The cycle ride that is ‘The Hunger Games on wheels’

It’s a cycle race across that makes the Tour de France seem like a luxurious romp.
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On Saturday at 6am, 70 riders will set out from Fremantle on the first Indian Pacific Wheel Race, a gruelling solo ride that will take them almost 5500 kilometres across the Nullarbor then through the Adelaide Hills and Snowy Mountains to the Sydney Opera House.

And because it’s what’s called an unsupported race, they will be either carrying all the food, water and repair supplies they need or buying them at service stations, supermarkets and bike shops along the way.

The leaders are expected to ride for more than 20 hours a day, throwing a swag beside the road for a few hours’ sleep before setting off again.

“It’s almost like The Hunger Games on wheels,” organiser Jesse Carlsson says. “Riding is only one part of the puzzle.

“The logistics of it – staying safe and making sure you’re well fed and well watered – are critical. It doesn’t matter how fast you are, if you run out of food, you’re not going anywhere.”

Carlsson, who is also riding in the race, was inspired by the feats of pioneer outback cyclists as The Overlanders.

“There’s this rich history of ultra endurance cycling in that’s largely been forgotten,” he says. “Even back in the 1890s, when the bike became more widely available, these adventurous young blokes headed across the desert with no known water sources, no GPS or anything like that, just to see if they could make it to the other side.”

Carlsson has ridden similar unsupported solo races overseas, coming second in the Tour Divide, which is 4500 kilometres off-road from Canada to the US-Mexican border, and winning the Trans Am Bike Race, which is 6800 kilometres from the US west coast to the east coast.

“A lot of riders here who have talent lament the fact they can’t find the time or money to head over so I thought let’s put something on and have a big showdown.”

While professional cyclists have support crews that include managers, mechanics and masseurs and watch their diet closely, the modern Overlanders won’t have any of those luxuries.

“They’ll be getting familiar with pies, sausage rolls, potato cakes and all that greasy service station food,” Carlsson says. “It’s not a gourmet tour across by any means.”

One of nine women racing, Sarah Hammond, expects the constant pain to be “horrific” as she rides hard.

“It could be your knees hurting or your back hurting,” she says. “I’ve strained my neck in the past, I’ve had altitude sickness, I’ve had sleep deprivation where you’re falling asleep at the bike and everyone suffers saddle burn and cysts and blisters.

Taking on the race, she believes, involves “a special kind of crazy.”

To buy supplies along the way, Hammond will carry a credit card, cash in case it’s not accepted and coins for any vending machines she needs to use for a snack or drink overnight.

Journalist and author Rupert Guinness, who is also racing, thinks it could be one of the toughest unsupported, solo races in the world given the likely extremes of weather.

“The hardest thing will be the inevitable moment – not just once but a number of times – when the rationale will be to stop and say ‘this is ridiculous’ and have to push through that,” he says. “Those moments will come.” Three of the racers

Paul Ardill, 74

A veteran cyclist who has previously ridden from Perth to Sydney, he is aiming to finish in 24 days. One of his reasons for racing is to get his mind off his triathlete daughter Cheri Lutz’s sudden death last year.

Attitude: “My wife has express posted me to Perth and said I’ve got to find my own way back.”

Sarah Hammond, 36

The Melbourne cyclist started riding “the crazy stuff” with the Trans Am Bike Race across America last June, losing the lead when she accidentally rode 100 kilometres off course. She thinks this race will be harder because it’s more remote.

Attitude: “You see some pretty amazing stuff while you’re suffering.”

Rupert Guinness, 55

Inspired by the pioneer outback cyclists, the longtime cycling journalist hopes to finish in three weeks. Professional riders Richie Porte and Rohan Dennis think he is “mad”, which he finds difficult to argue against.

Attitude: “Part of my interest is seeing, when I do bottom out emotionally and physically, how I handle those moments.”

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The architects who shaped Canberra

Over the past century many architects have added their “language” to the Canberra landscape; like our first private practitioner, Kenneth Oliphant, through to 1960s entrepreneurs Pettit & Sevitt who brought architect-designed homes to a broader market.
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Contemporary architects carry on that responsibility and their creations and opinions are not only their legacy, but an important contribution to Canberra’s heritage. THENKenneth Oliphant

“Oliphant came to Canberra after his Melbourne firm won a competition to design houses here,” says David Hobbes, an associate at Philip Leeson Architects, who is a joint heritage adviser to the ACT government.

“At that time, most of the homes and buildings in Canberra were designed by the government and he was sent to supervise the construction of the winning designs.”

Hobbes says it wasn’t long before Oliphant was approached to design homes for Canberra’s middle class and his early work began to populate parts of the inner south and north.

Two of Oliphant’s more well-known achievements include historic Calthorpe’s House and the Barton Court apartments.

“Part of his appeal was that he wasn’t government and that his designs were individual, detailed, elegant, sit well on their sites and are enhanced by their gardens,” Hobbes says.

“His buildings definitely have contemporary cache.” Pettit & Sevitt

These Sydney builders were creatures of the swinging sixties who introduced mass market architecture into project building.

Pettit & Sevitt made their name in Sydney where their split level and pavilion-style homes created a big impact, particularly on Sydney’s North Shore with its steeply sloping bush blocks.

“Their style was particularly suited to our sloping blocks in suburbs like Aranda, Pearce and Torrens and they worked well with native gardens,” Hobbes says.

“When you walk around their designs, you get a real sense of how they created the illusion of space. The actual floor space might be quite modest, but the split-level and positioning of windows create a feeling of spaciousness.” NOWTerry Ring

Terry Ring is the principal of Kingston-based Architects Ring & Associates. He believes the holy grail for architects is to create a sense of place in every home they design.

“In Latin, that’s known as ‘Genius Loci’ and it really distils into that feeling you get in a home when it feels just right,” he says.

Many of his designs are in Forrest, Deakin and Red Hill.

Rings says his designs are guided by three principles: scale, proportion and balance.

“You have to get those right or a home is just not going to work,” he says.

“And it’s got to work in its street setting – you have a responsibility to the other homeowners that your design is going to improve their amenity, not detract from it.” Tony Trobe

Tony Trobe is a well-known architectural commentator on ABC Radio and principal of TT Architecture, also based in Kingston.

The multiple award-winner is concerned about the approach to home design in new suburbs.

“Their homes seem to be conceived with either of two approaches; uniformity or the personal whim model,” he says.

Trobe advocates a design focus at the street level rather than the house or the whole suburb.

“The identity of the street should be king,” he says.

“One might opt to live in a street with a cluster of simple modernist boxes, traditional Manuka cottages, Frank Lloyd Wright Prairie houses or Aussie shed-styles.

“Each street needs to have a coherent theme. Our new suburbs should not, in Menzies words, ‘ruin a good sheep paddock’.”

Old meets new

The meticulous attention to detail, excellent proportions and solid construction have allowed Canberra’s Oliphant homes to stand the test of time.

For architect Rodney Moss and his wife Christina, pictured, it was one of Oliphant’s early designs – a 1930s heritage-listed property in Barton – that offered an ideal starting point for their family home.

Designed in 1988, Rodney’s award-winning contemporary extension is concealed behind the original cottage facade. While the front rooms remain in their original condition, light-filled open-plan living extends out the back and onto the alfresco deck and swimming pool.

The home’s high-pitched roof – another hallmark of Oliphant’s work – gives Rodney his studio space.

They are the home’s third owners. Its first owner was Alf Stafford, the personal driver for a long line of prime ministers from Menzies through to Whitlam.

Alongside the beautiful design, the Mosses love the history of Canberra’s early homes and their links to the city’s foundation.

“We hanker for something that’s rooted in the past,” Rodney says. Cover property

42 National Circuit, Forrest

Designed in 1927, Alcorn House is a classic example of Kenneth Oliphant’s early Canberra work.

The heritage-listed house boasts period details throughout and a mix of formal and informal living areas.

Positioned on a 1202-square-metre block, the residence is set among established gardens, providing a peaceful, private setting for entertaining.

The open-plan family and meals area opens onto a sunny terrace, overlooking the heated swimming pool.

Modern inclusions in the kitchen and bathrooms are sympathetic to the home’s original design.

The gourmet kitchen is equipped with stone benchtops, gas cooking and high-quality appliances.

All bedrooms are generously proportioned and two feature en suites and walk-in wardrobes. Two secondary bedrooms include built-in wardrobes and a fifth room could be used as a home office or study.

It is conveniently within walking distance to both grammar schools, the Parliamentary Triangle and Manuka’s boutiques and restaurants.

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Northbourne Avenue renewal draws strong residential interest

Geocon’s mega Northbourne Avenue project to shape light rail corridorLight rail already a major influence for Canberra property developersNorthbourne Avenue transformation continues with new land for sale at Lyneham
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Future Northbourne Avenue residents are looking past the current construction site and towards the thoroughfare’s future.

The first major development at the city end of the light rail corridor, Geocon’s 250-unit complex Midnight, is officially released on Saturday with the opening of the display suite. However, 150 units have already sold.

Managing director Nick Georgalis said the company had sold about 10 apartments a day over the past two weeks.

“Inquiries and interest on this particular project have been through the roof,” Mr Georgalis said.

Mr Georgalis said all unit types from one-bedroom apartments to penthouses have received strong interest and three penthouses averaging $1.4 million were among the apartments that have sold.

The nine-storey building will be built on the existing NRMA House site at 92 Northbourne Avenue, opposite the future Elouera Street tram stop.

In addition to residential apartments, the $185 million project will include a 183-room Abode Hotel, 2500 square metres of commercial space and 200 public care spaces.

Mr Georgalis said Midnight would act as “a precinct within a precinct” and connect Northbourne Avenue to Braddon’s shops and restaurants.

“The location is by far the most prominent in Canberra, but it offers value for money,” Mr Georgalis said.

Trees along Northbourne Avenue’s median strip will be felled by the end of March to make way for the light rail.

Overnight construction work on the tram line has been criticised by current residents.

“[Northbourne Avenue] looks like a war zone at the moment but in 2019, 2020 it’s going to be an avenue that represents what Canberra is,” Mr Georgalis said.

“It’s not the bush capital, it’s an emerging city.”

Mr Georgalis said strong interest in the Midnight project bodes well for other developments slated for the corridor.

A 30,000-square-metre site in Dickson sold for $40 million to the Art Group in August and will include a 697-unit development.

The Art Group will also build a nine-storey, 209-unit complex at 217 Northbourne Avenue in Turner.

Tenders for a 25,000-square-metre site former public housing site in Lyneham closed on Wednesday. It will accommodate up to 500 apartments.

“For the first cab off the rank I think it’s an awesome result,” Mr Georgalis said.

“I think everyone is going to be selling quite quickly when they do release their projects.”

While there has been debate around the supply of apartments in Canberra, Nick Georgalis said the rate of sales indicated an undersupply.

He said the ACT’s growing population, which is expected to surge by 25,000 people over the next four years, would add to the demand.

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Journey of transformation

4 Davenport Street, Ainslie$1.1-$1.2 million 4 bedrooms, 2 bathrooms, 5 car spaces
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The “worst house in the best street” has had an amazing transformation in this Ainslie home that now offers stylish contemporary living.

Jane Goodall and Chris Parkinson bought the 1959, three-bedroom, one-bathroom, old “govie” around 2015.

“We needed somewhere to live while our new home was being built in Downer. After we’d moved in, we started to wonder what we could with it,” Jane says.

“It was on a good-sized block and in a great location close to schools and both the Ainslie and Dickson shops.”

Jane’s love of home renovation and design led the couple on a journey of transformation for a tired, old building.

“We researched what people were looking for in a home and looked at how we might be able to incorporate those features,” Jane says.

Close liaison with the selected builders determined a previous extension at the back of the home could be repurposed along with the creation of a smaller extension at the front.

The house now presents with two zones: the front contains the entry, a study nook, four bedrooms, the master with en suite, a main bathroom and a living room.

This flows into the garden wing that features the kitchen, dining and family room.

“We put a lot of emphasis in the creation of a chef’s kitchen – it has three ovens,” Jane says.

“That’s probably an indicator of our approach to the innovation. We didn’t want it to simply present as a renovation ‘flip’, but as the outcome of a thoughtful redesign where no expense was spared.”

She believes the home would suit a young family, a professional couple or downsizers with its manageable and low maintenance 777-square-metre block.

Auction: Saturday, March 25, 10.30am, onsite. Inspect: Saturday, March 18, 9.30am-10.15am; Wednesday, March 22, 5pm-5.30pm; Saturday, March 25, 10am-10.30am. Agent: Holly Komorowski, home.byholly, 0434 973 987.

4 Harpur Street, Garran $860,000-plus 3 bedrooms, 2 bathrooms, 3 car spaces

Garran was considered one of Canberra’s outer suburbs when this home was built on Harpur Street in 1967.

Fifty years later, this solidly built, three-bedroom, family residence has now come onto the market for the first time.

The homeowner’s daughter, Jenny Waldie, remembers the fun she and her brother had playing on the building site as the home, designed by her parents, was gradually realised.

“They really liked the size of the block and its views,” she says.

“Mum and dad were also keen to create a house with maximum ‘useability’ that also took advantage of its north-facing aspect.”

Two large living areas capture the sun and Jenny recalls many casual meals in the “sunroom” that opens onto an outdoor entertaining area.

At the front of the home is a large kitchen that flows into the formal dining room. There are three generous bedrooms all with built-in robes. The main bathroom has a bath and shower and a separate toilet has a second shower.

Beneath the home is a triple garage, a workshop, cellar and plenty of storage.

Auction: Saturday, March 25, 1pm, on site. Inspect: Saturday, March 18, 1pm-1.30pm; Saturday, March 25, 12.30pm-1pm. Agents: Jane Kusetic, Chris Wilson, Cream Residential0408 662 119, 0418 620 686.

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Canberra tenants wait weeks for bond refunds over peak period

Canberra tenants reportedly waited up to nine weeks to get their rental bonds back over the Christmas and New Year period due to processing delays.
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Access Canberra has attributed “minor delays” to “increased transactions” at the time but property managers have expressed frustration with the agency’s lack of resources during the industry’s busiest period.

Former tenant Joel Steenbergen??? waited six weeks for his bond money to be deposited after applying for a refund via his property manager in December.

After returning from an overseas trip in January he began making enquiries with his property manager and then Access Canberra, which oversees bond lodgements and refunds in the ACT.

When an amount was finally transferred in February, half the refund was missing.

“The reason [for half the bond being refunded] was they didn’t have my wife’s details, so they had to split it into two payments. They sent the rest as a cheque about a week later,” Mr Steenbergen said.

“It put us out a little bit. I imagine other people buying another house or moving house, with all the costs, not getting the bond back for a month or two months is a bit of a joke, really.”

Landlords lodging new bonds were also affected by delays of up to several weeks over the summer months.

A Canberra agency that wished to remain anonymous said the delays, which have since been resolved, meant some outgoing tenants had to fork out large sums of money at the beginning of a new lease before their previous bond had been refunded.

The agency’s spokeswoman said delayed bond lodgements at the beginning of new leases had also sparked issues.

In one instance, a five-week processing delay resulted in one tenant breaking their lease early and vacating a rental property before the bond money had been charged to their credit card.

“The peak real estate rental period is November to the end of January and mid-February,” the spokeswoman said.

“We have lots of tenants moving in and out of rental bonds at that time and they [Access Canberra] haven’t accommodated that peak.”

The spokeswoman said she had heard similar complaints about delays from other businesses and property managers in the ACT.

Stricter administrative guidelines had also caused delays, including discrepancies between first names such as Chris or Christopher.

“We understand a process needs to be followed but it’s not helping move things along,” she said.

Tenants’ Union ACT executive officer Deb Pippen said tenants had reported delays of as long as nine weeks earlier this year.

An Access Canberra spokeswoman said the agency worked as quickly as possible to “process payments across a range of services, including rental bonds”.

“Minor delays in the processing of rental bond refunds occurred as a result of increased transactions over the Christmas/New Year period,” she said.

“Access Canberra worked to progress refunds as quickly as possible and normal processing timeframes of 10 days resumed within two weeks.”

The spokeswoman said a number of factors could affect processing timeframes, such as disputes made by tenants, landlords or managing agents, or the provision of insufficient information.

Ms Pippen said long processing delays were unusual and advised tenants to put in bond applications themselves, as soon as they moved out of a rental property.

“A lot of tenants don’t know that they can put in an application themselves and they rely on the agents,” she said.

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The plan that could wipe $40,000 off the cost of a house

Housing Perth 070808 AFR pic by Erin Jonasson. Housing affordability, first home buyers, interest rate rise and the mortgage stress on middle income families, property, home, house, residential realestate, property for sale, generic hold for files, AFR first use please. SPECIALX 00068604FOR SALEHOME LOAN Photo: Erin JonassonThe Parliamentary Budget Office has costed a proposal that would kill stamp duty and replace it with land tax, saving home buyers up to $40,000 in Sydney and $55,000 in Melbourne, while delivering billions of dollars to fund schools and hospitals.
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The costing will put land tax back up for debate when Parliament returns next week as the government looks to mark its authority on the housing affordability crisis less than two months out from the federal budget.

Both the NSW and Victorian governments have thrown their weight behind broader stamp duty tax reform and Treasurer Scott Morrison has indicated his support for a transition to taxing land.

“When you talk about tax reform, this is far and away the biggest prize on offer,” said John Daley, the chief executive of independent think tank the Grattan Institute.

Under current regulations, home buyers pay tens of thousands of dollars in stamp duty, creating an additional hurdle for people looking to enter the market amid soaring property prices in Sydney and Melbourne.

Removing stamp duty and implementing an annual land tax on all newly purchased homes would help level the playing field and generate billions of dollars in annual returns to the NSW and Victorian budgets, while also relieving federal government spending over a 15-year-period.

Under the policy submitted by the Greens and backed by the Grattan Institute and the Council of the Ageing, home buyers would no longer stump up to $40,000 in stamp duty when purchasing a property worth $1 million in Sydney. In Melbourne, a home buyer would save $55,000 stamp duty on a property of the same value.

Research from the Grattan Institute shows an annual tax of $1 per every $1000 of a home’s value would cost the median Sydney household $845 a year in tax and the median Melbourne home $623 a year.

To offset the cost of losing lucrative stamp duty payments, the Commonwealth would have to loan money to the states. The loans would peak in 2020 when the hit to the budget bottom line would grow to $800 million. Rising land tax revenues would enable the states to pay back the loan by 2030.

The Parliamentary Budget Office estimates that in the next four years alone the tax would generate $2.3 billion in revenue for the states, but warned the overall costings were of low reliability due to the variations in number of properties sold across each year.

Greens Leader Richard Di Natale said the prospect of property ownership had turned into a nightmare for many young people.

“Together with Capital Gains and negative gearing reforms, swapping stamp duty for a broad-based land tax would fix the broken system and make it easier for young people to live the n dream,” he said.

In December, Treasurer Scott Morrison pushed the states to transition to a land tax at the state and federal treasurers meeting.

He praised comments from NSW Treasurer Dominic Perrottet that reforms would free up housing stock for young buyers by encouraging them to move more.

In NSW the government provides concessions on stamp duty for new properties under $650,000 but with a median house price of more than $1 million few are sold below that price.

Last week Victoria abolished stamp duty for first home buyers purchasing a property valued below $600,000.

On Friday, Mr Perrottet said he welcomed dialogue with the Commonwealth “on sensible ways to reduce the tax burden and improve the efficiency of the tax system”.

A spokesman for Mr Morrison said “various ideas were always flagged on big issues,” but “the government won’t be drawn on budget speculation.”

Mr Daley urged the states and Commonwealth to work together on the basis that the long term benefits would outweigh the short term political pain.

“It would be very difficult to find any policy analyst or economist who doesn’t think it’s a good idea,” he said.

A tax on land is considered among the most efficient of all taxes because it is hard to avoid, targets the rich more than the poor, and unlike upfront taxes, does not discourage people from buying things like a GST does, and therefore provides both an economic and budgetary boost.

“Stamp duties are inefficient because they lead to people living in a house much smaller or larger than they need to because they don’t want to pay more stamp duty,” said Mr Daley.

Council of the Ageing chief executive Ian Yates said the policy would help older ns but would need to include provisions for rates to be deferred so new taxes did not hit pensioners in the short term.

“Stamp duty is a hurdle for older people to relocate or to ‘right size’ because they want something that is modern and in the same area and that is a financial challenge,” he said. cut

He urged Canberra to unite behind the change.

“When there is unanimity on the benefits of the transition it’s time we collectively applied our mind to how we get there,” he said.

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Bold design to delight downsizers

Maple, 24 Gawler Street, Deakin $1,425,000-plus
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The exteriors of the seven townhouses in Deakin’s Maple development are bold, with modern tones and angular facades.

The clean lines and smooth angles are carried through to the interiors of the homes.

Developer Daniel Flett, of Foresight Property Group, describes the design as “semi-Japanese inspired”. This inspiration carries throughout the development, popping up in touches such as an internal courtyard.

“I think it’s going to be quite a striking lower level,” Flett says.

He says design features such as raked ceilings add impact and create “significant volume in that lower level”.

The interior courtyard “will allow light to penetrate all the way through that floor” Flett says.

These striking townhouses have been designed to suit downsizers.

Flett says a downstairs master bedroom means residents have all their critical living on one for floor, which gives residents a lot more flexibility.

Downstairs, two spacious living areas are filled with natural light, falling in from generous windows to the courtyard and rear yards.

Large windows in the rear living area facilitate a seamless transition to the north-facing rear courtyard with covered space for entertaining. Kitchens are functional, with a walk-in pantry.

The homes sit at the heart of leafy and well-established Deakin, barely two minutes’ walk from the local shops. A local supermarket and cafe mean the essentials are close to hand, Manuka shops are just five minutes’ drive away and Canberra’s centre is also within easy reach.

An active lifestyle beckons with a range of parks and trails in the nearby Canberra Nature Park, while Lake Burley Griffin is a stone’s throw away.

Deakin Preschool, Canberra Girl’s Grammar and Forest Primary School are all close by. A bit out of the bustle of central Canberra, Deakin’s residents still enjoy easy access to cultural hubs such as the Kingston Foreshore.

Maple also offers buyers flexibility.

“We’ve got the ability to customise finishes at this point in time,” Flett says.

Space is plentiful, with most homes featuring three to five-car garages. Completion is expected in 10 to 12 months.

Inspect: Saturday, 10.30am-12.30pm. Agent: Darren Bennett, Ian McNamee & Partners Real Estate, 0418 633 806.

Feature we love: Interior courtyards make for a fresh and light-filled interior with a twist.

Who lives here: The comfortable suburban lifestyle of inner south suburbs such as Deakin and Red Hill holds plenty of appeal for families and downsizers.

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How the A-list were wooed to the Golden Slipper

“Oh god no, I’m not going to the boondocks,” cried Sydney’s A-list once upon a time when invited to the Golden Slipper.
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Now, despite the need to pack a lunch for the trip out to Rosehill, the increasing contingent of the glossy posse will be trackside at what n Turf Club chief Darren Pearce calls “a world-class event putting western Sydney on the map”.

“Our audience take their racing very seriously, not themselves,” he said.

The Night Manager star Elizabeth Debicki will be the biggest (human) name to grace the Rosehill Racecourse, an arena that’s been jazzed up with a $28 million refurbishment. She will hold court inside the plush Longines enclosure alongside corporate bigwigs and the Instagram famous.

It’s the second time the luxury watchmaker has sponsored the race day and while seahorses may be better equipped to take part in the five group one races, a who’s who of “influencers” and racing royalty will be flocking out to the ‘burbs for an afternoon of Winx, whisky and possible winnings. To ensure invited guests make the 20-odd kilometre trek from the CBD they will be chauffeured out west via “luxury coach”.

Horse trainer James Cummings, racing royalty Emma Freedman and Tom Waterhouse and social butterflies like I’m A Celebrity Get Me Out Of Here star Tegan Martin and Nikki Phillips will be treated to a three-course meal with more gold cutlery and scones with jam than a Buckingham Palace dinner party, bottomless goblets of Veuve Clicquot champagne and post-lunch whisky and cheese trolley.

“It’s a different crowd to events at Randwick as it’s an elite crowd who are there for the premier racing,” a Longines spokesperson told Fairfax Media.

“We are aligned with the biggest horse races around the world and Rosehill sees us able to meet our global standards. Our stipulations are that we have premium positioning right on the winning post and close to the track and we only get that out there. We also work with Michelin-starred??? chefs and the ATC’s catering service have impressed us with their ability to tweak the menu and offer full silver service dining.”

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Banks are itching to increase your mortgage interest rate

SYDNEY, AUSTRALIA – OCTOBER 30: NAB CEO Andrew Thorburn speaks at the NAB Full Year Results media conference at NAB House on October 30, 2014 in Sydney, . (Photo by Jessica Hromas/Fairfax Media) *** Local Caption *** Andrew Thorburn Photo: Jessica HromasIt was a gutsy call by the National Bank to raise mortgage interest rates on owner-occupier loans. It has opened the floodgates. Westpac was the first to follow and other banks are itching to do the same. It is not a matter of if – but when. It won’t be long before almost everyone’s mortgage will be more expensive.
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For the banks it was just about finding the right moment – the one that would be the least damaging for their public relations.

For the past six months banks – big and small – have been inching up rates on property investment loans, fixed-rate mortgages and interest-only loans etc but have resisted their desire to move on the elephant in the room – the owner-occupier variable interest rate. It’s the one that affects most homeowners, creates the biggest headlines and gets politicians foaming at the mouth.

The betting was always that Westpac would be the next, followed by the Commonwealth Bank and that ANZ would ultimately have to join the party or pay the financial price.

Undoubtedly the banks would rather time rate changes around a move by the Reserve Bank but this opportunity is not likely to present itself for a while yet – maybe not at all this year.

Inside the upper echelons on the major banks executives tie themselves in knots about the timing and the magnitude of rate moves.

They are paranoid about the six-monthly parliamentary grillings at the panel throw spears at bank bosses for misdeeds and anything that looks like they are disadvantaging customers in order to enhance profits. Hiking owner-occupier interest rates when the Reserve Bank hasn’t been the prompt puts them squarely in the line of fire.

It won’t be an accident that banks are moving almost immediately after the last round of hearings in Canberra because it will be another six months before they have to go back again.

It has been estimated that NAB and Westpac will boost their earnings on the back of this move on interest rates. The others can’t let this stand.

There would have been much debate inside NAB’s Melbourne bunker about how to sell this in the most palatable way.

In NAB’s case the rate change was dressed up quite well by including an announcement that first home owners would get a cut in their rate and investor loans would rise by more than owner-occupier rates.

The reality is that first home buyers are not constrained by interest rates, which are historically still very low. They are locked out of the market because they can’t afford a deposit on a loan – which in Sydney and Melbourne at least would be hundreds of thousands of dollars at a bare minimum.

And in a public relations sense, the community isn’t particularly sensitive to the increased costs of financing an investment property.

So what are these property investors going to do when hit by higher interest rates? Trouble is they can’t just move to another of the major banks for a better rate. All of them have been pushing up their home investor rates and none of them really want to take on many more investor customers because they are getting close to limits on growing investors loans set by the regulator, the n Prudential Regulation Authority. There is clearly no one attempting to grab market share in this product.

To a lesser extend the same applies for owner-occupier loans. With the Sydney and Melbourne markets experiencing huge price rises over the past four years, the risk appetite for lending in this market is certainly waning.

And this is another reason why other banks will ultimately join NAB and Westpac rather than hold back on interest rate rises in order to bolster their own market share.

Experts point to the possible exception being ANZ. It is flush with capital having sold much of its Asian business and may use the proceeds to fund leaving owner-occupier rates where they are.

This remains to be seen.

The traditional justification by banks for increasing interest rates (when the official RBA cash rate hasn’t moved) is that their own borrowing has become more expensive and they are passing this extra cost onto customers.

(The difference between the cost of bank borrowings and the rate at which they lend it to customers is called the net interest margin.)

NAB said this week that in the latest half-year result that margin had decreased. This doesn’t sit squarely with comments from the Reserve Bank that suggest that bank wholesale funding costs have actually decreased.

But to be fair, there are plenty of other factors that weigh into a bank’s funding costs – such as the rate it pays on our deposits.

CLSA bank expert Brian Johnson noted earlier this week that n bank earnings are five times more deposit sensitive than wholesale funding sensitive.

As one of NAB’s competitors observed, it is under more pressure than the others because it’s the smallest retail bank and price (of interest rates) is the only way to keep the margins up.

Ironically the Reserve Bank will be quietly pleased if the major banks follow NAB’s lead. It would dearly love rates to rise a little as a means of taking some heat out of the rising property market. The RBA would raise the cash rate if it could but has to measure this up against the effects it would have on already-low inflation and a generally sluggish economy.

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Super and pension funds fill commercial property void

One of the country’s biggest superannuation funds, n Super, is poised to intervene in the n property market, with more than $100 million allocated to fund individual projects.
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The retreat of the big four banks from financing commercial property projects is set to be filled by a raft of new sources including superannuation and privately backed funds and Asian and US institutional capital.

Last week’s warning from the banking watchdog, the n Prudential Regulation Authority, on the major banks’ commercial property exposure has added to the pressure.

Wingate director Mark Harrison said: “We are talking to private funds in and Asia. There’s going to be more capital in and the development sector in the next 12 months because there’s a gap to fill.”

“Players like ourselves are stepping up and filling the void. Our volumes have increased and we are looking at different products to fill the void,” Mr Harrison said.

Maxcap Group’s chief investment officer Brae Sokolski said his firm, which deals exclusively in commercial real estate debt, is managing a growing number of institutional sources of funding, including n superannuation funds such as the $2 billion n Super and Incolink.

“We are getting approaches from US and Chinese institutional capital who want to put more money in the space,” Mr Sokolski said.

While he declined to comment on n Super’s funding capability, he said “local funds are more risk focused”.

The retreat of the banks is healthy for the market, creating an opportunity for other institutions to enter, he said.

The gap in the commercial real estate debt market is reckoned to be $30-40 billion, he said.

Before the global financial crisis, major n banks accounted for 63 per cent of commercial real estate debt but the withdrawal of overseas banks and the failure of non-banking lenders left bank portfolios over exposed to the market at around 85 per cent.

Qualitas managing director of real estate finance Tim Johannsen said the property funding markets in North America and Europe were more evenly split between banks and private funds.

“There’s a way to go before private sources of funding catch up to that,” Mr Johannsen said.

Developer Tim Gurner, who has a $3 billion pipeline of 4500 apartments in Melbourne, Sydney and Brisbane, said it was important to maintain a relationship with the banks – if you have one.

“A move away from the majors isn’t worth it,” Mr Gurner said, noting it was important to know the ultimate source of the funds.

Banks had reduced the loan-to-valuation ratio for funding projects to between 55-57 per cent – down from 60-65 per cent, he said.

While non-bank sources could offer a higher LVR, he was wary about going to second-tier lenders for finance, although mezzanine finance is already used at the end of very big projects.

Banks are already scrutinising the profile of apartment buyers before they sign off on deals, whether they are repeat buyers, owner occupiers or investors, he said.

“They go right through the business and the buyers. It’s good for us,” he said.

“Developers with a good track record who are developing stock that banks like are alright. It’s tough for new businesses but they’re not stopping lending for everyone.”

And it’s not in every jurisdiction. Banks are no longer lending in the Brisbane market and they’re cautious about Melbourne. The Sydney market however is still “confident and bullish”.

“It’s a very tricky climate. It’s the worst I’ve ever seen – worse than the GFC,” he said.

n Super declined to comment on its lending practices.

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