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GUEST OBSERVER
Lots of ideas are being thrown about: the test for the Treasurer is to sort the good from the bad. Reports that the government was again considering using superannuation to help first homebuyers won’t inspire confidence.
It’s not the first time a policy like this has been floated within government. While these latest ideas to use super to help first homebuyers are marginally less bad than proposals from 2015, our research shows they still wouldn’t make much difference to housing affordability.
A seductive idea with a long history
Allowing first homebuyers to cash out their super to buy a home is a seductive idea with a long history. Both sides of politics took proposals to the 1993 election, before Prime Minister Paul Keating scrapped it upon his re-election.
Former Treasurer Joe Hockey last raised the idea in 2015 and was roundly criticised, including by then Coalition frontbencher Malcolm Turnbull.
Politicians are understandably attracted to any policy that appears to help first homebuyers build a deposit. Unlike the various first homebuyers’ grants that cost billions each year, letting first homebuyers cash out their super would not hurt the budget bottom line – at least, not in the short term. But as we wrote in 2015, that change would push up house prices, leave many people with less to retire on, and cost taxpayers in the long run.
Having learned from that that experience, the government has instead flagged two different ways to use super to help first homebuyers. Neither proposal would make the mistake of giving first homebuyers complete freedom to access to their super. But nor would they make much difference to housing affordability.
Using voluntary super savings for deposits
The first proposal reportedly supported by some in the Coalition, but now denied by the Treasurer, would allow first homebuyers to withdraw any voluntary super contributions they make to help purchase a home. Any compulsory Super Guarantee contributions, the bulk of Australians’ super savings, could not be touched.
Using super tax breaks to help first homebuyers build their deposit would level the playing field between the tax treatment of the savings of first homebuyers and existing property owners.
First homebuyers’ savings typically sit in bank term deposits, where both the initial amount saved and any interest earned is taxed at full marginal rates of personal income tax. In contrast, the nest eggs of existing property owners are taxed very lightly. For owner occupiers, any capital gain is tax free. For investors, capital gains are taxed at a 50% discount, and they get the benefit of negative gearing.
But even if there’s some merit in allowing first homebuyers to use super tax breaks to save for a home, it’s unlikely to make much difference. Few people are likely to take advantage of the scheme. Households are reluctant to give up access to their savings, especially when they’re already saving 9.5% of their income via compulsory super.
In fact the proposal works out to be very similar to the former Rudd government’s First Home Saver Accounts, and is likely to be just as ineffective. First Home Saver Accounts provided similar financial incentives to help first homebuyers build a deposit. Treasury expected A$6.5 billion to be held in First Home Saver Accounts by 2012. Instead only A$500 million had been saved by 2014, when Joe Hockey abolished the scheme, citing a lack of take up.
A “shared equity” scheme for super funds
The Turnbull government is reportedly also considering a “shared equity scheme” where workers’ super funds would own a portion of the property investment, and money would presumably be returned to the super fund when the property was sold.
Details are scarce, but the proposal raises several questions.
First, would the super fund use only the super savings of the co-investor to help buy the home, or would they add capital from the broader super fund pool?
Second, how would the super fund generate a return on the investment? A super fund that invests in rental housing gets the benefit of a rental income stream. A super fund co-investing in owner-occupied housing would not. The super fund could take a disproportionate share of any capital gains to compensate, but that hardly seems attractive for the funds in a world where interest rates are already at record lows.
Third, why involve super funds in a shared equity scheme in the first place? Australia’s super sector is already notoriously inefficient – total super fund fees equate to more than 1% of Australia’s GDP each year. A shared-equity scheme would inevitably add to super funds’ administration costs.
If the federal government is serious about super funds investing in housing, it needs to encourage wholesale reform of state land taxes, which levy a higher rate of land tax the more investment property a person owns. This discourages institutional investors such as super funds from owning large numbers of residential properties, because they pay much higher rates of land tax on any given property than a mum-and-dad investor.
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Focus on what matters
If Scott Morrison really wants to tackle housing affordability, he can no longer ignore those policies that would make the biggest difference. That means addressing both the demand and the supply side of housing markets.
On the demand side, that means reducing government subsidies for housing investment which have simply added fuel to the fire. Abolishing negative gearing and cutting the capital gains tax discount to 25% would save the budget about A$5.3 billion a year, and reduce house prices a little - we estimate they would be about 2% lower than otherwise.
The government should also include the value of the family home above some threshold – such as A$500,000 – in the Age Pension assets test. This would encourage senior Australians to downsize to more appropriate housing, while helping improve the budget bottom line.
At the same time the government should support policies that boost housing supply, especially in the inner and middle ring suburbs of our major cities where most of the new jobs are being created. Population density in the middle ring has hardly changed in the past 30 years.
The federal government has little control over planning rules, which are administered by state and local governments. But it can provide incentives to those tiers of government, if it is looking to do something that would really improve home ownership.
While there are plenty of ideas to improve affordability, only a few will make a real difference, and these are politically hard. In the meantime, the latest thought bubbles about using super savings for housing might be less bad than in the past, but they would be just as ineffective.
John Daley is Chief Executive Officer, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here</a>. 
Brendan Coates is Fellow, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/brendan-coates-154644" target="_blank">here</a>. 
Both are authors for The Conversation.
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jchancellor-FAypfDUnLy

The latest ideas to use super to buy homes are still bad ideas

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GUEST OBSERVER 
The minutes of the March Reserve Bank Board meeting certainly provides interesting reading.
While policymakers are relatively optimistic about the medium term outcomes for the Australian economy, there is clearly a number of ‘hot button’ issues that occupy policymaker thoughts.
To a greater extent it seems that central bank officials are ramping up their discussions and commentary on the housing sector.
In what could be described as the strongest language yet, the minutes discuss the “build-up of risks associated with the housing market”. In particular, the second to last paragraph of the minutes essentially lists a number of these risks, including “briskly” rising home prices; “a considerable” lift in additional supply of apartments scheduled to come on stream over the next few years; slowing growth in rents; rising investor finance; and - probably most concerning - the growth in household debt outstripping incomes. No doubt it is an evolving situation that the Reserve Bank will monitor closely over the coming year. 
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<img src="https://www.urban.com.au/images/2017/03/22/Screen%20Shot%202017-03-22%20at%209.03.05%20AM.png" alt="">
When it comes to the broader economy, the Reserve Bank believes that economic growth and inflation will lift over 2017, ruling out the need to cut interest rates further. If the forecasts were to change and the Reserve Bank became less positive, rate cuts would clearly be back on the radar screen, but the Bank believes risks are balanced. Rate hikes seem some way off.
The Reserve Bank has highlighted that the issues surrounding the housing sector. And while the latest ABS data on residential property prices also confirms the sizeable lift in home prices, data shows the growth in the number of homes is actually smaller in the past 12 months. Surprisingly the number of homes in Australia grew by 172,800 in the year to December after recording annual gains of 185,800 in the year to September and 182,400 in the year to June. It was the smallest annual lift in homes for 15 months.
Consumer confidence eased over the past week with consumers more negative on the outlook for the economy. In fact the reading on economic outlook over the next five years, hit a one-year low. Interestingly the readings on family finances has also weakened in the last few weeks. And while consumers are far from glum, there is no doubt the discussions on potential risks to the housing sector are adding a degree of caution.
Inflation expectations of consumers fell last week to the lowest reading since the start of the year although it still remains above 4 per cent.
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<img src="https://www.urban.com.au/images/2017/03/22/Screen%20Shot%202017-03-22%20at%209.04.45%20AM.png" alt=""> 
What do the figures show?
Reserve Bank Board minutes:
Last two paragraphs: “Given all of these considerations, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
“Recent data continued to suggest that there had been a build-up of risks associated with the housing market. In some markets, conditions had been strong and prices were rising briskly, although in other markets prices were declining. In the eastern capital cities, a considerable additional supply of apartments was scheduled to come on stream over the next few years. Growth in rents had been the slowest for two decades. Borrowing for housing by investors had picked up over recent months and growth in household debt had been faster than that in household income. Supervisory measures had contributed to some strengthening of lending standards.”
“Momentum in the labour market remained difficult to assess, but it was clear that spare capacity remained and there continued to be significant differences in labour market outcomes across the country. Domestic wage pressures remained subdued and household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt.”
“GDP growth had picked up in the December quarter to be around 21⁄2 per cent over 2016, which was only a little below estimates of the medium-term potential growth rate of the economy. This outcome confirmed that the weakness in the September quarter was temporary. Looking forward, year-ended growth was expected to pick up gradually to be above its potential rate over the forecast period. An appreciating exchange rate would complicate the adjustment of the economy following the end of the mining investment boom.”
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“Domestically, there had been a significant increase in the terms of trade in the second half of 2016 and many commodity prices had risen further in recent months. Although mining companies were expected to increase their dividend payouts following the sharp rise in mining sector profits in the December quarter, a significant proportion of shareholders are non-residents, which would limit the flow-through to an increase in household incomes in Australia.” 
Consumer confidence
The ANZ/Roy Morgan consumer confidence rating fell by 1 per cent to 112 in the week to March 19. Confidence is down 3.4 per cent over the year and below the average of 113.2 since 2014. Two of the five components of the index fell in the latest week:
The estimate of family finances compared with a year ago was up from +5 to +6;
The estimate of family finances over the next year was steady at +21;
Economic conditions over the next 12 months was down from zero to -3;
Economic conditions over the next 5 years was down from +7 to +3;
The measure of whether it was a good time to buy a major household item was up from +32 to +33;
In addition the inflation expectation 2 years ahead, fell from 4.7 per cent to 4.1 per cent. Inflation expectations have now held above 4 per cent for the past 14 weeks.
Residential property prices
The Bureau of Statistics (ABS) has released its Residential Property Price indexes.
“The price index for residential properties for the weighted average of the eight capital cities rose 4.1 per cent in the December quarter 2016. The index rose 7.7 per cent through the year to the December quarter 2016.
The capital city residential property price indexes rose in Melbourne (+5.3 per cent), Sydney (+5.2 per cent), Brisbane (+2.2 per cent), Adelaide (+1.8 per cent), Canberra (+2.8 per cent), Hobart (+4.5 per cent) and Perth (0.3 per cent), and fell in Darwin (-1.5 per cent).
Annually, residential property prices rose in Melbourne (+10.8 per cent), Sydney (+10.3 per cent), Brisbane (+3.8 per cent), Adelaide (+4.1 per cent), Canberra (+5.5 per cent) and Hobart (+8.8 per cent), and fell in Perth (-4.1 per cent) and Darwin (-7.0 per cent).”
The ABS notes that as at December 2016 there were 9.802 million homes in Australia.
“The total value of residential dwellings in Australia was $6,438,537.3m at the end of the December quarter 2016, rising $274,160.0m over the quarter.
The mean price of residential dwellings rose $25,400 to $656,800 and the number of residential dwellings rose by 39,600 to 9,802,700 in the December quarter 2016.”
CommSec estimate that there were 2.476 people per home in December quarter 2016, down 0.4 per cent on a year ago. The number of people per home have been falling in annual terms for 2 1⁄2 years.
Surprisingly the number of homes in Australia grew by 172,800 in the year to December after recording annual gains of 185,800 in September and 182,400 in June. It was the smallest annual lift in homes for 15 months.
CommSec estimates that wealth accumulated in housing assets rose by $10,547 per person in the December quarter to $265,276. 
The number of transfers (settlements) of houses and attached dwellings in Sydney in the December quarter was the lowest for any December quarter for the past 11 years.
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
The Australian Bureau of Statistics (ABS) provides quarterly data on residential prices. The figures provide further perspectives on the state of the housing purchase sector.
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
What are the implications for interest rates and investors?
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period.
When it comes to ‘hot button’ issues it’s clear that policymaker concerns are clearly centred on the housing sector. Healthy home prices have been a key driver of rising wealth levels, supporting spending. But the Reserve Bank is worried about the lift in debt levels to buy homes.
If the recent drop in consumer confidence is sustained it could lead to less household activity – a detriment to retailers. 
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Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/">CommSec</a>
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Reserve Bank raises concerns on housing: Savanth Sebastian

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The Avalon Beach restaurant space that cafe queen Jackie Milijash bought just before her death last year is being sold by the administrators of her estate.
The beloved restaurateur and business woman paid $1.95 million for the Old Barrenjoey Road commercial property with a view to opening a new establishment.
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She renovated the existing restaurant and bar premises to make a functioning space for the next few years, with the intention of eventually redeveloping the site. 
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Ian Halliday from BKH had drawn up the concept drawings for a commercial/residential development. 
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Lara Rowell at Fine &amp; Country Avalon Beach has set an April 8 auction date.
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Milijash was credited with helping create Sydney's cool cafe culture when she launched Jackies in Bondi in 1989.
<img src="https://www.urban.com.au/images/2017/03/22/Screen%20Shot%202017-03-22%20at%2012.54.50%20PM.png" alt="">
Now operated by former staffer turned foodie Myles Davis, who's back from the London cafe scene, overseen by her mother, Janina, Jackies Cafe in Paddington remains a favourite of the likes of A-listers Nicole Kidman, Hugh Jackman and Naomi Watts.
<img src="https://www.urban.com.au/images/2017/03/22/Screen%20Shot%202017-03-22%20at%2012.54.45%20PM.png" alt="">
This article first appeared in The Sunday Telegraph.
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Late cafe queen Jackie Milijash's Avalon Beach restaurant space listed

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GUEST OBSERVER 
Today’s Minutes are yet further evidence that the RBA is firmly on hold. The Board have retained a relatively optimistic view of the global and domestic economies.
And concerns around household debt and dwelling prices were once again aired.
This time, however, the Board was more explicit on housing-related risks by noting that, “recent data continued to suggest that there had been a build-up of risks associated with the housing market.” 
On the international economy, the Board sounds relatively upbeat on recent developments. In particular, it was noted that, “a number of indicators, including growth in global industrial production, global trade volumes and business sentiment, had improved.” And more importantly for monetary policy, “recent data had also confirmed the pick-up in global inflation.”
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The solid 1.1 percent lift in real GDP in the December quarter backed up the Board’s view that the weakness in the September quarter was temporary. Indeed, the 
Minutes note that growth over QIV had been, “above expectations”. The RBA continue to expect growth to pick up above its potential rate over the forecast period. This is clearly a best case scenario with the risk that growth outcomes undershoot the Bank’s expectation. 
The Board continues to lack conviction in its assessment on the labour market, noting that it, “remained difficult to assess”. The RBA expects spare capacity to “decline slowly.” Here we note that the Minutes predate the February employment report (published last week) which showed employment contracted over the month and the unemployment rate lifted to 5.9 percent. Another weak employment report would see the RBA’s forecasts for employment and wages growth tested.
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On housing, the Board has upped its rhetoric around the build-up of risks. The Minutes note that, “borrowing for housing by investors had picked up over recent months and growth in household debt had been faster than that in household income”. These comments coupled with the RBA’s acknowledgment that, “there had been a build-up of risks associated with the housing market” could be interpreted as the Bank calling on APRA to further place restrictions on lending to investors. In other words, watch this space. 
On the AUD, the Board notes that, “an appreciating exchange rate would complicate the adjustment of the economy”. We suspect that the RBA would have been expecting a March Fed rate hike to take some pressure off the AUD. 
But the currency has strengthened since the Fed tightened policy and is edging further away from where we think the RBA views the sweet spot (low USD0.70s).
The RBA’s well telegraphed reluctance to take the cash rate any lower has put more upward pressure on the AUD than would otherwise have been the case.
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The Outlook
We see little chance of further policy easing despite core inflation running below target and the unemployment rate being above the level associated with full employment. The consistent message from the RBA over the last six weeks has been that rate cuts are off the table.
When Governor Lowe appeared before the House of Representatives Standing Committee on Economics in late February he stated that, “the market pricing is for interest rates to be constant right through this year. That seems a reasonable proposition to me.” He further added that, “the main effect (of another rate cut) would be more borrowing for housing, pushing up housing prices.” This is clearly undesirable.
In our view, it would take a sustained loss of momentum in job creation or a fall in dwelling prices for Lowe to entertain the idea of taking the policy rate lower. Neither outcome is in our central scenario and as such, we see the RBA on hold over 2017 and well into 2018. 
 
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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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RBA Board minutes confirm policy is on hold over near term: Gareth Aird

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The latest RBA minutes have noted recent data continued to suggest that there had been a build-up of risks associated with the housing market.
"In some markets, conditions had been strong and prices were rising briskly, although in other markets prices were declining.
"In the eastern capital cities, a considerable additional supply of apartments was scheduled to come on stream over the next few years.
"Growth in rents had been the slowest for two decades. Borrowing for housing by investors had picked up over recent months and growth in household debt had been faster than that in household income.
"Supervisory measures had contributed to some strengthening of lending standards."
The bank had recently announced its concerns for the apartment market, warning a flood of new apartments could come onto the market in certain areas could push down prices causing heavy losses for developers.
Last week bank research noted the rate of housing market turnover, or transactions, is on an “unusual decline” with a sharp rise in off-the-plan sales of apartments — which are difficult to measure in a timely manner — likely to be a factor.
According to the central bank, other potential reasons could be lower rates of home ownership, particularly for younger households, and migration trends.
A fall in housing market transactions directly affects the economy as it hurts tax revenue - which made up about 40 per cent of total state tax revenue in 2014/15, besides impacting the creation of more jobs and related occupations such as real estate agents, lawyers and the finance industry, the RBA noted last week.
The RBA’s latest bulletin says the decline in the national housing turnover rate in recent years has come despite “the strength in a number of housing market indicators such as national housing price growth, which has historically been positively correlated with the turnover rate”. 
It says part of the recent weakness could from measurement issues arising from the increased share of apartments in new housing construction. 
 
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RBA notes build-up of risks in housing market

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Minutes of the March Monetary Policy Meeting of the Reserve Bank Board
Members Present
Philip Lowe (Governor and Chair), Guy Debelle (Deputy Governor), John Akehurst, Kathryn Fagg, John Fraser (Secretary to the Treasury), Ian Harper, Allan Moss AO, Carol Schwartz AM, Catherine Tanna
Others Present
Luci Ellis (Assistant Governor, Economic), Christopher Kent (Assistant Governor, Financial Markets), Alexandra Heath (Head, Economic Analysis Department)
Anthony Dickman (Secretary), Andrea Brischetto (Deputy Secretary)
International Economic Conditions
Members commenced their discussion of international developments by noting that forecasts by private sector analysts for growth in the major economies in 2017 had been revised upwards since mid 2016. Growth in global industrial production and merchandise trade had picked up further and survey measures of business conditions had remained at high levels. Headline inflation in the major advanced economies had increased noticeably in recent months, largely as a result of higher oil prices, to be close to most central banks' targets. However, core inflation had generally remained low.
The Chinese National People's Congress had announced a growth target for the Chinese economy in 2017 of around 6.5 per cent (or higher, if possible), which is only slightly lower than the pace of growth recorded for 2016. This suggested that the authorities would continue to use policy to support near-term growth. However, policymakers had also increased their focus on addressing the risks to longer-term growth. The People's Bank of China had signalled a reduction in monetary stimulus, reflecting concerns about rising financial stability risks, and the target for growth in total social financing had been lowered slightly to 12 per cent. Additional measures had also been put in place to curb rapid housing price growth in some cities. Members noted that there had been a pick-up in the growth of non-bank and off-balance sheet lending.
In the United States, consumption had been the key driver of expenditure growth over 2016, supported by continuing improvements in labour market conditions. Investment intentions had picked up significantly and the number of active oil rigs had increased in response to the higher level of oil prices. Fiscal policy was also expected to be expansionary under the new administration and the US economy was expected to grow above its potential rate in 2017. Members noted that the volume of trade destined for the United States had fallen significantly as a share of total global trade since the late 1990s. Nevertheless, a move to more protectionist policies would still be damaging for the medium-term outlook for both the US and global economies. Above-average growth in unit labour costs, higher oil prices and more expansionary fiscal policy were all expected to contribute to a further rise in core inflation, which had increased since 2015 to be only a little below the Federal Reserve's goal.
The euro area and Japanese economies had grown faster than their potential growth rates over 2016, resulting in further improvements in labour market conditions. The unemployment rate in the euro area had fallen to its lowest level in seven years, while the unemployment rate in Japan had declined to a two-decade low. In both economies, core inflation had remained low, while headline inflation had increased, largely as a result of higher oil prices. In the euro area, headline inflation had increased to be consistent with the European Central Bank's target. Measures of inflation expectations in both economies had been steady or had increased.
Members observed that merchandise exports had picked up for the euro area and Japan towards the end of 2016. A significant increase in merchandise exports had also contributed to growth in East Asia. Members noted that the increase in global trade over the second half of 2016 had been underpinned by an improvement in global economic conditions, both for Australia's major trading partners and other parts of the world that were important sources of external demand for output from East Asia.
Australia's terms of trade had risen by around 15 per cent over the second half of 2016 and were expected to rise again in the March quarter. In February, prices for iron ore, base metals and crude oil had all reached their highest level in more than a year, although the price of coking coal had fallen from its peak in November. Some reversal in the terms of trade was still expected, although the recent improvement in global demand suggested that higher commodity prices could be more persistent than previously anticipated. Members noted that generalised strength in commodity prices tended to indicate an improvement in global demand conditions, but that factors affecting the supply of commodities had also affected prices.
Domestic Economic Conditions
GDP growth in the December quarter of 1.1 per cent had been above expectations. The outcome partly reflected the reversal of some of the temporary factors that had contributed to the fall in output in the September quarter. Most notably, there had been a solid pick-up in export growth in the December quarter; in addition, growth in both consumption and business investment had been higher than expected. Total nominal income had risen strongly, driven by growth in mining sector profits as a result of the higher terms of trade; in contrast, growth in labour incomes had been unusually weak.
The mining sector had contributed to growth in the December quarter, reflecting higher exports and an unexpected increase in investment. Members observed that some resource firms may have been able to increase their exports to take advantage of higher commodity prices by running down inventories. Consistent with previous staff forecasts, the capital expenditure survey of investment intentions continued to indicate that mining investment would fall further over the following year or so, but that the drag on growth would dissipate over this period.
Non-mining business investment had risen in the December quarter, largely as a result of higher non-residential construction, although machinery and equipment investment had also risen. Non-mining business investment had picked up over the previous two years or so and business conditions had been more positive in recent months. In contrast to these more positive signs, non-residential building approvals had declined further and the capital expenditure survey continued to suggest that, in aggregate, firms do not intend to increase their spending on non-mining investment over the following year or so. Members observed, however, that this survey does not cover some important sectors, including education and health, and also does not include investment in intellectual property, which has become an increasingly important share of non-mining business investment in the national accounts measure. Members noted that in most sectors there had been little evidence that non-mining business investment had been held back by lack of access to credit.
Dwelling investment had rebounded in the December quarter; much of the strength had been concentrated in New South Wales. Even though building approvals had fallen significantly in recent months, the substantial amount of building work in the pipeline suggested that dwelling investment would continue to contribute to growth in coming quarters. Conditions in established housing markets had continued to differ significantly across the country. Over recent months, conditions appeared to have strengthened in Sydney and had remained strong in Melbourne; these cities had continued to record brisk growth in housing prices, and auction clearance rates had remained high. Housing loan approvals and credit growth had picked up for investors, primarily in New South Wales and Victoria. In contrast, housing prices and rents had fallen in Perth for two years or so, and apartment prices had declined in Brisbane.
Rural exports had grown strongly in the December quarter, reflecting strong farm production following favourable weather conditions in many areas over the second half of 2016. As a result of this and the higher prices for bulk commodity exports, there had been a trade surplus in the December quarter for the first time in almost three years. The current account deficit had narrowed to less than 1 per cent of GDP, the smallest deficit since 1980; the trade surplus was partly offset by a widening in the net income deficit as some of the increase in mining profits had accrued to foreign owners.
Household consumption growth, which had been relatively subdued in mid 2016, picked up in the December quarter, consistent with retail sales. Liaison with retailers suggested that recent trading conditions had been around average and household perceptions of their personal finances had also been around average.
The pick-up in consumption growth stood in contrast to the ongoing weakness in labour incomes, with the household saving ratio declining in the December quarter. Members noted that over the past two decades movements in the Australian household saving ratio had been much larger than those in other similar economies. One contributing factor was likely to have been that Australia had experienced a much larger terms of trade cycle than other developed economies with significant commodity exports. Differences in the evolution of household saving ratios across the states suggested that the terms of trade had played an important role in households' saving and spending decisions.
Indicators of labour market conditions had remained mixed. Employment growth had picked up in recent months and the unemployment rate had edged down to 5.7 per cent in January. Leading indicators, including job advertisements and firms' employment intentions, suggested that there could be some pick-up in employment growth in the near term. Members noted that although experience had varied across the states, in recent years employment growth had generally been stronger in the capital cities than in regional areas. Employment growth had continued to be concentrated in part-time jobs over the past year and wage growth had remained low, suggesting that the labour market had not been quite as strong as the headline employment and unemployment rate figures had indicated.
The wage price index had increased by 1.9 per cent over 2016, in line with the staff forecasts. Subdued wage growth appeared to have been broad based and was most pronounced in mining-related industries and states. Average earnings per hour in the national accounts had fallen sharply in the December quarter, as had the wage bill as a share of nominal GDP. Although quarterly movements in average earnings per hour are volatile, this measure of wage growth had also been subdued in year-ended terms, continuing to suggest there was very little labour cost pressure in the economy. Members noted that the recent experience of low inflation may also have contributed to lower wage outcomes and that other business costs, such as rents, are often linked to inflation. Members observed that although credit growth was lower than in previous decades, it had been faster than the subdued growth in household incomes.
Financial Markets
Members commenced their discussion by noting that global financial markets had been relatively quiet over the preceding month, with market participants focused on evolving expectations about the upcoming US Federal Reserve meeting, the new US administration's policies and national elections in Europe in coming months. Globally, monetary policy remained very stimulatory and financing remained readily available on favourable terms.
Financial market participants' expectations for an increase in the federal funds rate at the March meeting of the US Federal Open Market Committee (FOMC) had risen to over 90 per cent. This followed continued positive economic news in the United States as well as statements by FOMC members. Members noted the widely held expectations for no change in monetary policy settings in the euro area and Japan, compared with the general view earlier in the previous year that further monetary easing was in prospect in these economies.
In major markets, 10-year government bond yields remained above their lows of mid 2016, reflecting the run of more positive economic news since then, as well as expectations that the new US administration's policies would support US growth. Members observed that, although euro area government bond spreads to German government bonds had increased over recent months in response to political developments, yields remained relatively low by historical standards. Corporate bond yields in developed markets remained very low, with spreads to government bonds having narrowed markedly over the previous year, particularly for non-investment grade bonds. Australian government bond yields had been little changed over the month and the spread to US Treasury yields had also been steady at a low level. As in other markets, Australian corporate bond spreads had narrowed over the preceding year.
Global equity prices had moved higher over the prior month in response to continued positive economic data. In the United States, financial sector share prices had increased strongly following the new administration's orders for a review of financial market regulations. In the euro area, banks' share prices had declined following lower-than-expected earnings, which were largely related to loan-loss provisions. Over the previous year or so, Australian share prices had moved broadly in line with those in the rest of the world excluding the United States, where share prices had risen further. Recent Australian company earnings results had been generally positive, driven by strong profits in the resources sector.
The US dollar had been little changed over the prior month in nominal trade-weighted terms, while the euro had depreciated a little against the US dollar, in part reflecting political uncertainty around the upcoming national elections. The Chinese renminbi had been broadly unchanged over the preceding month against the US dollar and in trade-weighted terms.
Members noted that the People's Bank of China had tightened monetary policy a little and indicated that further tightening was likely in response to rising inflationary pressures and to address leverage, including of financial institutions. The tightening had flowed through to increased corporate bond spreads; recent bond issuance in China had been weak after a sustained period of strength, although yields had remained low. In emerging markets more broadly, financial market conditions had been favourable and flows into emerging market funds had resumed as the global economic outlook had improved since mid 2016.
The Australian dollar had been little changed over the prior month and had remained more than 10 per cent higher against the US dollar and in trade-weighted terms since early 2016, reflecting the significant increase in commodity prices since then.
Members observed that Australian banks' funding costs and average outstanding housing and business lending rates were estimated to have been broadly steady over recent months. Interest rates had increased slightly over prior months for some investor and interest-only housing loans.
Financial market pricing indicated that market participants expected the cash rate to remain unchanged at the March meeting.
Considerations for Monetary Policy
In considering the stance of monetary policy, members noted that recent data had continued to support a more positive outlook for growth of Australia's major trading partners than had been apparent a few quarters earlier. A number of indicators, including growth in global industrial production, global trade volumes and business sentiment, had improved. Recent data had also confirmed the pick-up in global inflation. Financial market data suggested that the probability of the Federal Reserve increasing the federal funds rate at the March meeting had increased markedly and there was no longer an expectation of further monetary easing in other major economies. At the same time, however, there continued to be significant uncertainty about policy in China and the United States and the implications for global growth and trade after 2017.
Domestically, there had been a significant increase in the terms of trade in the second half of 2016 and many commodity prices had risen further in recent months. Although mining companies were expected to increase their dividend payouts following the sharp rise in mining sector profits in the December quarter, a significant proportion of shareholders are non-residents, which would limit the flow-through to an increase in household incomes in Australia. However, the fact that the recent increases in commodity prices had been supported by a pick-up in global demand raised the possibility that commodity prices could be higher than expected, in which case the flow-through to the domestic economy could be larger than currently forecast.
The Australian economy had continued to make its transition following the end of the mining investment boom, supported by the low level of interest rates and the depreciation of the exchange rate since 2013. GDP growth had picked up in the December quarter to be around 2½ per cent over 2016, which was only a little below estimates of the medium-term potential growth rate of the economy. This outcome confirmed that the weakness in the September quarter was temporary. Looking forward, year-ended growth was expected to pick up gradually to be above its potential rate over the forecast period. An appreciating exchange rate would complicate the adjustment of the economy following the end of the mining investment boom.
Momentum in the labour market remained difficult to assess, but it was clear that spare capacity remained and there continued to be significant differences in labour market outcomes across the country. Domestic wage pressures remained subdued and household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt. Spare capacity was expected to decline slowly as momentum in the economy built; wage growth and underlying inflation were expected to rise, but only gradually.
Recent data continued to suggest that there had been a build-up of risks associated with the housing market. In some markets, conditions had been strong and prices were rising briskly, although in other markets prices were declining. In the eastern capital cities, a considerable additional supply of apartments was scheduled to come on stream over the next few years. Growth in rents had been the slowest for two decades. Borrowing for housing by investors had picked up over recent months and growth in household debt had been faster than that in household income. Supervisory measures had contributed to some strengthening of lending standards.
Given all of these considerations, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
The Decision
The Board decided to leave the cash rate unchanged at 1.5 percent.
For more information, go to the Reserve Bank website <a href="https://www.rba.gov.au" target="_blank">here</a>.
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Minutes of March 2017 Monetary Policy meeting of the Reserve Bank Board

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GUEST OBSERVER
Not being able to pay loan repayments on time is one of the most frightening and common concerns of property investors, and rightly so.
Last year over 50,000 full-time jobs were lost in Australia alone, and with less than half of the country having private health insurance, many investors would be at risk of losing their portfolio if an unforeseen circumstance such as being fired or becoming ill, arose.
Preparing for situations that may result in a loss or diversion of income is essential when it comes to safeguarding your property portfolio. Although preparation is paramount, there are also processes that can be followed once unexpected financial difficulties strike that can offer assistance to avoid an investor having to sell.
To ensure investors are properly prepared prior to any unforeseen circumstances arising, see below:
<ul>
<li>
Make income protection insurance a priority. Often income insurance is considered too expensive or unnecessary; however as an investor it is vital to safeguard your portfolio. Although it will be an additional cost to pay monthly, if an illness or injury occurs, most policies will cover 80 percent of your income, meaning expenses incurred via your portfolio are still covered until you recover.  Also, in most cases income protection premiums are a tax deduction.</li>
</ul>
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<li>
Research and ensure you have the policy which best suits you. Unfortunately there isn’t one specific income protection policy that suits everyone. To ensure you are choosing the most cost-effective and beneficial option for your situation, make sure you compare various options before committing to a policy. </li>
</ul>
<ul>
<li>
Aim to have a neutral to positive cash flow portfolio. If overall across a property portfolio the rents equal or exceed the costs and repayments, sustaining the portfolio will not be contingent on job income and will give peace of mind in the event you are forced to stop working.</li>
</ul>
<ul>
<li>
Create a buffer in your offset account. Once an investor has an offset account set up, you can keep surplus funds there which will give you two primary benefits:</li>
</ul>
<ul>
<li>Offset a portion of the interest being paid on the home loan.</li>
</ul>
<ul>
<li>If the property is negatively geared and you experience an unforeseen circumstance, these funds could be used to cover the weekly shortfall in rent.</li>
</ul>
If unforeseen circumstances arise that investors aren’t prepared for:
<ul>
<li>
Seek immediate expert counsel. If an unforeseen circumstance has caught you off guard and you are fearful for how this will affect your finances, arrange to meet with an accountant or financial planner immediately to implement a plan that ensures the obligatory loan repayment is able to be made.</li>
</ul>
<ul>
<li>
Advise the bank of the situation. All lenders have a financial hardship line, so take the time to work with them on a suitable payment arrangement so you keep on top of your repayments.</li>
</ul>
<ul>
<li>
Research what the current market rent is on each of your properties.  The average rent in each market changes constantly. Keeping up to date with the current rate ensures you are able to see where you can increase the rent for better cash flow.</li>
</ul>
Zaki Ameer is founder of Dream Design Property and can be contacted <a href="https://www.ddpproperty.com.au/" target="_blank">here</a>.
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How to safeguard your property: Zaki Ameer

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GUEST OBSERVER
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Federal government plans to restrict foreigners from buying more than half the homes or apartments in any new development will only discourage offshore developers from doing business in Australia.
The proposal pitched as one of a raft of possible measures in the May budget to help young Australians enter the property market would be a waste of taxpayers’ money and potentially disastrous for the economy.
Foreign buyers already faced a wide range of restrictions and fees when it comes to investing in property in Australia.
Enough is enough.
The roll-on effect if this latest proposal is included in the May budget could be an economic disaster for Australia. 
This is just a ploy from the Government to make it look like they are doing something for first home buyers but it will just discourage offshore developers from investing in Australia.
The foreign buyer restriction could be the last straw and could result in driving away foreign buyers investing in Australian property. Excessive surcharges and further restrictions on foreign buyers could also lead to fewer international students coming to Australia as well as a slower population growth and a rise in unemployment.
Most buildings developed by onshore developers rely on local funding which typically limits their sales to foreign investors at 15-20 percent of the total sales.
This was not the first-time foreign buyers have faced a limit on the dwellings they can buy in Australia.
Before 2009, there was a regulation that meant developers could only sell half of their new dwellings in any development to foreign buyers.
But this all changed when the Global Financial Crisis (GFC) hit and the then Labor government decided to abolish the foreign limit for off the plan properties. This meant foreign buyers could buy whole developments if they were marketed both locally and overseas.
 
Mark Mendel, is founder and chief executive officer of iBuyNew.com.au and can be contacted <a href="https://www.ibuynew.com.au/" target="_blank">here.</a>
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Foreign investor restrictions could be disastrous: Mark Mendel

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GUEST OBSERVER
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The unsolicited proposal for the development of the Martin Place metro station demonstrates the innovation that can come from the private sector. 
Macquarie Bank’s proposal to fund a new metro station by developing two commercial towers linked by retail arcades is good news for Sydney.
The tax payers do not have to fund the new station as a result of the development opportunities on adjacent sites.
The Martin Place station development follows a similar approach for the renewal of Wynyard station by Brookfield who own adjacent sites to Wynyard. In both cases it is the private sector that has come up with world class designs for the station infrastructure as well as for adjacent tall commercial buildings. 
Both of the new station proposals also include major retail outlets to activate the transport concourses which uses private sector expertise in making bustling public spaces.
Sydney is developing an extensive underground pedestrian network that still connects to natural light through the station redevelopments. This dry pedestrian network will be the perfect route for commuters during future wet weather like the current heavy rain that Sydney is going through.
The Urban Taskforce encourages the NSW Government to use the unsolicited proposal process in other locations where private sector innovation can deliver quality public domain outcomes.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI">here</a>.
</div>
</div>
</div>
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Private sector innovation provides quality public outcomes for Martin Place Metro

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A historic cable tram shed and workshop in North Melbourne that has been converted into a family home has been sold for $6.5 million.
It was bought three years ago for $3.35 million by car collector Chris Page because he wanted to grow his car collection.
He and his family moved from their Carlton home and renovated the historic 1918 building which had previously sold in 1978 at $155,000.
It is now a vast five bedroom home with a big garage downstairs as well as a street-facing mechanic business.
Page hoped that another like-minded car lovers will secure the property which was also advertised as a development site.
His hopes came true, as the buyer is a fellow car enthusiast who has a car collection.
The property first began as a cable tram shed in the 1920s before being converted into a tramways administration office and then finally into a Mediterranean grocer before being converted into the current home.
The reported pre-auction price indications were $5.5 million for the property that includes the mechanic business space.
The business owner would be happy to stay if the new owner wishes.
The property was offered through Jellis Craig agents John Morello and Simon Mason.
<div> </div>
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Historic North Melbourne cable tram shed conversion sold

A mix of Gold Coast locals, fly-in, fly-out purchasers from Sydney and Melbourne, and Brisbane-based families has driven early sales success at Broadbeach's newest apartment tower, Lumara.

The 26-level project, a joint venture between builder-developer 5Point Projects and Bourke Projects, comprises just 37 luxury residences and is attracting a buyer profile that is looking for exclusivity, above the most amenity-rich suburb on the Gold Coast.

[smartcode_project:default project_id=150454 project_image_fid=364156]

Jamie Bourke, Director of Bourke Projects, says every buyer secured so far intends to use Lumara as a lock-up-and-leave residence, combining holiday use with the ability to work remotely when required.

“The size of the apartments, both half- and full-floor options, and the different zones within the floorplans, lends itself perfectly to dedicated home office setups and multi-generational family holidays,” Bourke says.

That flexibility has become a key drawcard for affluent buyers seeking a second residence on the Gold Coast without sacrificing the ability to conduct business away from their primary home base.

The absence of holiday letting within the building has also resonated strongly with purchasers.

“This type of buyer doesn't need to generate holiday rental income,” Bourke says. “They're paying for exclusivity, privacy and certainty around who their neighbours are.”

[smartcode_project:default project_id=150454 project_image_fid=366491]

The strong demand comes amid broader shifts in the high-end apartment market following the Federal Budget announcements in May.

“We were already seeing strong enquiry from high-net-worth buyers, but that has only accelerated since the policy changes,” Bourke says.

“A lot of those buyers are looking to place more capital into premium lifestyle assets rather than investment-grade stock that has been targeted by the Federal Government.”

[smartcode_project:default project_id=150454 project_image_fid=366486]

Designed by Cottee Parker, Lumara adopts a slender, sculpted form with an emphasis on natural materials suited to its beachfront setting. The architectural approach draws on coastal influences, with a palette of stone, timber and concrete selected for durability and the ability to weather over time.

Apartments are limited to three and four-bedroom configurations, with a maximum of two residences per floor through the mid-levels and a selection of full-floor and dual-level homes in the upper levels. All apartments are oriented to the north to maximise natural light, cross-ventilation and views across the ocean, city skyline and hinterland.

A two-level amenity offering is positioned high within the building on levels 20 and 21, conceived as a sky wellness retreat. Facilities include a magnesium pool, spa, sauna and steam rooms, alongside more social spaces such as a private dining room, resident lounge, workspaces and outdoor barbecue areas integrated with landscaped greenery.

The uppermost levels are reserved for larger-format residences, including several full-floor homes and a dual-level penthouse with its own private wellness features and recreational spaces.

&nbsp;

To give buyers confidence, 5Point and Bourke commenced construction ahead of the apartments launching to the market, a sure-fire way to prove they mean business, and the building will be delivered. They are targeting a 2028 completion date.

[smartcode_project_cta:default project_id=150454]

Joel Robinson

Locals, interstate holiday makers, drive early sales at Lumara, Broadbeach's newest luxury apartment tower

Often when it comes to purchasing property, the biggest barrier to entry is the deposit. Buyers of established homes typically aim for a 20 per cent deposit to avoid the added cost of Lenders Mortgage Insurance, while most property transactions require around a 10 per cent deposit when contracts are exchanged.

The off-the-plan market works differently, with buyers typically paying a deposit during construction and settling the balance upon completion. As completion approaches at <a href="https://www.apartments.com.au/new-apartments/fabbrica-fitzroy-369-gore-street-fitzroy-vic-3065">Fabbrica Fitzroy</a>, developer <a href="https://www.apartments.com.au/developers/pace-development-group">Pace</a> is making it easier for buyers to secure a residence through a deposit-matching incentive. Purchasers need only contribute a five per cent deposit*, with Pace matching the remaining five per cent.

The offer comes as Pace unveils a completed display apartment and townhouse, now available for inspection by appointment ahead of the project's Spring completion.

[smartcode_project:default project_id=139552 project_image_fid=371009]

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/winwood-mckenzie-architecture">Winwood Mckenzie</a> and landscaping by <a href="https://www.apartments.com.au/landscape-architect/acre">Acre</a>, Fabbrica draws on Fitzroy’s industrial and manufacturing history, incorporating references to the former Argyle Shirt Factory and Life Savers Confectionery Company that once occupied the site.

The development comprises 85 residences, spanning low-maintenance apartments through to larger-format townhouses with private street access and double lock-up garages, a relatively uncommon offering in Fitzroy’s higher-density apartment market.

Pace says the project has been designed to appeal to buyers seeking inner-city convenience without sacrificing space, flexibility, or amenity.

[smartcode_project:default project_id=139552 project_image_fid=371016]

Inside the residences, Winwood Mckenzie has focused on adaptable layouts and integrated detailing, with features including custom joinery, and concealed storage solutions. The material palette leans into warm, tactile finishes intended to complement the building’s industrial architectural language.

Fabbrica’s rooftop amenity is a key part of the project offering. Spanning around 800 sqm, the communal rooftop includes a private dining room, communal kitchen, lounge spaces, work-from-home zones, and outdoor dining areas overlooking the Melbourne CBD skyline.

[smartcode_project:default project_id=139552 project_image_fid=371017]

Landscape architecture studio Acre has introduced a layered rooftop garden designed to soften the urban setting while creating a more communal environment for residents.

The Fitzroy location also positions residents within walking distance of Brunswick Street, Smith Street, parks, cafés, galleries, and public transport, while remaining only minutes from Melbourne’s CBD. The project has an enviable Walk Score of 96.

[smartcode_project:default project_id=139552 project_image_fid=371025]

Pace, which is also delivering the project as builder, has developed more than 100 projects across Melbourne over the past three decades. The vertically integrated approach has become increasingly common among developers seeking greater control over construction delivery amid broader market pressures affecting the apartment sector.

The strikingly contemporary Gore Street development is now around 70 per cent complete, with purchasers expected to move into their new homes in Spring 2026. A limited number of residences remain available under the current deposit match offer.

*Conditions apply in relation to the deposit match offer.

[smartcode_project_cta:default project_id=139552]

Pace offers five per cent deposit match at Fabbrica Fitzroy ahead of Spring completion

Sydney developer Hyecorp's roots on the Lower North Shore stretch back three generations, and that deep understanding of the market continues to shape where and how it develops today.

From high-rise towers to boutique apartment projects, the family-run developer has built its reputation by focusing on a part of Sydney it knows intimately. Founded by Michael Abolakian in the early 1990s, Hyecorp is now led by his sons Stephen, Troy and Patrick.

Stephen Abolakian, joint managing director alongside Troy, has spent more than two decades in the business, overseeing development, planning, finance, marketing and sales.

Abolakian says the developer's disciplined focus on where it chooses to operate has been, and continues to be, one of Hyecorp's greatest strengths.

“We know the buyer profile exceptionally well,” Abolakian says.

“The demographics between places like Willoughby, Chatswood, St Leonards and Roseville are very similar. There are nuances between suburbs and projects, but culturally and from a buyer perspective, there’s a strong overlap.”

That buyer has historically been overwhelmingly owner-occupier driven.

Unlike many Sydney apartment developers that have traditionally relied heavily on investor demand, Hyecorp’s projects have typically attracted downsizers, upsizers, rightsizers and family owner-occupiers seeking long-term homes rather than short-term investments.

“Historically, investors have been a much smaller portion of our demand profile,” Abolakian says.

“We design for owner-occupiers. We don’t design for yield, we design for comfort, amenity, family living and long-term usability.”

That philosophy extends well beyond apartment layouts.

From landscaping and communal gardens to shared amenities and circulation spaces, Hyecorp’s developments are designed around how people actually live, something Abolakian believes has become increasingly important in Sydney’s apartment market.

“There was probably a period where having an approved project in market was enough,” he says.

“There wasn’t as much competition and if you built it, buyers would come. That’s no longer the case.”

“There’s more supply in the pipeline now, particularly with TOD precincts and low and mid-rise reforms opening up opportunities across Sydney. Buyers have more choice, so if you get the product wrong, they’ll simply go elsewhere.”

[smartcode_project:default project_id=110379 project_image_fid=311393]

The shift has forced developers to become more sophisticated in how they approach apartment design, particularly as owner-occupier expectations continue to rise.

For Hyecorp, that means thinking beyond who the buyer is today and designing for who they may become in five or 10 years' time.

“People buying now often aren’t moving in for several years,” Abolakian says.

“You might have a young couple buying today, but by the time they move in they may have children, older children, or changing lifestyle needs. You’ve got to think about how families evolve.”

That thinking also shapes Hyecorp’s approach to amenity, which positions wellness at the forefront.

[smartcode_project:default project_id=149594 project_image_fid=362634]

While resort-style facilities have become increasingly common marketing tools across Sydney apartment developments, Abolakian says the challenge is ensuring amenities are genuinely usable and appropriate for the scale of the project.

“If amenities are done right, they can materially improve the living experience,” he says, adding however that if you&nbsp;overdo it or get it wrong, you can end up with facilities nobody uses that simply create ongoing strata costs.”

That balance is something Hyecorp is aiming to strike with projects like Roseville Avenue, one of the group's upcoming Lower North Shore developments, which Abolakian describes as bringing a resort-style living experience into a metropolitan setting.

“It’s about creating something that feels special without being excessive,” he says.

“Good gardens, quality apartments, thoughtful amenity. Creating that resort feeling in a metro location.”

<img alt="Hyecorp" data-entity-type="file" data-entity-uuid="13c4c0f3-b1b7-44cf-9344-0b3d1d07797a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-02%20at%2012.14.57%E2%80%AFPM.png?VersionId=9OLWjyj2bYkDV35F78WJnyMSPfc2bJ2z" />

The focus on owner-occupier product comes as Sydney’s apartment market continues to navigate a difficult development environment.&nbsp;For Hyecorp, maintaining an in-house operating model across construction, sales, marketing and development management has become increasingly important in navigating that environment.

“We’ve always believed in keeping a lot of the process in-house,” Abolakian says.

“It creates efficiencies, but it also creates quality control. You can make faster decisions and ensure the end product stays aligned with the original vision.”

Despite the challenges, Abolakian believes demand for quality owner-occupier apartments across Sydney remains strong beneath the surface, particularly across established Lower North Shore suburbs where downsizers continue to seek new housing options close to existing communities.

“There are definitely people waiting,” he says.

“Once some of the broader uncertainty settles, whether that’s the global environment or some of the local economic noise, I think the right projects will perform very strongly.”

Hyecorp currently has three residential developments on the market across Sydney’s Lower North Shore.&nbsp;Audrey, St Leonards, positioned opposite Newlands Park, is nearing completion and preparing to welcome its first residents, with the project now almost sold out.

Hyecorp has also recently launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/celine-chatswood-37-archer-street-chatswood-nsw-2067">Celine Chatswood</a>, an architectural tower, while continuing to deliver&nbsp;<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet Roseville</a>, a more boutique scale of development with just 34 apartments.

Why Hyecorp continues to back Sydney's Lower North Shore apartment market

South East Queensland’s apartment market is entering a new phase defined by rising prices, constrained affordability, and mounting pressure on the construction pipeline, according to RPM Group’s latest SEQ Apartments &amp; Townhomes Market Report.

The May 2026 report highlights a widening divide between what buyers can afford and what developers can viably deliver, with detached house prices continuing to push more buyers toward apartments across Brisbane, the Gold Coast, and the Sunshine Coast.

RPM says Brisbane’s median house price has reached around $1.5 million, accelerating the shift toward higher-density housing as buyers are increasingly priced out of the detached market.

[smartcode_project:default project_id=135094 project_image_fid=356540]

Median unit prices rose across all three major SEQ markets in the March quarter. Brisbane City recorded the strongest annual growth, with median unit prices climbing 21 per cent to $862,000, while the Gold Coast reached the highest overall median at $950,000, up 17 per cent year-on-year. The Sunshine Coast followed at $870,000, representing annual growth of nine per cent.

RPM noted the affordability gap between houses and units remains significant, with detached homes commanding premiums of 67 per cent in Brisbane and 68 per cent on the Gold Coast relative to apartments.

The report suggests this price disparity is increasingly consolidating buyer demand within the apartment market, particularly among downsizers and owner-occupiers.

“Demand is real. Supply is moving. But they’re operating on different timelines and the gap between what’s being built and what buyers can afford is the defining tension in this market right now,” RPM Queensland and NSW Managing Directors Peter Neale and Clinton Trezise said in the report.

[smartcode_project:default project_id=150787 project_image_fid=366230]

While approvals and commencements are strengthening, RPM argues the delivery pipeline remains constrained by construction costs, labour shortages, and extended build timelines.

Apartment approvals across Queensland increased 86 per cent over the year to February 2026, reaching 12,682 approvals, the highest level recorded since 2016. Brisbane overtook the Gold Coast as the state’s most active apartment approval market, with nearly 5,000 apartments approved over the past 12 months.

Unit commencements also strengthened considerably, rising 48 per cent year-on-year to 5,453 commencements in the December 2025 quarter, the highest level since 2018.

However, RPM’s research found apartment delivery timeframes have expanded sharply compared to the previous cycle. Projects are now averaging around 30 months from approval to completion, compared to roughly 20 months a decade ago.

[smartcode_project:default project_id=143932 project_image_fid=367515]

The number of units under construction has climbed to approximately 31,530 dwellings, nearing the previous 2016 peak, though projects are remaining in the pipeline for considerably longer.

Construction costs continue to weigh heavily on feasibility. RPM found the average apartment construction cost in Greater Brisbane reached $630,000 per dwelling in 2025, exceeding both Sydney and Melbourne. Coastal Queensland markets, including the Gold Coast and Sunshine Coast, were even higher at an average of $817,418 per apartment due to the prevalence of larger premium product.

The report also points to increasing pressure from Olympic-related infrastructure spending ahead of Brisbane 2032, with labour competition expected to intensify over the next several years.

[smartcode_project:default project_id=150017 project_image_fid=370960]

ANZ Associate Director of Property Daniel Gradwell said the underlying demand drivers across South East Queensland remain strong, supported by interstate migration, downsizers, and population growth.

“The challenge is bringing enough supply to market to meet that demand, and nothing on the horizon makes that straightforward,” Gradwell said.

RPM’s analysis found the affordability challenge is becoming more pronounced in the new apartment market itself, with only three per cent of surveyed new apartments priced below $1 million.

Instead, the market is increasingly concentrated in higher price brackets, with the most common new apartment price band across SEQ sitting between $1.5 million and $1.75 million. Around half of all new apartment stock surveyed is priced below $2 million.

The report suggests developers are not necessarily avoiding lower price points by choice, but because current construction economics make delivering affordable apartments increasingly difficult at scale.

Rental conditions also remain tight across the region. Median rents for one-bedroom apartments rose 12 per cent in Brisbane over the past year to $580 per week, while Gold Coast one-bedroom rents increased nine per cent to $630.

Despite rising rents, RPM noted bond lodgements have generally trended downward over the past five years, indicating more apartments are being absorbed by owner-occupiers rather than retained as investor-held rental stock.

Looking ahead, RPM expects projects targeting the mid-market owner-occupier segment between $1.25 million and $2 million to remain the most viable part of the market, while premium projects in highly constrained coastal or riverfront locations continue to attract demand.

“Construction costs are rewriting the feasibility rulebook across Greater Brisbane, and with little relief in sight, only projects in the right price band, right location, and with presales secured early will make it through,” the report concludes.

SEQ apartment demand outpacing affordable supply as construction timelines stretch: RPM

Camberwell Junction has long been the epicentre of amenity in Melbourne’s Boroondara region.

For nearly a century, it has drawn both locals and visitors, anchored by the Camberwell Sunday Market, which first operated in 1929 and quickly became a fixture of the suburb’s identity. Over time, the Junction evolved into one of Melbourne’s most established retail and lifestyle precincts, now comprising more than 400 stores and over 300 commercial businesses.

Despite that depth of amenity, one thing has remained notably limited: the supply of new apartments.

In a suburb defined by its heritage streetscapes and tightly held residential stock, new development opportunities have been scarce, particularly within the core of the Junction itself. That lack of supply has left a gap in the market for larger, design-led apartments suited to downsizers and owner-occupiers wanting to remain in the area.

Boutique developer Above Zero identified that gap when it secured a prime site on Burke Road, in the heart of Camberwell Junction.

[smartcode_project:default project_id=4896 project_image_fid=368543]

The site has a long planning history. Various proposals have been put forward over more than a decade, many of which were knocked back by the City of Boroondara, with initial applications dating back to 2015. Above Zero acquired the site in 2022 and returned with a revised scheme, refining both the building’s height and its ground-level interface to better align with Council expectations.

That process has culminated in approval for Camberwell House.

The Cera Stribley-designed development will deliver 57 residences on a 1,950 sqm site within the Camberwell Activity Centre, placing it directly within one of Melbourne’s most established retail and transport hubs.

It is expected to be one of the only new apartment developments to launch in the Junction in recent years, reinforcing the rarity of new supply in the precinct. Currently, there are just a handful of projects on the market in Camberwell, underscoring the significance of a development of this scale and positioning.

[smartcode_project:default project_id=4896 project_image_fid=368544]

Camberwell House has been conceived with a clear focus on larger-format apartments. The project will offer a mix of two-, three- and four-bedroom residences, alongside a limited number of penthouses, targeting owner-occupiers seeking scale rather than volume-driven product.

The building’s vertical presence will also set it apart.

Positioned on Burke Road, the development is set to become one of the taller buildings in its immediate context, allowing for elevated outlooks across Melbourne’s CBD skyline and toward the Dandenong Ranges. In a precinct characterised by lower-scale built form, that height provides a point of differentiation, particularly for buyers seeking outlook and natural light.

[smartcode_project:default project_id=4896 project_image_fid=368568]

Architecture has been led by Cera Stribley, with interiors by GOLDEN and landscape design by Florian Wild. The design approach centres on material consistency and restraint, with residences oriented to maximise light, ventilation and connection to outdoor spaces.

Full-height glazing and generous terraces form a key part of that strategy, allowing apartments to extend beyond their internal footprint and engage with the surrounding environment.

Beyond the private residences, a significant component of the project is its amenity offering.

Above Zero has positioned Camberwell House as a “complete living environment”, incorporating a full floor dedicated to resident facilities. At the centre of that is a wellness zone, including a 12.5-metre lap pool, spa, sauna and treatment spaces, alongside a gym and recovery-focused amenities.

This level of amenity is more commonly associated with inner-city developments, rather than established middle-ring suburbs like Camberwell.

[smartcode_project:default project_id=4896 project_image_fid=368588]

Additional shared spaces include a private library lounge, dining and entertaining areas, and an indoor golf simulator. A self-contained guest suite has also been incorporated, allowing residents to accommodate visiting family or friends without impacting their primary living space.

The inclusion of these facilities reflects a broader shift in buyer expectations.

As more downsizers look to transition from larger family homes into apartments, there is increasing demand for developments that offer not just a residence, but a lifestyle. That includes access to wellness, social and entertaining spaces within the building itself, reducing the reliance on external amenity while still maintaining proximity to established precincts.

Camberwell House is positioned to benefit from both.

Its location places it within immediate walking distance of Camberwell Junction’s retail and dining offering, as well as public transport connections, including tram and train services. That combination of internal amenity and external convenience is central to its appeal.

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Jellis Craig Projects Director Stephen Bowtell is handling sales for the project and says Camberwell House offers a rare entry point into one of Melbourne’s most tightly held markets.

“Buyers are recognising that Camberwell House offers something they simply haven’t seen before in Boroondara,”&nbsp;Bowtell&nbsp;says.

“It combines a level of resident amenity and service typically associated with Melbourne’s premium inner-city developments, while being positioned right in the heart of Camberwell Junction.

“The response to the concierge offering has been particularly strong. Buyers appreciate not only the convenience, but also the sense of security and peace of mind that comes from having a dedicated presence in the building every day.

“When you combine that with the wellness facilities, the exceptional arrival experience, and panoramic views across both the CBD skyline and the Dandenong Ranges, it creates a lifestyle proposition that is genuinely unique within the local market.”
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[smartcode_project_cta:default project_id=4896]

Jonathan Chancellor

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