The corporate regulator is investigating cases where real estate agents may be pushing investors into self managed superannuation funds to buy real estate, The Australian Financial Review reports.

According to the newspaper, the Australian Securities and Investments Commission is looking at cases involving estate agent advertising campaigns.

But ASIC is almost powerless to regulate savers who established SMSF schemes online with no advice, other than through education, ASIC Commissioner Greg Tanzer told the AFR.

ASIC this week released guidance to improve advice given to SMSF investors. 

AAP, with a staff reporter

The Reserve Bank of Australia says concerns record low interest rates will spark an unsustainable house price bubble are "alarmist".

RBA assistant governor Malcolm Edey told a Sydney conference that although house price growth was "higher than average", it was not getting out of control.

Dr Edey said household incomes had been keeping up with rises in home prices over the past 10 years, with inevitable peaks and troughs in the ratio over that period.

"We shouldn't be rushing to reach for the bubble terminology every time the rate of increase in house prices is higher than average because by definition that is 50 per cent of the time," he told the Financial Services Institute of Australasia (Finsia) conference in Sydney.

"You're just going to be unrealistically alarmist in making that call every time that happens.

"This is an area to watch but we do need to keep it in perspective."

Earlier this week, the International Monetary Fund called for tougher global lending rules to stop banks fuelling price bubbles.

Its report raised concerns that record low interest rates in Australia are generating the beginnings of an unsustainable property price boom, with two senior economists calling for regulators to act after the RBA September meeting minutes yesterday said it was important for banks to maintain prudential lending standards in a low interest rate environment.

Dr Edey said low interest rates were benefiting the housing sector at the moment.

"One of the expected effects of low interest rates is that it stimulates demand, spending and borrowing – that's how monetary policy works," he said.

"We're seeing that influence working at the moment in the housing sector."

Australian Prudential Regulation Authority chairman John Laker said the low interest rate environment was a positive for Australia, but warned there were risks that would grow over time if interest rates stayed low for a long time.

One problem was borrowers not being able to make their repayments once interest rates did eventually go up.

"There is a broader risk in that if institutions lower their lending standards either to protect their market share or acquire more market share," Mr Laker said.

"It's been something that we have been, in the last few years, talking to deposit-taking institutions about very, very intensely."

One of the causes of the global financial crisis was financial institutions in the US and Europe making risky loans, which were exposed when house prices collapsed.

Mr Laker said the Australian banking system was more sound than it was five or six years ago.

"We know that because we managed to negotiate the financial crisis without the fallout for our financial systems," he said.

"The banking sector is holding more capital, it's holding higher quality capital, it is holding more liquid assets."

By a staff reporter

Brickworks Ltd expects an improved result in its building products division in the coming year and says its property trust is seeing significant growth, after posting a lift in full-year profit.

The group increased net profit attributable to members by 97 per cent to $85.2 million in fiscal 2013, compared with $43.3 million in the prior year.

Normalised net profit after tax rose by 27 per cent to $100 million, compared with $78.9 million in the previous year.

Earnings before interest and tax in the land and development division rose by 161 per cent to $49.6 million, driven primarily by the sale of Oakdale South for a $23.4 million profit in the first half and continued strong growth of the joint venture property trust, Brickworks said.

Revenue rose nine per cent to $606.5 million, compared with $556.9 million in the previous corresponding period. 

Brickworks will pay a dividend of 27 cents per share, fully franked.

"Australia is yet to see a broad based recovery in detached housing construction, however most forward indicators are now positive," the group said.

Brickworks said housing affordability had improved to a ten-year high and consumer confidence is at its highest level since December 2010, and these positive indicators are translating to increasing demand.

Wilhelm Harnisch, CEO of Master Builders Australia says that low interest rates have not been flowing through to the new home sector. Watch to hear how builders are faring in the latest episode of Business Accelerators.

Calgary— The road ahead for Australia's property market features predictions of an urban housing boom, as well as a housing bubble and an openness on the Reserve Bank of Australia's part to taking interest rates deeper into record-low territory.

But what does that rock-bottom interest rate-fuelled housing boom-to-bubble scenario look like?

There's no need to deal in hypotheticals when Canada is already there.

The Bank of Canada's benchmark rate has remained at a record low 1 per cent since September 2010, effectively putting the country's central bank on the sidelines of the debate about what Canadian politicians can do to take the steam out of Canada's overheated real estate market without risking a crash.

The average housing price in Canada is about $C380,000 ($A394,331) nationally, up 8 per cent over the past year. That growth has largely been fuelled by a few core urban markets, such as Toronto, where the average price of a detached home hit $C783,708 ($A812,530) in August, Vancouver where the average price for a two-storey home is about $C1.1 million ($A1.14 million) and Calgary, where single family homes hit a record average price of $C465,000 ($A482,000) in August.

Unlike the United States, Canada's real estate market never popped during the global financial crisis. Although that helped the Canadian economy survive the crisis, the property market's continued growth, and the extent to which record-low interest rates fuelled that growth, has worried politicians – who have moved four times to tighten mortgage lending rules in an effort to engineer a soft landing.

Since 2008, the government has shortened the maximum amortisation period on mortgages the government will insure from 40 years to 25 years, scaling it back in five-year increments between 2008 and mid-2012. Insurance is mandatory for home buyers who have less than a 20 per cent down payment.

The government of Stephen Harper also limited in mid-2012 the maximum amount Canadians can borrow when refinancing their homes to 80 per cent, from a previous ceiling of 85 per cent, of the value of their home. The move was made to limit the shifting of consumer debt onto mortgages insured by the government, or as finance minister Jim Flaherty likes to say, consumers “using their homes like ATM machines”.

The Harper government also lowered the debt service ratio for government-backed insured mortgages to 39 per cent, calculated by comparing consumers' total monthly housing payments to their monthly income. The limit for the total debt service ratio (total monthly debt payments to monthly income) was reduced from 45 per cent to 44 per cent.

And lastly, the government made state-backed insured mortgages available only to homes with a purchase price of less than $C1 million in an effort to reduce taxpayers' exposure to liabilities on the higher-end of the real estate market.

The conservative Harper government hoped in particular that the shorter amortisation period, and the resulting higher monthly payment and higher income required to qualify for a mortgage, would reduce the number of high-risk mortgages being issued to homebuyers who may struggle to carry mortgages costs when interest rates rise or if their home value declines.

For the most part, the changes resulted in a short dip in home sales and in some cases prices, but sales and prices have largely continued their steady march upwards.

And most importantly, the reforms have done little to discourage Canadians from taking on debt. Canada's ratio of household debt to after-tax income rose to a record 163.4 per cent in the second quarter of 2013, well above peak pre-GFC household debt levels in the US and Australia's 130 per cent household debt ratio.

The Economist recently determined Canada's housing sector is over-valued by 74 per cent compared to average rents and by 30 per cent relative to average disposable income. (The same report found Australia's housing sector to be overvalued by 46 per cent and 24 per cent, respectively.)

Such indicators have prompted the government to consider further measures it can take to essentially save Canadian homebuyers from themselves.

With the Bank of Canada forced to the sidelines, having already taken the benchmark rate to record lows, the government has turned to the banking regulator for help.

The regulator has begun quizzing Canadian banks about the impact of the 2012 changes, while surveying the impact of further rule tightening.

One possible change would involve cracking down on uninsured 30-year mortgages, which banks continue to offer to homebuyers who have a 20 per cent or more down payment, to force more homebuyers into the 25-year cap for government-insured mortgages.

The changes may be too little, too late.

The head of investment at Canada's largest insurance company, Sun Life, has warned that growth in Canada's real estate market is a “dead cat bounce”, or a brief recovery in the price of an asset in overall decline, while warning that housing prices will fall 10-15 per cent.

Meanwhile Robert Shiller, an economist credited with predicting the US housing crash, has said he sees trouble ahead for the Canadian housing sector, saying it is at risk of “a slow-motion version of what happened to the US”.

Residential sector building permits fell 12.9 per cent in June, and were down 18.8 per cent for multi-unit dwellings, while in the largest markets such as Toronto, Vancouver and Calgary, residential land investments for home building has plunged 51, 52 and 30 per cent, respectively, pointing to trouble ahead.

The stakes are high. The housing sector, including construction, renovation and ownership cost, accounts for 20 per cent of Canada's GDP, whereas the US peaked at 18 per cent in 2005, and construction jobs account for a record 7.4 per cent of total employment, compared with 4.2 per cent in the US.

If the Reserve Bank does lower interest rates further and predictions of rising housing prices hold true, Australia may well be headed for Canada's current situation.

If anything, Canada's model suggests a go-slow approach on the Reserve Bank's part would give it the chance to play a lead role in managing future housing bubble concerns, rather than risk finding itself in the Bank of Canada's position on the sidelines of a potential crash in the making.

Dow Jones

Sales of previously owned homes rose unexpectedly in August to the highest level since 2007, an indication that potential buyers were rushing to lock in deals before mortgage rates rose further. 

Existing-home sales rose 1.7 per cent in August from a month earlier to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Thursday. That was the best month of sales since February 2007, when home values were just beginning to decline from the housing bubble. The pace was 13.2 per cent higher than last year at the same time. 

"This is partly due to the rise in interest rates, which again hurries some of the people into making the decision," said Lawrence Yun, chief economist for the Realtors' group. August is a lagging indicator of activity in June and July, when rates began their ascent, he said. 

Economists had predicted sales would fall to a pace of 5.25 million in August. July's figure was unrevised at a 5.39 million pace. 

Still, Mr Yun warned the surging home sales pace could be the "last hurrah" for the next 12 to 18 months as rising rates and home prices start to hold back buyers. Already, Realtors are seeing a decline in tours of homes. 

A strong housing market has helped buoy the economic recovery by improving confidence among consumers, encouraging household spending and generating construction jobs. 

Rising mortgage rates this summer have sparked a rush to buy homes as prospective homeowners want to lock in rates before they rise further. The average rate on a 30-year fixed-rate mortgage was 4.57 per cent last week, according to mortgage giant Freddie Mac, a level that is still historically low but well above the below-3.5 per cent rate in the spring. 

Rates have been increasing in recent months as speculation grew that the Federal Reserve would start winding down its $85-billion-a-month bond-buying program, which was designed in part to push down long-term interest rates. But Wednesday, the central bank said it would keep its program in place as it waits for more evidence that the economic recovery will be sustained. 

Other risks threatening a slowdown in the housing market are looming. Homebuilders said earlier this week their confidence paused in September, though it remains at nearly an eight-year high. A survey by the National Association of Home Builders said builders are increasingly seeing hesitancy from potential buyers, largely due to the rising mortgage rates. 

Home prices are rising, likely as demand grows for the low stock of homes available for sale. 

The Realtors group said Thursday that the median price of an existing home was $212,100, up 14.7 per cent from a year earlier, its strongest gain since October 2005. 

And inventories remain tight of previously owned homes. The number of homes available for sale in August rose 0.4 per cent from July to 2.25 million. Still, the figure was down 6 per cent from a year ago. He expects inventories to tighten further into the winter. 

Home builders and economists, including Mr Yun, have said more homes are needed to meet increasing demand. 

"There is an ongoing shortage of inventory on the market," Mr Yun said Thursday. "I don't anticipate this housing shortage to go away," adding that that could push up prices further. 

On Wednesday, the Commerce Department said single-family new-home construction was up 7 per cent in August from a month earlier and permits for single-family homes, an indicator of future construction, rose to their highest level since May 2008. 

Right up until the early 20th century, taking an innocent stroll on the foreshores of the US West Coast was hazardous for your health: you might suddenly fall unconscious, and wake up to find yourself an unfree seaman aboard a US clipper bound for China. That’s where the term “Shanghaiing” originated: not because the crime happened in Shanghai, but because Shanghai was normally the victim’s first port of call as a shipping slave.

How do I know? Because I looked it up on Wikipedia, which counts as research on such topics – though not on, say, the link between bushfires and climate change. Why did I bother? Because my call on house prices was shanghaied by the property lobby, and now that I am near certain I’ll be wrong even as I defined it, I want to un-Shanghai myself first.

For the record, what I said (from memory, in answer to a question from Kerry O’Brien on The 7.30 Report) was that after its Bubble Economy collapsed in 1990, Japanese house prices had fallen 40 per cent over 10-15 years, and I saw no reason why Australia would avoid the same fate. This turned into the famous bet when Rory Robertson sprang it on me at Parliament House on November 26th, 2008 (one month after the Rudd government had doubled and trebled the First Home Vendors Grant as part of its package to fight the global financial crisis -- a move I described at the time as “Rescuing the Bubble”). The actual exchange was as follows (click here to hear it for yourself):

RR: I think you said a 40 per cent fall on average across Australia, is that correct?

SK: Yeah, but over a 10-15 year period, mate... it's a long-term bet, but I'm willing to stick to it

RR: Well how about this? If Australian house prices, as measured by the Statistician, fall from peak to trough in nominal terms by 40 per cent, I will walk from Canberra to the top of Kosciuszko, and if in fact Australian house prices fall by less than 20 per cent, so it turns out you're less than half right, you walk..."

We never negotiated the fine print of this bet -- a failing I have since regretted. Three obvious points that needed clarification were:

- When was the peak?

- Was the fall in real or nominal terms?

- How do you define the end of the bet?

As I found out to my chagrin, Rory and the property lobby defined these three points as:

- The peak was March 2008, the date before the bet that house prices had peaked, which was before Rudd’s First Home Vendors Boost was introduced;

- Nominal prices, not inflation-adjusted; and

- The bet was over as soon as house prices exceeded the March 2008 peak.

My definitions were:

- The peak might have been March 2008 had Rudd not restarted the housing bubble via the First Home Vendors Boost, but the peak would probably come sometime after the boost expired. When that happened, I did think that it would be the peak for real house prices;

- Either one of either nominal or inflation-adjusted prices should qualify. The global economy was entering a debt-induced Depression, and the previous one had led to deflation as well. If the bet had been in real terms and deflation had also occurred, then nominal house prices could fall 40 per cent and yet real house prices could actually rise (if the fall in the CPI was greater than 40 per cent). Since this was just a bet about house prices -- rather than a combined bet about house prices and deflation -- a fall of that magnitude in either should real or nominal prices should qualify; and

- The end couldn’t be any temporary new peak in prices -- even in a crash, house prices do sometimes wobble, especially in real terms if deflation occurs (as is evident in both the Japanese and US data shown in Figure 1). The best way to define it was by the duration of the bet -- which was 10-15 years -- but that’s too long, so maybe a compromise was necessary. Rob Burgess’s suggestion of a 20 per cent fall over five years made sense (though even that was in Rory’s favour, since it was in nominal terms only, and used the minimum time horizon I specified rather than the average).

Figure 1: House prices in Japan, US and Australia since their peaks

But I thought I could negotiate terms? Ha! There’s no contract when you’ve been shanghaied. As the house price frenzy gathered pace in 2009 thanks to Rudd’s Boost, I realised that I’d done the proverbial innocent-stroll-along-the-US-West-Coast by agreeing to this bet, without having lawyers negotiate the terms beforehand. Any attempt to clarify what I meant by the bet would be pilloried by the property lobby in the media -- I’d be portrayed as trying to weasel out of my commitment. So when it became obvious that Rudd’s Boost was going to drive house prices to a new high, I decided to do The Walk to Kosciuszko -- even though I didn’t believe I had lost the bet -- simply to shut the property lobby up.

Real house prices peaked in June 2010 (see Figure 2), and I did think then that prices would fall from that peak by enough for me to win the bet as I had defined it.

Figure 2: The bet, its nuances, and The Walk to Kosciuszko

They did duly fall by 10 per cent over the next two years -- which was well on the way to meeting my expectations of a 20 per cent drop over five to seven years. But now they are rising again in a renewed bubble, and I expect they’ll soon exceed the previous peak.

I also expect that this new bubble will ensure that, when the hot air finally leaves the Australian Housing Balloon, its deflation will be too slow to result in a 40 per cent fall below the June 2010 level by June 2025—which is the Statute of Limitations on my original call. So I expect to lose the bet, on my own terms.

I’ll discuss why I think I will be proven wrong in the next instalment.

PS I noted on my Debtwatch blog last week that my mortgage accelerator indicator was still rising, indicating sustained price rises were afoot. Here’s the mortgage acceleration and house price change graph from that post, updated for the most recent ABS data, which was released last Monday.

Figure 3: Mortgage acceleration and house price change

Steve Keen is author of Debunking Economics and the blog Debtwatch and developer of the Minsky software program. 

Big offshore portfolio managers with billions of capital invested in Australian residential mortgages have become concerned about an Australian property market crash, The Australian Financial Review reports.

According to the newspaper, Threadneedle Asset Management investment manager Henry Cooke said fund managers in Britain were spending a lot of time analysing whether Australia was experiencing a housing bubble.

“That’s the sector everyone outside Australia wants to know about,” Mr Cooke told an Australian Securitisation Forum conference, the AFR reports.

“My concern is if you start to see a downturn in the economy ... foreign investors start to get nervous.”

However Mr Cooke and other offshore fund managers at the conference, who are investing in home loans issued by Australian banks, were cautiously optimistic Australia would avoid the kind of crash seen in places like the United States, the AFR reports.

Abacus Property Group raised $75 million in a share sale to buy more buildings, including seven properties it plans to acquire in Queensland, Victoria and New South Wales.

Abacus sold 33.5 million securities at $2.24 each, a 3.3 per cent discount to the 10-day volume weighted average, the company said in a statement to the ASX.

The Kirsh Group, which has a 48 per cent stake in Abacus, bought some of the new securities in a sale managed by JPMorgan Chase & Co and Shaw Corporate Finance.

Abacus’ gearing following investment of the proceeds of the share sale will fall to 30 per cent, from 32 per cent at present.

In the six months to end December the company expects to issue a distribution of at least 8.25 cents per security. 

By a staff reporter

CSR Ltd has reaffirmed guidance at the upper end of forecasts, assuming no significant deterioration in construction volumes or in Australian dollar aluminium prices, after posting a jump in half-year net profit.

The group's net profit after tax was $36.2 million in the six months to September 30, a 92 per cent increase compared with a restated $18.9 million in the previous corresponding period.

Trading revenue was $877.1 million, a two per cent increase compared with $859.8 million in the previous corresponding period. 

CSR will pay an interim unfranked dividend of five cents per share. 

By a staff reporter 

Westfield Group has reaffirmed its full-year net operating income forecast, saying its global operations continue to perform in line with expectations.

In a third-quarter update, Westfield said it is on track to meet earnings forecasts across all regions, in the range of four per cent to five per cent in both the United States and United Kingdom portfolios, and 1.5 per cent to two per cent in the Australian and New Zealand portfolios.

Westfield reaffirmed full-year 2013 distribution forecasts at 51 cents per security, a three per cent increase from the previous year. 

The group has bought back 150.3 million securities so far this year and recently sold its 16.7 per cent stake in Karrinyup shopping centre in Perth for $123.3 million. 

Apparently office property is the ugly duckling when it comes to property investment at the moment. Even retail space doesn’t look as unappealing -- even in a world where consumers are increasingly turning to the internet for shopping.

Sentiment towards office space has weakened according to National Australia Bank’s quarterly commercial property survey. The graph below shows the slippery slope office property has found itself on.

Over the quarter property professionals raised expectations for capital growth and income in all property classes except office. At the same time, gross rents dropped the most for office properties, losing two per cent in the September quarter. Retail came in second losing 1.6 per cent, followed by industrial losing 0.4 per cent.

Although the National Bank survey doesn’t provide a compelling outlook for office property in general, Mirvac evidently feels differently following the acquisition of two Collins Street opportunities – an asset and development opportunity.

When structural change is underway, it makes sense to swim with the tide. And as described in a series of articles over the past week, structural forces are moving the major building blocks of Australian prosperity.

That change is occurring both naturally, through an ageing population, and unnaturally through the tax/superannuation system, and has resulted in a misallocation of resources that affects the lives of millions of people every day.

The problem, and the solutions to that problem described below, are both an enormous political opportunity for the party that ‘swims with the tide’, but also a very difficult argument to make to voters.

To understand, in tangible terms, what needs ‘fixing’, let’s assume a couple, Mr and Mrs Smith, in their mid 70s with a superannuation fund worth $500,000 and a house within 15km of a capital city CBD.

Once upon a time their ‘cheap’ house was on the periphery of the city, but it’s now worth $1,000,000 because it is seen as ‘inner city’ in comparison to newer suburbs further out.

The Smiths draw an income from their super fund, topped up by the pension, but struggle to make ends meet themselves and therefore to help their two adult children and four grandchildren with the kind of gifts any grandparent would like to make.

But then one day, the Smiths see an ad for a ‘debt free’ equity release product in which the bank will buy a stake in their home (at a large discount, in the way bonds are bought at a discounted rates to reflect the ‘interest’ they will pay over time) and decide to ‘sell’ half their house.

Based on normal actuarial principles, a $500,000 stake might be worth, say $350,000 to a bank that has to hold the asset to maturity – and manage risk, particularly ‘longevity risk’.

So the Smiths now have: $500,000 in super, $500,000 in equity in their own home, and $350,000 to consume themselves, to use for the benefit of their children/grandchildren or invest elsewhere.

The beauty of such a scheme is that it allows the Smiths to stay in their own home until death/old age catch up with them. Same neighbourhood. Same friends. And a better standard of living – expensive renovations such as a stair-lift or walk-in bath are now affordable, and Mr Smith will never cut the lawn himself ever again.

There is, essentially, a huge pool of money held back by cultural values (the desire for home ownership) or fear of the future. Allowing that pool to flow to more useful places, without fear/distress to old Mr and Mrs Smith, is something that can be done by the free market, but can be greatly assisted by a government response.

So what is holding the wall of money back?

Firstly, as Ian Harper suggested (A huge opportunity in retirees' hidden wealth, November 12) the expansion of this kind of product by banks and other financial institutions would be greatly assisted by the creation of a government-backed securities market into which half the Smith’s home can be sold.

Equity Release Bonds (if we can call them that), in normal times would carry little unexpected risk. However, the threat of a GFC-style property crash cannot be ignored, and the government’s role would be to offer a ‘put option’ on each bond – a guarantee to buy them at, say, 80 per cent of their value, and hold them through a period of instability in ways private finance houses would not be able to.

Secondly, a push to liberate the capital locked up in homes would shine a light on the elephant in the room – that Australia has two incongruous tax regimes covering the family home and super nest egg.

For purely cultural reasons, we’re happy to pay for our homes in after-tax dollars, and take the capital (often after death) capital-gains-tax-free. In super, by contrast, workers on decent salaries/wages get a massive tax rebate on every dollar put into their fund, pay tax on earnings within the fund over time, and (despite Labor’s plans to change it) take tax-free income at the other end.

Put together, that is a dog’s breakfast of a tax system. Super tax concessions, which still largely follow the Costello model left by the Howard government, are massively regressive and work against both the principle of a ‘progressive tax scale’ and against the principles underpinning the Hawke/Keating move to create the super guarantee in the first place.

As economics writer Leith van Onselen pointed out recently, if you believe in a progressive tax scale, then how does it make sense to give an effective super tax concession of 17.5 per cent to somebody earning in the $37,000-$80,000 bracket, while giving a full 30 per cent to every dollar earned  over $180,000? (See his full argument here.)

The super guarantee was supposed to take normal-income workers out of the pension system by forcing them into long-term investments. Instead, it is heavily skewed to giving tax breaks to wealthier Australians and, worse, still allows a lot of income to be ‘laundered’ through the super system in the last few years of work and then withdrawn a short time later – not a long-term investment at all.

That’s why a reform to unlock housing wealth would also be a reform to overhaul our nonsensical super/housing tax regimes. And that is why I argued on Tuesday that this reform would be as grand a project as creating the super guarantee in the first place, or getting the GST through parliament – very, very difficult, but massively beneficial to the nation.

There is one other factor holding this reform back – a very human factor.

At present, many baby boomers plan to have their assets divvied up by their descendants after they die. That way, they will never see what little monsters their children can turn into when they scrap over the will.

As one homelender told me last week, a large number of people wishing to release equity from their home ultimately give up when they discuss it with their kids and discover the family conflict it can cause.

To my mind, that creates an opportunity for a new kind of financial advice. 

By way of analogy, in a divorce scenario a lawyer will tell you what you can screw out of your ex-partner.

However, in recent years divorces have tended to be governed less by combative lawyers and more by mediators, whose primary question (as it should be) is “what is best for the children?”

A similar service could quite easily be offered to Mr and Mrs Smith. Their $350,000 of released equity could come with sound financial advice – taking into account, in an unbiased way, what’s best for the various family members expected to get a slice of the pie. A bit for school fees, a bit for South Pacific cruises, a bit for a new car.

That is not a job for government, but getting the market up and running is.

The largest intergenerational wealth transfer in Australia’s history has already begun. Some refer to this process as a ‘generational war’ – but it doesn’t have to be that way.

Wars usually start because resources have been locked in the wrong place for too long. 

The political leader that can offer a smoother transition through a government-backed equity release market, would not only be averting a financial ‘war’ - they’d be making Mr and Mrs Smith and the decendants happier, healthier and more prosperous.

There’s got to be a few votes in that. 

By a staff reporter

Non-executive director of Mirvac Group Ltd, James MacKenzie, will resign from his position in January 2014.

In a statement to the Australian Securities Exchange, Mirvac chairman John Mulcahy thanked Mr MacKenzie for his "significant contribution" over the past eight years.

"Since assuming the role of chairman in 2005 James has steered the group through some very challenging circumstances," he said.

"His leadership of the board has been a key contributor to getting Mirvac to where it is today, with its strong management team, robust balance sheet and clear strategy.

"Mirvac is well positioned to enter into its next period of focused growth."

In September, Mr Mulcahy replaced Mr MacKenzie as chairman of the Mirvac board. It came after a tumultuous year for Mr MacKenzie, who came under fire from investors over a perceived lack of explanation of the board's decision to replace managing director Nick Collishaw with Susan Lloyd-Hurwitz.

Mr MacKenzie's announcement came ahead of the group's annual general meeting, at which Mirvac said it would reactivate its dividend redistribution plan from the December 2013 fist-half distribution.

Mr Mulcahy told shareholders "all in all, the outlook for the business is positive."

"The group’s balance sheet is in good shape and there is a clear strategy in place," he said.

"We will continue to leverage our asset management capability to retain a well-performing passive portfolio and we will utilise our development capability to deliver target returns in our commercial and residential developments."

National Storage is increasingly expected to float Australia's first listed self-storage trust before Christmas, responding to renewed interest in equity for real estate investment trusts, according to The Australian Financial Review.

In what would be a $280 million vehicle, APN Property Group would sell the $206 million unlisted storage fund with 28 properties it manages into the vehicle, the newspaper reported.

The National Storage business would be added to the vehicle, which includes 62 properties across Australia.

Morgan Stanley is handling the National Storage float, the AFR reported, and the plan first emerged as a possibility in July.

By a staff reporter

Lend Lease Group Ltd says it is well positioned for the year ahead with a substantial pipeline of development and construction projects, and has welcomed the new coalition government's focus on infrastructure.

Addressing shareholders at the group's annual general meeting, chief executive officer Steve McCann said the group had a strong backlog of work, a strong balance sheet and access to third party capital to assist funding the delivery of the pipeline.

He said the focus now needed to be high quality execution.

"We do have a very significant embedded value in the projects we have secured and we need to work diligently to maximise that value," he said.

"Our diversity across various businesses and markets has proven that we are resilient to changing conditions in our various markets and we will continue to focus on diversifying our earnings through more stable sources of income as well as some offshore development opportunities."

Lend Lease chairman David Crawford said the group was encouraged by the election of the coalition government on a platform of infrastructure growth, "as this means a strong focus on major projects and on the funding model for those projects - which makes it a very attractive space in which to play".

Fund managers are backing a $123.7 million bookbuild for the National Storage REIT ahead of it being thrown open to institutional investors tomorrow. 

“It’s not the world’s cheapest or most exciting offer but it will be important in a balanced portfolio,” one fund manager said.

The deal would see 126.3 million securities in National Storage securities sold at 98 cents apiece, according to a fund manager offered the REIT by broker Morgan Stanley today. The trust would have a market capitalisation of $240 million, earning 7.8 cents per security in calendar year 2014.

A sizable portion of the float had already been pre-determined, and would go to property fund managers and specialist small-cap players, according to a person familiar with the matter.

One fund manager predicted the deal would be covered and said it was well-priced.

“Property trusts don’t get the same day one trading premium that offerings like Freelancer do,” the fund manager said. “But it is not mispriced, the debt is modest and the assets look okay.”

Fund managers are backing a $123.7 million bookbuild for the National Storage REIT ahead of it being thrown open to institutional investors tomorrow. 

“It’s not the world’s cheapest or most exciting offer but it will be important in a balanced portfolio,” one fund manager said.

The deal would see 126.3 million securities in National Storage securities sold at 98 cents apiece, according to a fund manager offered the REIT by broker Morgan Stanley today. The trust would have a market capitalisation of $240 million, earning 7.8 cents per security in calendar year 2014.

A sizable portion of the float had already been pre-determined, and would go to property fund managers and specialist small-cap players, according to a person familiar with the matter.

One fund manager predicted the deal would be covered and said it was well-priced.

“Property trusts don’t get the same day one trading premium that offerings like Freelancer do,” the fund manager said. “But it is not mispriced, the debt is modest and the assets look okay.”

GPT Group’s takeover bid for the Commonwealth Property Office Fund (CPA) caught the market off-guard yesterday, with many believing the Dexus Property Group-Canada Pension Plan Investment Board bid would go unopposed. GPT had other ideas, however, and its move has the commentariat expecting more bids in coming weeks.

One scribe labels the GPT proposal as the first “really aggressive play” of Michael Cameron’s tenure as chief executive, while another notes that shareholders will be hoping for more restraint than that seen in the frantic race for Warrnambool Cheese and Butter.

Meanwhile, political tension between Indonesia is threatening to erupt, potentially putting Australia’s important trade ties with the southeast Asian nation at risk.

The sudden battle for control of CPA, however, draws the most interest form jotters. The Australian’s John Durie is among those to label the bid “smart” and believes it to be “well timed and structured.” However, Cameron may have left his loyal followers jolted by the bid, which represents a departure from his slow and steady approach since assuming the top job in 2009.

“When Cameron talked up the fact that with CPA under his wing he would be the nation's biggest office owner, his followers would have cringed because that's not the talk you'd expect from him. He has spent four years carefully nursing GPT back to fighting strength, winning unit-holder support in the process by being disciplined, not grabbing bulk for bulk's sake.”

Despite this, the current takeover battle is far from the “lunacy on display” with the fight for WCB, Durie contends. Shareholders of both GPT and Dexus would be happy with a victory provided the offers don’t stray far from the current proposals in front of CPA.

The Herald Sun’s Terry McCrann agrees, with property M&A a far more subtle event than the race to feed Asia.

“Now it remains to be seen whether Cameron can succeed. The margin of GPT's offer over Dexus is small. That's the unavoidable reality of property investment; we are not going to see crazy strategic bidding like with Warrnambool Cheese. It might end up being necessary for GPT and Dexus to share the spoils.”

Business Spectator’s Stephen Bartholomeusz also looks ahead to the likely process from here and argues that each party will be desperate to trump the other. After all, once a company steps up to the bidding table, it’s always difficult to leave empty-handed.

“Because the bidding for CPA is now contested, there is the potential for further developments in the bidding, although the Dexus-Canada Pension Plan Investment Board offer has already been increased once to win CPA’s endorsement. Having made his big move, however, Cameron will be reluctant to walk away from it.”

There is a lot at stake with the victor to become the largest office property owner in the country.

Still, Cameron’s move may be a little risky, according to the Australian Financial Review’s Chanticleer columnist, Tony Boyd. The property group will be hoping it can get access to Dexus’ 15 per cent shareholding in CPA or else it risks getting stuck with too much debt, in Boyd’s opinion.

“The debt on the GPT balance sheet will rise by $1.1 billion if GPT gets caught holding a stake between 50.1 per cent and 90 per cent. That could put its A minus credit rating at risk. However, GPT is comfortable with having to carry more leverage if it has to. But its firm belief is that Dexus and CPPIB will not want to get stuck in an illiquid investment.”

It is always dangerous to second-guess the likely moves of an opposing suitor, though Dexus would have little to gain by retaining its stake should CPA opt for the GPT proposal.

In politics, the Abbott government has further strained relations with Indonesia after refusing to apologise for spying. The criticism from usually reserved Indonesian President Susilo Bambang Yudhoyono “is a grave development” and a sign the relationship could get worse before it gets better, according to The Australian’s foreign affairs editor Greg Sheridan.

“This is an extremely serious problem now in a relationship of supreme importance to Australia. Abbott's stand is logical and reasonable, but I'm not sure if he got the tone just right – though this is a problem from hell and there may simply be no right tone.”

Given Australia’s trade ties with Indonesia, there is a lot riding on good relations between the two countries and the current fracture does not bode well.

However, while the relationship is very important, Sheridan’s colleague Paul Kelly wonders just how crucial it is in the prime minister’s opinion.

“There is … a core contradiction in Abbott's position. He keeps saying he sees Indonesia as "the most important single relationship" Australia has with any country. The truth is different. In terms of strategy, intelligence and institutional trust the Australian system does not accord Indonesia this status.”

Last year, Australia’s trade with Indonesia was worth close to $15 billion. And with this, and Abbott’s crucial boats policy, on the line to an extent, the AFR’s Laura Tingle goes as far as to say Tony Abbott has taken a “very big gamble” with the results to be “the first big test of his prime ministerial judgement”.

In company news, Fairfax’s Elizabeth Knight labels the Australian Competition and Consumer Commission investigation into allegations Crown boss James Packer sought to collude with Echo Entertainment as a “waste of taxpayers’ money”. The classic story of one man’s word against another’s meant a charge was never going to stick.

Meanwhile, the AFR’s Jamie Freed continues analysis of Qantas’ push for a level playing field on foreign ownership with rival Virgin Australia. But, while the national carrier has a strong case to make in Freed’s view, there is little to suggest anyone would be keen to build a strategic stake and it appears nothing more than a sign of concern from Qantas’ management about its future.

Finally, the Herald Sun’s McCrann discusses the stubbornness of the Aussie dollar and even foresees the potential for our currency to return to parity. That would be the stuff of nightmares for Reserve Bank of Australia governor Glenn Stevens, but if the US taper continues to get pushed back, it is a distinct possibility.