UK watchdog fines SEI Investments £1m for failing to protect client money

first_imgDuring the period, there were many occasions when the firm did not do its internal reconciliations, or make sure any shortfall or excess identified in its internal reconciliation of client money was paid into or withdrawn from the client bank account by the close of business, it said.The asset manager also did not realise it was using a non-standard method of internal reconciliation, the regulator said.“SEI therefore failed to ensure it maintained its records and accounts in a way that ensured their accuracy,” the FCA said.If SEI had become insolvent, it said, its failings could have led to complications and delay in distribution, and placed client money at risk.On average, there had been about £84.3m a day in SEI’s client money accounts during the period, it said.The FCA said SEI Investments did not train staff that were responsible for client money.Once, it said, an SEI employee with no CASS (FCA Client Asset Sourcebook) training had manually adjusted SEI’s client money requirement from the £14m calculated using the internal client money reconciliation to £932,000 – as he assumed the £14m shortfall was wrong because it was an unprecedented amount.SEI acknowledged the fine, and said it regretted that the situation had arisen.But it insisted none of its clients had suffered or lost money.“All client money was fully segregated from SEI assets at all times, with appropriate trust protection,” SEI said.The FCA’s observations centred on CASS training and a technical calculation methodology related to FCA client money requirements, it said.“Despite using a client money calculation that had been certified annually since 2007 by SEI’s CASS auditors as compliant, in 2012, the FCA determined that the calculation varied from its standard methodology,” it said.During the period in questions, neither SEI nor its external auditors had been aware of any reason why the calculation model used did not offer at least as much protection as the FCA standard calculation, it said.However, the firm said it has since invested significantly in reviewing and improving its CASS arrangements.Commenting on the case, Jim Muir, director of financial data management firm AutoRek, said the fine was a clear signal that protecting client money was an imperative for all financial institutions.“As we enter 2014, we anticipate that the FCA will continue its client money crackdown and there will be even more severe penalties for breaches of financial controls,” he said.Extra sanctions such as individual bans and firms being prevented from taking on new business seem certain to be imposed as well as fines, he said.“Far too many firms have corruptible, unauditable and unsustainable manual reconciliations and calculations,” he said. Asset manager SEI Investments has been fined nearly £1m (€1.2m) for failing to protect client money properly.The UK Financial Conduct Authority (FCA) said it fined the firm £900,200 for client money breaches that took place between November 2007 and October 2012.SEI qualified for a 30% discount on the full £1.2m fine by agreeing to settle the matter at an early stage, the regulator said.Tracey McDermott, director of enforcement and financial crime at the FCA, said: “SEI has committed a serious breach by failing to comply with our client money rules for over five years.”last_img read more

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Dutch security scheme puts PE, infrastructure investments on hold

first_imgIt added that it was also reconsidering the management of its 1.2% private property by Syntrus Achmea Real Estate & Finance (SAREF), explaining that it had serious difficulties disposing of its holdings. The plans to sell the assets came as the portfolio delivered a return of 5.8% last year.The private security scheme indicated that it also wanted to divest its stake in commercial mortgages, which were also managed by SAREF.The asset class produced almost 4.7%, whereas private mortgages generated 8.2% last year.The pension fund, which has 56,000 participants in total, posted a 17.9% return, with euro-denominated government bonds and equity generating 11.4% and 11% respectively.Credit and inflation-linked bonds returned 8.5% and 5.7% respectively.PPB further said that it had extended its contract for pensions provision with Syntrus only after it had negotiated “increased transparency, better quality as well as lower costs”.The scheme reported administration costs of almost €122 per participant. Costs for asset management and transactions were 0.43% and 0.07% of asset under management respectively.In 2014, it had hedge a quarter of its interest risk on liabilities through government bonds and interest swaps.Its currency hedge fully covered developed markets and 70% of the most important reserve currencies, and had contributed €11.7m to returns, it said. PPB, the €1.2bn industry-wide pension fund for the private security sector, said it halted further investments in private equity and infrastructure last year, pending the conclusions of an asset-liability management study (ALM). In its annual report, the fund suggested that ”modest economic growth as well as a declining number of buy-out transactions last year” had contributed to its decision to stop investing further.Its 2% allocation to globald private equity – both through funds and directly in companies – generated almost 18%, according to the scheme, which said that by far the largest part of its performance-related fees were paid for investments in the asset class.PPB attributed the 13.4% return on its 2.4% infrastructure portfolio largely to a revaluation of its investments.last_img read more

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One-third of German firms weighing pension-fund closure – survey

first_imgMore than 35% of medium-sized companies in Germany surveyed by Towers Watson are thinking to close their pension plans due to the current market environment.The consultancy warned, however, that many them were still unaware of exactly what effect the low interest rate had had on their balance sheets.It also acknowledged that the issue was a “sensitive” one, as most medium-sized companies in Germany aim to finance their pension liabilities from their revenues.The consultancy found that nearly 60% of companies lacked any buffers for their pension liabilities, and that just 20% were thinking to rectify this. Further, only one-quarter of respondents had a “comfortable” funding level of more than 75%.The discount rate applied by German companies, after seven years of low interest rates, is set to fall even further, which will, in turn, increase liabilities.The rate is currently derived by using rates over a seven year-period, which means the last year with a relatively high rate – 2008 – will be removed from the calculation.Amendments to this rule under German accounting standard HGB – applied mainly by small and medium-sized enterprises – are currently being discussed.According to the Towers Watson survey from September, covering 146 medium-sized companies, more than half of the participants are mulling changes to their pension plans.Forty-seven percent are thinking to make changes on the “liabilities side”, while 37% are mulling full closure.This, according to Haiko Gradehandt, head of medium-sized enterprises at Towers Watson in Frankfurt, would be a “dramatic signal” for occupational pensions in Germany.last_img read more

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Interview: RobecoSAM CEO on ESG’s ‘unprecedented transformation’

first_imgSpeaking to IPE after the conference, Prepoudis said that although the focus among asset owners was still on risk management he was confident more would appreciate the opportunities that came from sustainability investing. Quant combinationDemand from asset owners was driving significant change in asset management, Prepoudis said.In particular, investors are keen on quantitative asset management combined with environmental, social, and governance (ESG) factors. This could involve combining investment performance factors such as momentum, value, or quality, with ESG. HSBC’s UK pension scheme is one of the most notable proponents of this approach, having combined an ESG tilt with equity factor strategies for its primary defined contribution fund launched last year.With this in mind, Prepoudis would like RobecoSAM to intensify co-operation with its sister company Robeco to combine the latter’s quantitative investing capabilities with RobecoSAM’s ESG research.The two are already working together on a mandate to manage an “optimised equity index strategy with an ESG approach” for France’s Fonds de réserve pour les retraites. “I see enormous momentum in that [quantitative] field from the climate side,” said Prepoudis. “There are more and more clients looking to combine quantitative asset management approaches and deeply integrate ESG research into these concepts.“You have to have a solid framework for how you combine these two elements in portfolio construction simultaneously.”This would help convince the large sophisticated asset owners of the benefits of this approach, he said.Catering for such demand increasingly required having vast analytical capacity to examine copious amounts of data, the CEO explained.“We have to have people on board who understand how to get at really interesting datasets and have a solid understanding of how these can be transformed into financially material information,” he said.RobecoSAM is well positioned on this front, but competition is intense.“Our peers have realised that sustainability has become a really important topic for all the big asset owners and every since a pretty fierce war for talent has started out there in the marketplace,” Prepoudis said.RobecoSAM had $16.1bn (€15.3bn) of client assets under management, advice and/or license as at the end of December 2016. Together with S&P Dow Jones Indices, it publishes the Dow Jones Sustainability Indices (DJSI) and S&P ESG factor weighted indices. Every year it carries out sustainability analyses of over 3,900 listed companies, which feeds into the DJSI. Investors are catching up with corporates in appreciating sustainability as a concept that can help unlock opportunities rather than just mitigate risk, according to the chief executive of RobecoSAM.Speaking at a Responsible Investor conference in London earlier this month, Aris Prepoudis – who took over as CEO in January – said investors’ approach to sustainability was unfolding in a similar way to how the corporate sector embraced the concept.Investors’ initial approach to sustainability was to think about it as a risk management tool, Prepoudis said, but on the back of better statistical evidence they have become more aware that deeper integration of sustainability can help identify more innovative business models and better investment opportunities.The CEO said sustainable investing was undergoing unprecedented transformation. Keeping up intellectually with the “bright minds” of the younger generation entering this field was a challenge.last_img read more

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UK roundup: Regulator, PPF monitoring Carillion scheme

first_imgBHS owner convicted for failing to supply information to TPRDominic Chappell, the majority owner of Retail Acquisitions Limited, has been convicted of failing to hand over information to TPR, in relation to the collapse of high street chain BHS. Chappell’s company bought BHS for the nominal sum of £1 in 2015. It fell into administration a year later.“This conviction shows that… anyone who fails to co-operate with our information notices risks getting a criminal record.”Nicola Parish, TPRChappell was found guilty at Brighton Magistrates’ Court yesterday of failing to supply information relating to the sale and collapse of BHS, despite multiple requests from TPR. He faces a financial penalty.Sentencing was originally scheduled for 19 January, but this has now been adjourned, according to a notice from TPR on 17 January.According to court reports, Chappell had claimed he was unable to respond due to workload, restricted access to BHS’ offices following the administration, and poor health.In a statement, Nicola Parish, TPR’s executive director of frontline regulation, said the regulator was “satisfied” with the ruling.“The power to demand specific information is a key investigative tool in our work to protect people’s pensions,” she said. “This conviction shows that the courts recognise its importance and that anyone who fails to co-operate with our information notices risks getting a criminal record.”Separate anti-avoidance action against Chappell regarding the BHS pension schemes was ongoing, the regulator said. TPR last year secured a £363m payment towards the schemes from BHS’ former owner Sir Philip Green.UK state pension ‘could run out of money by 2035’The UK is likely to run out of money to fund its state pension within 20 years unless contributions are increased, according to the government’s actuary.The Government Actuary’s Department (GAD) has said National Insurance contributions – which workers pay to fund the state pension and other benefits – would have to rise as the population ages.Martin Clarke, the government actuary, said in a review of the National Insurance Fund that a growing pensioner population would put pressure on the fund despite plans to raise the state pension age.In addition, reforms to the state pension had made it more generous and therefore more costly.Lastly, Clarke highlighted the UK’s ‘triple lock’ policy, whereby state pension payments increase annually in line with the higher of earnings growth, inflation, or 2.5%.The Conservative Party had aimed to scrap the triple lock but was forced to retreat on this idea when it struck a coalition agreement with the Democratic Unionist Party following last year’s election.In 2014 and 2015 the UK Treasury topped up the National Insurance Fund, and Clarke warned such contributions would have to continue. However, current rules limit how much the Treasury can contribute, meaning it would only delay the fund running out of money, he said.The GAD report was published in October but only hit national headlines this week.Calum Cooper, partner at consultancy firm Hymans Robertson, said the current state pension system was “dangerously unsustainable”.“The chances are that our working landscape will look radically different over the next few decades,” he said. “Life expectancy is continuing to rise faster than the state pension age meaning many people will feel compelled to continue working well into ‘retirement’.” Cooper added that the automation of jobs across different industries could also have a “devastating impact”, reducing worker contributions just as more people request government support. The company – a major supplier of services to the UK government – is discussing debt restructuring and recapitalisation options with its lenders and shareholders.According to the Financial Times, ministers from several government departments met yesterday to discuss the situation, and more officials will meet with the company, TPR and the PPF today.A spokeswoman for the PPF confirmed that the lifeboat fund was involved. She said: “The PPF is aware of the discussions between the company, government and banks and, along with the trustees and TPR, will act as it always does to protect the interests of Carillion scheme members and levy payers.”A spokesman for TPR declined to comment on meetings with the company or ministers, saying: “We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded. We will not comment further unless it becomes appropriate to do so.” The Pension Protection Fund (PPF) and the Pensions Regulator (TPR) are both on alert as engineering firm Carillion faces mounting financial difficulties.Carillion’s defined benefit (DB) pension schemes had a total shortfall of £804m (€905.4m) at the end of 2016, according to the company’s latest annual report. Carillion paid £46.6m into the scheme during that year in accordance with a funding plan agreed in 2014, which stands to run until 2029.In October, the company agreed to defer “certain pension contributions” as part of a short-term funding arrangement with lenders.The London-listed company has been seeking to offload parts of its business after making a £1.1bn loss before tax in the first half of 2017. Carillion’s net debt rose to £571m and its underlying profits fell significantly during the period, according to its half-year report, published in September.last_img read more

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PKA makes first onshore wind investment with €350m Swedish project

first_imgPKA already boasts five offshore wind parks within its DKK275bn (€36.9bn) portfolio. However, the pension fund said the right type of investment and partnership had not previously been available to make an onshore investment possible.Peter Damgaard Jensen, CEO of PKA, said: “The model created for this investment can be copied to other similar investments, as we have seen with our investments in offshore wind parks. With experienced and solid partners, a unique structure has now been created among major Nordic players in the field of energy, creating a large wind park that is profitable for all parties, without subsidies playing any significant role.”This latest wind project will take the value of renewable investments in PKA’s total portfolio to DKK20bn. The fund aims to be invest 10% of its portfolio in renewables by 2020.Damgaard Jensen continued: “We don’t expect this to be our last investment in onshore wind. We focus on this type of investment because we continue to find interesting opportunities in combining good returns to our members with mitigation of climate change.”Vestas will supply and install the wind turbines, as well as carry out active output management services under a 25-year contract. Turbine delivery is expected to begin in the first half of 2021, with full commissioning planned for the fourth quarter. Danish pension fund PKA has made its first direct onshore wind power investment with a stake in a 353MW project in Sweden, which will supply green energy to 220,000 households when completed in 2021.PKA has partnered with Danish turbine manufacturer Vestas and Swedish energy company Vattenfall to install 84 turbines in two areas of northern Sweden – 50 across the Blakliden and 34 across the Fäbodberget wind parks.  Vestas will own a 40% share of the project equity, with PKA and Vattenfall each holding 30%. A mezzanine loan from PKA and Vattenfall will provide 25% of the funding. Total construction costs are estimated at €350m.The bulk of the power generated by the turbines will be taken by Norsk Hydro on a long-term fixed price agreement.last_img read more

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Pressure building on UK audit regulator’s leadership as inquiry begins

first_imgThe MPs’ intervention followed the release on 16 May of a damning report into the collapse of the outsourcing firm Carillion. The report accused the Pensions Regulator (TPR) and the FRC of being “united in their feebleness and timidity”.TPR chief executive Lesley Titcomb announced last week that she would step down from her role at the end of her contract in February 2019.Frank Field and Rachel Reeves, chairs of the two MPs’ committees, said in their letter of 22 May that they had “multiple serious concerns about the performance of the FRC”.The MPs also argued that the FRC needed a “significant shift in culture” to perform as the public expected.Critics of the FRC have argued that it is too close to the audit firms that it supervises, and that it has failed to pursue them with sufficient vigour since the financial crisis.The FRC has also been criticised for taking too long to wrap up investigations into allegations of audit shortcomings following corporate collapses.Sir John Kingman has already started the process of taking evidence for his probe, having contacted stakeholders privately. Sources familiar with the process, who spoke to IPE on condition of anonymity, said Sir John was fully aware that his options included scrapping the FRC.Political pressure building on FRCSeparately, the FRC has also come under scrutiny in the UK parliament’s upper house, where Liberal Democrat peer Sharon Bowles has tabled a total of 65 questions for ministers to answer related to the FRC and the country’s audit regime.The questions addressed topics such as the collapse of Carillion, company law and the FRC’s procurement policies.In addition to the FRC’s existing woes, the opposition Labour party’s John McDonnell has ordered a review of his own into the entire auditing and accounting regime in the UK.The review will be led by Prem Sikka, professor of accounting and finance at the University of Sheffield.In a speech to the Labour party’s “State of the Economy” conference in London last month, McDonnell said the Carillion collapse showed that “the accounting and the pensions regulators have once more failed to do their jobs.”Sikka’s review is intended to develop principles for good regulation, streamline the regulatory system, promote efficiency and timely action by regulators, and make them more accountable to the public.Sikka told IPE: “This is a people’s review and we would love to hear form anyone who wants to have an input.” Members of the UK parliament questioned whether the leadership of the Financial Reporting Council (FRC), the country’s accounting watchdog, is fit for purpose.Politicians have urged Sir John Kingman, chairman of a review into the future of the FRC, to confirm that his inquiry will examine the regulator’s leadership and culture.In an an open letter, the joint chairs of the Work and Pensions Select Committee and the Business, Energy and Industrial Strategy Committee invited Sir John to “consider whether the leadership of the FRC is equipped to effect the necessary change.”An FRC spokesperson declined to comment on the contents of the letter but referred instead to the watchdog’s April statement welcoming the Kingman review.last_img read more

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​PFA hails real estate, alternatives as 2018 gains hit €1bn

first_imgPFA, Denmark’s largest commercial pension fund, has said that the large-scale real estate and alternatives investments it has added over the last two years are now starting to bear fruit.The pension fund said its total return for the first nine months of the year amounted to DKK8.3bn (€1.1bn) before tax. This was less than half the DKK18.3bn reported for the same period last year, but much higher than the DKK838m it reported for the first half of 2018.Anders Damgaard, PFA’s group chief financial officer, said: “Q3 took a positive turn and generated strong returns following a turbulent start to the year.”Real estate, alternative investments and US equities had a positive effect on the result, ensuring a return of up to 4% for customers in the first nine months of the year, he said. Anders Damgaard: ‘We are beginning to see value creation from property and alternative investments’In the first three quarters of the year, real estate produced a 6.3% return for PFA, alternatives generated 4.5%, while equities returned 4.2% and bonds made a 0.1% loss.Damgaard said that, within a very short period of time, PFA had built some strong investment funds, which allowed the firm to take part in some of the biggest deals in Denmark as well as abroad, where the institutional investor could assert itself as an active long-term owner.“At the same time, we have, in recent years, invested more markedly in the green transition by means of investments in the world’s biggest offshore wind farms,” he added.During 2017 PFA doubled its exposure to alternatives, including significant allocations to private equity and infrastructure.IPE interviewed seven Nordic pension providers, including PFA, about their investment strategies and portfolios in this month’s edition – read it here. “Now, we are really beginning to see the value creation that our many property and alternative investments give our customers,” Damgaard said.last_img read more

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What it’s like to build a home in Townsville

first_imgChris and Cat Sabadina with daughters Charlotte, 7, and Chelsea, 4, with builder Joel Hewitson at the start of their new home at Burdell. Picture: Evan MorganBUILDING a home instead of buying an established property can be a daunting prospect but the Sabadina family are discovering it can be a seamless process.The family of four made up of Chris and Cat Sabadina and their two daughters Charlotte 7 and Chelsea 4, are building their dream home at North Shore with Joel Hewitson from Hewitson Homes. The house will be base don the Hewitson Homes display home.After years of renting the family are eagerly waiting for their new house to materialise which is expected to be finished around May.Cat Sabadina said signing on to build was definitely a leap of faith but the process had been easier than they expected.“All the people we know who have built have horror stories but when we met Joel Hewitson we had a great feeling,” she said.“We just really trusted him and felt that he was really genuine.“From here the whole process went a lot quicker than I expected.”More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020The family started searching for their dream home by looking at established properties but when they couldn’t find anything they liked they decided to have look at the North Shore Display Village.They instantly fell in love with the Hewitson Home display home, Journey 280.After visiting their mortgage brokers they secured finance before heading to North Shore to find a block of land.They secured a 761 sqm corner block late last year which will easily accommodate their four bedroom home while also allowing them the option of adding a swimming pool and side gate access.Once they decided on their home design with the help of Mr Hewitson they then were able to choose their finishes.Earlier this week the slab was laid for the house and the family have been eagerly visiting their block on most weekends to see the progress being made. Mrs Sabadina said they knew they wanted to live at North Shore as they had lived in the masterplanned community while they were renting.“We rented at North Shore a few years ago and we love it out there,” she said.“The people are really friendly and there are walking tracks an playground although where we were renting was quite cramped os we knew we wanted a corner block.”last_img read more

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Sydney, Melbourne cop it as Brisbane 2-yr forecast holds

first_imgNAB has left Brisbane’s two year house price forecast alone but revised Sydney downwards.One of the Big Four Banks has revised its house price expectations, with Brisbane’s two year forecast holding steady as Sydney cops the brunt of declines.The National Australia Bank Residential Property Survey Q1 2019 now expects Brisbane to see a -1.8 per cent fall in house prices this year but the two year outlook was unchanged at 0.NAB group chief economist Alan Oster said Australian housing market sentiment improved a little in the first quarter backed by an easing in the rate of decline of house prices.While it remained very weak, “longer-term confidence also picked up suggesting housing market conditions may start improving moving into 2021”.While Sydney was expected to cop a peak to trough fall of 20 per cent and Melbourne 15 per cent, NAB expected “other capitals to hold up better”. More Real Estate News Sydney 2019f -7.2; 2020f -2.5Melbourne 2019f -4.3; 2020f -1.0Brisbane 2019f -4.2; 2020f -2.2Adelaide 2019f 0.9; 2020f 0.5Perth 2019f -4.7; 2020f -0.8Hobart 2019f 1.6; 2020f 1.2Cap City Avg 2019f -5.6; 2020f -1.8*percentage changes represent through the year growth to Q4 (Source: CoreLogic, NAB Economics) National Australia Bank Residential Property Survey Q1 2019: Dwelling Price Growth (6-month ended annualised, %). Source: CoreLogic, NAB Economics. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p216p216p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenHow much do I need to retire?00:58 FOLLOW SOPHIE FOSTER ON FACEBOOK National Australia Bank Residential Property Survey Q1 2019: *percentage changes represent through the year growth to Q4. Source: CoreLogic, NAB Economics. “We also see the adjustment continuing in an orderly manner, with prices remaining well up on five years ago.” He expected to “see the RBA cutting interest rates twice in 2019 to 1 per cent on a policy of least regret”.The survey expected rents to keep growing, boosting yields for investors, but for the market in Brisbane to be dominated by owner occupiers — especially upgraders — as foreign buyers continued to retreat.More from newsParks and wildlife the new lust-haves post coronavirus13 hours agoNoosa’s best beachfront penthouse is about to hit the market13 hours agoThe biggest issue was set to be access to credit for both new housing and buyers of established property. Over 300 property professionals participated in the Q1 2019 survey.center_img When auctions and elections collide Why real estate often resists economic downturns NAB HEDONIC UNIT PRICE FORECASTS (%)* First home buyers hit 6 year highlast_img read more

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