Camden Professionals

How to Protect Yourself When Buying Property Off the Plan

Buying property off the plan offers the promise of securing real estate at today’s prices and time to save before settlement. But it also comes with risks—some of which have become more prominent due to legislative changes and market volatility. Here’s what you need to know to protect yourself.

What Does Buying Off the Plan Mean?

Buying off the plan means purchasing a property before it’s built—usually based on architectural drawings, floor plans, or display suites. This approach is common for apartments, townhouses, and house-and-land packages.

You’re buying based on a promise—what the developer says will be built—not on something you can physically inspect. Because of this, the contract, construction timeline, and financial protections become even more critical.

How It Works

Deposit: Typically 5–20% upfront. Remainder is paid upon completion.
Loan Process: Lenders assess your loan application at the beginning, but may revalue the property at settlement.
Timeline: Construction may take 12–24 months or more.
Stamp Duty: You might qualify for concessions depending on the state and your buyer status.

Pros of Buying Off the Plan

Lower Upfront Costs: Small deposit and more time to save.
Potential Stamp Duty Savings: Especially for first-home buyers or new builds.
Tax Benefits: Depreciation deductions for investors.
Customisation: Option to choose finishes or layouts (in some cases).
New Build Appeal: Lower maintenance costs and premium rental potential.
Possible Capital Growth: If market rises during construction, your equity could grow before settlement.

Cons and Risks to Watch Out For

Construction Risk: Developer might delay, change plans, or go broke.
Final Product May Differ: Quality or layout may not match what was promised.
Valuation Issues: Bank may value property lower at settlement, requiring you to cover the shortfall.
Market Changes: Property value could fall before completion.
Vacancy Risk: Over-supply in a new development could lower rental returns.
Strata/Body Corporate Fees: May be higher than expected due to shared amenities.
Contract Terms: Some contracts favour the developer and offer little protection for the buyer.
Sunset Clause Abuse: Developers may cancel contracts to resell at higher prices if allowed.

Critical Contract Considerations

Sunset Clauses

Ensure the clause has limits. Can the developer extend the date multiple times? If so, you could be stuck indefinitely.

Developer Exit Rights

Does the contract allow the developer to cancel unilaterally or transfer the project to another entity? If yes, you may have limited recourse.

Funding & Pre-Sales

Check if the project relies on a minimum number of sales to proceed. If financing falls through, the project might never get off the ground.

Legal Advice Is Essential

Work with a property lawyer experienced in off-the-plan contracts. They can spot red flags and help you understand what you’re really signing up for.

How to Protect Yourself

Get Independent Legal Advice before signing anything.
Understand Your Cooling-Off Rights (varies by state).
Review the Developer’s Track Record and financial stability.
Request Specific Completion Dates and limits on extensions.
Clarify What Happens if the Developer Defaults or changes the development.
Check for Government Protections such as first home buyer grants or stamp duty concessions.

Conclusion

Buying off the plan can be a great opportunity—but only when approached with caution, legal guidance, and a full understanding of your rights. Contracts can be complex and often favour the developer. To protect your deposit and avoid future disputes, it’s essential to:

Vet the developer,
Understand contract terms,
Plan for financial changes,
And most importantly, seek professional legal advice.

Being informed now can save you thousands later.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

Camden Professionals

What is the Australian Government 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme (previously known as the Home Guarantee Scheme) is a federal initiative that enables eligible first home buyers to purchase a property with a minimum deposit of 5 %, by having the government act as guarantor for a portion (commonly 15 %) of the home loan. This means successful applicants can avoid paying Lenders’ Mortgage Insurance (LMI), which often can run into tens of thousands of dollars.

If the buyer were ever to default on repayments, and selling the property didn’t cover the debt, the government guarantee would cover the shortfall.

From 1 October 2025, the scheme is formally rebranded and updated as the Australian Government 5% Deposit Scheme.

What changed on 1 October 2025?

On 1 October 2025, a number of key reforms took effect:

No limit on places: There are now unlimited guarantee places — there is no cap on the number of applicants who can access the scheme.
Income caps removed: The prior income thresholds (e.g. $125,000 for singles / $200,000 for couples) were abolished. Applicants of all income levels can apply.
Higher property price caps: The maximum eligible property prices have been significantly increased across most states and territories.
Regional scheme folded in: The prior separate “Regional First Home Buyer Guarantee” is being closed to new applicants, and regional buyers will simply use the standard first home buyer path under this scheme.
Simplicity and rebrand: The scheme is now more streamlined under a single name.

These changes broaden access and simplify the scheme operation.

Who is eligible (and who isn’t)?

Basic eligibility criteria

To qualify under the new scheme (from 1 October 2025 onward), applicants generally must:

Be an Australian citizen (in past versions, permanent residents were sometimes eligible, but the restructured scheme emphasises citizenship
Be at least 18 years old
Be a first home buyer (i.e. not have held property previously) and intend to live in the property (owner-occupier)
Have saved at least 5 % deposit (excluding LMI, since LMI is waived under the scheme)
Purchase a property that is within the relevant price cap for the area)
Use a participating lender (not all lenders may participate)

What changed from the prior scheme

Under the old scheme, there were income caps (singles capped at $125,000, couples at $200,000) — these have been removed.
Previously, there was a limit on how many participants each year — that has now been removed.
The separate regional guarantee has been discontinued for new applicants; regional buyers now use the general scheme.

Note: If an application was lodged before 1 October 2025, the old rules (income caps, place limits) may still apply.

What are the new property price caps?

Here is a summary of some of the updated caps, effective from 1 October 2025:

State / Territory	Capital City / Major Regional	New Price Cap
NSW (capital city & regional centre)	Sydney etc.	$1,500,000
NSW (other regional)	Other parts of NSW	$800,000
Victoria (capital & regional)	Melbourne, Geelong	$950,000
Victoria (other)	Rest of Victoria	$650,000
Queensland (capital & regional)	Brisbane, Gold Coast, Sunshine Coast	$1,000,000
Queensland (other)	Other QLD areas	$700,000
Western Australia (capital)	Perth	$850,000
Western Australia (other)	Regional WA	$600,000 (
South Australia (capital)	Adelaide	$900,000
South Australia (other)	Regional SA	$500,000
Tasmania (capital)	Hobart	$700,000
Tasmania (other)	Regional TAS	$550,000
ACT	Canberra	$1,000,000
Northern Territory (NT)	Darwin & region	$600,000
Jervis Bay & Norfolk Islands	Islands	$550,000
Christmas / Cocos Islands	Remote	$400,000

Under the old scheme, caps were much lower — for example, in NSW, the cap was $900,000. However, even with the higher caps, many median home prices still exceed them, particularly in major capitals.

How much deposit do you need (and what additional costs apply)?

You must provide a deposit equal to 5 % of the purchase price of the property. For example:

For a $1,500,000 home in Sydney, a 5 % deposit is $75,000
For a $950,000 property in Melbourne, a 5 % deposit is $47,500

Because the government backs part of the loan and no LMI is charged, eligible buyers can avoid paying tens of thousands in mortgage insurance premiums. (NAB)

But — there are still other fees and costs you must budget for, including:

Stamp duty (varies by state/territory; some jurisdictions offer concessions or exemptions for first home buyers)
Legal / conveyancing costs
Building and pest inspections
Loan establishment fees, valuation fees
Ongoing interest and loan repayments

One caution: while you avoid LMI, servicing a 95 % loan means higher interest payments and more risk if property values decline.

Pros and cons of the scheme

Advantages

Lower barrier to entry: You can enter the market with just a 5 % deposit rather than needing 20 % or paying LMI.
Significant savings on LMI: For example, someone buying a $1 million home with a 5 % deposit may avoid an LMI fee of ~$34,000 (or more) depending on lender/insurer.
More homes eligible: The higher price caps unlock more properties for access under the scheme.
Increased competition / access: Unlimited places mean no waitlist or quota constraints.
Speeds up home ownership: Reduces the time it takes to save a large deposit.

Risks and downsides

Higher loan amount / interest cost: Because you’re borrowing 95 %, you’ll pay more interest over time.
Risk of negative equity: If property values fall, you may owe more than the property is worth.
Not all properties qualify: The scheme only applies to certain property types and values (within the price caps).
Stamp duty still applies: Especially in high-value markets, stamp duty can be substantial.
Market inflation concerns: Some analysts warn the scheme might push up house prices. Treasury modelling predicts a 0.5 % increase over six years, though critics argue increases could be sharper.
Affordability stress: Even if you’re eligible, high repayments may stretch finances — some studies warn many qualifying buyers still can’t comfortably meet repayments.

How to apply (or prepare to apply)

Check your eligibility using the government’s tool (at firsthomebuyers.gov.au) or via participating lenders.
Confirm which lenders participate — not all lenders will join the scheme, so you must apply via a participating lender.
Obtain loan pre‑approval via a participating lender, along with the scheme application.
Find and contract a suitable property within your area and under the price cap.
Submit your scheme application to Housing Australia (via your lender).
If approved, settlement proceeds under the normal conveyancing processes.

If your contract was signed prior to 1 October 2025 but settlement is after, there are transitional provisions — your application might still qualify under the new rules depending on timing.

FAQs (Frequently Asked Questions)

How has the First Home Buyer (Guarantee) Scheme changed?

It is now rebranded as the Australian Government 5% Deposit Scheme.
Income caps (which limited access by earnings) have been removed.
There is now no limit on participants (no quota or places cap.
Property value caps have been increased in most regions.
The regional scheme has been merged, simplifying the scheme structure.

Who is now eligible under the 5% Deposit Scheme?

Australian citizens aged 18 or older
First home buyers who intend to live in the property
Applicants who have saved at least a 5 % deposit
Buyers who purchase within the applicable local price cap
Must use a participating lender

Importantly, income is no longer a barrier.

Do I still need to provide my tax Notice of Assessment?

No — for applications submitted on or after 1 October 2025, you are no longer assessed against income caps. Thus, the requirement to produce a Notice of Assessment for income verification is no longer necessary for new applications after that date.

If I signed a contract before 1 October but settle after, which rules apply?

If your scheme place is applied for on or after 1 October, your application will be assessed under the new rules. However, if your application was submitted before 1 October, the previous criteria (income caps, place limits) will apply.

Does the scheme cover all types of property (houses, units, land)?

Generally yes — as long as the property’s value is under the cap, and it meets lender security standards (e.g. acceptable dwelling). Some properties, such as off-the-plan or certain uses, may have additional rules depending on the lender. Always check with your lender.

Will this scheme push up house prices?

There is risk of upward price pressure. The government’s modelling estimates a 0.5 % increase over six years. However, some analysts warn the impact could be more significant.

Can I stack this with other first home buyer concessions or grants?

Yes — in many states you can still apply for state/territory first home owner grants, stamp duty concessions, or exemptions, where available, in addition to this scheme. This varies by jurisdiction.

Source: Housing Australia, NAB

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Camden Professionals

Negative Gearing Myths

Negative gearing is a hot topic in Australia — and not just among property investors. It’s regularly debated in political circles, often mentioned in discussions around housing affordability, and widely misunderstood by first-time investors.

Despite its popularity, many Australians still don’t fully understand what negative gearing is, how it works, or who it benefits. As a result, they may be making investment decisions based on misinformation.

In this post, we unpack what negative gearing really means, clarify some of the most common misconceptions, and outline key factors to consider before using this investment strategy.

What Is Negative Gearing?

Negative gearing occurs when the expenses associated with owning an investment (like loan interest, rates, repairs, and maintenance) exceed the income it generates — typically rent or dividends. This results in a net loss, which investors can offset against their taxable income.

Example:

Let’s say your rental property earns $25,000 in rent per year, but your costs total $35,000. That’s a $10,000 loss. You can use that $10,000 to reduce your total taxable income for the year — lowering your tax bill.

While it’s most common in the property market, negative gearing can also apply to investments like shares.

Common Misconceptions About Negative Gearing

“Negative Gearing Is Only for the Wealthy”

This is one of the biggest myths. While high-income earners may benefit more from the tax deductions, negative gearing is not exclusive to the wealthy. What matters is:

Your ability to borrow money to invest.
Whether you have sufficient income to fund the loss.
If your taxable income is high enough to make use of the deduction.

Many middle-income Australians use negative gearing — particularly those looking to build wealth over the long term.

“It Guarantees a Profit”

Negative gearing is not a guaranteed moneymaker. The strategy assumes that the capital value of your investment will increase over time, eventually offsetting your losses. But if the value falls — or even stays flat — you may end up worse off.

Plus, you need to be able to sustain the cash flow losses year after year. If interest rates rise, or the property sits vacant, that can be a serious financial burden.

“You Get an Instant Tax Refund”

No — you don’t get a cheque from the ATO the day you lodge your BAS or tax return. Negative gearing reduces your taxable income, which in turn reduces the amount of tax you owe at the end of the financial year.

It’s a delayed benefit, not an immediate cash injection.

“Negative Gearing Is Always a Good Idea”

Wrong again. While negative gearing can be a useful long-term wealth-building strategy, it isn’t suitable for everyone.

You need to assess:

Your financial stability and income reliability.
Your investment timeframe — it’s typically not suitable for short-term investors.
Your risk tolerance — especially in a rising interest rate environment.
Whether the property or asset is likely to grow in value.

Negative gearing is a high-risk approach that requires careful planning and advice.

Frequently Asked: What Should You Consider Before Negative Gearing?

Before committing to a negatively geared investment, ask yourself:

Can I afford to cover any shortfall between income and expenses?
Do I understand the risks of rising interest rates, property vacancies, or market downturns?
Am I investing for long-term capital growth?
Have I sought advice from a qualified financial or tax adviser?

Many people assume that if everyone is doing it, it must be safe. But that’s rarely the case in investing. Negative gearing involves borrowing money to make a loss today, in the hope of gaining tomorrow. That’s not a strategy to enter lightly.

What About Housing Affordability?

Negative gearing is often criticised for giving investors an edge over first home buyers. Critics argue it drives up property prices by increasing demand and reducing affordability, especially in major cities.

Research from institutions like the Grattan Institute suggests that while negative gearing contributes to investor activity, it’s not the only factor affecting housing affordability. Supply constraints, population growth, and interest rates also play a role.

Still, it’s an important consideration in the broader economic context — especially for policymakers and younger Australians trying to enter the housing market.

Final Thoughts for Business Owners and Investors

Negative gearing is a legitimate investment strategy in Australia — but it’s not a guaranteed path to wealth, nor is it a loophole only accessible to the rich. The key is understanding the true nature of the risks and rewards.

We recommend:

Doing your homework
Assessing your financial situation honestly
Seeking tailored advice from a licensed financial adviser or tax professional

Whether you’re investing in property, shares, or another asset class, understanding how negative gearing works — and clearing up the common myths — will help you make smarter, more informed financial decisions.

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How the First Home Super Saver Scheme Works

For many Australians, saving for a first home deposit is one of life’s most challenging financial milestones. Rising property prices, inflation, and everyday living costs can make it difficult to build a deposit fast enough. That’s where the First Home Super Saver (FHSS) scheme comes in — offering a tax-effective pathway to grow your deposit by using your superannuation account.

By tapping into the concessional tax environment of super, the FHSS scheme may help first-home buyers get into the property market sooner — and with less stress.

What Is the FHSS Scheme?

The First Home Super Saver scheme allows eligible first-home buyers to make voluntary contributions to their superannuation fund — either before-tax (concessional) or after-tax (non-concessional) — and later withdraw those contributions (plus deemed earnings) to put toward the purchase of their first home.

The most tax-effective approach is to make concessional contributions via salary sacrifice or personal contributions (with a tax deduction). These contributions are taxed at just 15% within super, which is likely lower than your marginal tax rate — allowing you to grow your deposit faster than in a regular savings account.

Who’s Eligible?

To use the FHSS scheme, you must:

Be at least 18 years old
Have never owned property in Australia (including residential, investment, or vacant land)
Intend to live in the home for at least six months within the first 12 months of ownership

Note: Exceptions apply if you’ve suffered financial hardship, such as bankruptcy or divorce.

How Much Can You Contribute?

You can contribute up to $15,000 per financial year under the scheme
There’s a lifetime cap of $50,000 per person
Couples can combine their contributions for up to $100,000 in total

Voluntary contributions must be within your existing concessional and non-concessional contribution caps. And remember, once the money is inside super, it’s locked away until you formally apply for release through the FHSS scheme.

What Can You Withdraw?

When you’re ready to buy, you can access:

85% of your concessional contributions (after the 15% contributions tax)
Associated earnings based on a fixed ATO rate (currently 7.17%)
Less tax at your marginal rate, offset by a 30% tax credit

Example:

Let’s say you contribute $50,000 over four years via salary sacrifice:

You’ll be able to withdraw around $42,500, plus deemed earnings
Final withdrawal amount depends on earnings and any applicable taxes at withdrawal

Using the FHSS Scheme – Step by Step

Request a Determination: Before buying, apply through the ATO to confirm how much you can withdraw
Apply for Release: After determination, request the funds (processing time: 15–25 business days)
Sign a Contract: You must buy or build within 12 months of receiving the funds
Missed Deadline? You may need to return the funds to super or pay additional tax

Important Considerations

Not All Super Funds Participate: Check with your fund before making FHSS contributions
Impact on Centrelink or Benefits: The withdrawal counts as assessable income, which may affect your entitlements in that year
Vacant Land Rule: You can’t use FHSS for land-only purchases unless it includes a build contract

Maximising Your Deposit: Combine with Other Schemes

You may be able to combine FHSS savings with:

The First Home Owner Grant (FHOG)
The First Home Buyer Assistance Scheme (NSW)
The Home Guarantee Scheme (to reduce or eliminate Lenders Mortgage Insurance)

Some lenders also waive LMI for professionals in medicine, law, or finance — another reason to talk to a mortgage broker.

Is the FHSS Right for You?

If you’re a disciplined saver looking to buy in the next few years, the FHSS scheme offers a unique opportunity to boost your deposit while saving on tax. It’s not a fast-cash solution, but with the right strategy, it could give you a significant head start.

Speak with your financial adviser, tax agent, or super fund before getting started to ensure the scheme suits your situation and goals. With careful planning, the FHSS could be your smartest step toward owning your first home — sooner than you thought possible.

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Why is Strategic Wealth Planning Important?

Financial planning can be particularly complex for high-net-worth individuals or affluent Australians. Structuring wealth involves navigating various challenges, including tax implications, legal considerations, and family dynamics. For this reason, many affluent Australians seek professional advice to design an optimal wealth structure for themselves and their families. This process typically involves collaboration between a financial adviser, accountant, and lawyer to comprehensively address asset protection, taxation, investments, and family goals.

The key to establishing an effective wealth structure is starting with the end in mind. It’s essential to take the time to define both your personal and financial goals thoroughly. Adopting a “measure twice, cut once” approach ensures careful consideration before committing to any strategy or structure. Additionally, the strategy should be flexible to accommodate the changing needs of families and business owners over time.

A Typical Wealth Plan for a High-Net-Worth Family

A common holistic wealth structure for affluent families might include:

A family investment trust
A Self-Managed Superannuation Fund (SMSF)
In some cases, an investment company

Most families also own their principal place of residence personally. Typically, ownership is held by the non-risk partner to provide additional protection. However, if stamp duty is a consideration, there are ways to transfer equity interest without transferring the asset.

Asset Protection

This structure provides robust asset protection, especially when each element (e.g., family trust or SMSF) is overseen by a corporate trustee. It’s crucial to evaluate any loans these companies owe as part of the strategy. SMSFs and superannuation in general offer excellent protection, particularly in bankruptcy scenarios.

Tax Considerations

Family trusts typically distribute all profits to beneficiaries. By directing distributions to an investment company, the tax rate on these distributions can be capped at 30%, provided the cash is transferred to the company. The placement or ownership of investments within the structure is another critical factor. Allocating assets appropriately across trusts, SMSFs, and companies can minimize tax liabilities and optimize portfolio returns. A financial adviser can guide you in making these decisions effectively.

Estate Planning

A well-structured wealth plan enables you to pass assets owned by the family trust to beneficiaries by changing the director of the trustee company. One area that is often overlooked is when family members of the trust have loaned money into the trust for investment. This is considered an estate asset, and depending on your objectives, it may remain an estate asset or could be gifted to the trust.

When structured correctly, an SMSF offers greater flexibility in managing death benefits compared to retail or industry funds. For example, a legal representative or surviving spouse can control the distribution of death benefits based on the deceased’s nomination. Greater flexibility in these nominations provides the surviving beneficiary with more control over how benefits are allocated.

Family trusts and investment companies are not automatically included in a person’s will. This highlights the importance of consulting a lawyer to ensure estate planning aligns with your wealth structure. A comprehensive estate plan generally strikes a strategic balance between asset protection and tax efficiency. Your financial adviser, combined with an estate specialist lawyer, can help you achieve the appropriate outcome that aligns with your wishes.

Family Considerations

Many families design wealth structures that meet current needs while creating a legacy for future generations. This often involves setting up an additional family trust to own the investment company within the structure. Such arrangements allow the family’s patriarch or matriarch to transfer control of the investment company to a child or preferred beneficiary by simply changing the director, while other assets within the family trust can remain under their control.

Careful planning of SMSF death benefit nominations is especially important in blended family situations. Without effective strategies, disputes or claims on the estate from third-party claimants may arise, potentially disrupting your legacy. Engaging a financial adviser can help safeguard your assets, protect them from family and business risks, and ensure your estate planning goals are met.

The Importance of Review

A well-established wealth structure is an investment in your family’s financial future. It’s worth the time and effort, as its impact will be long-lasting. Start with the end in mind, and involve your circle of advisers early in the process. As your personal and financial circumstances evolve, it’s crucial to regularly review and adjust your strategy to ensure it remains aligned with your goals.

Frequently Asked Questions (FAQ)

Why is strategic wealth planning important for high-net-worth individuals? Strategic wealth planning is crucial for high-net-worth individuals because it helps navigate complex challenges such as tax implications, asset protection, and family dynamics. It ensures wealth is structured in a way that optimizes financial outcomes, minimizes risks, and creates a lasting legacy.
What are the benefits of a family trust? A family trust offers benefits like asset protection, tax efficiency, and flexibility in estate planning. It allows wealth to be distributed to beneficiaries in a controlled manner and can be structured to minimize tax liabilities.
How can I ensure my wealth structure is tax-efficient? To ensure tax efficiency, you should properly allocate assets across different structures like family trusts, SMSFs, and investment companies. A financial adviser can help guide you in structuring your investments to minimize tax liabilities and optimize portfolio returns.
What is the role of estate planning in wealth structure? Estate planning is essential in ensuring your wealth is passed on according to your wishes. It involves aligning your wealth structure with your will and ensuring there are strategies in place to manage your assets effectively after death, including the distribution of superannuation benefits and other family assets.
Why should I review my wealth structure regularly? As your personal and financial circumstances change, it’s important to review and adjust your wealth structure. Regular reviews ensure your strategy remains aligned with your goals, protecting your wealth while maximizing its growth potential.

In conclusion, strategic wealth planning is an essential part of safeguarding your financial future. By taking a thoughtful, comprehensive approach and working with a team of professionals, you can create a wealth structure that protects your assets, optimizes your tax situation, and secures your legacy for future generations.

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House vs Apartment: Which is the Best Choice for First-Home Buyers?

For first-time homebuyers, the decision between purchasing a house or an apartment can feel overwhelming. While affordability is an important factor, it’s not the only consideration when choosing your ideal property. According to the ANZ CoreLogic Housing Affordability Report 2024, servicing a mortgage for a median value house requires 54.7% of household income, while an apartment requires 41.6%. However, factors such as your budget, lifestyle, and long-term goals should also heavily influence your decision.

Whether you’re looking for more space, proximity to work, or potential investment returns, this article explores the key aspects of both houses and apartments, helping you assess which option aligns best with your needs and future aspirations.

Key Factors to Consider Before Choosing a House or Apartment for Your First Home

To help guide your decision-making process, consider these important factors:

Cost

Apartments are generally more affordable than houses, especially in metropolitan areas. According to CoreLogic data, the price gap between median capital city house and unit values grew from 16.7% in March 2020 to 45.2% ($293,950) by early 2024. As houses tend to come with a higher purchase price, your deposit requirement will also be greater. If affordability is a priority, an apartment may offer a more accessible entry point into the property market.

Location

Apartments are typically located in or near city centers, providing easy access to work, dining, shopping, and entertainment. This can be ideal for individuals who prioritize convenience and shorter commutes. Conversely, houses are more commonly found in suburban areas, offering more space and a quieter environment. Location is subjective—some may value the hustle and bustle of the city, while others may prefer a peaceful suburban lifestyle.

Lifestyle

The size of the property plays a significant role in determining which type of home will suit your lifestyle. For singles or couples without children, an apartment may be a more practical choice, as it requires less upkeep and offers lower maintenance. However, for growing families or those who value space and privacy, a house may be a better fit, providing extra bedrooms, a garden, and room for expansion.

Future Plans

Think about where you see yourself in the coming years. If you plan to start a family or need extra space for guests, a house may be the right choice to accommodate your evolving needs. On the other hand, if your plans involve relocating or you prefer a low-maintenance property, an apartment could be a more suitable option. Your future intentions can help determine the best long-term investment.

Amenities

One of the advantages of apartment living is the availability of amenities. Many apartment complexes offer shared facilities such as gyms, swimming pools, and communal gardens, which may not be present in houses. If you value these extras, keep in mind that apartment living often involves strata fees to cover the maintenance of such amenities. It’s important to evaluate whether these benefits align with your lifestyle preferences and if you’re willing to absorb the additional costs.

Resale Value

When it comes to resale value, houses tend to appreciate more quickly than apartments, though the housing market can be unpredictable. Houses often offer greater potential for capital growth, making them a more lucrative investment in the long run. However, apartments in sought-after locations may also see solid returns, particularly if there is strong demand for rental properties. Assessing the property market and understanding future trends can help you make a more informed decision about the potential resale value of your home.

Conclusion

Choosing between a house and an apartment as a first-time homebuyer depends on a variety of factors, including your budget, lifestyle preferences, and long-term goals. If affordability, convenience, and low-maintenance living are top priorities, an apartment may be the ideal choice. Alternatively, if you seek more space, privacy, and room for future growth, a house may better suit your needs.

Ultimately, it’s important to think ahead and choose a property that not only meets your current requirements but also aligns with your evolving lifestyle and financial plans. Careful consideration of all these factors will help ensure that your first home purchase is a sound investment for both your present and future.

Buying a House Versus and Apartment
Consideration	Apartment	House
*Affordability*	Apartments are typically more affordable and often located in prime areas that may be out of reach if you were buying a house	Higher upfront costs, such as stamp duty, inspections, and potentially LMI (if applicable), are required. You may need to save a larger deposit for a house
*Maintenance*	Low maintenance – Building management handles common areas and exterior repairs.	Higher maintenance – Homeowners handle all tasks like lawn care, roof repairs, and general upkeep
*Security*	Often includes security features like CCTV, 24-hour guards, and gated communities	Security depends on location and individual measures like alarm systems
*Amenities*	Access to shared facilities like gyms, pools, and community centres	Any additional facilities must be installed and maintained by the homeowner
*Privacy & Space*	Limited privacy and space due to proximity to other units and shared walls	Greater privacy and more space, including backyards and distance from neighbours
*Renovations*	Limited options due to building management rules; some renovations may require approval	Full control to customise and renovate both interior and exterior
*Location*	Often located in central areas or near public transport, workplaces, and cultural attractions	Can be located in suburban or rural areas, which may require longer commutes but offer larger properties
*Investment Potential*	High rental demand in urban areas; renovations can boost resale value	Can build significant equity over time, with potential tax benefits for mortgage interest and property taxes
*Flexibility*	Easier to sell or rent; good for those who value flexibility and mobility	Less flexible due to the higher costs and effort required to sell or relocate
*Market Risks*	May face slower value growth, which could impact resale returns	Higher exposure to market fluctuations, but long-term appreciation potential is stronger
*Utility Costs*	Lower utility bills due to smaller size	Higher utility bills because of larger size and additional features
*Suitability*	Suitable for first-time buyers, those on a budget, or people seeking low-maintenance living	Ideal for those looking for long-term stability, privacy, space, and higher appreciation potential

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Why Asset Protection Is Essential for First Home Buyers and Property Investors

For first home buyers and property investors, asset protection is a crucial yet often overlooked aspect of financial planning. As you embark on the journey of purchasing your first home or investing in real estate, securing your assets from potential risks and liabilities should be a top priority. Here’s why asset protection is vital and how you can safeguard your investments effectively.

Understanding Asset Protection

Asset protection involves strategies and legal structures designed to shield your assets from potential risks such as creditors, lawsuits, or unforeseen financial difficulties. For first home buyers and property investors, this means taking steps to protect your property and investments from threats that could compromise your financial security.

Shielding Against Legal Claims

One of the primary reasons for asset protection is to safeguard your assets from legal claims. In the event of a lawsuit or legal dispute, your personal assets could be at risk if you’re found liable. For property investors, this is particularly pertinent as investment properties can be subject to various legal challenges, from tenant disputes to property-related accidents. By employing asset protection strategies such as creating trusts or holding property in a company structure, you can reduce the risk of personal liability.

Protecting Against Financial Risks

Investing in property involves significant financial outlay, and with it comes the risk of financial strain. Unexpected events such as market downturns, high vacancy rates, or sudden repairs can impact your cash flow. Asset protection strategies can help mitigate these risks by separating your personal finances from your investment assets, ensuring that a financial setback in one area doesn’t jeopardize your entire financial well-being.

Ensuring Financial Privacy

Asset protection also plays a role in maintaining financial privacy. By structuring your investments through entities such as trusts or companies, you can keep your personal financial details confidential. This separation helps protect your personal information from public scrutiny and potential misuse, especially in high-stakes investment scenarios.

Facilitating Succession Planning

For property investors, asset protection is integral to effective succession planning. Properly structured asset protection can ensure that your investment properties and other assets are passed on according to your wishes, minimizing disputes and tax implications for your heirs. Trusts, for instance, can be used to manage and distribute assets efficiently, providing peace of mind that your estate will be handled in line with your plans.

Enhancing Risk Management

Effective asset protection contributes to overall risk management. By understanding and implementing strategies to protect your assets, you can proactively address potential risks before they become significant problems. This includes setting up appropriate insurance coverage, maintaining detailed records, and employing legal structures to mitigate exposure to risks.

How to Implement Asset Protection Strategies

Consult with Professionals: Seek advice from financial planners, accountants, and legal experts specializing in asset protection. They can help you tailor strategies to your specific circumstances and ensure compliance with relevant laws and regulations.
Consider Legal Structures: Explore different legal structures such as trusts, companies, or joint ventures to hold your assets. Each structure offers distinct benefits in terms of liability protection, tax implications, and management flexibility.
Obtain Adequate Insurance: Ensure that you have comprehensive insurance coverage for your property and investments. This includes property insurance, liability insurance, and income protection insurance to cover potential risks.
Implement Risk Management Practices: Regularly review and update your asset protection strategies to address changing circumstances and risks. This includes maintaining accurate records, conducting risk assessments, and staying informed about legal and market developments.
Plan for the Future: Develop a clear succession plan for your assets and investments. This involves making decisions about how your assets will be managed and distributed in the event of your absence, ensuring that your wishes are honored.

Conclusion

Asset protection is a fundamental aspect of financial planning for both first home buyers and property investors. By implementing effective strategies to safeguard your assets, you can reduce risk, ensure financial privacy, and facilitate smooth succession planning. Prioritizing asset protection not only enhances your financial security but also provides peace of mind as you navigate the complexities of property ownership and investment.

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Western Australian Government Incentives for Home Buyers

In Western Australia, prospective home buyers can benefit from a range of government incentives designed to make home ownership more accessible and affordable. These programs are especially valuable in today’s competitive housing market, where rising property prices and increased living costs can pose significant barriers. Here’s a look at some of the key incentives available to Western Australian home buyers in 2024.

First Home Owner Grant (FHOG)

The First Home Owner Grant is a significant initiative aimed at assisting first-time buyers. As of 2024, eligible Western Australian first home buyers can receive a grant of up to $10,000. This grant is available for new homes with a value up to $750,000. To qualify, buyers must meet certain criteria, including being an Australian citizen or permanent resident and purchasing their first home. This financial boost can help cover upfront costs such as deposit requirements and initial expenses.

First Home Loan Deposit Scheme (FHLDS)

The First Home Loan Deposit Scheme is another key program supporting new buyers. It allows eligible first-time buyers to secure a mortgage with a deposit as low as 5%, without needing to pay for lenders mortgage insurance (LMI). This scheme is particularly beneficial in reducing the financial burden of saving for a larger deposit, making home ownership more attainable for those who might otherwise struggle to meet traditional deposit requirements.

HomeBuilder Grant

The HomeBuilder Grant was introduced to stimulate the housing sector and support home buyers during challenging economic times. In Western Australia, the scheme provides a grant of $15,000 for new home builds and substantial renovations. To be eligible, construction or renovation contracts must be signed by specific dates and meet other criteria, such as the value of the property not exceeding $750,000. This grant can significantly offset the costs associated with building a new home or undertaking major renovations.

Stamp Duty Concessions

Western Australia also offers stamp duty concessions to ease the financial strain on home buyers. For first home buyers, there are exemptions and discounts available on stamp duty for properties valued up to $500,000. Additionally, if the property is purchased for a price between $500,000 and $750,000, a partial concession may apply. This helps reduce the upfront costs of purchasing a property and makes home ownership more financially feasible.

Keystart Home Loans

Keystart Home Loans is a state government initiative providing low-deposit home loans to eligible Western Australians. This program is particularly aimed at those who may not meet traditional lending criteria due to low deposits or other financial constraints. Keystart offers competitive interest rates and flexible lending options, making it easier for buyers to enter the property market.

Conclusion

Western Australian government incentives play a crucial role in supporting home buyers, offering various financial aids and concessions to make home ownership more attainable. Whether through grants, concessional schemes, or low-deposit loans, these programs are designed to alleviate some of the financial pressures associated with buying a home. Prospective buyers should explore these opportunities to take full advantage of the support available in their journey towards home ownership.

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How much money do you need to purchase a home or unit in Perth

The sizeable sums needed to secure and service a loan for a median-priced house are the result of 11 cash rate rises since May last year, which have slashed buyer borrowing power faster than prices and increased mortgage costs. With more rate rises still expected this year to slow down inflation, the biggest issue in the housing market is mortgage stress. We look at how much you need to earn to be able to afford a housing loan as well as what income levels are needed to avoid mortgage stress.

Although the house prices on the west coast continue to rise new Canstar modelling shows a Sydney buyer who purchased a house for about $1.46 million – the median price for the March quarter on Domain data – would have needed a gross annual income of $255,600 to have sufficient borrowing capacity to purchase with a 20 per cent deposit.

That is $50,700 more than was needed the previous March, despite a sharp fall in house prices since, and more than triple the $78,800 median pay of full-time employees last year, according to the latest Australian Bureau of Statistics figures. Average full-time earnings sit at $94,000.

Sydney house hunters need to earn more than $250,000 to borrow enough to purchase a typical home, while their Melbourne counterparts need almost $180,000, making homeownership near impossible for the average Australian. Brisbane and Perth buyers needed almost $145,000 and $124,000 respectively, requiring a pay rise of more than $27,000 from the previous year.

The table below sets out the data applicable to Perth.

How much income you need to purchase a unit in Perth and service the loan

	March 2022	March 2023	Change
Median house price	$364,054	$360,428	-$3,626
Loan amount (80% LVR)	$291,243	$1,167,885	-$107,469

Gross annual income (Single) required to…
Have sufficient borrowing power	$65,200	$78,500	$13,300
Avoid mortgage stress	$49,200	$70,200	$21,000

How much income you need to purchase a house in Perth and service the loan

	March 2022	March 2023	Change
Median house price	$633,762	$672,177	$38,415
Loan amount (80% LVR)	$507,010	$537,742	$30,732

Gross annual income required to…
Have sufficient borrowing power	$93,900	$123,900	$30,000
Avoid mortgage stress	$85,600	$130,800	$45,200

Notes:

The modelling assumed a single buyer purchased in March, when the cash rate was 3.6 per cent, with a 20 per cent deposit and no existing equity. It shows the income required to secure a 30-year loan with a variable mortgage rate of 6.13 per cent, and a 3 per cent interest rate serviceability buffer.

The cash rate has since lifted to 3.85 per cent and could rise again when the Reserve Bank meets on Tuesday.

Canstar group executive Steve Mickenbecker said the modelling showed how challenging the market was for first home buyers, and noted the situation had likely worsened since earlier this year – given another increase to the cash rate and an uptick in property prices. In Perth, a buyer would need a $30,000 increase in income as at March 2023, when compared to purchasing a home in 2022 – the average household income required in 2022 was $93,900 compared to $123,900.

“For single first home buyers, 99 per cent of them are going to be excluded from buying a house at the median price,” Mickenbecker said.

AMP Capital chief economist Dr Shane Oliver said first home buyers would find it almost impossible to get into the market at the median house price. “Prices are still down from their highs, so that is helping, but the roughly doubling interest rates are working against that,” Oliver said. “That means even if you have a 20 per cent deposit saved up, you’d be struggling to buy at the median.”

“Tax data shows that only 1 per cent or 2 per cent of Australians earn above $180,000 a year, so you’d have to be relying on having two high-income earners, or alternatively, relying on the Bank of Mum and Dad to be able to buy,” he said.

Oliver said with inflation at 6.8 per cent, there was likely another rate rise to come on this month, or next month. The Agency’s Catherine Murphy said first home buyers had been able to stretch themselves to buy at close to the median house price, when interest rates were at record lows, but were now priced out.

Source: Canstar & smh.com.au

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Where is the Perth property market heading?

REIWA’s 2023 property market quarterly update estimates Perth house prices will remain steady in the first half of 2023, while rent prices will continue to increase. “Perth’s median house price increased marginally in the first quarter of the year, rising 0.9 per cent from $540,000 at the end of 2022 to $545,000 at the end of March,” REIWA CEO Cath Hart said. If you are an investor then the prospects for capital growth are stronger in the West than the East coast.

The local market has shown remarkable resilience in the face of 11 interest rates rises, backed by strong demand and affordable prices. It is expected that prices will continue to hold firm in the next quarter even if there are one or two more rate rises. However, should we see a period of interest rate stability or even cuts, we would expect to see consumer confidence rise, boosting activity and prices. Low price growth is still a strong possibility across the remainder of 2023.

It is a different story in the rental market, with prices up 5.8 per cent since the end of 2022. “This has been fuelled by declining supply and increasing demand and more rent price increases are expected this year,” Ms Hart said.

Perth sales market

Properties continued to sell quickly in the first quarter of 2023, with good numbers at home opens and many properties still receiving multiple offers. Homes sold in a median 13 days in March,” Ms Hart said. The number of listings for sale hit a twelve year low of 6,931 at the end of December 2022 and we have seen the number of properties for sale drop even lower than that recently.

Properties are still coming to the market at good numbers, and at levels higher than pre-COVID, so the low number of listings on www.reiwa.com is more a reflection of the speed of sales, rather than a lack of properties.

Demand for housing in WA is expected to stay relatively strong, supported by population growth. WA’s population grew 1.8 per cent in the year to September 2022 and the State Government’s recent Mid-Year Budget review forecast further growth of 1.5 per cent in 2022/23 and again in 2023/24.

As more people arrive in WA, this will maintain the demand for housing and keep listings low. And with such tight rental conditions, more people will look to buy rather than rent. Long-awaited building completions remain a wild card for both sales and rental markets. As more COVID building-incentive new homes are completed, there may be an easing in both markets, but this will be offset by population growth according to the REIWA.

New home approvals have also been falling, so this will also affect housing supply in the future, which will result in increases in prices.

Perth rental market

2023 has already proved to be challenging for tenants. The vacancy rate was 0.7 per cent in January, February and March. Homes are leasing in a median 14 days and property managers are still seeing queues at home opens and receiving multiple applications. Declining supply and increasing demand are at the heart of the issues the rental market is facing. Property investors are not entering the market in the post COVID era with 800 fewer rental properties available now than at the start of the year and a decline of 19,200 since January 2021. Although there is interest from Eastern State investors who see value in the WA market, it hasn’t been enough to replace the properties that have been lost.

The proposed changes to the Residential Tenancies Act (RTA), and calls for other reforms such as rent capping and limiting when increases can take place, remain a concern for the remainder of 2023.

According to the REIWA, he vast majority of rental stock in WA is owned by small, private investors and they are listening to the debate over rental reform in various states and they’re nervous about some of the changes being considered.

There are already significant pulls to exit the WA market with 10 interest rate rises, a bulk of mortgages set to switch from fixed to variable-rates this year and a broad recovery in WA home values post-COVID.

Regional WA

Market conditions across regional WA are expected to remain strong in 2023. All regional centres saw median price growth in 2022 although, like Perth, the rate of growth has been slowing. Regional centres are also experiencing low vacancy rates and rising rent prices and this will continue. Regional centres will also benefit from population growth. It won’t just be Perth that feels the effects of population growth, particularly interstate and overseas immigration,” Ms Hart said. Some migrants will move to the regions, which will support these property markets as well.

WA Rental Reforms – What this means for Landlords and Tenants

With the announcement of reforms to the Residential Tenancies Act 1987 last week, there are plenty of questions about what the reforms will mean in practice, how they will be implemented, and when. We have compiled a summary of the reforms and the most Frequently Asked Questions.

What is the Residential Tenancies Act?

The Residential Tenancies Act 1987 (or RTA) is the law that outlines the rights and responsibilities of tenants and landlords in Western Australia, as well as providing the process for settling disputes.

Why is the RTA important now?

Delays in new home building completions caused by labour and material constraints over the past couple of years have meant the supply of housing has just not kept up with demand. Perth’s vacancy rate is currently sitting at 0.7% making it incredibly difficult for tenants to find a home. For owners, soaring interest rates and invasive regulatory changes are causing them to leave the rental property market, with more than 19,200 rentals lost across WA since January 2021. By contrast, more than 70,000 people have chosen to make WA their home since then.

It’s been more than 10 years since the State’s rental laws have been reviewed and a lot has changed. After a three-year review, the State Government has announced an update to the RTA that if feels will balance the demands of both renters and landlords in a challenging environment by providing greater flexibility for prospective tenants, as well as investor certainty and ownership control.

What has the State Government announced?

After much consideration, the State Government has announced the following proposed changes to the RTA:

no changes to no – grounds terminations
prohibiting the practice of rent bidding, with landlords and property managers unable to pressure or encourage tenants to offer more than the advertised rent
reducing the frequency of rent increases to once every 12 months
tenants will be allowed to keep a pet or pets in a rental premises in most cases
tenants will be able to make certain minor modifications to the rental premises and the landlord will only be able to refuse consent on certain grounds
the release of security bonds at the end of a tenancy will be streamlined, allowing tenants and investors to apply separately regarding how bond payments are to be disbursed
disputes over bond payments, as well as disagreements about pets and minor modifications will be referred to the Commissioner for Consumer Protection for determination

What do these changes mean for me?

The State Government believes a balance has been struck between the need for reform and the need to incentivise investment that builds rental supply in Western Australia. For both renters and prospective renters, these changes will allow for a more modern lease, with more freedom and flexibility to choose how they can turn a house into a home.

For investors, these changes will not unduly impact the rights of the property owner. These proposals will also draw a line under tenancy reform in Western Australia, which will encourage certainty for investors currently in the market, as well as prospective investors.

Source: REIWA

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How much money do you need to purchase a home or unit in Perth

Where is the Perth property market heading?