property, fear is mounting that the downturn in housing could affect the broader economy.

That will happen if consumption contracts significantly and the credit squeeze starts to impact unemployment.

Last week the Reserve Bank signalled a further potential cut to the cash rate if the economy takes a hit.

“This is to some extent uncharted territory,” Reserve Bank deputy governor Guy Debelle says.

The hope now is that the downturn in house prices can be contained.

“The worst-case scenario for Australia is that the downturn in house prices starts to feed back to the real economy and you get unemployment increasing and interest rate cuts don’t do very much,” he says.

“Under that scenario you could see house prices down by 20 to 30 per cent. But that is really a relatively low probability.

“Everything has to go wrong, but the chance of that is going up by the day.

“That’s the concern for me: it’s generally not accepted … that the probability of a very bad scenario right now is real.”

Watch 7.30 tonight for the first of three special programs on the state of the property market from reporter Geoff Thompson and producer Alex McDonald.

Notes about this story:

  • Data excludes areas with fewer than 20 sales in a given year
  • Data on capital city housing market downturns begins in 1980 in NSW, Victoria and Queensland; 1989 in Western Australia and Tasmania; 1991 in ACT; 1993 in South Australia; and 1999 in the Northern Territory

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This property downturn is a different beast from the big one in 1989

Interesting views, in more than one way, apartment building maintains itself as the Ponzi scheme …

However at CAAN we would suggest that it is Beijing’s crackdown on “offshore acquisitions” that has played the major role in the downturn in the Sydney and Melbourne property market.  The ANU Database recently revealed that Chinese investment in Australian property slumped 40 per cent last year due to this crackdown, and it was alleged Canberra’s tougher enforcement of foreign ownership laws …

Despite New Zealand and Canada having both implemented rules to curb money laundering through property, Australia’s real estate gate keepers have been exempted once again. (early October 2018)

Search CAAN WEBSITE FOR:

Foreign property Developers & Offshore Money back in Australian Property Market

NOTE THE PASSAGES HIGHLIGHTED IN THIS REPORT!

This property downturn is a different beast from the big one in 1989

ANALYSIS BY BUSINESS REPORTER MICHAEL JANDA

For sale sign outside an apartment building.
PHOTO

A looming oversupply of apartments looks set to weigh further on property prices.

ABC NEWS: LIZ PICKERING

 

The last time Sydney property prices fell this much, mortgage rates were around 17 per cent, unemployment was 6 per cent (on its way to 11) and Australia was heading into the recession we had to have.

This is what that 1989 downturn looked like — short and sharp in Sydney and Perth, and lingering in Melbourne (which didn’t get back to its late-80s peak until 1997).

VIEW:

The 1989-1991 property downturn

What a contrast to the current real estate downturn, where new borrowers can get mortgage rates under 4 per cent, unemployment is at 5 per cent and has been falling for the past few years, and the latest official figures out this week are expected to show the economy growing above average at 3.3 per cent.

Despite these near-boom conditions, property prices are falling fast in the south-east capitals, while Perth’s stubborn decline simply refuses to end.

VIEW:

The current property downturn

*This, of course, raises the question of why Sydney and Melbourne are recording big price falls while their economies are chugging along perfectly well.

There isn’t a single answer, but one factor stands out and it is same trigger that caused the late-80s correction — mortgage debt. But for very different reasons.

In 2018 buyers can’t get the money

*Despite what many economists argue, the single most important factor that determines home prices is credit availability.

It’s intuitive — very few people can buy their first home without mortgage debt, so how much you can borrow will determine how much you can pay. Most investors also rely heavily on debt for their purchases.

At least for owner-occupiers, many people in very crowded markets (Sydney and Melbourne) will borrow close to as much money as they can to buy the best home in the best location they can afford.

How much you can borrow depends on how much banks are willing and able to lend you at a given point in time, given your income and living expenses.

The most immediate trigger for the current housing downturn is that those lending standards have tightened, especially the assessment of living expenses.

For many years Australian banks kept expanding the amount of credit that they’ll provide to prospective home buyers and property investors.

Even the global financial crisis barely slowed the lending binge, as the Federal Government’s bank guarantee kept credit flowing and its first home buyer boost scheme stoked demand.

VIEW:

Australia’s record household debt

In the process, mortgage lending standards eroded so far that most banks used low-ball expenses estimates to bump up the amount they could lend, along with evidence of widespread fraud and deception about borrowers’ income and other debts.

 

But the taps have finally been turned down — first by the banking regulator (with a particular focus on investors) and then by ASIC’s belated enforcement of responsible lending laws and the banking royal commission’s strict interpretation of how loan applicants should be assessed.

Housing credit is still growing, but at the slowest monthly pace since 1984 and the weakest annual pace since 2013, and it is still decelerating.

The equation is simple — if banks now lend buyers 20 per cent less than they were before, that means those buyers will have about that much less to spend on their purchase.

There may be some buyers who have access to savings or existing housing equity that won’t be affected quite as much, but clearly home prices will fall significantly.

The largest falls will be in the most expensive markets where people have to borrow more relative to their income — i.e. Sydney and Melbourne — and this is exactly what we’re seeing.

In 1989 people couldn’t afford the money

Interest rates were in the double-digits throughout the 1980s, because inflation was also very high (mostly between 6-10 per cent in the second half of the 80s).

However, things took a nasty turn when the average standard variable mortgage rate jumped from 13.5 per cent in June 1988 to 17 per cent in June 1989.

VIEW:

Owner-occupier mortgage interest rates

*This 25 per cent rise in interest rates in just a year had two significant effects.

First, it put many borrowers in severe financial difficulty, no doubt causing some to sell, either by choice or because they had defaulted on their loan.

Second, potential borrowers also would’ve been assessed for loans at the higher interest rates, meaning their borrowing capacity was reduced — a similar effect to what tighter lending standards are having now.

As in the current environment, smaller loans inevitably mean smaller purchase prices.

Regulated credit crunch better than rate spike

Even though Sydney property prices are about to surpass their late 1980s decline, and Melbourne looks set to follow in the new year, the principal trigger for this housing correction seems less dangerous.

Rather than pushing people into default with high interest rates — as the RBA did in the late 1980s — APRA, ASIC and the royal commission are simply forcing banks to lend more responsibly.

This has reduced property prices but will also, if sustained into the future, cap household debt levels and gradually reduce risks in the financial system and economy.

While interest rates remain this low, even most of those who shouldn’t have been granted loans can probably keep meeting their minimum repayments and avoid a forced sale into the falling market.

Chris Rands, a portfolio manager at funds manager Nikko AM, says debt servicing levels are around long term averages meaning “the ability to repay that debt is by no means stretched”.

Lower interest rates mean Australian household debt repayments have remained similar even as debt levels surged.

PHOTO Lower interest rates mean Australian household debt repayments have remained similar even as debt levels surged.

SUPPLIED: NIKKO AM, BLOOMBERG, RBA

 

If the current housing downturn is mainly being caused by the tighter lending standards implemented this year, those lending standards are already in place, unlikely to be tightened much further, and prices should be nearing a trough.

Already, Reserve Bank governor Philip Lowe warned in a recent speech that Australia needs banks prepared to make loans in the expectation that some borrowers will not be able to repay them.

“If they become afraid to lend simply because of the consequences of making a loan that goes bad, our economy will suffer. So a balance needs to be struck here.”

Tighter lending standards not the only issue

However, it is not solely tighter lending standards that have caused the current decline.

The bank regulator APRA’s efforts to rein in property investment, though now relaxed, have reduced a key source of demand in the market.

It’s a source of demand unlikely to rebound strongly soon, given that Labor is highly likely to be elected and implement promised restrictions to negative gearing and a reduction of the capital gains tax discount.

*Foreign investors have also pulled back from the market, in part because of tougher enforcement of investment rules and increased state taxes on purchases by overseas buyers.

At the same time, housing supply has surged, especially of apartments in Sydney, Melbourne and Brisbane.

Most analysts denied there was a housing oversupply until the last year or so, but the majority now appear to have changed their mind.

 

*While credit availability is the key determinant of property prices for more desirable homes in good locations, this increased supply and reduced demand should start pulling down prices at the lower end as the buyers who remain have far more choice and less competition.

This is where population policy is a key uncertainty.

*If Australia dramatically cuts back on its combined permanent and temporary migration intake then there will be fewer people to soak up this excess supply, meaning any adjustment will take longer.

*But, with developers already canning new projects, if population growth remains around current high levels the apartment glut may not last too long.

Interest-only reset the biggest domestic risk

Perhaps the biggest risk, though, is the hundreds of thousands of interest-only mortgages due to reset to principal and interest repayments over the next few years.

At the peak of the recent property boom, interest-only loans accounted for around 40 per cent of new mortgages being issued, and even more in markets like Sydney.

These loans became so prevalent that bank regulator APRA introduced a cap, so that no more than 30 per cent of any bank’s new lending could be interest-only.

*Most of these loans reset to principal and interest after five years, meaning the big roll-over started this year and will run until 2022.

The increase in repayments on the switch to principal and interest can be 35 per cent or more — a much bigger shock than those 17 per cent interest rates were back in 1989.

 

Banks have already raised rates on interest-only loans to encourage borrowers to switch to principal and interest ahead of the interest-only period expiring, and tens of thousands have.

However, the risk remains that those who haven’t are those who can’t afford the switch to principal and interest.

If that is the case then there could be a wave of forced sales to add to the regular sales and investors who have already bailed out.

While sentiment around whether now is a good time to buy has improved in Sydney, there probably isn’t yet the pent up demand with finance available to soak up even more sales without further price falls.

 

SOURCE:  https://mobile.abc.net.au/news/2018-12-05/two-very-different-housing-market-downturns/10580614?pfmredir=sm

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The battle to keep your home while under mortgage stress

 

COMMUNITY ACTION ALLIANCE FOR NSW (CAAN) …

Kaye Weinert is just one of an estimated one million Australians in mortgage stress.

She was forced to leave Adelaide and move to Shepparton, Victoria, for work, where she now lives in a caravan with little money for food, just so she can afford to keep her house.

And it has taken its toll with the stress of the threat of foreclosure unless she can cough up with a payment of $8,130.93!

“It’s your life, it’s your stability — the only anchor in the world where the anchor has gone missing,” she said.

KEY POINTS:

estimated one million Australians in mortgage stress

-more than 60,000 households are at risk of defaulting on their loans in the next 12 months

-the Salvation Army has found increasing levels of financial hardship amongst those over 55 years of age

ABS data suggests almost two thirds of Australian household debt is owed by households in the top 40 per cent of the income distribution

-less than 10 per cent of household debt is owed by the poorest 20 per cent of households

 

The battle to keep your home while under mortgage stress

TUESDAY 4 DECEMBER 2018

 

*Kaye Weinert is just one of an estimated one million Australians in mortgage stress.

She was forced to leave Adelaide and move to Shepparton, Victoria, for work, where she now lives in a caravan with little money for food, just so she can afford to keep her house.

And it has taken its toll.

“You see this? ‘Payment of $8,130.93 will be accepted to prevent foreclosure action’,” Ms Weinert said, showing 7.30 a letter from her mortgage provider.

“And it’s like, ‘Oh, my god’. You don’t know how you are going to do it. You don’t know.

“If I see the name of the mortgage provider on my phone, my heart starts pounding, my throat tightens, I start shaking.

“It’s not just bricks and mortar, it’s home.”

Mortgage stress occurs when a household’s net income does not cover its ongoing expenses.

It is believed more than 60,000 households are at risk of defaulting on their loans in the next 12 months.

‘I may not make it to retirement’

 

Ms Weinert bought her house in the Adelaide suburb of Elizabeth 20 years ago with money she received after a family tragedy.

“I was in an old housing trust home,” she said.

Three bedrooms — I had three kids — and you know, it was something we were going to have for the rest of our lives and I could pay off and then pass through to the kids if I die.”

But several years ago Ms Weinert lost her job.

Despite dipping into her modest retirement savings, her mortgage slipped into arrears.

“I’m not going to have super to retire on and, as I said to the ATO, as I’ve said to the superannuation mob, wouldn’t it be better off to pay the house, take that stress off me, then have $30,000 left when I retire? Because I may not make it to retirement,” she said.

’84pc of mortgage holders over-indebted’

 

The Salvation Army has found increasing levels of financial hardship amongst those over 55 years of age.

Its Moneycare program is one of the largest providers of financial counselling across the country.

In a report released in October, the Salvation Army raised concerns about the level of debt it was seeing amongst homeowners.

*”84 per cent of owners with a mortgage tend to be over-indebted, with mortgage at least three times that of their annual disposable income,” the report said.

“This is almost double that of the Australian figure in 2015/16, where 47 per cent of those with a mortgage tend to be over-indebted.”

Economist Saul Eslake said while most Australians were not in the same desperate position as Ms Weinert, the problem was getting worse.

“I have no doubt that the degree of mortgage stress, whatever it is, is higher now than it has been at any point in the last decade,” he told 7.30.

8″If mortgage stress were to become significantly more widespread than it is, then I think the Reserve Bank would be much more inclined to hold off raising interest rates than it is at the moment.”

Mr Eslake said the Reserve Bank was continuing to keep a close eye on the level of mortgage stress.

*”ABS data suggests almost two thirds of Australian household debt is owed by households in the top 40 per cent of the income distribution, and less than 10 per cent of household debt is owed by the poorest 20 per cent of households,” he said.

“We’ve seen that, for example, in parts of regional Western Australia and Queensland where house prices have fallen significantly in the aftermath of the mining boom … there have been significant increases in mortgage delinquencies and defaults, and much greater falls in prices than have occurred in any of the capital cities.

If under certain circumstances we were to see much bigger declines in property prices in parts of Sydney or Melbourne, for example, than most forecasters are currently expecting, then I guess there would be some increase in the number of distressed sales.”

Home ‘the only anchor’

Ms Weinert is hoping it does not come to that for her.

 

She is doing everything she can, with the support of a financial counsellor, to solve her mortgage problems.

But the fear of losing her family home remains overwhelming.

“It’s your life, it’s your stability — the only anchor in the world where the anchor has gone missing,” she said.

 

SOURCE:  https://www.abc.net.au/news/2018-12-04/the-battle-to-keep-your-home-when-under-mortgage-stress/10577498?fbclid=IwAR3XhLGnmRpEPnKBEG9LTvD5hs4iwUab-xD8D3-hIPPLyk_E7_IeovuGYOM

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Australian House Prices Fall at Fastest Pace Since GFC: Corelogic

SYDNEY house prices would need to fall 20 per cent to open the market to many Australian First Home Buyers with lowest wages growth!
However, Sydney’s region of Ryde has seen the largest fall over the year, with values in this area now down 14.4 per cent since peaking in August 2017.
RYDE looks forward to First Home Buyers and not more developers demolishing Sydney’s Mid Century Homes for fast-build bulky fugly concrete caverns robbing neighbours of their amenity!
KEY POINTS:
-weakest conditions since the global financial crisis, led by Sydney and Melbourne’s major declines
Sydney’s housing market is down 9.5 per cent since peaking in July last year
-the ramp up in housing supply in Sydney and Melbourne coinciding with slowing demand (foreign buyer activity)

-due to Chinese government clamp down and the reduced prices in Australia resulting in less Chinese interest

 

Related: Melbourne Trumps Sydney as Top Investment and Dev

Australian House Prices Fall at Fastest Pace Since GFC: Corelogic


Australia’s housing market has recorded the weakest conditions since the global financial crisis, led by Sydney and Melbourne’s major declines.

The fall in prices gathered momentum in November, with the national dwelling values falling 0.7 per cent, the weakest month-on-month change since the end of 2008 during the GFC, reveals Corelogic’s home value index.

Sydney’s housing market is down 9.5 per cent since peaking in July last year.

While Melbourne’s dwelling values, which peaked in November 2017, have dropped by 5.8 per cent through to last month.

*Corelogic said Sydney’s 9.5 per cent peak-to-trough fall was on track to “eclipse the previous record peak-to-trough decline” set during the last recession when values fell 9.6 per cent between 1989 and 1991.

Related: Sydney and Melbourne House Prices Will Fall 20%: ANZ

Corelogic

Corelogic

Defying the downturn, Corelogic said the strongest conditions were seen in Hobart, Canberra, and some areas of Brisbane and Adelaide.

Brisbane’s housing market was one of the few capital cities to record an increase in home values for the month of November, a modest 0.1 per cent rise for the month, while annual growth values are up 0.3 per cent.

Hobart dwelling values increased by 9.3 per cent, by far the strongest conditions across any of the capital cities, while Canberra values are up 4 per cent for the past 12 months.

Corelogic head of research Tim Lawless said conditions across Australia’s housing market are increasingly diverse.

“Dwelling values are trending higher across five of the eight capital cities, albeit at a relatively slow pace compared with the previous surge in Sydney and Melbourne.

Hobart and regional Tasmania continue to be the standouts for capital gain, with values up 1.7 per cent across both regions over the past three months.”

Ongoing factors such as the tightening of lending conditions has influenced the notable downward trend in Sydney and Melbourne, while other regions are seeing some level of growth.

“Additionally, housing affordability constraints are more pronounced in these markets and rental yields are substantially lower, indicating an imbalance between rental values and dwelling values,” Lawless said.

“The ramp-up in housing supply has been more pronounced in these markets against a backdrop of slowing demand, and Sydney and Melbourne have also been more affected by the reduction in foreign buying activity.”

Related: Melbourne Trumps Sydney as Top Investment and Development Destination

Lawless said pressure on national dwelling values was largely constrained in Sydney and Melbourne, combined the capital cities account for 55 per cent of the value of Australia’s housing asset class.

Lawless said pressure on national dwelling values was largely constrained in Sydney and Melbourne. Combined the capital cities account for 55 per cent of the value of Australia’s housing asset class.

Buyers on top

Buyers entering the market are the clear winners of the market slowdown.

Advertised listings have surged higher as a result of less market activity, Lawless says, ultimately providing buyers with ample choice and a platform for strong negotiation.

“The rebalancing towards buyers over sellers in Sydney and Melbourne is clear across Corelogic’s vendor metrics, with clearance rates tracking in the low 40 per cent range while private treaty sales are showing substantially longer selling times and larger rates of discounting than they have over recent years.”

The weakest capital city sub-regions were based across Sydney and Melbourne.

Sydney’s region of Ryde has seen the largest fall over the year, with values in this area now down 14.4 per cent since peaking in August 2017.

Corelogic said the fall was mostly driven by lower detached housing values.

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BOARDING HOUSES: Communities rise up against development in R2 Zones

 

Residents express their opposition to the proposed boarding house in Waratah Road, Engadine. Picture: John Veage

 

VIEW:  https://www.theleader.com.au/story/5754312/residents-rise-up-a-second-time-against-boarding-house/

IS this happening where you live too?

Photo:  boarding house in Bondi

 

 

The NSW Government is considering reforms to cap the number of boarding rooms allowed in a boarding house development in low-density residential zones to a maximum of 12 per site.

 

Minister for Planning, Anthony Roberts, said the changes had been drafted in response to community concerns about local impacts of some boarding house developments.

 

*“Tough rules already exist governing the development of boarding houses to ensure they are only approved where they are close to public transport, compatible with council rules on density and building height, and where there’s adequate additional parking,” Mr Roberts said.

 

*“We have listened to the community and councils and what we’ve heard is that they want more limits placed on these developments in low density areas.

 

*“That’s why we’re proposing a 12 boarding room limit on boarding house developments in the R2 zone, to address community concerns about amenity impacts, such as overlooking, overshadowing and loss of on-street car parking.

 

“Labor introduced a boarding house State Environmental Planning Policy (SEPP) in 2009, but never imposed a room limit.

 

“Establishing a maximum number of boarding rooms per site in low-density zones will help to better manage any amenity impacts of boarding house developments on adjoining and nearby properties.”

 

Mr Roberts said the Affordable Rental Housing State Environmental Planning Policy (ARHSEPP) had already been amended earlier this year to address concerns about off-street parking.

 

*“The AHRSEPP was originally introduced in 2009 to increase the supply and diversity of affordable rental and social housing throughout NSW,” he said.

 

“However, it’s clear that the size, scale and proliferation of boarding house developments in the R2 zone is not in line with what was envisaged when the ARHSEPP was introduced.

 

“We already made changes in June this year, in response to community concerns, to increase car parking standards to 0.5 spaces per boarding room in all locations.

 

“The proposed changes we are releasing today support the Government’s commitment to keep listening and to make sure communities are at the heart of planning policy.”

 

The community is invited to comment on the proposed amendments, which will be on exhibition from today until Wednesday, December 19.

Find out more about the planning reforms.

 

Main Download List

 

SOURCE:  https://www.planning.nsw.gov.au/News/2018/Planning-reforms-proposed-for-boarding-houses

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