EXPERT INSIGHT

Make no mistake, this is a big spending budget.

The policy approach was appropriate highlighted by worthy social programs. However, a better balance between short term tax initiatives and genuine tax reform would have been a more effective approach.

New stimulus initiatives, headlined by the surprise extension to the instant asset write-offs for businesses, are worth 4.1 per cent of GDP over four years &ndash; about eight times the pace of the pre-election budget in 2019.

For perspective, the government&rsquo;s stimulus spending in last year&rsquo;s budget following the biggest economic shock since the 1930s was a little higher at 5.5 per cent of GDP, but not materially so.

The disruption from COVID and this associated stimulus response is forecast to see net debt lift from 19.2% of GDP in 2018/19 to 34.2% in 2021/22 and 40.9% in 2024/25.

Despite this sharp increase in debt the cost of servicing the debt is forecast to hold at a modest 0.7% of GDP due to the low interest rate environment.

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An early use of policies to reduce debt would have been at the expense of allowing the economy to operate at its potential.

As with other countries debt ratios are unlikely to return to pre COVID levels.

Any return to sustained full employment would see significant budget repair although the public sector is still likely to cycle around much higher debt ratios than we saw before the advent of COVID.

Despite employment levels now being above pre-COVID-19 levels and GDP expected to boom this year, the government is clearly going all in to &ldquo;secure the recovery&rdquo; and drive the unemployment rate down faster.

This drive for growth strategy, along with appropriate commitments to additional services, sees fiscal and monetary policy firmly working together to reach full employment.

The government defines full employment as 4.5 per cent, although that level is not forecast to be reached until mid-2024. Westpac &ndash; and I believe the Reserve Bank &ndash; sees it as 4 per cent or even a little lower.

BILL EVANS&nbsp;is the Chief Economist at Westpac

The policy approach was appropriate highlighted by worthy social programs, however, a better balance between short term tax initiatives and genuine tax reform would have been a more effective approach

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Federal Budget 2021: Genuine tax reform stuck in the too-hard basket: Bill Evans

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EXPERT OBSERVER
Westpac has lifted its economic growth forecasts for 2020 and 2021 from –3.0% and 2.8% to –2.0% and 4%, respectively. Our growth forecast for 2022 has been lowered from 3.5% to 3.0%.
As a result of this substantial near term boost to the growth forecasts we have also lowered our forecasts for the unemployment rate by December 2021 from 7.0% to 6.0% and 6.3% to 5.2% by December 2022.
Under these forecasts we expect that the level of consumer spending and the level of GDP will return to the “end 2019” levels by the June quarter 2021.
By end 2021 GDP will be around 2% above the end 2019 level but still around 3% below the level of GDP that would have been expected in the absence of covid.
These revisions follow the stronger than expected print for GDP growth in the September quarter (3.3%) compared to our forecast of 3.0% and our revised forecast growth rate in the December quarter of 2020 from 1.6% to 2.3%.
The dominant message from the September quarter national accounts was the 7.9% surge in consumer spending, including 9.8% for services and 5.2% for goods. Consumer spending actually contracted by 1.2% in Victoria while it lifted by 11% in the other states.
As the Victorian economy (around 25% of the national economy) reopens in the December quarter and momentum remains positive in the other states we expect consumer spending to lift by a further 5% in the December quarter.
The key to the revision for 2021 is the expectation that the recent lift in Consumer Sentiment to a seven year will be sustained; the increased momentum in the housing market will continue; a likely commitment by the government to continue to target a lower unemployment rate in the 2021 Budget; the huge boost to markets and global growth prospects with the advent of vaccines; the significant buffer of savings that will accommodate a large fall in the savings rate; ongoing reopening momentum; a likely upward revision to the government’s currently overly pessimistic net migration forecasts.
The headwinds from deferred loans and the tightening of insolvency laws are now seen to be less threatening for the economy as the economy has gathered such momentum in the second half of 2020.
BILL EVANS is the Chief Economist at Westpac
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Westpac's Bill Evans optimistically revised 2021 unemployment forecast

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At its December meeting the Reserve Bank Board decided to maintain the policy settings it adopted at the November Board meeting.
The Governor confirmed the key forecasts that were adopted for the November Statement on Monetary Policy: “It will not be until the end of 2021 that the level of GDP reaches the level attained at the end of 2019. In the central scenario, GDP is expected to grow by around 5 per cent next year and 4 per cent over 2022”.
That growth profile is expected to be consistent with an unemployment rate of 8% by end 2020; 6.5% by end 2021; and 6% by end 2022.
It is this persistently high unemployment rate that is expected to weigh on wages growth and ultimately inflation prompting the Governor to confirm that “the Board is not expecting to increase the cash rate for at least 3 years”.
Over the course of the next few months, as we move to the next Board meeting on February 2 the Board may need to significantly review its forecasts.
Firstly, the unemployment rate in December, seems unlikely to reach 8% given its current level of 7.1%.
Westpac expects strong employment growth in November as Victoria reopens and while the participation rate is likely to rise a jump in the unemployment rate to 8% seems unlikely.
Secondly, the RBA is forecasting growth in 2020 of minus 4% implying growth of around 3.5% in the second half. We expect the GDP report for the September quarter will print around 3% leading to a growth rate in 2020 of minus 3% including growth in the second half of around 4.5%. That further supports the likelihood that the unemployment rate finishes the year well below the RBA’s 8% forecast.
With population growth in 2021 reflecting a likely contraction in net immigration potential growth in 2021 could be in the 1.5% – 2.0% range, (the Government’s current forecasts are for net migration in 2020/21 of minus 70,000 and for 2021/22 of minus 20,000).
The RBA’s forecast of GDP growth of 5% in 2021 currently implies a fall in the unemployment rate of 1.5 ppt’s – such a gap between potential and actual growth (3–3.5 ppt’s) could well see a more significant fall in the unemployment rate. Certainly, if we end 2020 with an unemployment rate below 7.5% and markets “buy” the 5% growth forecast for GDP in 2021 markets are likely to be projecting an unemployment rate of well below the RBA’s current 6.5% forecast.
For 2022 the RBA is forecasting another “above potential “growth rate of 4%. While population growth will have lifted in 2022 as foreign borders reopen we are almost certain to get a below par rate of population growth in 2022- implying perhaps a potential growth rate of 2.25% – well below the forecast rate of 4%. Markets may also be surprised that in such circumstances the unemployment rate is only forecast to fall by 0.5% from 6.5% to 6.0%.
We are sceptical about the 5% growth forecast in 2021 but would expect that if it was “delivered” the unemployment rate would finish 2021 well below the RBA’s 6.5% forecast; equally a 4% growth rate in 2022 with sub-par population growth would likely see a bigger fall in the unemployment rate than 0.5 ppt’s.
Faster than forecast falls in the unemployment rate in 2021 and 2022 would certainly invite speculation in the market about the RBA’s policy direction.
Taking the RBA’s unemployment rate forecasts at face value there is clear scope for more policy support. The RBA sees its role as complementary to fiscal policy – “monetary and fiscal support will be required for some time” and “the Board is not expecting to increase the cash rate for at least three years”.
The decision to peg the three year target bond rate at the cash rate is the strongest form of forward guidance – much bolder than we see from other central banks that engage in forward guidance.
On the face value of the RBA’s current forecasts, Westpac’s view that the RBA will be required to adjust the target rate on the three year bond around mid 2022, seems reasonable but, as discussed, the risks around the forecasts will see significant market speculation around this issue through 2021.
We also learned from Deputy Governor Debelle’s speech last week that the 3 year rate is more significant for the private sector than the longer maturities (say 5 – 10 years).
That implies that the sequence of any unwinding of the policy package of the November Board meeting is likely to be QE first; followed by yield curve control; followed by adjusting the cash rate.
In the near term the Governor’s confirmation that “The Board will keep the bond purchase program under review, particularly in light of the evolving outlook for jobs and inflation … is prepared to do more if necessary”. raises the real prospect that the $100 billion program, which is targeted to be completed by June, will be extended. That decision would certainly be consistent with the timing that Westpac currently envisages for the adjustment of the yield curve control policy.
Since the Board announced its suite of policies on November 3 the AUD has risen from USD0.716 to USD 0.737. As noted in the Governor’s Statement the policy response contributes to “a lower exchange rate than otherwise”.  Reasonably the Governor attributes the vaccine related “improvement in risk sentiment” with a depreciation of the US dollar and an appreciation of the Australian dollar”. There is no hint of disappointment or impatience with this rise in the AUD.
Conclusion
Whereas 2021 might appear to be an uneventful year from the perspective of the cash rate the introduction of the RBA’s other policy tools raises a range of uncertainties about the policy mix.
All of these uncertainties will have significant implications for markets; the yield curve; and ultimately the economy.
2021 might not be that boring after all!
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Uncertainty around RBA forecasts suggests 2021 will not be boring: Bill Evans

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EXPERT OBSERVER
The success of vaccine tests; Australia’s current strong growth story; and pivots around monetary policy are highly relevant to the market outlook.
The approach to monetary policy in Australia is changing.
In his speech last Monday, the Governor neatly set out the four aspects of current policy.
The nature of forward guidance – “we have now moved to place much more weight on actual outcomes rather than forecast outcomes". A reasonable interpretation here is that particularly due to the combination of globalisation and technology the functioning of labour markets has changed and the need to be pre-emptive with policy has dissipated.
It is now appropriate to wait to see inflation firmly within the 2–3% band AND high wages growth, requiring a return to a tight labour market. Arguably he is making the “tight labour market” a necessary condition so, if for example a spike in inflation resulted from a supply shock then that would be an insufficient condition to raise rates.
Consistent with the above view he emphasises the RBA’s mandate – price stability; full employment; and economic welfare. He confirms the sentiment in 1) by emphasising the need to reduce spare capacity in the labour market – jobs are the central focus and success with jobs will lead to progress on the inflation front.
He discusses “the gravitational pull of low global interest rates” – if that pull, which reflects the global excess of savings over investment, is overlooked developments around the exchange rate and the economy would be adverse.
However, in the Q&amp;A he again describes negative rates as “extraordinarily unlikely” since they make it “harder for banks to lend” although he does accept that the gravitational pull represented by any future decision of the US Federal Reserve to go negative would cause a rethink.
BILL EVANS is the Chief Economist at Westpac
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Mid-2021 economy likely to experience a “soft patch”: Bill Evans

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EXPERT OBSERVER
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Last Wednesday we released a bulletin in which we forecast that the RBA was set to cut the overnight cash rate to 0.1%; the three year target bond rate to 0.1%; the rate on the Term Funding Facility to 0.1%; and the rate the RBA pays on Exchange Settlement balances to 0.01%. 
We also forecast that the Bank would commit to further purchases of Australian and semi government bonds in maturities between 5 and 10 years. 
We expected that the action would be announced at the next Board meeting on October 6. 
We now expect the move will come a month later at the Board meeting on November 3.
October 6 happened to be Budget Day so our expectation was that it would be another “Team Australia” initiative with both the fiscal and monetary authorities working together to address the economic crisis. 
The dimension of the crisis is best summarised by the official forecasts that the unemployment rate is set to rise to 10% by the end of the year and only be back to around 7% by the end of 2022. 
Admittedly, the choice of Budget Day to announce a series of further monetary stimulus steps was without precedent (the Budget is usually on the second Tuesday of the month and the RBA Board meeting is on the first Tuesday of the month). 
But the current crisis is without precedent as the blowout in the Budget deficit from $1 billion in 2028/19; to $85 billion in 2019/20; to an expected $230 billion in 2020/21 testifies. 
The timing of the key speech from Deputy Governor Debelle, from our perspective, pointed to the October timing. 
The speech indicated more concern from the RBA with respect to the outlook and emphasised that the Bank had more scope to ease policy. 
It came a week before the “black out” period for the October meeting and was the last scheduled speech before that “black out”. 
Our reading of the speech was that any policy changes were likely to come very soon. 
In fact he noted that it would be better to err on the side of doing too much rather than too little. 
As we discussed last week, the arguments for the RBA not changing policy near a Budget due to the need to assess the contents of the Budget did not stand up especially in a crisis period. 
For example, it is very unlikely that the RBA will lower its 7% forecast for the unemployment rate by end 2022 as a result of the contents of the Budget. 
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The “wait and see" argument also does not pass the “history test”. 
Since 2000 the RBA has changed the cash rate in May (a week before the Budget) on eight occasions. 
May has been the “most popular “month over the whole year for adjusting policy in those 20 years(ironically, second is November with seven changes). 
But certainly cutting the cash rate a week before the Budget announcement has a much less significant effect on the government’s capacity to sell the Budget than acting on Budget Day. 
A central bank moving on Budget Day could be interpreted by the government and the bank itself as diverting attention away from the Budget and complicating the government’s task in “selling” the Budget. 
The Governor himself, who has been such a strong proponent of fiscal policy, may also see the advantages of allowing space for the government to promote its Budget. 
So in the eyes of the authorities, there was probably a trade- off between a “Team Australia” moment and the government having the clear air to sell its Budget without any distractions from other policy makers. 
We saw the package of measures in March (widely described as a Team Australia policy approach) as boosting confidence through the impact of the combined policies. 
Central banks are influenced by and aim to influence expectations. 
For our “Team Australia” theme to have been viable we needed to see expectations and support for the concept build over the course of last week following Dr Debelle’s speech on Tuesday and our note on Wednesday. 
That has not happened. 
But the arguments for RBA providing a further policy boost to the economy are just as relevant. 
Consequently, we expect that the policy initiatives that we have outlined will now be introduced on November 3 giving the government adequate time to sell its Budget without any distractions coming from monetary policy. 
Bill Evans is the chief economist at Westpac.
This was first published <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/September/er20200928BullRBAPolicyChanges.pdf" target="_blank">on WestpacIQ</a>.
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Westpac push RBA rate cut forecast to November

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EXPERT OBSERVER
In a speech yesterday the Deputy Governor of the Reserve Bank gave a fairly clear hint that the Board is set to cut the cash rate and other key policy rates at its October Board meeting.
The Bank is also likely to extend its objectives for bond purchases to include general support for the Australian and semi government yield curves in the five to ten year maturity range. It is likely to leave this commitment open ended at this stage.
We have discussed these issues in previous notes but did not expect the action as soon as the next Board meeting as now seems to be the case.
The theme is likely to be, as we saw in March, a Team Australia moment where the Reserve Bank is directly supporting a bold Federal Budget.
The prospect of the RBA “sitting back” to assess the Budget, which has been seen as the “norm” in previous years is not appropriate for these unique times.
We now expect the RBA to cut the overnight cash rate to 10 basis points; to adopt a 10 basis point three year bond target; and to adjust the rate on any new drawdowns of the Term Funding Facility to 10 basis points. All these rates are currently set at 25 basis points , which the Governor has generally described as the effective lower bound for the cash rate.
The Bank is also likely to reduce the rate which the Bank pays on Exchange Settlement Account balances from 10 basis points to 1 basis point.
If the banks are only earning 1 basis point on their ESA balances there will be significant incentive to purchase bonds, even if the bond is only yielding 10 basis points, or lend to the private sector.
BILL EVANS is <a href="https://westpaciq.westpac.com.au/Article/44613/14186/" target="_blank">Westpac's chief economist</a>
 
 
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Westpac now expect RBA to cut in October: Bill Evans

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EXPERT OBSERVER
The Westpac-Melbourne Institute Index of Consumer Sentiment surged by 18% from 79.5 in August to 93.8 in September.
We suspected last month’s 9.5% collapse in the Index was an over-reaction but this month’s 18% rebound is a pleasant surprise nonetheless. It comes despite official confirmation in the survey week that Australia had experienced its first recession since 1992. Clearly this was ‘old news’ with respondents more focussed on the future.
The rebound means the Index is now just 1.6% below the average over the six months prior to the emergence of COVID-19 in March.
Recall that the sharp fall in August was in reaction to the deteriorating virus situation in Victoria which had seen the state government announce hard lockdown measures at the start of the month including ‘Stage 4’ restrictions for Melbourne. But the more concerning message in August was the weakness in other states – in particular, the 15.5% slump in confidence in NSW.
The state had seen persistent clusters of virus cases and combined with Victoria’s problems, sparked concerns of a wider ‘second wave’ outbreak. To a lesser extent these fears were also apparent in Queensland where confidence tumbled 8.1%.
However, Victoria’s new cases slowed markedly once lockdown measures were in place and we saw no evidence of second waves in either NSW or Queensland.
It should be noted that the September survey was completed before the announcement by Victorian State Premier Andrews on September 6 of a slower than generally expected move towards reopening. The disappointment with that announcement could have been expected to dampen the 14.9% surge in confidence in Victoria, although frustration at the extended lockdown measures would likely still be more than outweighed by the clear success they have had in containing the virus.
We do not expect the Premier’s announcement would have had any impact on the positive results in other states.
BILL EVANS is the Chief Economist at Westpac
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Consumer sentiment roars back despite news of recession: Bill Evans

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EXPERT OBSERVER
We have revised our growth forecasts in 2020 and 2021 to reflect a more resilient consumer and labour market - particularly in Victoria.
We have revised our growth forecasts for the Australian economy in 2020 from minus 4.7% to minus 3.5%.
Forecast growth in the September quarter has been increased from flat to 1.8% while growth in the December quarter is revised down from 2.8% to 2.2%.
For 2021 we have revised down growth from 3.0% to 2.5%.
The unemployment rate that was expected to reach 8.5% by the end of 2020 has been lowered to 7.8%; while the forecast end 2021 rate has been held around 7.5%.
The GDP Report this week signalled that the Australian economy had contracted by a record 7% in the June quarter. Consumption contracted by a spectacular 12.1% and hours worked fell by 9.8%. The fall in consumption explained 98% of the overall reduction in activity.
Despite that collapse in hours worked total nominal wage income “only” fell by 2.5% and total nominal household income actually rose by 2.2%.
With a sharp fall in spending and an actual increase in incomes the savings rate rose to 19.8% from 6.0%, highlighting the significant improvement in household balance sheets which would be consistent with considerable pent up demand to spend.
BILL EVANS is the Chief Economist at Westpac
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Optimistic revision of economic growth forecasts: Bill Evans

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EXPERT OBSERVER
The Australian economy contracted by 7% in the June quarter, broadly in line with expectations (both Westpac and market median at -6%).
This is by far the largest quarterly contraction in the Australian economy on record (previous record was -2.0% in June 1974).
However by international comparisons the contraction is relatively mild with UK (-20.3%); Europe (-12.1%); US (-9.1%); and Japan (-7.8%) all exceeding Australia’s contraction.
Of course these extraordinary numbers reflect the impact on activity from governments’ actions to contain the health damage to citizens from the Coronavirus.
As with other countries the primary impact of the containment policies was to restrict consumer spending. For Australia consumer spending represents 56% of GDP yet the 12% contraction in consumer spending explained 98% of the overall contraction in GDP. Components of consumption which were most adversely affected were: transport services (fell 86%); accommodation services (-77%); catering services (-56%); recreational and cultural services (-52%) and health (20%).
Household gross disposable income rose by 2.2%, largely reflecting the boost to social assistance benefits.
Hours worked fell by 9.8% although wage incomes declined by only 2.5%. That “gap” is explained by the JobKeeper subsidy payments which were used to maintain the wages of workers who experienced a significant reduction in hours worked.
With the lift in household incomes and the collapse in spending the household savings rate soared to 19.8% from 6% in the March quarter.
The sharper fall in hours worked relative to output points to the disproportionate job losses in the labour intensive service sectors of the economy.
The dominance of consumer spending in this result is generally highlighted by other components of expenditure, which were weak, reflecting the recession conditions, but not spectacularly so – business investment fell 3.5%, including a fall of 6.8% in machinery and equipment and a partly offsetting rise in infrastructure investment; residential construction fell by 6.8%; and real estate activities fell by 18.6%.
Nevertheless we can expect that the lags from recessionary conditions in the June quarter will continue to impact business investment and housing for the remainder of the year.
Exports fell by 6.7% (including a 24.6% fall in travel services and a 46.6% fall in transportation services) while imports fell 12.9% as the international border closure triggered a 98.7% fall in travel services and a 32.9% fall in transportation services. Overall net exports contributed 1.0ppt to GDP growth.
The growth outlook for the remainder of the year will be dependent on the success which government achieve in containing the virus.
On the positive side we assess that the economy had considerable momentum going into the September quarter following the 4% snap back in hours worked in June and the lift in jobs in June and July. Of course that momentum was severely impacted by the deterioration in Victoria which represents around 24% of national GDP.
Our current figuring points to a flat quarter overall in September to be followed by a strong recovery in the December quarter. That recovery is dependent upon our base assumptions that Victoria will move through to a Stage2 in the December quarter while other states will avoid any damaging second waves.
As we have seen in today’s report the governments’ support packages have played a key role in containing the impact on household incomes from the containment policies. The December quarter will – on current policy settings – see a considerable scale back in that support affecting both households and business.
However, as demonstrated by the spike in the savings rate, the household balance sheet is in much better shape to cope with the partial withdrawal of the government payments.
The upcoming Federal budget, on October 6, provides the government with another opportunity to reassess and reset policy support. The annual Budget will undoubtedly be expansionary, the question is the degree of additional stimulus and the form that takes. The bringing forward of already legislated income tax cuts is an appropriate action in the current environment.
Overall we expect that the net positive effect of the general reopening of the state economies on the consumer sector, including relaxation of key state border restrictions will underpin a strong recovery in the December quarter.
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What does the record 7% collapse in GDP mean? Bill Evans

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EXPERT OBSERVER
The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, rose from –4.43% in June to –4.37% in July.
The Index growth rate remains in deep negative territory consistent with recession. However, it appears to have bottomed out in April at -5.61% and, without the recent disaster in Victoria, it seemed certain that the June quarter would have marked the low point in the growth cycle.
Victoria represents around 25% of national output. We expect the hard lockdown following the renewed virus outbreak to see the Victorian economy contract by 9% in the September quarter. That will offset the ongoing recovery we expect to be unfolding in other states as they continue to reopen, albeit at varying speeds.
For Australia overall, we expect growth in the economy to be flat in the September quarter before lifting by 2.8% in the December quarter on the assumption that Victoria moves through Stage 4 to Stage 2 and the other states avoid ‘second wave’ outbreaks.
The Leading Index growth rate has now lifted 1.24ppts out of what was a deep hole in April (growth relative to trend bottoming at –5.61%). That has been led by strong initial rebounds in two components: US industrial production (adding +1.75ppts) and hours worked (adding 0.78ppts). However, these gains have been materially offset by deteriorations in several other components, including: dwelling approvals (–0.47ppts); the Westpac-Melbourne Institute Unemployment Expectations Index (–0.43ppts); and the Westpac-Melbourne Institute Consumer Expectations Index (–0.31ppts).
Indeed, the three-monthly improvement would have been about double the size, and much more convincing, if it had not been for the renewed weakening in these other components. In the case of sentiment-based components, the weakness since April clearly captures the initial impact of the Stage 4 lockdown in Victoria – which saw a particularly disturbing nationwide drag on confidence in the August month.
Looking over the six months since the onset of the COVID-19 pandemic, the Index still shows a large, broad-based weakening. July’s growth rate is 3.26ppts below its February pace. Six of the eight components have driven the fall: US industrial production (–1.52ppts); aggregate monthly hours worked (–0.78ppts); the S&amp;P/ASX200 (–0.45ppts); dwelling approvals (–0.40ppts); and the two consumer sentiment based components (a combined–0.48ppts). Commodity prices (+0.14ppts) and the yield spread (+0.23ppts) have provided some slight offsets.
While we always provide this standard six month comparison the key in these extraordinary times is the lift we have seen since April, which is signalling some improvement, while noting the recent impact on confidence components in response to the Stage 4 lockdown in Victoria.
The Reserve Bank Board next meets on September 1 and we can expect the Board to maintain current policies.
From a policy perspective the next major event will be the Commonwealth Budget which will be announced on October 6. Westpac expects the government will be committed to providing generous ongoing support to the economy. However, most of this support is likely to be of a non-recurring form including bringing forward the July 2022 tax cuts; one off payments; and infrastructure spending.
BILL EVANS is the <a href="https://www.westpac.com.au/news/authors/bill-evans/" target="_blank">chief economist at Westpac</a>.
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Westpac's Melbourne leading index has bottomed out: Bill Evans

Brisbane-based developer <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a> has made a striking debut on the Gold Coast, officially unveiling its $250 million COMO development in Varsity Lakes, a lifestyle-driven residential project anchored by an extensive rooftop wellness and activity precinct.

Having recently launched to market, construction has already been fast-tracked by <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a>, ensuring momentum continues on what is set to become a landmark residential address for the growing Varsity Lakes community.

Located at 22 Lake Street, Varsity Lakes, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels, comprising one-, two- and three-bedroom residences designed for modern living. However, it is the project’s rooftop amenity offering that sets COMO apart.

[smartcode_project:default project_id=135546 project_image_fid=363510]

Designed as a dedicated wellness and recreation hub, the rooftop will feature a 25-metre lap pool, fully equipped gymnasium, and multiple pickleball and paddleball courts - amenities rarely seen in boutique apartment projects.

Residents will also have access to a sauna and plunge baths, while landscaped gardens and relaxation zones will provide tranquil spaces overlooking sweeping panoramic views across the Gold Coast skyline.

The rooftop precinct has been designed to function as the social and wellness heart of the development, encouraging residents to embrace an active, balanced lifestyle within their own building.

&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363512]

Red &amp; Co director David Laverty said the amenity offering was central to the project’s design from the outset.

“Amenities were at the forefront of our decisions,” Laverty said.

“Buyers today are looking for more than just an apartment - they want a lifestyle that promotes health, connection and balance.

“The rooftop at COMO has been designed to be the epicentre of that lifestyle, with a suite of wellness and recreation facilities that are quite unique for a boutique development of this scale.”

&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363514]

Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the residences prioritise liveability, featuring spacious layouts, 2.7-metre ceilings and high-quality finishes throughout.

The development sits beside Bond University, placing residents within walking distance of education, retail and dining options within the vibrant Varsity Lakes precinct, including Robina Town Centre, Varsity Lakes Train Station and a range of leading schools.

[smartcode_project:default project_id=135546 project_image_fid=363511]

Laverty said the location was a key driver behind Red &amp; Co’s decision to bring the project to the Gold Coast.

“<a href="https://www.apartments.com.au/developments/varsity-lakes-qld-4227">Varsity Lakes</a> was a clear choice for us to invest in as it’s a lifestyle hub that seamlessly blends lakeside living with urbanity,” he said.&nbsp;

“Como will capitalize on this great location, delivering a project that not only creates premium homes, but a lifestyle defined by community, wellbeing, and connectivity.”

Red &amp; Co has delivered more than 500 apartments and townhouses across 26 projects in Brisbane in recent years, with COMO marking the company’s first major Gold Coast development.

[smartcode_project_cta:default project_id=135546]

Joel Robinson

Red & Co unveils amenity-rich Como development in Varsity Lakes

Gold Coast developer&nbsp;<a href="https://www.apartments.com.au/developers/big-projects">Big Projects</a> has secured approval for its second Mermaid Beach project.

The developer, currently selling <a href="https://www.apartments.com.au/new-apartments/the-frederick-mermaid-beach-2265-gold-coast-highway-mermaid-beach-qld-4218">The Frederick in Nobby Beach</a>, has secured approval for its next project just 1.5 kilomnetres up the road.

The new development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/glenelg-residences-2462-2472-gold-coast-highway-mermaid-beach-qld-4218">Glenelg Residences</a>, has been designed by BDA Architecture and&nbsp;will have just under 100 apartments across an 11-storey building&nbsp;at 2462–2472 Gold Coast Highway, on the corner of Glenelg Avenue just under 300m from the future Mermaid Beach Light Rail stop.

The apartments, a mix of two- and three-bedrooms, will sit above a retail-focused ground plane and under extensive rooftop resident amenities.

<img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screen%20Shot%202024-06-11%20at%209.55.04%20am.png?VersionId=z6NV4izeuvhBSSVlY6vK6TPO1LxrFeaG" />

BDA said in its planning submission that the project is intended to support the area’s transition toward higher-density, mixed-use living. “This project offers the opportunity to generate appropriate higher-intensity development within the future Light Rail corridor of <a href="https://www.apartments.com.au/developments/mermaid-beach-qld-4218">Mermaid Beach</a>,” the submission noted.

At ground level, Glenelg Residences will include eight retail tenancies designed to activate the street frontage, complemented by a basement bar offering an additional hospitality element. Above, residents will have access to a rooftop amenity deck featuring an infinity pool, hot and cold plunge spas, day beds, and barbecue facilities.

The architectural approach adopts a restrained material palette of brick, textured concrete, and integrated landscaping, with cantilevered concrete frames and cascading planting intended to soften the built form. BDA described the design as aiming to create “a memorable sculptural mid-rise mixed-use building” that responds to both its coastal setting and urban context.

<img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screen%20Shot%202024-06-11%20at%209.55.45%20am.png?VersionId=cpjIVBqcT_sujmo2UMWkVyLcQ7WGJHaQ" />

The approval comes as the City of Gold Coast continues to plan for significant population growth, with regional targets requiring more than 100,000 new high-density dwellings by 2046.

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Big Projects, led by Matthew and John Barrett, is part of a growing cohort of developers that deliver construction in-house, providing a high level of confidence to prospective purchasers.
</section>

[smartcode_project_cta:default project_id=150260]

Big Projects secures approval for Glenelg Residences in Mermaid Beach

Sherpa Group is ramping up its investment in the southern Gold Coast by lodging a development application for <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, a new $350 million project in Coolangatta.

The move comes after the group’s $27 million acquisition of the 2,029 sqm site on the corner of Griffith and Warner Street, last year.

They will develop 194 apartments across a 26-storey tower, which will become Sherpa’s largest project to date.

Viveré will be the next chapter in the Flourish story, following closely behind Amargo, Oasis, and the Avenues in Palm Beach, as well as Symphony in Brisbane, all designed to deliver affordable housing in lifestyle-rich locations, giving locals a real chance to secure a residence close to the beachfront.

The HAL Architect-designed project will offer a diverse range of residences, from one-, two, and three- bedroom apartments to the premium Canopy range to luxury penthouses.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c85f5a7e-a22f-4745-8def-400adb3c0b35" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.43%E2%80%AFAM.png?VersionId=OY.chur3BPExn1exQ2q8clHqWnW_CaBi" />

“The Gold Coast is undergoing a period of immense growth, with more people drawn to the incredible 
lifestyle that’s available, leading to strong growth in property prices,” said Christie Leet, founder of Sherpa 
Group.

“Our goal at Sherpa is to ensure locals are not priced out of the market in prime locations, which is why we 
created the Flourish collection.

“Flourish Vivere will form the next chapter in our portfolio, and we are so excited to be lodging the DA, marking our first project in Coolangatta.”

A signature of the Flourish developments is the communal rooftop. Flourish Vivere will showcase a private resident’s lounge, outdoor dining with barbecues and pizza ovens, heated pool, fully-equipped gym, and a wellness centre with sauna and steam room.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c09372cc-aae6-4458-af2e-f291bd19a5e5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.49%E2%80%AFAM.png?VersionId=Sc_RLXl5jiff.tnadogXjQJ_WIpDjf3p" />

The project is strategically located to offer a walkable lifestyle, with the Strand shopping centre, cafes, restaurants, shops and the beach, all just a short stroll away.

“We have meticulously planned Vivere to build on the Flourish legacy, creating a truly special project,”&nbsp;Leet added.

“Wellness, lifestyle and community are at the forefront of every decision we make, and that has not 
changed for Vivere.”

With the DA now lodged with the Gold Coast City Council, Sherpa has moved quickly to secure LPS Group as the builder, offering buyers a level of certainty that is rarely seen in today’s market.

Sherpa has delivered 16 residential projects over the past seven years with a pipeline of $1 billion, with more under construction.

Sherpa takes Flourish brand to Coolangatta, lays plans for Flourish Vivere 

S&amp;S Projects is boosting its investment at Rainbow Bay to more than $1 billion after the prolific Gold Coast developer acquired a new site for $20.25 million and immediately laid plans for a new luxury apartment project in the sought-after precinct.

The site, which is the company’s fifth acquisition at Rainbow Bay in the past four years, will be home to the company’s largest project to date after delivering 3 sold-out projects and construction progresses on Radia worth a combined $215m. 
S&amp;S Projects is currently finalising plans for its latest strategic acquisition, a 1,518 sqm site located 209-213 Boundary Street in Coolangatta, with a development application expected to be lodged within weeks.

The luxury residential development will build on the company’s highly successful projects at Rainbow Bay, comprising Flow, Awaken, Esprit and Radia, with Radia currently under construction by Hutchinson Builders.

“We have been unflinching in our commitment to Rainbow Bay and the transformation we have helped drive in this incredible part of the Gold Coast, which is among the city’s most desirable residential locations,” said S&amp;S Projects founder and director Paul Gedoun.

“Our fifth project will reflect the best of what we have done so far to create a lifestyle precinct that is second to none.”

The latest development, which has yet to be named, is proposed to accommodate 88 luxury apartments in a design that will immerse residents in a unique wellness lifestyle that expands on the legacy of S&amp;S Project’s earlier developments at Rainbow Bay.

The development will feature an expansive rooftop garden and wellness centre with a resort- style pool, among a host of lifestyle amenities planned for residents.

“Rainbow Bay, with its beautiful, protected beach and alongside one of the world’s best surf breaks at Snapper Rocks, is the natural wellness heartland of the Gold Coast,” said Gedoun.

“We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden.”

The latest acquisition comes as S&amp;S Projects is at the completion of Esprit and construction continues on Radia, which are part of their significant portfolio undertaken by the company at Rainbow Bay since 2022.

The $215 million Radia, which comprises 38 apartments, is currently the flagship development by S&amp;S Projects at Rainbow Bay which is expected to be completed in 2027.

Jayde Pezet, of Pezet Matheson, which has managed sales and marketing for S&amp;S Projects across their Gold Coast portfolio, emphasised the developer’s commitment to continuous improvement and excellence.

“S&amp;S Projects continue to elevate the benchmark of luxury with each development," Pezet said.

“We have worked with S&amp;amp;S on their 4 other projects in Rainbow Bay and their approach reflects a team that is constantly learning, refining, and pushing the standard higher.

“Their hyper-local knowledge and deep expertise within the luxury property sector are what truly set them apart, allowing them to deliver projects that feel both globally sophisticated and authentically connected to their coastal environment”

S&amp;S Projects plans to officially launch its latest project at Rainbow Bay in the second half of this year.

“As we embark on our largest project yet, we have pulled out all stops to create another landmark development that truly reflects the relaxed southern Gold Coast lifestyle,” Gedoun added.

S&S buys $20m Rainbow Bay site for fifth beachside apartment project

Japandi, an emerging design trend that combines Scandinavian functionality with Japanese rustic minimalism, remains relatively untested in Australia’s residential development market.

As developers look to differentiate their projects and offer something distinct to buyers, Brisbane-based developer Lantona has embraced the hybrid style for its recently launched Toowong apartment project, <a href="https://www.apartments.com.au/new-apartments/koya-residences-6-josling-street-toowong-qld-4066">Koya Residences</a>, with early response to the design proving positive.

Lantona entrusted Red Door Architecture and interiors practice Luma Design Co with delivering the Japandi brief. The approach blends Japanese minimalism with Scandinavian functionality, emphasising warm, restrained interiors, natural materials and clean lines. Drawing on the Japanese concept of wabi-sabi (beauty in imperfection) and the Scandinavian principle of hygge (comfort and cosiness), it creates serene, uncluttered and sustainable living environments.

These design principles are expressed throughout the Josling Street development, both in its exterior form and across the 40 one-, two- and three-bedroom residences within.

[smartcode_project:default project_id=150787 project_image_fid=366229]

Koya reflects a deliberately scaled approach, with the five-storey form designed to align with the surrounding residential streetscape rather than dominate it.

“Koya is conceived as a building that sits comfortably within its surroundings. Every decision, from material selection to spatial planning, has been guided by long-term liveability and enduring relevance,” the developer said.

[smartcode_project:default project_id=150787 project_image_fid=366243]

Positioned within an established inner-west neighbourhood, the development sits near riverfront parklands and the Bicentennial Bikeway, while remaining within walking distance of Toowong Village and multiple public transport options connecting to the CBD, St Lucia and West End.

Lantona said the location was central to the project’s conception, pointing to Toowong’s balance of green space, transport access and proximity to major education institutions.

“<a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> combines river access, walkability, immediate CBD connection and a strong educational presence. That balance made it the obvious setting for Koya.”

[smartcode_project:default project_id=150787 project_image_fid=366230]

Communal amenity is concentrated on the rooftop, where a shared retreat will include a pool, dining areas and outdoor spaces oriented towards neighbourhood and city views. The design allows for both private use and small gatherings, extending the living environment beyond individual apartments.

Koya enters the market at a time when smaller-scale developments are becoming less common in established suburbs, with many recent projects in the suburb shooting for the sky.

In a nod of confidence,&nbsp;<a href="https://www.apartments.com.au/builders/brisbane-builders">Brisbane Builders</a>&nbsp;has already commenced construction on the building, which is slated for completion in early 2027. Keenan &amp; Byrne is marketing Koya.

[smartcode_project_cta:default project_id=150787]

Bill Evans

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