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GUEST OBSERVER
It’s always fascinated me, the place that architecture holds in the public imagination.
I don’t mean that regular people frequently get carried away about buildings, which they generally don’t. I’m talking about the heady, even intoxicating way that architecture as a practice, and architects as practitioners, appear in popular media: on TV, in movies, in books, in toys and games, and increasingly also in art galleries.
The idea of architecture, as a constructive kind of daydreaming, remains strikingly potent in fiction and pop culture. By extension, the idea of architects themselves as feverishly creative individuals, conjuring new worlds into being, remains (sometimes quite literally) seductive.
As a result, if I had a dollar for every stranger who has confided in me (often quite shyly, perhaps a little disappointedly) that they always wanted to be an architect, I would at this moment be retired and lying on a beach.
The construction is almost entirely fantastical. Ask any architect about their actual working life and they will tell another story altogether – albeit one with its own satisfactions and fulfilments.
But the fact that these ideas are fanciful doesn’t diminish their power; and to try and debunk them would anyway be missing the point: they are whimsies, wishful thoughts, romantic reveries. People really seem to want architecture to be this otherworldly, world-making activity. Or maybe they want to believe we live in a world where such wondrous transformations and constructions are possible. Whatever the reason, architects get an awful lot of good press.
(Actually they also get a fair bit of bad press: it’s an eternal irony that architects are on the one hand charged with keeping alive all our most treasured dreams about inspiring places and ways of living, and on the other condemned as out-of-touch prima donna aesthetes who make (ugly) art with other people’s money).
I’ve written about all of these issues before (forgive the shameless self promotion): about how such ideas manifest in childrens’ books and about how the popular conception of architecture seems to link it inexorably with play – framing architectural design as the exercise of childlike creativity; architectural drawings and scale models as dramatic props; architectural instruments as toys; and the work of architects as really a frolic: hardly work at all.
Then, a few weeks back, I saw yet another example of the phenomenon – and it got me thinking again.
Imaginary Architecture
Imaginary architecture was an interactive, “all ages” installation at the Melbourne Arts Centre, which ran for several weeks in January. Conceived by artist Lara Tumak, the exhibition was commissioned by the Arts Centre, following an earlier incarnation developed with ArtPlay – the City of Melbourne’s dedicated children’s cultural centre and program of art workshops.
The installation posed the question, “is it possible to create architecture out of nothing more than dreams?”
Of course in the real world the answer is, emphatically, no. But in the realm of art, and furthermore the realm of fiction and play, of fantastical exploration and imagined occupation, then anything is possible, and architecture becomes an incredibly rich field of conjecture and concoction.
The Imaginary Architecture installation was mounted in the dim downstairs of the Arts Centre, in a space that is as much theatre as foyer, and from the outside it looked like a pile of cardboard boxes. At intervals, mysterious sounds would emerge from within, and coloured lights would flicker and flash. 
A perimeter of large appliance boxes piled up to form a loose enclosing wall, which you entered through a cardboard arch, at the scale of a child, forcing adults to bow their heads. Within, smaller boxes were stepped and stacked all over.
Each of these little boxes had been contributed by a visitor who, having been encouraged to bring a biscuit or cereal or shoe box of their own, could make their own scene inside the box, using art supplies and materials provided. They could then choose to add it to the colony.
Attendees were each given a torch to shine through a specially-made aperture in the top of each box, revealing the scene inside.
The dioramas were inventive, and evidently mostly by children. Some had set a whole house within the box/room, others created outdoor scenes – dinosaur habitats, playgrounds, cemeteries. I saw a pet adoption centre, and a room full of hanging clothes. There were of course many bedroom scenes, with little cardboard kids inside, doing their own things. The attendant told me that some of the most popular had been undersea worlds, and party scenarios.
My own little boy worked diligently to make a paper campsite inside a shoe box - a person sleeping in a tent, under a blanket, while outside a river flowed by. He specified that it was night time, and that there was a “golden night-fish” in the river. It was very serious business.
Working your way around the installation, lining up your torch at the top and illuminating each little interior in turn, was like peering into the windows of innumerable strange and wonderful buildings. But even more than that, it was like peering into other possible realities.
The city as collective space
The installation, unassuming as it was, offered some profound observations.
First was its proposition about urbanity: to me it seemed a new take on showing the human life of a city (as opposed to, say, its infrastructure or built form). It framed the city as a collection of fantastical rooms: as the stacked accumulation of many lives, a colony of people each in their own separate spaces, each engaged in their own pursuits.
Like the lit windows of apartment buildings at night, each box thus represented a life taking place: separate, distant, unknown and yet familiar. This seemed a strangely compassionate vision of cities, of the commonalities of humankind, even alongside its multitudinous, mysterious difference. The vision is humanist without being nostalgic: this is how so many of us now live, in cities, this is how we co-exist in urban space, piled neatly one upon another.
Perhaps one of the reasons that architecture and cities are so frequently appearing in art galleries these days, as an instrument of interaction and “immersive” engagement, is precisely because they represent such collective activity. Like a coral reef or an ant colony, a city is the result of thousands and millions of individual agents, coming together in cooperation.
The interior life, not the exterior form, of architecture
Another refreshing aspect of the installation was its focus on the inner life of architecture – on rooms, and what goes on inside buildings, rather than their external form. With cardboard boxes as literal building blocks, the show was not about “signature” design or buildings as novel sculptural objects.
In this sense it was the opposite of another very popular recent instance of architecture in the art gallery - Olafur Eliasson’s The cubic structural evolution project. That work, recently reprised as part of Queensland’s Gallery of Modern Art’s 10-year celebrations, involves visitors making and remaking a city of white Lego, constructing teetering towers and elaborate, lace-like forms.
I saw that same work at the City Gallery Wellington in their intriguing 2015 show Demented Architecture, and it was amazing to see adults and children alike sitting down, with such commitment and concentration, to build a city together.
But while Eliasson’s work is clearly engaging, and very well loved by public audiences, Tumak’s Imaginary Architecture is another proposition altogether. It is a show about interior space and scenography and human action - the kinds of (both possible and impossible) things that people might conceivably do in a room.
We might even say it was a show about interiority: the quality of insideness that interiors have, and the sense that buildings have a secret and perhaps completely unexpected life going on within, which can rarely be read from the façade.
In this way, the interior becomes a metaphor for imagination itself. The inner life of rooms reflects the inner life of people. Dream homes are not only made from dreams, they are homes for dreams: places where whimsical ideas can take refuge from an increasingly frightening, turbulent world.
Maybe this is why architecture still holds such a particular place in the popular consciousness: it seems to provide a shelter and occasion for the play of the imagination.
Naomi Stead is Professor of Architecture, Monash University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/naomi-stead-108029" target="_blank">here</a>. 
 
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Dream homes: Architecture and popular imagination

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GUEST OBSERVER
On a state basis, NSW is the standout, with private non-residential building work done rising since late 2012. 
Work done in the retail, office, aged care and entertainment have driven the increase. More recently the construction of new office space has slowed. 
After trending higher since 2011, non-residential building work has declined in Victoria over 2016. The recent decline has been largest in health and warehouses, although this follows strong growth previously. There has been a solid lift in work done in the retail sectors over 2016. Non-residential building work has also risen at a solid pace in Queensland. There has been a particularly large lift in construction in the tourism, education, health and aged-care sectors.
<a href="https://www.propertyobserver.com.au/images/2017/02/17/Screen%20Shot%202017-02-17%20at%208.41.55%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/17/Screen%20Shot%202017-02-17%20at%208.41.55%20AM.png" alt="">
Non-residential construction remains soft in both WA and SA. In WA, office building has more than halved as the effects of the mining downturn are still playing out. Despite the decline, office space remains oversupplied in Perth with vacancy rates increasing sharply since 2012.
In SA, construction in the commercial and industrial categories has declined over the past two years. However this is partly offset by a lift in health, tourism and education. 
In the public sector, non-residential construction has picked up a little in most States.
What’s in the pipeline?
The approvals data also shows us the value of building work in the pipeline. Private sector non-residential approvals have lifted strongly since September 2016 for all the broad categories. Approvals translate into actual work done with different lags depending on factors such as the size of the project and the industry. However most approvals translate to work done with a lag of between three and twelve months. So the recent lift in approvals means stronger building activity in 2017.  
Within commercial approvals both retail &amp; wholesale and office approvals have lifted strongly in the States of NSW, Victoria and QLD. Approvals for building in the “other” category have also picked up driven by rising approvals in accommodation, entertainment, health and aged care. NSW and Victoria are behind the increase, with approvals down in Queensland and flat in WA and SA 
Industrial approvals have lifted too, due to rising approvals in Victoria and QLD. In QLD there has been a lift in approvals for factories, warehouses and agriculture. In Victoria approvals for warehouses and agricultural have picked up.
Public sector non-residential approvals have also lifted in recent years. However approvals have turned down a little in recent months. This is largely due a drop in approvals in NSW and VIC 
Going further through the pipeline, the building work yet to be done data shows the estimated value of remaining work on buildings that have been started but not yet completed. The amount of building work yet to be done has been broadly steady over 2016.
The pipeline of commercial building work done has fallen as the amount of office building yet to be done has declined sharply. However there has been an offsetting lift in work yet to be done in the industrial and other category. Within the other category work yet to be done in accommodation and aged care have lifted sharply. And education has risen too. In the industrial category, work yet to be done in factories and agriculture has lifted. 
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" target="_blank">here</a>.
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Private non-residential building work a standout in NSW: Gareth Aird

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GUEST OBSERVER
For the last two weeks, I have been in the US visiting investors; hedge funds; corporates and officials.
I still have more meetings to complete, including with other Fed officials, but I would like to set out some assessments so far.
One debate is whether current pricing for interest rates; the USD; and the stock market is dependent on a successful fiscal policy outcome for Trump. Alternatively, pricing might be factoring in some economic reform (particularly banking) and not much more. The answer is probably that the share market is more optimistic about a successful policy outcome than the bond market. Bank deregulation (freeing up bank lending) would be stimulatory as long as confidence holds and, with the Fed now proclaiming that the US economy is at full employment, the higher bond rates are justified. However, if the share market needs a successful fiscal plan (centred on tax cuts) to hold current levels, then equities would be vulnerable to a marked sell off in the share market should the plan prove to be elusive.
The problems with a significant tax cut are manifest. It seems that there are around five Republicans in the deficit hawk camp who are firmly opposed to any policy that is not "revenue neutral" and five are "soft no's". The current controversy over Russia will only harden opposition within the party.
Failure to deliver a package by the summer would expose the initiative to a Democrat filibuster. The Ryan/Brady Plan, which was laid out last summer when the Republicans appeared unlikely to win the Presidential Election, does deliver a revenue neutral result (after assuming a fairly optimistic growth response to the plan) but it requires the Border Tax (featuring no tax deduction for costs of import_s and no tax on export sales). This would be an effective tax on the trade deficit. Such a tax would be hugely disruptive and is encountering significant opposition, we understand, from within the White House. Other "nasties" in the Ryan/Brady Plan are to allow interest cost or state tax deductions and no real allowance for retaliating moves from trading partners.
Another possible funding channel might be to impose large tariffs to help fund the tax cuts and achieve some of Trump’s protectionist objectives. Tariffs can be introduced by Executive Order without the need to go through Congress, although they may be subsequently challenged in the courts and by the WTO.
Overall, arbitrary tariffs are likely to be a more distortive mechanism than the Border Tax. However, that option, linked with some unpopular entitlement reform, might be back-end loaded and more modest tax cuts might constitute a plan that could be manipulated to “look” revenue neutral.
In such circumstances, the USD would rise further but the inevitable response from other trading countries would likely trigger a disruptive trade war – the recent encouraging lift in global PMI's and global equity markets would soon dissipate.
It was disappointing to hear generally, that infrastructure reform was a low priority well behind dismantling the Affordable Care Act, tax cuts, banking deregulation and trade. For instance, Trump could establish an infrastructure bank capitalised with $150-$200 billion in Federal funds. That would be funded by the repatriation of deferred foreign profits (taxed at 7.5% - 10.0%) and geared at 6x1 with a Federal government guarantee (the impact on the deficit would only be the funding cost). That would deliver on a key promise and probably gain full Democrat support along with enough Republicans to pass Congress. Such an initiative would encourage growth optimism and, if well managed, boost productivity expectancy.
Alternatively, there could be a national effort to privatise current infrastructure (for example, most toll roads are state owned) with a commitment that funds would be reinvested in other infrastructure assets (not used to fund other contingent liabilities of the state). Complex issues between city/local/state/federal governments would need to be resolved with a likely solution being that the Federal government would need to provide incentives to the cities and states to sell the assets.
There are solutions to the successful implementation of an infrastructure plan. If markets saw genuine progress in banking and other sectorial deregulation along with an infrastructure plan, the inevitable shock to confidence that is likely to occur in the summer if trade and unfunded tax initiatives dominate the agenda could be avoided.
So where does the Fed stand in all of this uncertainty? I expect that it will be comfortable to "skip" a March move until we see more clarity on these issues and, more import_antly, the impact such developments have on confidence and markets. For example, the Fed sees that "financial conditions" have eased due to narrowing credit spreads and a rising stock market despite higher rates and a higher USD. A reversal in markets would tighten financial conditions and associated drop in confidence would force a review of the growth outlook.
I also expect that the "asymmetric" approach to policy-setting is still a key majority view amongst FOMC members - better to err on the side of higher inflation than risk entrenched low inflation. With the slow response from wages to "full employment", there is little risk of getting too far behind the curve. On the other hand, I assess that the Chair now believes that the US has reached full employment and, therefore, the normalisation process should proceed (but with two hikes not three in 2017).
I remain comfortable with the June/December call for Fed policy in 2017.
What do investors think of all these issues for Australia? In short, the key channel will be Trump’s trade policies. Any indiscriminate large tariff or Border Tax would pressure China's foreign reserves and growth outlook. This would likely trigger a protectionist response from China, which while not impacting our resource exports, would most likely threaten our services exports to China.
My central thesis is that the Australian economy is likely to slow in 2018 due to a construction downturn and falling terms of trade. Commodity prices are likely to fall sharply under the weight of a supply response from Australian and Chinese (private) producers; an unwinding of speculative positions in China; and a slow-down in growth associated with a resumption of reform in China following the November Congress.
Downward pressure on the AUD will only intensify in the event of Mr Trump taking the “trade option”. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
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Trump; trade and the FED: Bill Evans

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GUEST OBSERVER
The insecurity of rental housing and unsatisfactory condition of many properties are receiving much-deserved media attention following the release of a national survey of tenants.
However, the stock response to the insecurity this revealed – longer fixed-term agreements – is not the answer. The solution to the failure of existing legal protections must take into account the structural features of the rental market, including the mobility of tenants.
The survey, commissioned by Choice, National Shelter and the National Association of Tenant Organisations, presents evidence of a widespread sense of worry, dissatisfaction and injustice on the part of tenants. According to respondents:
75 percent feel that competition for rental properties is “fierce”;
50 percent are concerned about being “blacklisted” on a tenancy database;
50 percent have experienced some form of discrimination;
30 percent live in properties requiring non-urgent repairs, and 8 percent require urgent repairs;
11 percent experienced a rent increase; and
10 percent reported an angry response after requesting repairs.
Residential tenancy laws cover many of these problems. That tenants are not successfully exercising their legal rights indicates a deeper problem of insecurity in renting. This problem is both structural and legal.
Small landlords and mobile tenants
Small landlords dominate the Australian rental sector: 72 percent own a single property each. Most (62 percent) make a net rental loss, so it is important to them that they can switch out of the sector when it suits them.
Research for the Australian Housing and Urban Research Institute (AHURI) indicates that 21% of landlords exit the sector within their first 12 months. By five years, 59 percent will have exited.
When landlords exit, they might sell to another landlord or an owner-occupier. Older research indicates that the transfer of rental housing into owner-occupation is a significant feature of the Australian market.
These dynamics cause structural insecurity for tenants. They also mean many landlords do not willingly tie up their sole asset in a long fixed term.
Despite the legal and structural insecurity of the sector, most moves by tenants are for their own reasons.
The ABS Housing Mobility and Conditions survey shows that tenants generally are very mobile: 81% have been in their current premises for less than five years. About half of moves between rental premises were for “personal reasons” (including family and employment reasons); 20 percent were to get more suitably sized housing; and 15 percent because of a termination notice from the landlord.
This degree of mobility suggests it is not in most tenants’ interest to enter into long fixed terms and the rental liability it entails. That’s not to mention the risk of being tied to a small landlord who is an unknown quantity and has no business reputation to protect.
Residential tenancies law in Australia
Each state and territory in Australia has its own Residential Tenancies Act. These differ in the details but are broadly similar in outline. All provide standard terms for tenancy agreements, processes for rent increases and terminations, and relatively accessible dispute resolution and eviction procedures.
Most do a decent job, on paper at least, when it comes to repairs and maintenance. Generally speaking, landlords are obliged to ensure rented premises are provided fit for habitation and maintained in a reasonable state of repair.
This means tenants are entitled to repairs even if the premises were in bad condition to begin with, and even if they pay relatively low rent. Tasmania is an exception: there, landlords are obliged to maintain premises in the condition in which they were first provided.
Similarly, each state and territory prohibits landlords from interfering in tenants’ quiet enjoyment of their premises. Most expand this right to protect tenants’ “reasonable peace, comfort and privacy”.
A key problem is that the ability of landlords to give notices of termination without grounds undermines existing protections. Philip Robins/AAP These are important protections, even though there may be scope to improve them – for example, by adding specific standards for safety devices and fixing particular legal defects like Tasmania’s. The great problem is that the ability of landlords to give notices of termination without grounds undermines the existing protections in every state and territory.
Without-grounds termination notices give cover to terminations by landlords for bad reasons, such as retaliation and discrimination. This means the prospect of receiving such a notice hangs over tenants when repairs and other issues arise.
What’s the solution, then, to high insecurity?
The legal insecurity of tenants might be improved in several ways.
Under the current laws of each state and territory, a fixed term prevents the landlord from terminating without grounds, and on other grounds such as sale or change of use of the premises, for the duration of the fixed term. It also prevents the tenant from lawfully terminating without grounds.
The idea of long fixed-term tenancy agreements is occasionally raised in the media and has caught the attention of the New South Wales and Victorian governments in their reviews of residential tenancies laws. Both those governments are considering how to facilitate long (five-year) fixed terms, including by altering other aspects of their laws – such as the protections about repairs.
But this approach presents problems of its own. Long fixed terms are unwieldy for landlords and tenants. Trying to make them more useful also threatens other valuable legal protections.
The present structures of the Australian rental sector call for different reforms.
We can reconcile the mobility of tenants with their sense of insecurity if we think of “security” as more than just the legal right to occupy. AHURI researchers have conceived of “secure occupancy” to encompass a person’s ability to make a home of premises and exercise housing autonomy. This includes the ability to confidently get repairs done in one’s premises, or keep a pet – and to freely decide to make a new home elsewhere.
This conception points towards a stronger reform agenda for improving security. Instead of long fixed terms, we should abolish without-grounds termination by landlords.
The law should instead provide a comprehensive set of reasonable grounds for termination, with notice periods and exclusion periods appropriate to each ground. This accommodates our present lot of small landlords, and can be done immediately.
Over a longer term, we should set our housing tax and finance policies to get a more stable sort of landlord. That would be one who operates at greater scale, has a reputation to protect and is less interested in switching out of the sector than in receiving a steady trickle of rents from secure tenants.
Chris Martin is a research fellow, Housing Policy and Practice, in the City Futures Research Centre, University of New South Wales and can be contacted <a href="https://www.be.unsw.edu.au/profile/chris_martin" target="_blank">here</a>.
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Rental insecurity and why fixed long-term leases aren't the answer: Chris Martin

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GUEST OBSERVER
Labour market statistics are among the most valuable pieces of data we analyse to gauge the health and strength of an economy. 
Trends in the labour market influence virtually every part of an economy. And they have a major impact on monetary and fiscal policy decisions as well as the functioning of society more generally. 
The latest ABS employment report allows us to draw a line under the sand on how the Australian labour market performed over 2016. It also provides a good stepping off point for thinking about how conditions in the labour market will evolve over 2017. 
In this note we take a frank look at how the Australia labour market performed over the past twelve months. We analyse key metrics like employment, unemployment, participation and hours worked. And we 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 2017 and what it means for policy. 
1. Employment 
We kick off with employment growth because job creation goes hand in hand with output growth (chart 1). Throughout 2016 average monthly employment growth was significantly lower than in was in 2015. The average monthly gain was 7.1k which is a third less than it was in 2015 (chart 2). As a result, annual employment growth in the year to December 2016 slowed to 0.9 percent compared with 2.5percent the previous year. And unsurprisingly, output growth eased over 2016. The latest national accounts put annual GDP growth at a below trend 1.8 percent in QIII 2016.
<a href="https://www.propertyobserver.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%2012.52.24%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%2012.52.24%20PM.png" alt="" width="264" height="701">
 
In addition to soft employment growth, the composition of jobs growth has been suboptimal. Part-time employment was the sole driver of jobs growth over 2016 (chart 3). The ABS estimates that part-time employment lifted by 126k over 2016 while full-time jobs fell by 34k. To be fair, there was a pickup in full-time jobs over the December quarter which provides a glimmer of hope that things may be improving. But over the calendar year as a whole, the news was ordinary for those seeking full-time work.
To recap, a worker is deemed to be employed full-time if they are working more than 35 hours a week. Working between 1 and 35 hours a week means a worker is considered part-time. So a part-time worker could be working a significant number of hours or hardly working at all.
The latest figures show that a part-time employee works on average 17.0 hours a week. A full-time worker on average clocks up 39.2 hours. Having this data enables us to calculate full-time equivalent (FTE) employment growth and the news here is particularly sobering (chart 4). On our calculations, FTE employment growth was flat in the year to December 2016. In other words, the Australian economy created no FTE jobs over 2016. This should concern policymakers because growth in FTE jobs should be a lot higher (1 percent or above) to take into account new entrants into the labour market. It’s therefore no surprise that Australia has near record higher underemployment (see section 3). 
<a href="https://www.propertyobserver.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%2012.54.00%20PM.png" target="_blank">Click to enlarge</a>
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2. Unemployment
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It’s fair to say that from where we were 18 months ago, the decline in the unemployment rate has bettered RBA and market consensus forecasts which previously had it stuck above 6 percent over 2016 and 2017. But before we get carried away, the unemployment rate moved a little lower over the year purely because of a fall in participation (see section 4). 
Australia has a strong population growth rate and generally needs to generate at least 15k a jobs a month to stop the unemployment rate rising. But over 2016 the economy was generating half as many jobs a month and yet the unemployment rate moved marginally lower. This is reconciled by a fall in participation. On our calculations, the unemployment rate would have risen to around 6.2 percent if the participation rate has remained constant. 
The slight downward trend in the unemployment rate has had a positive impact on job security concerns (chart 6). The WBC MI monthly gauge on unemployment rate expectations moved down a little over 2016 (a decrease indicates that respondents are less pessimistic about the labour market). This helps to loosen the consumer purse strings and since the spending of one person is the income of another, we also welcome the fall in job security fears. 
There is more work to be done, however, because the unemployment rate is still above the level we associate with full employment (around 5 percent) and job security fears are still quite elevated even though they have been receding. Further, the unemployment rate in Australia is higher than the equivalent rate in the US, Japan and the UK – three economies that Australia is generally assumed to be doing better against (chart 7). 
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3. Underemployment and underutilisation 
In the past the unemployment rate was deemed sufficient to measure labour market slack and therefore very little air time was given to the underemployment rate. But over the past two years it’s become increasingly fashionable to talk about the underemployment rate because it’s been rising while the unemployment rate has been falling. Underemployment provides a gauge of the proportion of people who are employed but whose labour is not fully utilised. That is, they have a job but want to work more and can’t find the work. 
The underemployment rate largely tracked sideways at around 8.4% over 2016 which is near its record high. This is undesirable and means spare capacity in the labour market is a lot higher than the unemployment rate implies. 
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 – it has been stuck above 14 percent for the past 18 months (chart 8).
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The number of additional hours of work wanted by underemployed workers has been stable at around two days (or a little under 15hrs) per week since the mid- 2000s. This compares with unemployed people who are on average looking for an additional 33 hours per week1. To put it in layman’s terms, at the end of 2016,  
8 1⁄2 percent of the Australian workforce wanted to work two more days per week than hey are currently working and 5 3⁄4 percent of the workforce were out of a job and wanted one. These numbers are too high and should concern policymakers.
There is a large pool of the workforce who either need work or want more work. 
Having the information on hours of additional work sought enables us to construct an adjusted underutilisation rate. To do this we weight the underemployment rate to take account of the average underemployed person seeking 15hrs a week work compared with 33hrs for an unemployed person. This measure provides the purist measure of spare capacity in the labour market. It moved a touch lower over 2016 from 9.7 percent to 9.5 percent but it is very high by our historic standards and presently sits above the level hit during the GFC. In fact, you have to go back to the late 1990s for the last time the adjusted underutilisation rate was so high.
The data shows that the economy is operating well below its capacity and there is an output gap. As we have covered previously, this has dragged down the pace of wages growth and inflation.
4. Employment to population and participation
The share of the Australian workforce in a job trended down over 2016. The employment to population ratio ended the year 0.4ppts lower at 60.9 percent (chart 9). This shift downwards basically reflects employment growth running below population growth. Normally that would be associated with the unemployment rate drifting higher, but a decline in the participation rate has allowed the unemployment rate to grind lower. A declining participation rate and flat employment to population ratio means that the downward trend in the unemployment rate is overstating the relative strength of labour demand.
The participation rate fell over 2016 for cyclical and structural reasons .
The cyclical force dragging the participation rate lower over the year largely reflects the discouraged job seeker syndrome. The participation rate fell sharply over 2016 in the mining states of WA and QLD (chart 10). And more so for men than women. The big downturn in mining-related investment has greatly reduced job prospects for workers in these states. Some workers appear to have given up looking for employment and have left the workforce. As a result, the participation rate has fallen. 
Structurally, the ‘grey army’ – those aged 65 and over – have continued to grow as a share of Australia’s population. This story will continue to play out over a long period of time and it will drag the participation rate down. Basically, the ageing of the population has increased the dependency ratio (the age-to-population ratio of those typically not in the labour force). This underpins the need for fiscal reform.
There is a misconception that Australia’s immigration policy will help to offset the impacts of the growth in the dependency ratio. It works in the short term, but it’s not a long term solution. As the Productivity Commission argued in April 2016, “the continuation of an immigration system oriented towards younger working- age people can boost the proportion of the population in the workforce and, thereby, provide a ‘demographic dividend’ to the Australian economy. However, this demographic dividend comes with a larger population and over time permanent immigrants will themselves age and add to the proportion of the population aged over 65 years.” In other words, it’s a policy more akin to kicking the can down the road. 
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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 11). The 
news is not good. But it’s not surprising given what the other indicators of the labour market aforementioned are suggesting.
The data indicates that total hours worked was just 0.4 percent higher in the year to December 2016. This is weak given population growth is running at 1.4%. As such, hours worked per capita fell over 2016 to a multi-decade low (chart 12). In fact, you have to go back as far as the recession of the early 1990s for when per capita hours worked was as low as it is now. This trend is concerning because it means that unless there is a big lift in productivity, output per worker will be weak along with per capita income. It’s no wonder that there has been no meaningful improvement in Australia’s fiscal position given per capita hours worked has been falling. As we covered back in October, the performance of the Australian economy looks far from spectacular on a per capita basis.
Labour market by state
Back in November we flagged that Australia has a new “two-speed” economy that comprises: (i) NSW and Victoria (driven largely by Sydney and Melbourne); and (ii) the rest of Australia (see here). The evidence is in, among other things, the labour market.
There has been little in the way of jobs growth outside of NSW and Victoria (charts 13 and 14). Employment growth in the Garden State has powered along, driven in part by particularly strong population growth. Jobs growth has slowed in NSW, but Australia’s Premier State put on a lot of jobs in late 2015/early 2016 and the unemployment rate is close to the level we would associate with full employment.
On the other hand, the impact of the downturn in mining investment is particularly evident in the labour markets of Australia’s two resource-rich states. Employment growth in QLD is down a sizeable 1.4% through the year to December 2016 while it’s down by a similar amount in WA. Things have picked up in SA and employment growth is running at a respectable pace. Jobs growth in Tasmanian remains soft but things improved a little in the second half of 2016.
The unemployment rates across the states vary just like the employment data (chart 15). The unemployment rate has trended lower in NSW and sits at a healthy 5.0%. In Victoria, despite solid jobs growth, the unemployment rate ended 2016 unchanged on a year earlier at 5.9% because of a rise in participation. For the rest of the country, the unemployment rate sits at or above 6.0%. The trend is WA is particularly concerning given the unemployment rate has been moving north. It ended the year 0.6ppts higher at 6.7%. 
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What can we expect in 2017?
Our frank assessment is that the labour market was soft over 2016. But there are tentative signs that things may be a little better in 2017, at least in the near term. More specifically, jobs vacancies and business surveys are pointing to a lift in employment growth.
The latest NAB Business Survey (January) showed a material jump in the employment conditions indicator (chart 16). This index has historically had a high correlation with the ABS labour force data. It currently sits at its highest level since 2011 which points to a near term lift in employment growth. The rise in the employment index is consistent with a lift in capacity utilisation which provides a source of optimism for business investment - an essential ingredient to long-run job creation. The ANZ jobs vacancies series also posted a solid rise in January (4.0%) and annual growth accelerated to its strongest pace since August 2016.
In addition to the business surveys, the lift in commodity prices over the latter part of 2016 is flowing through to export receipts which filters through to domestic  income. Higher income growth supports consumption which ultimately underpins the demand for labour. So there are some causes for optimism.
But equally, there are plenty of risks. The rate cut chamber only has a few bullets left and even then, the ability of monetary policy to stimulate genuine economic activity from here is questionable. Consumer confidence is still fragile and the geopolitical backdrop suggests that the global economic outlook contains more uncertainties than usual. So while the business surveys suggest that near term employment growth should improve, that picture can change quite quickly, particularly given that the improvement in business confidence and increase in capacity utilisation has yet to translate into actual investment.
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What does it mean for monetary policy 
In our view, trends in the labour market are the one to watch in 2017 for clues on the next move in rates. Market participants became fixated on the inflation data throughout 2016 because the RBA eased twice, in May and August, when core CPI came in below target. But since Governor Lowe has been in the top job, inflation has continued to print below target and yet rates have remained unchanged. Concerns around the further build-up of household debt and strong dwelling price growth mean that it would take a slowdown in employment growth (or lift in the unemployment rate) for Lowe to entertain the idea of taking the policy rate lower. 
We think that jobs growth will be sufficient to keep the unemployment rate crabbing sideways which should fend off calls for rate cuts. The risk, however, sits with easing over the next six months while ever inflation is below target. Labour market slack needs to be gobbled up before we start to see wages growth lift. And in our view, that’s some way off. As such, talk of rate rises is premature and we cannot see the case for the policy rate rising over the next year. 
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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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Labour market trends the clue to future rate cuts: Gareth Aird

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GUEST OBSERVER
While many media outlets paint a rather bleak and uncertain future for the world economy, long-term bond yields in Australia finished 2016 higher than at any other point throughout the year.
This is even more impressive considering that the cash rate (which has a strong correlation with bond yields) was cut twice for a total of 50 basis points over 2016. Figure 1 shows how much long-term rates increased towards the end of last year and into 2017. Yields on 10-year Australian government bonds have increased by 74 basis points since September and nearly 100 points since the last interest rate cut in August. 
Table 1 shows the difference between yields on 10-year government bonds and 90-day treasury bills in basis points (1 point = 0.01 percent). 
This tells a similar story to the graph in Figure 1; a widening between short-term and long-term rates. The important point is that this widening from August until December last year is driven by an increase in long-term yields rather than a cut in short-term rates, as it was from July to August.
 
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Often if the yield curve becomes too inverted, the RBA is forced to cut short term rates to improve liquidity by incentivising banks and other institutions to lend out money. 
An increase in long-term yields is a dream scenario for the Reserve Bank, as this is a signal of higher investor confidence and a better outlook for the Australian economy. 
December was also the first month since September 2014 that the entire yield curve was positive (long term rates above medium, and medium term rates above short term). This is a sign that investors expect improving economic condition in the long run. It also shows investors’ belief that the economy will do well over the next few years.
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The ASX Cash Rate Futures market pegs the chances of a decrease in official cash rates at the next meeting (7th March) at 5 percent. While this may seem appropriately low, it does highlight that even with a rising yield curve, investors still believe an interest rate cut is more likely than a hike in 2017. 
For more information from Secret Agent, <a href="https://secretagent.com.au/" target="_blank">click here</a>.
 
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Rate cut more likely than hike in 2017: Secret Agent

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The Turnbull government is planning to cut capital gains tax concessions for property investors, according to a report in The Australian Financial Review.
It says the policy backflip will be unveiled in the May budget.
"It is understood the policy being worked on within government would be confined to property investment, and not apply to all investments such as shares, as Labor's plan would," reporter Phillip Coorey wrote.
The options being worked on include following Labor in halving the 50 percent discount on capital gains tax to 25 percent, or reducing it by another amount. The other is adopting a phased model in which the discount would increase the longer the property was held. A property would have to be held for several years before the investor was eligible for the full 50 percent discount.
The suggestion has been wrapped up as seize the initiative on housing affordability but will provide revenue to help replace soon-to-be dumped budget cuts.
"Neither would the Coalition policy target negative gearing, as Labor is doing."
But Malcolm Turnbull this morning said the Government did not support the Labor Party’s plans to increase capital gains tax or negative gearing.
“We do not support the Labor Party’s plans to increase capital gains tax or indeed their plans to outlaw negative gearing.
"Our policy is… focused on encouraging investment and employment and the economic growth and opportunity that Australians need”.
“The only party that is an advocate for higher taxes is the Labor Party… We are a party of lower taxes, supporting investment, supporting employment, and bringing the Budget back into balance”.
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Property investor capital gains tax mooted to rise in 2017 Federal Budget

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Leslieville, the original Cooks Hill family home of the legendary Arnott's biscuit family has been listed for sale.
The <a href="https://www.realestate.com.au/property-house-nsw-cooks+hill-124611374" target="_blank">stately sandstone home</a> was built for William Arnott in the 1870's on the outskirts of Newcastle, next door to his Steam Biscuit Factory that opened in 1877. It was demolished in 1949.
Set on 633 sqm, the six bedroom home has been restored by its current owners. Eight original fireplaces are still in tact, as are the gardens and ornate lacework.
The home is described as one of the 'few sites remaining in NSW and possibly Australia assoicated with both the personal and business life of William Arnott' by the Office of Environment and Heritage.
Century 21 Novacastian agent Rob O'Brien has the listing that was priced between $2.45 million and $2.65 million on its 2016 listing.
William Arnott relocated from Scotland to Australian in 1848 when William was 21. He proceeded to work as a baker in Mayfield as well as try to get into gold mining.
He relocated to Newcastle in 1865 and opened a bakery on Hunter Street, which became well known for its biscuits, which began to ship to Sydney in 1882. 
The Arnott's tenure at the home ended in 1968 when they sold it to adult education group WEA.
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Cooks Hill home of Arnott's biscuit family listed

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GUEST OBSERVER
Moral panic over recent increases in visibly homeless people in central Melbourne has brought to the fore the critical shortage of affordable housing across the metropolitan areas of Australia’s wealthiest cities.
But living on the street is only the tip of the iceberg. Many more households are living in insecure and/or overpriced accommodation. Their plight is due to an undersupply of appropriately priced, sized and situated rental housing.
The Commonwealth government is reportedly planning to scrap the National Affordable Housing Agreement with the states. Without a clear alternative, the weakness of state policies, which lack clear targets and mechanisms for providing more and better affordable housing, adds to the problem. One state, Victoria, still doesn’t have an affordable housing strategy.
South Australia’s strategy has 15 percent inclusionary zoning as one of several mechanisms to achieve affordable housing targets. Western Australia provides regular progress updates on the regional targets of its Affordable Housing Strategy 2010-2020. Tasmania adopted a ten-year strategy in 2015.
New South Wales has had affordable housing policies in place since 2009. The NSW government has a new plan to build more social housing and improve existing stock. Queensland released a draft strategy in March 2016.
While these state policies vary in their success, Victoria does not even have a strategy to critique.
Victoria’s toxic planning legacy
No doubt Premier Daniel Andrews inherited several industrial-strength cans of toxic planning waste when Victorian Labor won office in November 2014. This legacy came not only from the Liberals, but from the earlier Bracks-Brumby Labor government.
Under the 2000s Labor government, the fourth new metropolitan strategy in four decades, Melbourne 2030, largely failed to stop sprawl. The main excuse for sprawl – that increased and largely unregulated housing supply would magically enable affordability – had become a sad joke.
As former Labor adviser Joel Deane’s book Catch and Kill shows, inability to respond to basic public concerns about planning and transport was perhaps the most significant factor in Labor’s 2010 election defeat.
If Labor had been ineffective in creating new affordable housing, the Liberals’ planning decisions between 2010 and 2014 were disastrous. Australia’s largest urban renewal site – Fishermans Bend – was drastically up-zoned from Industrial to Capital City (also known as “Anything Goes”). They did this without extracting a cent in added value from landowners towards affordable housing – or any other infrastructure.
Huge parts of the southeastern suburbs – Liberal strongholds – were essentially walled off from new housing, even though these had some of the best school and transport infrastructure to serve a rapidly growing population. Hundreds of job cuts meant the civil service lost experience and capacity to do better.
A long wait for action on affordable housing
The Victorian Labor 2014 election platform stated:
All Victorians have a right to safe, affordable and secure housing.
Yet in more than two years since its election, the Labor government has not completed any of the major reforms that would enable affordable housing.
Plan Melbourne’s “refresh” has not been published in its final form. The Residential Tenancies Act still has to be strengthened. The residential zone review hasn’t been completed.
Perhaps most disturbingly, we are still waiting for the results of the early announcement that the state treasurer was going to work with the planning and housing ministers to develop an integrated affordable housing strategy.
A new advisory body, Infrastructure Victoria, published a 30-Year Infrastructure Strategy in December 2016. “Social housing” (public and non-profit) was one of its top three priorities. However, compared with principles of “a good plan”, the affordable housing section of this strategy does not pass the test.
According to the literature on plan analysis, good plans should have seven elements: a clear vision; specific goals; a fact base informing alternatives; a spatialised sense of what goes where; a very specific implementation plan, with costs, timelines and responsible authorities; a monitoring and evaluation plan; and specific horizontal (across all parts of government, the private sector and civil society) and vertical (alignment between national, state and local government) integration.
Vancouver shows how to do it
The City of Vancouver’s Housing and Homelessness Strategy 2012-2021 is an example of an affordable housing plan that ticks the boxes. It has a clear vision embodied in the strategy’s subtitle:
A home for everyone.
The strategy sets specific numeric housing targets. These cover everything from supportive housing for homeless people with mental disabilities, to social housing, market rental and home-ownership options.
These targets are based on a robust and transparent analysis of housing trends across the city. While all subsequent neighbourhood plans are intended to achieve a mix of dwelling cost and size, there is a particular emphasis on locating supportive housing near areas with significant homeless populations.
The partnerships with other levels of government, private developers and non-profit providers are comprehensive. A new Vancouver Affordable Housing Authority has been established to coordinate these efforts. Since the report’s adoption, further mechanisms such as a community land trust have been established. Annual reporting against the targets is available on the City of Vancouver’s website.
In contrast, Infrastructure Victoria is an advisory body to state government, not an implementation agency. Its vision of a “thriving, connected and sustainable Victoria where everyone can access good jobs, education and services” begs the question of how progress towards these attributes would be measured.
Infrastructure Victoria does estimate an extra 30,000 affordable homes are needed over the next ten years. But it admits this figure is not well justified, due to a lack of good information on affordable housing deficits.
It recommends further work on an affordable housing plan with specific funding streams. However, this cannot really be expected to be the plan that “tackles [the] affordable housing shortage”, as its own website boasted of the draft report.
At best, Infrastructure Victoria’s plan is a baby step. It does clearly state the importance of social housing as critical infrastructure. It also begins to justify mechanisms that could achieve some scaling up of affordable housing outcomes.
But the public housing waiting list now has more than 35,000 names. About 120,000 households receiving Commonwealth Rent Assistance are still unable to afford living where they do. That includes 50,000 households in the lowest income bracket. And another one million new households are expected to move into Victoria within the 30-year timeframe of the infrastructure strategy.
This all means that baby steps will not be enough to prevent rapidly increasing homelessness.
 
Carolyn Whitzman is professor of Urban Planning, University of Melbourne and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/carolyn-whitzman-9944" target="_blank">here</a>.
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States drag feet on affordable housing, with Victoria the worst

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GUEST OBSERVER
The premise of superannuation relies on trust in the system and trust in the government to protect Australia’s primary savings vehicle. Stability of legislation and consistency of policy. This is why we strongly support enshrining the objectives of superannuation in law, and why we are so adamant that the objectives must strive for dignified and secure retirement. Also, consumers need to be able to trust that the advice they receive from their advisors is accurate and in their best interest.
Today I want to focus on three main points.
First, I will briefly reflect on our significant achievements as an Association since establishment in 2003. Second, I will discuss ‘professionalism’ and last, I will touch on the tremendous opportunities that we have at this time.
Fourteen years ago, very few understood the SMSF sector, let alone its role in our nation’s future prosperity. Its survival was hanging in the balance and desperately in need of a ‘leader’.
It is now the largest sector in the superannuation industry. Since those dark days in 2003 when SMSFs were under real threat, the sector has had six-fold growth in funds under management and more than doubled in the number of funds. These are phenomenal statistics and something which each of you should be immensely proud. It is your doing.
Predictions by Rice Warner in fifteen years’ time have SMSFs continuing to be a standout leader in Australian superannuation doubling again in size and numbers.
As a direct result of the SMSF Association’s contribution to that growth:
ˇ      There is public recognition of the SMSF specialist and the SMSF profession. Others tried and failed, but we continue to grow.
ˇ      Career pathways from high school to PhDs exist through the Association’s specialisation programs and we now have our first graduates from the University post-graduate SMSF specialist programs.
ˇ      Our strong advocacy programs have improved access to superannuation and advice. We punch well above our weight.
Today, SMSFs are now integral to our superannuation system and national prosperity. They are too big to ignore.
The growth, and the importance of SMSFs and their communities can be tracked directly to your Association and your input.
Despite at time significant headwinds, we have never wavered from our Vision “to enable Australians to take greater control of their own destiny through a sustainable SMSF community”.
Our Mission has always been to ‘lead the professionalism, integrity and sustainability of the SMSF sector’. These enabled us to navigate the constantly changing environment in which we exist professionally.
There is no better example of this than last year’s far-reaching changes to superannuation in the May Budget.
Our strong advocacy ensured that concessional and non-concessional caps were not further reduced.
We maximised the benefits of the new rules, particularly for women, and SMSFs are now the best placed to adjust to new laws such as the $1.6 million transfer balance cap and flexible contribution rules.
And this leads to my second point.
The word “profession”, at its core, it’s an indicator of trust and expertise.
A ‘professional’ is someone who is independently qualified by a recognised body, governed by a code of ethics, committed to excellence, integrity, professional development and the promotion of the public good within their expert domain.
While we have advocated strongly and you have personally committed as a professional, we have left it to others and government to determine what our profession really looks like. Too often in the past, parts of our industry preferred to pull back towards the lowest common denominator instead of making the tough decisions to move forward into a new professional era.
Often fear, costs and efficient systems design were reasons for the focus on products instead of people and the building of a profession.
It is time to take control.
Research shows trustees number one motivation for being an SMSF trustee is control.
Our members are early adopters. But now as role models you must demand your peers and others in your supply chain join in the journey. Help them commit to their learning journey and membership.
I challenge you now to take control of your profession. I challenge you to be a leader.
It is your responsibility to continue building the profession by bringing everyone in the supply chain into your professional community, whether it be at the entry administration level or the elite strategic advice level. You should maximise and leverage opportunities at every level of your business.
Don’t settle for mediocrity because it is safe or what the government sets a baseline for you – be the cornerstone in creating your future profession. Take a good honest look at the opportunities before you.
You need to want co-regulation. Create a professional legacy for others to follow.
Raising competency and knowledge is not easy, nor is it quick, but it is necessary. To create trust, you, as advisors, accountants, auditors and administrators, must maintain standards expected and demanded of professionals.
It is absolutely necessary. To think otherwise is delusional. Truly professional advice will create trust with your clients. It will help them make better decisions.
It will lead to a better outcome for you and the SMSF industry.
It will set you apart in a crowded market.
To my last point, the future is in our hands and the opportunities held within that future are enormous.
Your clients have never been in greater need of your trusted professional advice.
As I mentioned, last year’s budget changes have provided the SMSF sector with unexpected but significant advantages, which if understood, can add such significant value to your clients. There has never been a better time to engage and build trust and confidence.
I know that due to the complexity of SMSFs, you as advisors will have opportunities to add meaningful value well into the future.
Technology and digital innovation will create new tools to assist those who commit to their own future professional development and help them stand out.
I also believe future advice will be part technology and part human. If you look to the US market you see the growing need for advice in retirement implementing a hybrid advice solution.
You and your peers are absolutely necessary to the SMSF industry, but the future will not again tolerate a product story.
You can be leaders.
In fifteen years’ time, just imagine what the industry will look like to efficiently advise, service and invest in the predicted $1.2T of funds under management in SMSFs. 
We must all continue to demonstrate that SMSFs can be a vehicle for people to take control of their destiny.
Others in our super sector are threatened by the power of SMSFs.
They continue to oppose us.
Others claim to be run for the benefit of members. SMSFs are run BY the members.
As your representative Association, we will continue to engender integrity and trust for consumers and government in this sector. It is critically important that we maintain and further develop a highly competent, well-regulated, competitive SMSF sector.
I am confident you will meet these challenges and opportunities in all their different forms. You have done so in the past and will continue to so, knowing 1.1m people have already placed their faith in us and knowing that this figure will also double.
We cannot let the future SMSF Trustees down.
John F. Kennedy said in 1962 about why it matters to go to the moon: "We choose now, not because it is easy but because it is hard…..this challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”
We are ‘flying to the moon’ to achieve our future as professionals who are trusted by Australians.
I have trust in you.
I know you will accept this challenge and I know you will win.
Be proud of where we sit as an industry but be vigilant to ensure the SMSF industry fulfils its potential and its place in the Australian economy.
Andrea Slattery is managing director and chief executive officer, SMSF Association, and can be contacted <a href="https://www.smsfassociation.com" target="_blank">here</a>.
This is an excerpt of the speech given to the 2017 SMSF Association National Conference.
 
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SMSFs integral to our superannuation system: Andrea Slattery

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.

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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.

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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.

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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.

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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.

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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.”

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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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Jonathan Chancellor

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