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GUEST OBSERVER
I’m deeply concerned by how many people are sleeping rough or homeless in our city.
It's not illegal for people to be homeless – for some people it’s an inevitable consequence of the housing affordability crisis in Sydney.
The City’s doing more than any other local government in the country.
Specialist homelessness services funded by the City helped more than 320 people access housing with support and prevented more than 450 people from becoming homeless last year.
But virtually all the levers of power and responsibility lie with the state government.
What we’re seeing in Martin Place is the direct consequence of decades of gutless inaction from successive State Governments.
Instead of investing in more social housing in our area, they’ve kicked people out of their homes and sold them to the highest bidder.
City staff are actively working to keep Martin Place safe and clean but we have no power to forcibly move people on – only the Police can do that.
But even if the Police were directed to do that, where does the Minister expect people to go? Putting them up in hotels for three or four nights is not an answer.
The fact is you can’t solve homelessness without housing – we need long term solutions and we urgently need the NSW Government to step up and do their bit.
Here’s three practical things the Minister and Government could do today:
<ul>
<li>Open Sirius and move people in – 77 homes are currently sitting empty in a building purpose built for social housing. This would immediately resolve the issue in Martin Place;</li>
<li>Support our proposal for funding for a second Common Ground development in the city – our proposal together with Mission Australia Housing and Macquarie Corporate Holdings would create 150 new affordable and social housing unit with 50 specifically designed for vulnerable homeless people; and</li>
<li>Allow the City to extend the affordable housing levy across our area.</li>
</ul>
Levies are an effective &amp; financially feasible way to deliver affordable housing units but the City is currently only allowed a levy in Green Square (which has delivered 106 units) and in Ultimo/Pyrmont (which has delivered 445 units).
If the State Labor Government in 2009 had approved our request to extend the levy it would have funded an estimated 2000 additional affordable units by now.
Our works shows that extending the levy now could deliver up to 2000+ new affordable units across our area.
Over the next three years, the City will invest $6.6 million on homeless services which includes $3.5 million for the State Government’s Family and Community Services agency to help them do their work in Martin Place and other areas.
Clover Moore is Lord Mayor of Sydney.
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Homelessness an inevitable consequence of the housing affordability crisis: Clover Moore

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<img src="https://counter.theconversation.edu.au/content/81619/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Home ownership among young people is declining, as mortgage debt almost doubles for the same age group, results from the Household Income and Labour Dynamics in Australia (HILDA) survey show. It also shows young people are living with their parents longer. 
The Melbourne Institute of Applied Economic and Social Research undertakes the survey every year. It’s Australia’s only nationally representative household longitudinal study, and has followed the same individuals and households since 2001.
The survey shows the rate of home ownership among 18 to 39 year olds declined from 36% in 2002 to 25% in 2014. In the same age group, the decline in home ownership has been largest for families with dependent children, falling from 56% to 39%. 
<a href="https://www.propertyobserver.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.04.42%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.04.42%20AM.png" alt="">
Even for those in this group who manage to buy a home, mortgage debt has risen dramatically. In 2002, 89% of home owners in this age range had mortgage debt. By 2014 this had risen to 94%. 
More significantly, the average home debt rose considerably. Expressed in December 2015 prices, average home debt grew from about A$169,000 in 2002 to about A$337,000 in 2014. Low interest rates since the global financial crisis have meant mortgage repayments for these home owners have remained manageable, but this group is very vulnerable to rate rises. 
<a href="https://www.propertyobserver.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.05.55%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.05.55%20AM.png" alt="">
Detailed wealth data in the survey, collected every four years since 2002, show this increase in debt and decrease in ownership are part of a trend in the wider population. HILDA shows 65% of households were in owner-occupied dwellings in 2015, down from 69% in 2001.
In fact, the decline in home ownership has been greater than the decline in owner-occupied households. This is largely because adult children are living with their parents for longer.
For example, the HILDA data show that the proportion of women aged 22 to 25 living with their parents rose from 28% in 2001 to 48% in 2015. For men this proportion rose from 42% to 60%.
Among those who manage to access the housing market, the data shows that the growth in home debt is not simply because they are borrowing more to purchase their home. A surprisingly high proportion of young home owners (between 30% and 40%) actually increase their debt from one year to the next, despite most of them remaining in the same home. Even over a four-year period - for example, from 2010 to 2014 - at least 40% of young home owners with a mortgage increase their nominal home debt.
<a href="https://www.propertyobserver.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.06.50%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.06.50%20AM.png" alt="">
The proportion of people with home debt that exceeds the value of their home – that is, negative equity – has also risen. In 2002, 2.4% of people had negative equity in their home; in 2014, 3.9% had negative equity. This is a relatively small proportion, but this could change as even small decreases in house prices will result in substantial increases in the prevalence of negative equity.
<h2>How this changes with location, income and profession</h2>
In 2014, less than 20% of Sydneysiders aged 18 to 39 were home owners, compared with 36% or more in the ACT, urban Northern Territory and non-urban regions of Australia. To a significant extent this reflects differences across regions in house prices. 
Sydney and Melbourne have particularly high house prices, while non-urban areas generally have comparatively low house prices. Regional differences in the incomes of 18 to 39 year olds also play a role. 
Those with the highest home-ownership rates are professionals and, to a lesser extent, managers. They experienced relatively little decline in home ownership. 
For workers in other occupations, home ownership has declined substantially. In 2014 home ownership was especially rare among community and personal services workers, sales workers and labourers.
This decline represents profound social change among this age group, where renting is increasingly becoming the dominant form of housing. In 2002, 61% of people aged 35 to 39 were home owners – a clear majority of their age group. By 2014, this proportion had fallen to 48%.
The changing housing situation of young adults is part of a broader change in the distribution of wealth in Australia. The HILDA Survey shows that differences in average wealth by age have grown since 2002. For example, in 2002, median net wealth of those aged 65 and over was 2.8 times that of people aged 25 to 34. In 2014, this ratio had increased to 4.5. 
<a href="https://www.propertyobserver.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.07.55%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/02/Screen%20Shot%202017-08-02%20at%209.07.55%20AM.png" alt="">
The decline in home ownership among young adults and this broader trend in wealth have implications for their long-term economic wellbeing and indeed for the retirement income system. Even if house price growth moderates and many of those currently aged under 40 ultimately enter the housing market, it’s likely that a rising proportion will not have paid off the mortgage by the time they retire. It may be that many will resort to drawing on superannuation balances to repay home loans, in turn increasing demands on the Age Pension.
<a href="https://theconversation.com/profiles/roger-wilkins-95906" target="_blank">Roger Wilkins</a> is Professorial Research Fellow and Deputy Director (Research), HILDA Survey, Melbourne Institute of Applied Economic and Social Research, University of Melbourne and author for The Conversation.
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Home ownership falling, debts rising – it’s looking grim for the under 40

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<h4>Statement by Philip Lowe, Governor: Monetary Policy Decision</h4>
At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
Conditions in the global economy are continuing to improve. Labour markets have tightened further and above-trend growth is expected in a number of advanced economies, although uncertainties remain. Growth in the Chinese economy has picked up a little and is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Commodity prices have generally risen recently, although Australia's terms of trade are still expected to decline over the period ahead.
Wage growth remains subdued in most countries, as does core inflation. Headline inflation rates have declined recently, largely reflecting the earlier decline in oil prices. In the United States, the Federal Reserve expects to increase interest rates further and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively and volatility remains low.
The Bank's forecasts for the Australian economy are largely unchanged. Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3 per cent. The transition to lower levels of mining investment following the mining investment boom is almost complete, with some large LNG projects now close to completion. Business conditions have improved and capacity utilisation has increased. Some pick-up in non-mining business investment is expected. The current high level of residential construction is forecast to be maintained for some time, before gradually easing. One source of uncertainty for the domestic economy is the outlook for consumption. Retail sales have picked up recently, but slow growth in real wages and high levels of household debt are likely to constrain growth in spending.
Employment growth has been stronger over recent months, and has increased in all states. The various forward-looking indicators point to continued growth in employment over the period ahead. The unemployment rate is expected to decline a little over the next couple of years. Against this, however, wage growth remains low and this is likely to continue for a while yet.
The recent inflation data were broadly as the Bank expected. Both CPI inflation and measures of underlying inflation are running at a little under 2 per cent. Inflation is expected to pick up gradually as the economy strengthens. Higher prices for electricity and tobacco are expected to boost CPI inflation. A factor working in the other direction is increased competition from new entrants in the retail industry.
The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities. Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes.
The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
To go to the RBA website <a href="https://www.rba.gov.au/media-releases/2017/mr-17-13" style="font-size: 12.16px;">click here</a>.
 
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Investors facing higher rates warns RBA Governor Philip Lowe's August 2017 statement

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<img src="https://counter.theconversation.edu.au/content/81319/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Contrary to the image a property investor might conjure up - a wealthy full-time property speculator - most residential investors in Australia don’t actually rely on it as their primary source of income.
In reality, Australia’s residential investment market is dominated by people who, having bought their own home, have moved onto buying an investment property. These small-scale investors own 83% of all investment properties.
Previous research shows that real estate investors tend to be married, wealthy males with high income and full-time employment. 
A typical rental housing investor is a high-income earner or family partnership, owning one or two dwellings as an extra income source. The probability of becoming a residential investor tends to increase with age and homeowner status, but declines after the age of 65.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.34.43%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.34.43%20AM.png" alt="">
With home ownership rates in Australia at around 70%, the Australian Bureau of Statistics (ABS) reports that residential investment represents, on average, 35% of all housing finance, while the rest are all owner-occupiers. This means residential investment is an important part of the mortgage market and banking system. 
Most residential investment is centred around rent or resale; only a small proportion goes on construction of new homes. And residential investment by corporations or big companies represents only 8% of the market.
Private data from a major mortgage provider used in my research (for the period 2003-09) reveals what the typical real estate investor looks like. They are on average 42 years old; 72% are married; and fewer than two-thirds of investors get finance with a co-borrower. Only a third of investors are female. 
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.35.44%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.35.44%20AM.png" alt="">
The Conversation, <a class="license" href="https://creativecommons.org/licenses/by-nd/4.0/" target="_blank">CC BY-ND</a>
According to the same data, residential investors have an average net monthly income of A$8,600, or A$103,200 a year. But if we exclude the 100 investors with a net monthly income over A$100,000, the average net monthly income becomes A$6,617, or A$79,404 a year. 
Residential investors, financing the property with a mortgage, have on average A$934,091 in net wealth (50% of investors have A$581,541 in net wealth). Some of them have diverse portfolios; 6% of investors also own shares with an average value of A$4,884.
The data also show that direct residential investors are mainly professionals, in management positions, small business-owners, or workers with a skilled trade. Overall, 27% are self-employed, relative to the 19% of self-employed owner-occupiers.
Where they invest
The data reveal that direct residential investors invest mainly on existing houses, as do owner-occupiers when buying a property. The ABS reports only 3% of investors’ financial commitments are destined for construction of new dwellings.
Our data shows that residential investors are more willing to invest interstate or in a different postcode than owner-occupiers. While almost half of residential investors invest in a property located in a different postcode to where they live, 11% of residential investors buy properties in states other than the state where they live.
Most residential investors choose rural and regional areas to invest. Many residential investors choose to buy property in big metropolitan cities like Sydney and Melbourne. 
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.37.07%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2011.37.07%20AM.png" alt="">
However, the top 10 postcodes chosen by residential investors to buy property (between 2003 and 2009) include Cairns (QLD), Mandurah (WA), Torquay (VIC), Mackay (QLD) and Launceston (TAS).
Why do they invest?
Our research shows the main reasons for accessing finance to buy a house, other than to live in it, are income and wealth accumulation. 
Some investors invest because they see it as a long-term, secure, “bricks and mortar” investment. To these investors other types of assets (such as shares and bonds) may seem harder to understand and it may be more costly to enter these markets. 
A proportion of real estate investors see it as a source of permanent income, while others speculate on the potential capital gains in real estate and invest expecting to increase their wealth. 
This reason becomes more prominent during periods of strong house price appreciation. For example, between 2003 and 2009 year-to-year average house price inflation has been 8.9%.
Academics have also argued that the Australian taxation system motivates – rather than facilitates – housing investment, as investors are able to access 50% deduction on capital gains and negative gearing. Another motivator to invest in real estate may be more mortgage finance access; for example, between 2003 and 2009 the average 12-month housing credit growth has been of 14.6%. 
Of course there are other reasons to invest, such as moving up or down and maintaining other property as an investment, or getting a holiday home and keeping it as an investment too. There are also “unintentional” real estate investors that may have inherited or acquired property.
Most residential investors are your average Australians, who invest in rural or regional areas as a secondary source of income and to gain equity. So when thinking about who is the typical Australian retail investor, you could probably look at your neighbour.
<a href="https://theconversation.com/profiles/maria-yanotti-349557" target="_blank">Maria Yanotti</a> is Lecturer of Economics and Finance Tasmanian School of Business &amp; Economics, University of Tasmania and author for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>.
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Who is the typical investor in the Australian property market?

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<img src="https://counter.theconversation.edu.au/content/81551/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
There is very little, if anything, to commend discretionary trusts. The benefits they bring, and it’s hard to see many, are dwarfed by their destructive and damaging features.
Trusts are usually used to allocate money to members of a group, usually a family. Under a discretionary trust, the only way a beneficiary will get income or capital from the trust, is if the trustee chooses to give them something. Family companies are often included as beneficiaries to minimise tax.
The Labor party’s current focus on trusts is warranted because overwhelmingly, trusts are used to minimise tax, avoid paying creditors and to avoid the fair division of property after a relationship breakdown.
Due to a lack of data, it’s hard to estimate the amount of lost tax revenue from the current regime. However, on conservative assumptions, I estimate we are easily losing A$2 billion per year in income tax through discretionary trusts. 
If a discretionary trust elects to be a “family trust” under the tax law, it can also access a number of other concessional tax rules. These tax concessions aren’t available to any other entities or taxpayers.
How trusts are used
There are a few other ways discretionary trusts are used. They are also used to frustrate creditors, people who are owed money by the beneficiaries of trusts. 
Someone who is owed money by a beneficiary of a trust can’t go to the trust to settle their debt. This is the case even if the beneficiary has received money from the trust in the past and is likely to receive money in the future, after release from bankruptcy (having not paid their debts).
Unsecured creditors, such as suppliers of businesses dealing with a trustee, also cannot settle their debts with a trust if the trustee doesn’t have sufficient assets. Often the trustee will be a company paid to manage the trust, with only a few dollars of share capital. 
According to data used in my research from the Australian Taxation Office, a lot of family wealth (aside from the family home) is held in discretionary trusts. On relationship breakdown, one spouse will often argue that because the assets are in a discretionary trust, they are not owned by anyone, and therefore won’t be divided with the rest of the couples’ assets.
The Family Court has wide powers to decide what can be divided, and generally the court included assets in the discretionary trust to be divided, where a spouse is a trustee, or has the means to appoint or remove a trustee. However, if the spouse is “removed” or “distanced” from the discretionary trust, it becomes harder and harder for the court to include these assets to be divided.
Discretionary trusts are also used in succession planning. Where a person has property to give away and wants the flexibility to do it over time. It also allows the payments to change with needs and circumstances. For example, if a trust beneficiary landed a high-paying job, they could be given less. Conversely, they could be given more if they lost their job.
There may be a case for these arrangements when a person has died. By putting assets into a discretionary trust, a deceased person may be able to “tie up assets” for around 80 years (the maximum period permitted). But this sort of flexibility is available to anyone when they are alive; there is no need for a discretionary trust. 
So can we just get rid of trusts? Legally, it could be done. But outright abolition is not practically achievable, at least in the short-term.
What to do with trusts
There are broadly two options for tax reform when it comes to trusts. These measures can be implemented while leaving users of discretionary trusts free to enjoy all other legitimate features and benefits.
The first option, which many still seem to favour, is to impose the company taxation system on the discretionary trust (that is, tax them as companies). Due to the presence of the <a href="https://www.ato.gov.au/Business/Imputation/In-detail/Utilising-franking-tax-offsets-and-effect-on-losses---corporate-tax-entities/">refundable franking credit tax offset rule</a>, taxing trusts as companies would not really address the central issue of tax minimisation. 
Trusts would still be able to manipulate allocations of money across low-rate beneficiaries and change allocations from year-to-year to avoid tax. However, it would remove the availability of the capital gains tax discount to discretionary trusts.
Another option is to use an attribution approach to trusts, just as the social security system does and as family law effectively does. Under the attribution model, the person who contributed the assets to the discretionary trust and/or the person who controls the assets in the trust are deemed to own the income and the assets. This would largely reflect general law entitlements of each spouse and very often reflect the economic contributions to building up those assets.
Of course, this model has challenges in design and in enforcement. However, given the complexity of rules in Australia’s income tax and the enforcement issues that confront the Australian Taxation Office in numerous areas, any difficulties with the attribution model are easily overcome. And of course, it’s already part of the social security regime for assets and income tests.
<a href="https://theconversation.com/profiles/dale-boccabella-15706" target="_blank">Dale Boccabella</a> is Associate Professor of Taxation Law, UNSW and author for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>.
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Family trusts often cause more harm than good

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GUEST OBSERVER
The labour market has comprehensively strengthened over the past four months.
Trends in employment (including the composition of jobs growth), the unemployment rate, participation and hours worked suggest that output growth will accelerate over H2 2017.
Sustained strength in the labour market is a necessary condition for wage inflation to lift. 
Overview
After a soft 2016 the Australian labour market is on an encouraging trend. The latest ABS employment report was the fourth robust set of monthly jobs numbers in a row. The improvement is evident in a range of labour market indicators. And it suggests that GDP growth will lift over H2 2017. As a result, market pricing for another rate cut has faded to zero and a 65% chance of a hike within the next twelve months is now priced.
In this note we analyse the latest trends in the key metrics that relate to the labour market. We also take a brief look at outcomes by state. We conclude by presenting our views on what we think is in store for the labour market over the second half of 2017 and what it means for policy. 
Employment
We kick off with employment growth because job creation goes hand in hand with output growth (chart 1).
Click to enlarge
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.48.21%20AM.png" alt="">
Over the past four months there’s been a marked improvement in jobs growth. The ABS reports that employment has lifted by 154k over the four months to June and the average monthly gain has been 38.5k (chart 2). These results are strong. As a result, annual employment growth in the year to June 2017 accelerated to 2.0% - quite a bit higher than population growth (1.5%pa).
As we flagged a few weeks ago, Australia’s population growth has boosted headline growth rates and masked some per capita weakness in the economy. But if employment growth can continue to outpace population growth some of the per capita metrics related to the labour market and output will improve. From GDP perspective, the recent trend in jobs growth means we should see a lift in growth over H2 2017 after a soft 2016/17. 
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.49.33%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.49.33%20AM.png" alt="">
In addition to strong employment growth, the composition of jobs growth has been impressive. Taken at face value, full-time jobs have lifted by 179k over the past four months while part-time employment has fallen by 25k. As a result, the annual growth rates have converged (chart 3).
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.50.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.50.22%20AM.png" alt="">
There can be a fair bit of noise in the PT/FT split each month. But looking at the trend series indicates there has 4.0 recently been a solid lift in full-time jobs growth.
This is a welcome development and is reflective of some genuine strength in job creation. In addition, the pace of full-time job losses from the fall in mining-related employment has eased which means that the headwind on net full-time jobs growth has lessened. 
2. Unemployment  
There has been a modest improvement in the unemployment rate in recent month which reflects the combination of solid jobs growth dampened a little by a lift in participation. The trend unemployment rate, our preferred measure of the jobless rate, has come down by 0.2ppts over the past four months to be 5.6% in June (chart 4). The current level of the unemployment rate is not at a historically high 
one. But despite the fall it is above the non-accelerating inflation rate of unemployment (NAIRU) which the RBA recently estimated to be 5%. It suggests that there is still a fair way to go to take the economy back to the level we associate with full employment. But it’s moving in the right direction, albeit that it’s a slow grind.
Job security fears have remained stubbornly high despite the recent improvement in the labour market. It looks to us like the latest strength will need to be maintained if job security fears are to lessen. In fact, in may be the case that a lift in wages growth is also required for job security fears to recede. 
3. Underemployment and underutilisation 
Underemployment remains a problem in Australia. In May, the underemployment rate was 8.8% - just 0.1ppt off its record high (chart 5). To recap, people who are underemployed have a job but want to work more and can’t find the work.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.51.26%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.51.26%20AM.png" alt="">
The number of additional hours of work wanted by underemployed workers has been stable at around two days (or 14hrs) per week since the mid-2000s. This compares with unemployed people who are on average looking for 33 hours of work per week. 
On Wednesday, when this note was in train, RBA Governor Philip Lowe gave a speech on The Labour Market and Monetary Policy which covered a lot of the themes here. One chart in the Governor’s speech depicted proportionately the reasons why people work part-time. The data came from the HILDA release and indicated that the bulk of people in part-time work have chosen to be there. Nothing surprising there. Interestingly, however, the proportion of people who are working part-time because they could not find full-time work was put at around 9% which marries up almost perfectly with the underemployment rate.
Data on underemployment is published by the ABS on a quarterly basis so we will need to wait until August for the next update. But the trend lift in full-time employment suggests that it’s more likely than not that the underemployment rate inches a little lower when the new data prints.
The sum of the unemployment rate and the underemployment rate produces the underutilisation rate which is the broadest measure of spare capacity in the labour market – using the latest unemployment and underemployment rates puts it at 14.4% in June. This is quite high and means that the economy is operating below its capacity and there is a negative output gap. We have known this for some time. What we are interested in from here is the direction in the underutilisation rate and there are tentative signs that it’s starting to decline. In our view, it’s going to need to come down materially to generate wages inflation. 
4. Employment to population and participation
The share of the Australian workforce in a job has recently lifted. The employment to population ratio has ticked up by 0.46ppts to 61.3% (chart 6). This shift upwards basically reflects employment growth running above population growth. Given the very solid jobs growth over the past few months we would have expected the unemployment rate to fall by more than 0.2ppts. But its decline was capped due to a lift in participation.
Labour force participation has picked since late 2016. There are structural and cyclical forces that drive participation and it looks like some of the cyclical headwinds have receded. At the end of 2016 the part. rates of WA and Qld had fallen quite a bit through the year as the big downturn in mining-related investment reduced job prospects for workers in these states. As a result, some local workers had given up looking for work which reflects the discouraged worker syndrome. But the recent lift in jobs in WA and Qld has been coupled with an increase in participation which suggests a touch more optimism for workers in these states. 
5. Hours worked
Hours worked, as you would expect, is strongly correlated with output, consumption and employment growth. It is also a key input into examining productivity growth because we can measure output per hour (or unit of labour).
Monthly aggregate hours worked is quiet volatile so we look to the annual change in trend terms to best gauge what’s been happening in that space (chart 7). The news is pretty decent. The data indicates that growth in total hours worked has accelerated to be 2.3% higher in the year to June 2017. For most of the last five years annual employment growth has been stronger than growth in hours worked because of the strong growth in part-time relative to full-time employment. But the recent strong lift in full-time employment has seen growth in hours worked pick up to be running ahead of employment growth. It’s still early days and we aren’t getting too carried away. But these type of developments are generally commensurate with an authentic lift in the demand for labour.
The increase in aggregate hours worked has been sufficient to see per capita hours worked lift from a multi-decade low (chart 8).
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.52.39%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.52.39%20AM.png" alt="">
 
Again, we are coming off a low base and there will need to be a sustained upward trend in per capita hours worked if Australia’s labour market is going to genuinely tighten. 
6. Labour market by state
In our view, one of the striking things about the latest jobs growth is that it’s been relatively broad-based (charts 9 and 10). For most of the past few years there has been a “two-speed” economy that comprises i) NSW and Victoria (driven largely by Sydney and Melbourne); and (ii) the rest of Australia. We wrote about this in late 2016.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.53.59%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.53.59%20AM.png" alt="">
But the labour force data suggests that we may be seeing some convergence in outcomes. This is a particularly welcome development.
Jobs growth has been spectacularly strong in Victoria, driven by population growth. But there has also been solid growth in employment over the past few months in Qld, WA and SA, which had previously all looked soft. Employment growth in NSW has slowed, but that’s to be expected given Australia’s biggest state is close to full employment.
There is a little more divergence in terms of trends in the unemployment rate (chart 11). The trend jobless rate in NSW sits at a healthy 4.8%. In Victoria, despite strong employment growth, the unemployment rate has remained stuck above the national rate at around 6.0%. The jobless rate has also trended sideways in Qld while it’s unexpectedly fallen in WA. 
What does it mean for policy?
There are two key questions that need to be answered to determine what the recent labour market trends mean for monetary policy: (i) can they be maintained; and (ii) will they generate wages inflation.
On the former, the leading indicators suggests that the pace of job creation will ease from its current red-hot pace. But it should still be sufficient to match and slightly better the monthly increase in labour market supply (charts 12, 13 and 12. 14). The CBA PMIs, along with the NAB Business Survey and the vacancies  data, suggest that employment growth should average around 20k a month in the near term. That would be enough to exert some further mild downward pressure on the unemployment rate.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.54.58%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.54.58%20AM.png" alt="">
There are still plenty of headwinds for the labour market to contend with over 2017. Namely, a gradual decline in dwelling construction, closure of the car industry and the completion of the final big resources projects. But there are also a few tailwinds at work like the continual ramp up in public investment, particularly in NSW, and the improvement in the global economy which is providing a boost to Australia’s tradables sector. 
On that basis, the first condition about ongoing labour market improvement is satisfied in our view and that takes another rate cut off the table. The focus therefore shifts to what the improvement in the labour market means for wages growth given a lift will be required to propel core inflation back to target. Here, we think that we are still some way from labour market slack being eroded sufficiently to put genuine upward pressure on wages.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.55.49%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.55.49%20AM.png" alt="">
Our modified Philips curve, which puts underutilisation against wages growth, suggests that we probably need to see underutilisation fall comfortably below 14% for wages growth to lift (chart 15). In our view, that is unlikely to happen until early next year which would all but rule out a rate increase in 2017. In addition, because any improvement in wages growth is coming off a very low rate, we suspect that the RBA will not act to tighten until a solid uptrend is firmly in place. As a result, we don’t see the RBA raising rates until late 2018. 
Gareth Aird is economist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905">here</a>.
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Has the Australian labour market turned a corner? Gareth Aird

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Over the past decade, the government has attempted to tackle housing affordability by implementing countless measures, from the removal of stamp duty taxes and first home owner grants, through to penalising foreign investment.
Yet, the Victorian Planning Authority (VPA) predicted the continuation of the quarter century decline of home ownership rates, confirmed by the 2016 Census.
So now the question is, why can’t we just get it right?
The answer is not as complicated as we think. The issue is not disposable income or foreign investment. Rather than a continued focus on trying to restrict demand, I believe in the answer lies in unlocking supply.
There are three key factors holding back our industry: restrictive and time-consuming planning regulations, a severe undersupply of construction resources and the absence of infrastructure investment in the key growth corridors of Victoria. Collectively, these factors are stifling developers’ ability to bring stock to the market to meet demand.
According to industry website Sourceable, Melbourne development approvals take an average of nine months. As a result, developers tie up resources and capital in projects for extended periods and are unable to deliver the supply of housing needed to meet the state’s growing demand.
However, creating a planning system that is it up to speed with this fast-paced industry is only one piece of the puzzle. The demand for contractors and resources is skyrocketing. Contractors for major works are being shared amongst a huge number of competing developers, and those same contractors are often tendering for major infrastructure projects, of which there are a number currently underway.
The tug-of-war battle for resources is causing increased delays and higher construction costs.
These delays not only impact the final cost, they also immobilise developers who are unable to work on more projects concurrently.
In the 2017 State of Land Report by the Urban Development Institute of Australia (UDIA) it states that “57,000 new lots were released in 2016, a 10% increase since 2015” and yet the demand for these lots still outweighs supply. Buyers continue to camp out for land releases, sometimes for days at a time, afraid that if not, they will, yet again, miss out on the type of block or location that suits their needs.
Collectively, the delay caused by these issues directly correlates to holding costs for developers. Every month that a project is delayed the corresponding holding cost increases, attributed to high construction costs, mounting land taxes, council rates, interest on loans and more.
In a study by Urbis commissioned by the Property Council, it was found that these delays can add anywhere from $10,253 to $36,779 to the average cost of a block of land. A cost that must either be absorbed by the developer, or passed on to the purchaser.
The key concern is that this problem is on the rise. The Australian Bureau of Statistics estimate that the population of Australia will grow from 23 million to between 36.8 million and 48.53 million by 2061. According to the UDIA, due to this growing population, Victoria alone needs to deliver in excess of 55,000 new homes per year.
Looking beyond the limitation of the current planning process and undersupply of resources, the industry is also crippled by a lack of infrastructure investment in Victoria’s growth corridors. Danni Addison, Victorian CEO of the Urban Development Institute of Australia (UDIA) says that investment in infrastructure is at the heart of housing affordability and that we must be “focusing on investing in and delivering the roads and services that will make these areas more accessible to employment, amenities, and services”.
In the Interim Report released by the Victorian Population Policy Taskforce released in June 2017, it was revealed that 77 per cent of Victoria’s population live in Melbourne and that if Victoria does not move “from a city state into a state of cities”, this growth is simply unsustainable.
The 2016 census by the Australian Bureau of Statistics states that Victoria noted the most rapid growth in its history, recording a 10.7 per cent increase in population since 2011.
By working with industry bodies like the UDIA, Property Council of Australia (PCA) and others, we can bring about real positive change. Industry peers must support industry bodies to lobby for changes at a state and national level.
The recent government measures are simply not enough to facilitate this enormous increase in delivery. In fact, many of the changes will only lead to an increase in demand, pushing out development timelines and supply even further.
If the government is serious about enforcing change that will have a tangible effect on affordability and supply, it needs to minimise delays and red tape and provide a commitment to drive additional resources to streamline and fast-track the process. Only then can we work cohesively to keep up with the growing demands of Melbourne, Victoria and beyond.
As active industry members, we too are accountable for the housing affordability crisis. It is imperative that we pool our collective research and knowledge to inspire government and lobby for the real, tangible changes our industry needs in order to thrive and keep meeting the evolving needs of Australians across the country. 
 
John C Dwyer is Managing Director, <a href="https://dacland.com.au" target="_blank">Dacland</a>.
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Melbourne housing affordability and why we can't get it right

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GUEST OBSERVER
A large body of research shows that living in cities can harm our health. We know poor urban design can lead to people being less physically active, which is a factor in weight problems, obesity and cancers. But did you know urban life might lead to poor mental health?
Recent research points to the possibility that living in cities might be associated with higher rates of depression and anxiety. Some studies suggest that specific aspects of urban life might be “depressogenic” – in other words, lead to poor mental health. 
What is emerging from research is that living in cities may double the risk of schizophrenia and increase the risks of anxiety disorders (by 21%), mood disorders (by 39%), and depression (by 40%).
 
The range of potential explanations for these findings include issues related to the physical environment of cities – such as heat, noise, light, social isolation – and even a concentration of people at risk who may seek out better medical care in cities. 
So what might be driving these poor mental health outcomes? And are urban planners able to do anything about it?
<h2>Do some environments ‘mess with our minds’?</h2>
The bright lights, busy streets and noise of cities can increase our “cognitive load”. Swamped with incoming information, our minds can become stressed and mentally fatigued. 
Night-time lighting, higher noise levels (from traffic, aircraft, industries or neighbours, among other things), congestion and crowding, and even higher temperatures associated with urban heat islands can make it harder for us to concentrate. They also affect our ability to get a good night’s sleep.
It can be difficult to escape that cognitive overload and “decompress” in cities. There are usually fewer green spaces and fewer places to escape crowds. Higher housing density, the canyon effect of tall buildings and even barking dogs can all increase stress levels.
Some contend that the presence of too many liquor stores, higher levels of litter and graffiti, and even neglected landscaping and broken facilities may increase stress for some people. The presence of these elements has been found to signal lower levels of safety.
Recent research has also indicated our gut health and mental health are linked. This could be bad news for some urban residents. 
Research has shown fresh-food markets are scarcer than fast-food outlets in some cities. These food deserts may deny more vulnerable residents access to nutritious diets.
Housing costs are another factor that can heighten stress. But moving to more affordable areas on the fringes of cities and in regional centres is not necessarily a remedy. Doing so may reduce levels of social contact with family and friends. 
 
Researchers are increasingly demonstrating that access to social networks is important for helping us to cope with stressful life events. And not having someone to talk with, to help out looking after children, or just to be there in hard times, can lead to anxiety and depression.
Recent immigrants may also experience discrimination. Not only can they have lower levels of social capital, but experiences of abuse can be very harmful.
<h2>So what is the role of planning?</h2>
While we cannot blame planners for causing all these issues, they do have the ability to intervene and thus a role to play in improving urban life. Design guidelines, for example, can help by ensuring people have more accidental social encounters in spaces like cafes, at mailboxes or in gardens. 
So too can more strategic interventions such as community gardens – places where people grow not only food, but also friendships. More green space can also potentially buffer noise, heat and light, and provide respite from crowds.
In car-dependent outer suburbs and new housing estates, planners would do well to focus on first developing social facilities such as clubs, sporting facilities and parks. Public transport is another important intervention in such suburbs. Good access to public transport also reduces a household’s commuting expenses.
Our research suggests planners and built environment professionals have surprisingly low levels of knowledge about depressogenic environments. 
If planners don’t understand how cities might heighten mental health disorders, then how can we combat depressogenic environments? The good news is that simple steps can make a big difference.
<a href="https://theconversation.com/profiles/jason-byrne-6066" target="_blank">Jason Byrne</a> is Associate Professor of Environmental Planning, Griffith University and author for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>..
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Planners know depressingly little about a city’s impacts on our mental health

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GUEST OBSERVER
The Deloitte Access Economics “Investment Monitor” provides a detailed snapshot of Australia’s investment project pipeline. The database contains details on 1,205 investment projects valued at $20mn or more, as at June 2017. Here we provide an update of the key results.
Note, the full value of a project is included in the investment pipeline until the project is either completed or deleted. This differs from official estimates of the “work pipeline”, which is work outstanding on projects under construction.
<a href="https://www.propertyobserver.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.18.46%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.18.46%20AM.png" alt="">
The Investment Monitor estimates the total project pipeline to be $745bn at present. That is a $47bn decrease on March and $78bn below the level of mid-2016.
Project completions totalled $73.5bn in the quarter, dominated by the $61bn Gorgon LNG project.
<a href="https://www.propertyobserver.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.19.37%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.19.37%20AM.png" alt="">
New projects added to the database were worth $24.3bn, of which $9.8bn entered at the definite stage (under construction or committed). The public sector (including PPP’s) accounted for $12.5bn of the new projects, which are mostly transport initiatives, with a combined value of $9.6bn.
Mining sector projects now account for $300bn of the investment pipeline, $82bn below a year ago. This will fall further as work on the 3 remaining mega gas projects (worth $92bn) is completed by mid-2018. The total includes $189bn of potential mining projects (those under consideration or possible). Miners appear unlikely to embark upon another round of investment despite recent higher commodity prices given rising supply and uncertain demand.
The upswing in public investment continues, centred on transport projects, led by NSW and Victoria. The overall pipeline of transport projects is $232bn, including $190bn of public projects. Definite public transport projects total $110bn currently, a $60bn increase on two years ago. This includes a $12bn rise on three months earlier. The 2017 round of annual state budgets included commitments to new initiatives, particularly in Qld. 
Mining projects
The mining sector project pipeline has moderated as a number of the major gas projects have been progressively completed.
(Note, mining-related projects can be included in other sectors, e.g. transport &amp; storage.)
<a href="https://www.propertyobserver.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.20.27%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.20.27%20AM.png" alt="">
The total project pipeline for the sector is $300bn, down from $363bn at the start of the year, with the completion of the $61bn Gorgon LNG project in WA. The pipeline for the mining sector peaked at $478bn at the end of 2012.
The majority of mining projects are currently at the potential stage, at $189bn, up from $169bn at the end of 2015. The rebound in commodity prices from the lows of late 2015, early 2016 has contributed to more projects being considered for possible development. However, it is uncertain how many and how soon any of these projects will advance to the definite stage.
We are of the view that the recent run of higher commodity prices will not lead to another round of investment in mining projects, against the backdrop of rising supply and uncertain demand.
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<img src="https://www.urban.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2011.21.33%20AM.png" alt="">
Mining projects currently under construction or committed total $111bn. This is dominated by oil &amp; gas projects, at $94bn, of which 3 remaining large projects have a combined value of $91bn, on which work is scheduled to be progressively completed by mid-2018.
Shell’s Prelude $12bn floating LNG platform, which recently arrived in Australian waters, is expected to start production in 2018. The $34bn Wheatstone LNG project in the Pilbara WA, is facing delays, with work now expected to be completed in the June quarter 2018. The Ichthys $45bn project in the Northern Territory has also been delayed and is now expected to be finished in March 2018.
Recall that the 3 major gas projects in Qld were completed from mid-2015 through to the second half of 2016. Together the Curtis, Santos and Origin projects were valued at $66bn.
In the oil &amp; gas industry, there are $41bn worth of potential projects. This is dominated by 3 projects, each valued at more than $10bn, namely: the BHP, Exxon Mobil Scarborough floating platform; the 4th train at Gorgon; and the Greater Sunrise floating platform.
In the coal industry, the project pipeline is valued at $85bn, up from $67bn at the end of 2015. The value of coal projects under construction or at the committed stage is $10bn. It is the pipeline of potential coal projects that has grown of late, to $74bn currently, up from $54bn at the end of 2015. The largest coal project under consideration is the $22bn Adani Carmichael project in the Galilee Basin.
The metal ores industry has some $6bn worth of projects under construction or committed, while there are $71bn of potential projects, up a little from $67bn at the end of 2015. 
Non-mining
The pipeline of non-mining projects has grown over the past two years, rising to $401bn currently. This is $29bn above the level of two years ago, including a $4bn increase in the past year.
The project pipeline is evenly split between definite projects (those under construction or at the committed stage), at $198bn currently, and potential projects, at $202bn.
Notable is the progression of projects through to the definite stage. Relative to two years ago, the value of definite projects has jumped by $56bn, increasing from $143bn to $198bn, while the value of potential pipeline has declined by $27bn.
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The non-mining sectors include transport &amp; storage; services; and “other”. Services is comprised of: trade; accommodation; finance; community services; and mixed use. The “other” grouping includes: utilities; manufacturing; and agriculture.
The capital intensive transport sector dominates the pipeline of non-mining investment projects, accounting for $232bn of the $401bn total. The transport project pipeline has increased by $25bn over the past two years as investment in the sector has increased. See below for a detailed discussion of transport projects.
The pipeline of “other” non-mining projects has also seen a lift over the past two years, up $7bn, centred entirely on utilities, to be $63bn currently.
For the service sectors, the past two years have been mixed. Over this period, the total project pipeline declined by $3bn to $106bn, with gains in the retail &amp; wholesale sector and in ‘mixed-use’ offset by declines in accommodation and finance.
Of the $106bn project pipeline for services, the majority is at the definite stage, $58bn currently (which is $3bn lower than two years ago), and with $47bn in potential projects (unchanged from two years ago).
In the accommodation area, including hotels and resorts, a positive story is around the advancement to the definite stage of a number of projects. Investment in the sector is increasing in response to relatively strong population growth and rapid growth in international tourism and international students. Projects under construction or committed are valued at $5.9bn currently, some $3bn above the level of two years ago. The pipeline of potential accommodation projects declined during this period, down $7bn to $13bn.
For offices, the value of projects under construction is $16.2bn, up $2bn on the previous quarter. There are $5.1bn worth of projects under consideration. Prospects are for further projects to advance to construction as office vacancy rates move lower, on positive net absorption, particularly in Sydney and Melbourne. 
Transport projects
Investment by the public sector has been trending higher over the past couple of years. This is centred on an upswing in infrastructure spending as state governments across the nation commit to new projects, particularly in transport. The fiscal pressures of earlier years have receded and some states are making better use of their balance sheets.
The pipeline of transport &amp; storage projects, across the private and public sectors, is $232bn in total. This is $25bn above the level of two years ago and is unchanged from mid-2016.
For private projects, the investment pipeline has stabilised in recent quarters at $41bn, some $5bn below two years earlier. This is down from the highs of 2012, of around $54bn, a figure boosted by mining related projects.
Transport projects are concentrated in the public sector, with a pipeline of $190bn, which is $30bn higher than two years ago and in line with the level of 12 months earlier.
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The majority of public transport projects are at the definite stage (under construction or committed). Definite projects total $110bn currently, a $60bn increase on two years ago. This includes a $12bn rise on three months earlier. The 2017 round of annual state budgets included commitments to new initiatives, particularly in Qld.
Prospects are for additional transport projects to advance to the committed stage in coming years. The pipeline of potential public transport projects is still sizeable at $80bn, albeit down from $110bn in mid-2015.
NSW has been leading the way. Some $80bn in transport projects are in the pipeline in the state, up $24bn on two years ago. Of these, $55bn are definite projects, up $21bn on two years ago, including a $4bn increase in the past year. The majority of these projects are in Sydney, as the city attempts to reduce congestion.
Victoria is also boosting investment in transport, particularly in Melbourne. The pipeline of definite projects now stands at $24bn, a rise of $3bn on a year ago and $19bn on two years earlier. This includes the $10.9bn Melbourne Metro rail project which is to begin work in 2018. The pipeline of potential project for Victoria stands at $17.4bn, including the $10bn North East Link and the $5.5bn Western Distributor project, both of which could potentially begin work in 2018.
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In Queensland, investment is also on the rise. The pipeline of definite projects is now $19bn, some $13bn above the level of two years ago, including a jump of $7bn in the past three months following the June state budget. Notably, the state government has now committed to the $5.4bn cross river rail link, with construction expected to start early in 2018. 
State by state
The investment project pipeline on a state by state basis is heavily influenced by the mining investment downturn (WA, Qld &amp; NT) and by the public transport upswing (NSW &amp; Vic, as well as SA).
In the mining state of WA, definite projects total $70bn, down from $129bn three months ago with the completion of Gorgon. This figure will move lower by mid-2018, with the completion of Wheatstone and Prelude, together worth $46bn.
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In Qld, definite projects are at $44bn, up from a low of $36bn at the end of last year, boosted by a lift in public investment. Still this is well down from the high of $122bn in mid-2013 which included the 3 major gas projects.
In NSW, the pipeline of definite projects has climbed to $79bn, a $22bn increase on two years ago, centred on a $21bn lift in public transport projects.
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In Victoria, the pipeline of definite projects is at $42bn, a rise of $16bn on two years ago, including a $19bn increase in public transport.
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In South Australia, the value of definite projects has risen to $12bn, a near $2bn increase on a year ago and $6bn higher than two years ago. Public transport projects account for $3.8bn of the $12bn in total definite projects, while public and PPP projects across other sectors account for a further $4.0bn. 
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>. 
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Where is Australia's investment project pipeline headed in 2017? Andrew Hanlan

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GUEST OBSERVER
A recent expose by the ABC’s Four Corners has alleged significant illegal extraction of water from the Barwon-Darling river system, one of the major tributaries of the Murray River. The revelations have triggered widespread condemnation of irrigators, the New South Wales government and its officials, the Murray-Darling Basin Authority and the Basin Plan itself. 
If the allegations are true that billions of litres of water worth millions of dollars were illegally extracted, this would represent one of the largest thefts in Australian history. It would have social and economic consequences for communities along the entire length of the Murray-Darling river system, and for the river itself, after years of trying to restore its health.
Water is big business, big politics and a big player in our environment. Taxpayers have spent A$13 billion on water reform in the Murray-Darling Basin in the past decade, hundreds of millions of which have gone directly to state governments. Governments have an obligation to ensure that this money is well spent. 
The revelations cast doubt on the states’ willingness to do this, and even on their commitment to the entire Murray-Darling Basin Plan. This commitment needs to be reaffirmed urgently.
<h2>Basic principles</h2>
To work out where to go from here, it helps to understand the principles on which the Basin Plan was conceived. At its foundation, Australian water reform is based on four pillars.
1. Environmental water and fair consumption
The initial driver of water reform in the late 1990s was a widespread recognition that too much water had been allocated from the Murray-Darling system, and that it had suffered ecological damage as a result. 
State and Commonwealth governments made a bipartisan commitment to reset the balance between water consumption and environmental water, to help restore the basin’s health and also to ensure that water-dependent industries and communities can be strong and sustainable.
Key to this was the idea that water users along the river would have fair access to water. Upstream users could not take water to the detriment of people downstream. The Four Corners investigation casts doubt on the NSW’s commitment to this principle.
2. Water markets and buybacks
The creation of a water market under the Basin Plan had two purposes: to allow water to be purchased on behalf of the environment, and to allow water permits to be traded between irrigators depending on relative need. 
This involved calculating how much water could be taken from the river while ensuring a healthy ecosystem (the Sustainable Diversion Limit). Based on these calculations, state governments developed a water recovery program, which aimed to recover 2,750 gigalitres of water per year from consumptive use, through a A$3 billion water entitlement buyback and a A$9 billion irrigation modernisation program. 
This program hinged on the development of water accounting tools that could measure both water availability and consumption. Only through trust in this process can downstream users be confident that they are receiving their fair share.
3. States retain control of water
Control of water was a major stumbling block in negotiating the Murray-Darling Basin Plan, because of a clash between states’ water-management responsibilities and the Commonwealth’s obligations to the environment. 
As a result, the Murray-Darling Basin Authority sits outside of both state and Commonwealth governments, and states have to draw up water management plans that are subject to approval by the authority. 
The states are responsible for enforcing these plans and ensuring that allocations are not exceeded. The Murray-Darling Basin Authority cannot easily enforce action on the ground – a situation that generates potential for state-level political interference, as alleged by the Four Corners investigation.
4. Trust and transparency
The Murray-Darling Basin Plan was built on a foundation of trust and transparency. The buyback scheme has transformed water into a tradeable commodity worth A$2 billion a year, a sizeable chunk of which is held by the Commonwealth Environmental Water Office. 
Water trading has also helped to make water use more flexible. In a dry year, farmers with annual crops (such as cotton) can choose not to plant and instead to sell their water to farmers such as horticulturists who must irrigate to keep their trees alive. This flexibility is valuable in Australia’s highly variable climate. 
Yet it is also true that water trading has created some big winners. Those with pre-existing water rights have been able to capitalise on that asset and invest heavily in buying further water rights, an outcome highlighted in the Four Corners story. 
More than A$20 million in research investment has been devoted to ensuring that the ecological benefits of water are optimised – most notably through the Environmental Water Knowledge and Research and Long Term Intervention Monitoring programs. What is not clear is whether water extractions and their policing have been subjected to a similar degree of review and rigour.
<h2>What next for the Murray-Darling Basin?</h2>
The public needs to be able to trust that all parties are working honestly and accountably. This is particularly true for the downstream partners, who are the most likely victims of management failures upstream. Without trust in the upstream states, the Murray-Darling Basin Plan will unravel.
State governments urgently need to reaffirm their commitment to the four pillars that underpin the Murray-Darling Basin Plan, and to reassure the public that in retaining control of water they are operating in good faith.
Finally, rigour and transparency are needed in assessing the Basin Plan’s methods and environmental benefits, and the operation of the water market. The Productivity Commission’s review of national water policy, and its specific review of the Murray-Darling Basin Plan next year, will offer a clear opportunity to reassure everyone that the A$13 billion of public money that has gone into water reform in the past decade has been money well spent. 
Only then will the fragile trust that underlies the water reform process be maintained and built.
<a href="https://theconversation.com/profiles/ross-m-thompson-392674" target="_blank">Ross M Thompson</a> is Chair of Water Science and Director, University of Canberra and author for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>.
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Is the Murray-Darling Basin Plan broken?

<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, Castile, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" 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/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" 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/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Jonathan Chancellor

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