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<p>The Commonwealth Bank is the latest lender to lift interest rates for homebuyers looking to fix their home loan.</p>
<p>The country’s biggest lender lifted the rate of its popular 3-year fixed rate by 0.20 percentage points to 4.24 percent on Friday.</p>
<p>It also lifted its longer-term 5-year fixed rate by 0.60 percentage points to 4.74 percent.</p>
<p>CBA was the second major bank in a fortnight to lift fixed rates following Westpac.</p>
<p>A RateCity.com.au analysis shows that a further 20 lenders have lifted rates 268 fixed products since November 1.  </p>
<p>Peter Arnold, data insights director at RateCity.com.au said fixed rates are based on market expectations of future rates and "are the best indicator that we’ve got that a variable rate hike on the way.".</p>
<p>“Previously, banks were betting on lower rates in the future but we’re seeing those expectations change by the day.</p>
<p>"Shorter-term fixed rates are still sitting below variable rates, which tells us rates will stay steady when the RBA meets on Tuesday.  </p>
<p>“But longer-term fixed rates, such as 5 years fixed, are sitting higher than variable rates and rising by the biggest margins, which tells us that they don’t expect low rates will last forever.”</p>
<p>But he added it’s always a gamble when deciding whether or not to fix your home loan.</p>
<p><a href="https://www.propertyobserver.com.au/images/2016/12/05/Screen%20Shot%202016-12-05%20at%208.17.48%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2016/12/05/Screen%20Shot%202016-12-05%20at%208.17.48%20AM.png" alt=""></p>
<p>"Our research shows that over the past 20 years, people who stuck with variable rates came out ahead 63 percent of the time,” he said.</p>
<p>“People often fix in panic, for instance in the lead up to the GFC fixing became progressively more popular as rates increased to the point where one quarter of new loans were fixed at over 9 percent in March 2008.</p>
<p>“There are now 240, 3-year fixed rates under 4 per cent and you can even lock in a rate as low as 3.8 percent until Christmas 2021.</p>
<p>"So if you’re someone who prefers the certainty of knowing your repayments, then now might not be the worst time to consider fixing.”</p>
<p>According to Canstar, in monthly repayment terms, CBA’s rate increase will mean a rise of more than $355 for a borrower with a 30-year fixed loan paying the new rate of 4.74 percent.</p>
<p>It was a time of growing uncertainty in the lending market, reflected last week when Australian Broker reported on the growing gap between the most expensive and the most affordable loan rates for residential property has widened to nearly 240 basis points.</p>
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jchancellor-FAypfDUnLy

Commonwealth Bank lifts fixed rates

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<p><img src="https://counter.theconversation.edu.au/content/69291/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>Housing affordability is a hot topic in Australia. Governments are increasingly recognising that more needs to be done to provide a greater range of affordable housing options, especially in the major cities.</p>
<p>It is well documented, however, that proposals for affordable housing development often encounter opposition from host community members. </p>
<p>These community concerns tend to focus on the potentially damaging effects of such projects on property values and quality of life for existing residents. This is despite the public being generally supportive of affordable housing in principle. They would just prefer it wasn’t sited in their local area.</p>
<p>In reality, though, do the concerns that people have about affordable housing development materialise? Do property values go down? Does neighbours’ quality of life suffer?</p>
<p>Our case studies in Brisbane and Sydney provide evidence that, in most cases, they do not.</p>
<h2>Testing for local property impacts</h2>
<p>How did we test for the impacts of affordable housing projects? With thanks to Australian Property Monitors, we had access to property sales data throughout the Brisbane local government area (LGA), going back to 1999. </p>
<p>Using this data, we tested the impacts of 17 affordable housing developments on property sale prices through two different hedonic pricing models. The models were designed to test whether:</p>
<ol>
<li>
<p>The announcement and eventual construction of affordable housing projects had any impacts (positive or negative) on local property sale prices. Project announcement date was used to capture any “panic sales” that may have happened as a response to the announcements.</p>
</li>
<li>
<p>The extent of such impacts depended on proximity to the development (by direct distance in 100-metre intervals, up to 500 metres away from the affordable housing project).</p>
</li>
</ol>
<p>The two models were used to test these outcomes collectively for 17 affordable housing projects that were developed across Brisbane LGA between 2000 and 2009, and also on an individual project basis.</p>
<p>Collectively across the 17 projects, these had no significant negative impacts on local property prices. There were mild impacts on properties within 100 metres of affordable housing projects, but not at any statistically significant level. </p>
<p>We found that the characteristics of the individual properties sold (such as number of bedrooms, number of bathrooms) consistently had much greater influence on sale prices than proximity to affordable housing developments.</p>
<p>When looked at individually, the impacts of each project on local property prices were mixed. Some affordable housing projects had positive impacts and others negative. </p>
<p>Only a handful of the measured impacts were statistically significant, however. Even in these cases the impacts of proximity to affordable housing had much to do with other features of the neighbourhood (such as proximity to public transport hubs, water frontages and so on).</p>
<p>These two tests clearly showed that the impacts of affordable housing development on local property sales prices had been minimal. The impacts that were experienced were not universally negative (or positive).</p>
<h2>Impacts on the quality of life of neighbours</h2>
<p>What then of the impacts on neighbours’ overall quality of life? How does an affordable housing development affect things like traffic, crime, an area’s visual appearance, or sense of community? </p>
<p>To understand this, we conducted doorstep surveys with 141 residents who lived close to (within about 60 metres) eight affordable housing projects in Parramatta local government area. </p>
<p>These projects had been locally opposed but still completed. We selected the most-controversial projects and were able to achieve participation by between one-fifth and one-third of the 60 or so residents likely to have been most affected by those developments. </p>
<p>We wanted to know whether people’s fears at the planning stage had materialised once the developments were complete and occupied.</p>
<p>Across the eight projects, 78% of respondents had experienced no negative impacts as a result of affordable housing development. At only two of our eight sites had a significant number of neighbours experienced negative impacts. These impacts were mostly associated with the behaviours of a small number of individual residents. </p>
<p>At the other sites, the negative impacts were dispersed. Mostly, these related to minor issues such as parking and traffic. </p>
<h2>Fears are an obstacle in themselves</h2>
<p>Overall, our findings indicate that the feared impacts of planned affordable housing developments tend to be much greater than the impacts neighbouring residents actually experience once those developments are complete and occupied. </p>
<p>In other words, the perception of affordable housing is the key problem, not the affordable housing developments themselves. These are by and large unproblematic once completed. </p>
<p>These findings suggest that governments and developers need to devote much more attention to tackling negative public perceptions of affordable housing and its residents.</p>
<p><em><span class="fn author-name">Gethin Davison is l</span>ecturer in City Planning and Design, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/gethin-davison-317895" target="_blank">here</a>.</em></p>
<p><em><span class="fn author-name">Edgar Liu is r</span>esearch Fellow at City Futures Research Centre, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/edgar-liu-32200" target="_blank">here</a>.</em></p>
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Neighbours’ fears about affordable housing are worse than any impacts

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<p>Around $5 million has been paid for Springbank, a 328-hectare farm at Gundowring in Victoria's Kiewa Valley.</p>
<p>It was once owned by Hollywood star Mel Gibson. He lived at his north-eastern Victorian cattle farm with wife, Robyn in the mid-1980s, before buying and eventually relocating to Malibu.</p>
<p><a href="https://www.propertyobserver.com.au/https://www.allhomes.com.au/ah/vic/sale-residential/1651-gundowring-road-gundowring-albury-wodonga-region/1317289810511" target="_blank">The property</a> is about 35 kilometres south-east of Albury-Wodonga at the foothills of Mount Beauty.</p>
<p>It was sold by Albert Park racehorse owner David Trevethan and wife, Christine through Kim McQueen, director of lifestyle estates at Colliers International.</p>
<p>The 1651 Gundowring Road property was run by Mel Gibson as a retreat where he ran Angus cattle. <span>For much of its ownership the property was home to his father, Hutton Gibson, who lived a mud brick home on the holding that Mel Gibson bought for $237,500.</span></p>
<p>He sold a four-title holding to the Trevethans for $1.825 million in 2004.  </p>
<p>The property now features a modern four-bedroom Clancy stone home, heated pool along with 22 grazing paddocks, a state-of-the-art horse agistment facility and 17 dams, plus cattle yards and sheds.</p>
<p>It had been on and off the market since 2012.</p>
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Springbank, Mel Gibson's former Victorian farm resold

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<p>After a stellar spring selling season, the tail end of Sydney's 2016 vendors could sense a weakened pitch to secure auction success.</p>
<p>So having bought around the corner in Clontarf, the former fast bowler Brett Lee and wife Lana were among those to take a pre-auction offer.</p>
<p>Their redundant Seaforth waterfront home (above) sold just before its <a href="https://www.realestate.com.au/sold/property-house-nsw-seaforth-123958158?rsf=edm:iap:listing" target="_blank">weekend auction</a>.</p>
<p>The paperwork was being signed inside the three level home on Sydney's Spit as auction attendees were being turned away.</p>
<p>Clarke and Humel agents Cherie Humel and Michael Clarke had given $4.8 million price guidance, with the last minute negotiations securing the buyer at $4.91 million.</p>
<p>The couple paid $4.25 million for the four bedroom waterfront in 2013. Every level of the three storey home overlooks Middle Harbour, from the opulent master suite to the infinity pool and spa.</p>
<p>The family are trading up into a four bedroom Clontarf residence that cost more than $5 million. </p>
<p>A Middle Harbour home on the southern side of the Spit was the nation's top recorded sale.</p>
<p>The Parriwi Road auction was slow to start with a $6.2 million opening bid and was finally knocked down at $6.48 million.</p>
<p>Melbourne's highest sale was $5.1 million in Hawthorn through Jellis Craig (below).</p>
<p><img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%209.04.21%20AM.png" alt=""></p>
<p>It was a knockdown on one of Melbourne's most highly-coveted Scotch Hill streets, listed after being held by one family for 77 years.</p>
<p>The graceful double brick residence located on 1038sqm had no heritage overlay but rich timber panelling, soaring ornate ceilings and open fireplaces. </p>
<p>The former <a href="https://www.realestate.com.au/sold/property-house-vic-richmond-124055102" target="_blank">Richmond fire station</a> (below) fetched well over reserve when its sold for $3.335 million at weekend auction, attracting a large Melbourne crowd.</p>
<p><img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%209.05.08%20AM.png" alt=""></p>
<p>It was on the market with the first bid of $2.5 million. </p>
<p>There were three bidders with the Herald Sun reporting the buyer was a sculptor who planned to use the property as a studio for his works and potentially as a residence.</p>
<p>The property was sold by firefighter Peter Stafford, who operated a boarding house since it was purchased for $275,000 in 1992.</p>
<p>The fire station was built in 1893 as the MFB’s first Richmond base and decommissioned in 1966, when the base shifted to its current Church St location.</p>
<p>The four bedroom property came with the old watch room, billiards and locker room, fire engine bay and stables.</p>
<p>The combined capital city preliminary clearance rate rose this week to 75 per cent, up from last week’s final clearance rate of 73 per cent.</p>
<p>"This week’s auction market results indicate that clearance rates are maintaining strength coming into summer, a trend that is very different compared with last year’s performance when auctions clearance rates were tracking in the high 50 per cent to low 60 per cent range," Kevin Brogan at CoreLogic advised.</p>
<p>The number of properties taken to auction this week fell across the capital cities, with 3,173 reported auctions, down from 3,398 last week, which was the second busiest week for auctions this year.</p>
<p>The volumes were down in Melbourne and Sydney, to 1,410 and 1,158 respectively, but up across the smaller capital cities.</p>
<p>"Auction activity is expected to slow over the remaining weeks of December, however the strong trend in clearance rates is showing no signs of easing," Brogan noted.</p>
<p>Taking a late lead in the auction success rate, Melbourne’s preliminary clearance rate increased to 79.3 per cent, up from 76.1 per cent over the previous week.</p>
<p>Melbourne auction volumes decreased with 1,410 auctions held over the week, slightly down from 1,616 over the previous week.</p>
<p>Over the corresponding week last year, the clearance rate was 63.3 per cent across 1,622 auctions.</p>
<p>Melbourne's North East region was the best performer in terms of clearance rates, with an 88 per cent success rate across 166 auctions, followed by the North West region, with 83 per cent selling.</p>
<p>In Sydney, 1,158 auctions were held this week, down from 1,262 over the previous week. The preliminary clearance rate of 77.7 per cent was slightly up from 77.1 per cent last week, and also higher than the corresponding period last year, when a clearance rate of 52.9 per cent was recorded across 1,070 auctions.</p>
<p>The Northern Beaches region recorded the strongest clearance rate of 88.9 per cent across 112 auctions, while the North Sydney and Hornsby region had the highest volume of auctions (168).</p>
<p>Brisbane was host to 202 auctions this week and so far 123 results have been reported with a preliminary clearance rate of 50 per cent. </p>
<p>Brisbane had the nation's cheapest sale when $220,000 was paid in Caboolture (below).</p>
<p><img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%209.07.02%20AM.png" alt=""> </p>
<p>The three bedroom house at <a href="https://www.realestate.com.au/property/21-the-esplanade-caboolture-qld-4510" target="_blank">21 The Esplanade</a> sold at $290,000 in 2011.</p>
<p>It was initially listed in October last year at $320,000, then $280,000 by earlier this year.</p>
<p>This week, Adelaide saw a preliminary clearance rate of 64 percent, with 104 reported results across a total of 165 scheduled auctions. Perth’s clearance rate of 67.3 percent across 88 auctions was well up from recent lows.</p>
<p>Across Canberra a total of 136 auctions were held this week, compared to 112 last week and 123 at the same time last year. Canberra’s preliminary clearance rate of 63.8 percent is lower than it was the previous week when it was 72 percent.</p>
<p>Canberra offerings started at $437,000 at Chisholm.</p>
<p>Next weekend presents a "stringent test" for the market with about 900 Sydney auctions to be conducted, according to Domain economist Dr Andrew Wilson.</p>
<p>Melbourne auction numbers will rise this coming weekend with well over 1,300 listed.</p>
<p><span><span> </span></span></p>
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Red hot Richmond puts Melbourne as strong auction market

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<div><span style="color: #212121;">GUEST OBSERVER</span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>If you ask anyone where to find Sydney's true Chinatown, they will tell you "Haymarket." They will be wrong.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>The location of Chinatown has implications for property markets and real estate development. Anyone who invests in real estate should know where these active participants in the housing market prefer to live and work. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>It's true that Haymarket used to be Sydney's main Chinatown. It's full of tall buildings and places to buy Asian food, drink, and trinkets. Sydney's real Chinatown, though, has moved up to the Upper North Shore -- that group of suburbs located between Hornsby and Chatswood, mostly in Ku-ring-gai and Hornsby Shire councils.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Chatswood alone has four times the population of Haymarket ––at more than 20,000 people. Forty-seven percent of Chatswood residents are foreign born.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>It's no surprise that Chinatown has moved from Haymarket to the Upper North Shore. It has happened before. Sydney's first Chinatown, or "Chinese Quarter" as it was then known, was located in the Rocks from about the 1850s. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>What has turned the Upper North Shore into Sydney's real Chinatown?</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Juwai.com's Chinese buyer survey reveals that education motivates 44.6 percent of Chinese buyers in the area. The schools, proximity to ethnic services and retail outlets in Chatswood and quick train connection to the city all make the Upper North Shore a magnet for Chinese families.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>You might be surprised to know that just 27.7 percent of Chinese Upper North Shore purchasing inquiries are motivated by investment goals, meaning nearly three-quarters are owner-occupiers.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>In 2016, the suburb of Wahroonga has been the fastest gainer with Chinese buyers, with 56 percent more inquiries in the third quarter than in the second.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>One other thing you notice about the new Chinatown of Sydney's Upper North Shore is that it's not all cheap apartments and starter homes. Quite the opposite, in fact.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>These suburbs are known as some of the best in Sydney, and there are many premium buyers. Nearly half of all area inquiries are for properties with at least four bedrooms.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>What is the future for real estate in Sydney's new Chinatown? </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>For one, don't expect prices to fall much. High prices will continue so long as people like living there as much as they now do. Families who love their suburb don't sell their home unless they have to. That's one reason there are about 20% fewer auctions in the area than there were this time last year.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>We also expect the buyer makeup to remain relatively unchanged. Looking at Chinese-background buyers, in particular, almost all are Australian legal permanent residents or Australian citizens. You don’t have as many Chinese flying in from places like Shanghai to buy here.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Another reason we expect to see a floor under prices is the area's high quality, renewed housing stock. The land in the Upper North Shore is often more valuable than the house sitting on it. After buying, the majority of new owners invest in renovating, expanding and even replacing the older homes. This investment will help maintain or even push up prices when these properties go back on the market in the future.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Agent James Pratt, who is director of auctions for Raine &amp; Horne and James Pratt Auctions, told me that on Provincial Road in Lindfield, Houses No. 32 and 36 recently fetched more than $3 million at auction. In previous years, he said, they would have obtained a lower price.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>“It used to be that any property over the $2 million mark would have fewer registered bidders than a $700,000 unit, but it’s been the opposite this year, with 12 to 15 people registered at most houses," he said. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>"Fifteen registered is traditionally seen in highly sought-after entry-priced units."</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div>
<div><em>Gavin Norris is head of Australia for Juwai.com, the No. 1 Chinese international property portal and can be contacted <a href="https://list.juwai.com" target="_blank">here</a>.</em></div>
<div><span> </span></div>
<span style="color: #212121;"><span><br></span></span>
</div>
<p><span style="color: #212121;"><span> </span></span></p>
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Where is Sydney's real Chinatown? Juwai.com's Gavin Norris

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<p><img src="https://counter.theconversation.edu.au/content/69215/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>States like Tasmania have benefited from the end of the mining boom says Christopher Kent, speaking for the last time as the RBA Chief Economist.</p>
<p>Lower interest rates have boosted the housing markets, and a lower Australian dollar has made agriculture and services more competitive in these states. </p>
<p>But the news isn’t all rosy. Deloitte Access Economics projects Tasmania experiencing low-but-stable growth, buffeted by demographic trends. The state is also struggling with workforce participation, employment growth, labour productivity and educational attainment. </p>
<p>All of this will need to be addressed for Tasmania to realise the full benefit of the end of the mining supercycle. </p>
<h2>Tasmania suffered during the mining boom</h2>
<p>From early 2000 onwards, the Australian economy split in two. While the resource-rich west and north of Australia did very well during the mining investment boom, it was not really an exciting time for Tasmania. Tasmanian economist Saul Eslake noted:</p>
<p><em>"Not only did Tasmania not benefit from the mining boom, but it was actually hurt by it."</em></p>
<p>The boom drove inflation, interest and real exchange rates to very high levels. This was not favourable nor profitable for an economy that is highly reliant on competitive industries such as tourism, agriculture, manufacturing, forestry and building. </p>
<p>Tasmania was severely affected as exports make up around 19 percent of its Gross State Product (GSP). A higher Australian dollar made Tasmanian exports more expensive for others to buy. Higher interest rates made it more costly and harder to invest. </p>
<p>This also manifested within Australia, as Tasmania must compete with other states in the domestic market, even with the ACT whose exports only make up about 4.6 percent of its GSP. </p>
<p>During this era, Tasmania posted an average 0.3 percent and 0.27 percent annual average decline in GSP and employment growth respectively.</p>
<h2>Some sectors are booming now</h2>
<p>Though NSW and Victoria are leading the way, Tasmania is doing well since investment in the mining industry peaked a few years ago. </p>
<p>Lower interest rates and fuel prices are breathing new life into the Tasmanian economy. Tasmania is leading the nation in both retail spending growth and housing finance growth. The latter, growing around 10.3 percent year on year, is a leading indicator for real estate activity and housing construction. </p>
<p>Tasmania’s exports are also doing particularly well and tourism is a major driver of the growth in services exports. Tasmania recently topped the tourism growth league table, with international visitor numbers growing 19 percent year on year, boosted mainly by Chinese visitors. It looks like China is now impacting the Australian economy through tourism as well as mining.</p>
<p>The Tourism Investment Monitor 2016 report shows a 47 percent increase in Tasmania’s tourism investment last year, while the nation as a whole grew just 12 percent. In Tasmania, an unsurprising 66% of tourism investment was allocated for arts, recreation and business investment.</p>
<h2>The way forward</h2>
<p>But despite this growth in tourism and retail, Tasmania is still falling short in economic growth when compared to other states. It is at or near the bottom of national ranks on a number of different metrics - workforce participation, employment growth, labour productivity and educational attainment.</p>
<p>Further, as Deloitte highlighted, Tasmania is facing a demographic problem. The state government does have a target to grow the population to 600,000, but birth rates are low and immigration isn’t picking up the slack. Tasmania’s population is growing slowly. </p>
<p>Tasmania’s low population growth, coupled with its high ageing population, could significantly affect the labour force participation rate. The working age population as a percentage of total population is declining over time. There will soon be fewer workers and consumers, leading to lower investment and demand for retail and consumer goods and services. The ageing population will also raise the costs of health care and pensions, further affecting the state budget. </p>
<p>Australia’s near term growth prospects, if focused on securing stronger growth in non-mining sectors, is definitely welcome news for Tasmania. Tasmania should take advantage of the Asia-Pacific region’s increasingly dynamic environment to boost its production and innovative capacity.</p>
<p>But for Tasmania to have a credible continuing growth path it needs to have a realistic assessment of its own growth prospect. Tasmania needs to focus on long-term growth drivers such as population, participation and productivity. The declining labour participation rate needs to be supported through enhanced labour productivity or population growth. If not, it could lead to more anaemic growth.</p>
<p><em><span class="fn author-name">Mala Raghavan is l</span>ecturer of Economics, University of Tasmania and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/mala-raghavan-213411" target="_blank">here</a>.</em></p>
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There’s hope for Tasmania in the post-mining boom era

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<div class="column">GUEST OBSERVER </div>
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<div class="column">If you just looked at the top level results, there wasn’t a lot of good news in the business investment report.</div>
<div class="column"> </div>
<div class="column">Spending recorded a sizable quarterly fall, expectations of future investment are down over 14 percent compared with a year ago and the weakness was across all the states and territories bar Victoria and Queensland.</div>
<div class="column"> </div>
<div class="column">But this is really backward looking, categorising an environment that included the lead up to the Federal Election and Brexit – hardly an environment that would see businesses lift investment plans.</div>
<div class="column"> </div>
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<br>However the main good news or rather glimmer of hope was the lift in expected investment plans compared with last quarter. The fourth estimate for 2016/17 is $106.9 billion, up 1.7 per cent on the third estimate (June quarter). In addition investment plans have lifted substantially in the past six months, up by 17 percent.<br><p>Encouragingly the lift in investment plans over the last couple of quarters, may be a sign of a shift in momentum by the business sector, but it is too early to tell. Certainly the lift in business conditions in recent months may be supportive of a lift in investment plans – especially in light of the surge in commodity prices and improvement in the global economy. No doubt the rebalancing across the economy is also being supported by the slide in the Australian dollar – an outcome that should garner further traction in coming quarters. But as we have seen in the past, business may plan for future investment but then mothball projects if the economic landscape doesn’t improve.</p>
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<div class="column">Business spending looks like continuing to be a weight on Australia’s economic growth performance in the medium term. The Reserve Bank could cut rates again, but it is far from certain that this would have a measurable impact in further lifting business spending. The Reserve Bank is more forward- looking and is likely to maintain its neutral bias on a more upbeat medium term growth outlook.</div>
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<div class="column">It may be no surprise to see that home prices continue to lift across most capital cities. But what was clearly surprising was the slide in apartment prices across the nation, in particular the outsized 3.2 per cent fall in Melbourne apartment prices. Over the last year there has been a lot of discussion on the anticipated lift in housing supply, with particular concern on inner city Melbourne and Brisbane. And it may just be that this is the first sign of the lift in apartments coming on stream and curtailing price growth.</div>
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<div class="column">While the housing market is more mixed across the nation, it was encouraging to see some of the resource states seeing a decent lift in prices over November. And the lift in commodity prices may suggest that the mining towns may have come through the worst of the downturn.<br><p>  Overall policymakers will keep a close eye on the housing sector the early part of 2017, and will prefer to see more balanced house price growth across the nation. And in particular a lift in regional house prices would be a positive outcome. Annual growth in home prices across regional centres was just 1.4 per cent over the past 12 months. </p>
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<p>What do the figures show?</p>
<p>Private business investment</p>
<p>Overall: Business investment (spending on buildings and equipment) fell by 4 per cent in the September quarter after falling by 5.2 per cent in the June quarter. Spending on buildings fell by 5.7 per cent in the quarter while spending on equipment fell by 1.9 per cent. Investment is down 13.7 per cent over the year with buildings down by 24.3 per cent while equipment was up by 4.6 per cent.</p>
<p>Sectors: Mining investment fell by 7.2 per cent in the September quarter (ninth straight decline), while manufacturing spending fell by 4.9 per cent, spending by “other selected industries” fell by 1.9 per cent.</p>
<p>States: In seasonally adjusted terms investment fell in six of the eight states and territories in the September quarter. Investment fell the most in Western Australia (down 11.4 per cent), followed by Northern Territory (down 10 per cent), the ACT (down 8.1 per cent), South Australia (down 4.8 per cent), NSW (down 3.5 per cent), and Tasmania (down 0.1 per cent). The only rise was in Victoria (up 3.3 per cent) followed by Queensland (up 2.7 per cent).</p>
<p>Prices: The overall deflator for investment goods fell by 0.3 per cent in the September quarter after falling by 0.5 per cent in the June. The cost of buildings and structures rose by 0.2 per cent while the cost of equipment fell by 0.8 per cent. Over the year, the cost of investment goods fell by 0.5 per cent – the largest fall 41⁄2 years. The cost of buildings rose by 0.9 per cent while the cost of investment equipment fell by 3 per cent.</p>
<p>Forecasts: The fourth estimate for investment in 2015/16 is $106.9 billion, up 1.7 per cent on the third estimate but down 14.3 per cent over the year. Over the last six months, investment expectations have lifted by 17.1 percent.</p>
<p>Home prices</p>
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<p>The CoreLogic Home Value Index of capital city home prices rose by 0.2 per cent in November and was up 9.3 per cent over the year.</p>
In regional Australia, house prices fell by 0.2 per cent in October and were just 1.4 per cent higher than a year ago. (regional prices cover just houses and data is up to the end of October).</div>
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<br>In capital cities, house prices rose by 0.2 per cent in November while apartment prices fell by 0.1 per cent. House prices were up 9.6 per cent on a year ago and apartments were up by 7.2 per cent.</div>
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<br>The average Australian capital city house price (median price based on settled sales over quarter) was $645,000 and the average unit price was $540,000.</div>
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<div class="column">Dwelling prices rose in six of the eight capital cities in November: Darwin (up 3.7 per cent), followed by Adelaide (up 2.9 per cent), Hobart (up 0.9 per cent), Sydney (up 0.8 per cent), Perth (up 0.6 per cent), and Brisbane (up 0.4 per cent). Prices fell only in Melbourne (down 1.5 per cent). Dwelling prices in Canberra were unchanged.</div>
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<div class="column">Home prices were higher than a year ago in seven of the eight capital cities. Prices rose most in Sydney (up 13.1 per cent); followed by Melbourne (up 11.3 per cent), Hobart (up 8.5 per cent); Canberra (up 8.4 per cent); Adelaide (up 4.7 per cent), Brisbane (up 3.9 per cent) and Darwin (up 1.1 per cent). Prices fell in Perth (down by 3.4 per cent).<br><p>Total returns on capital city dwellings in the year to November rose by 13.1 per cent with houses up 13.3 per cent on a year earlier and units up 11.8 per cent.</p>
<p>Performance of Manufacturing</p>
The Performance of Manufacturing index rose by 3.3 points to 54.2 in November. A reading above 50.0 indicates that the sector is expanding. The index had been above 50 for 13 months up until August 2016 – the longest period of expansion since September 2006.<br><p>AIG notes “The expansionary conditions were broad-based, with six of the seven sub-indexes in the Australian PMI indicating expansion in November. The strong lift in new orders (59.5 points) together with solid growth in sales (53.5 points) is promising.”</p>
<p>What is the importance of the economic data?</p>
<p>“Private New Capital Expenditure and Expected Expenditure” is released quarterly by the Bureau of Statistics. The figures show both actual and expected spending by businesses on tangible assets such as new buildings, machinery and office equipment. The figures are obtained after sampling 8,000 private business units.</p>
<p>The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.</p>
<p>The Australian Industry Group compiles the Performance of Manufacturing Index (PMI) each month. The Australian PMI is the Australian equivalent of the US ISM manufacturing gauge. The PMI is one of the timeliest economic indicators released in Australia. The PMI is useful not just in showing how the manufacturing sector is performing but in providing some sense about where it is heading. The key ‘forward looking’ components are orders and employment.</p>
<p>What are the implications for interest rates and investors?</p>
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<div class="column">The great unwinding of mining investment continues although the lift in commodity prices may result in more of a soft landing in coming quarters.</div>
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<div class="column">The Chinese economic data remains encouraging, showing that the transition from the industrial sector to household sector remains on track. The manufacturing sector is expanding, while the services sector is clearly the driver taking up any slack.</div>
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<div class="column">The latest Australian manufacturing data is encouraging, suggesting that the current levels of interest rates and the Australian dollar are working in favour of domestic producers.</div>
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<div class="column">The Reserve Bank has regularly noted that housing supply will lift over coming years as work is completed on the bevy of new homes – especially apartments. The Reserve Bank looks to be comfortably on the interest rate sidelines over the coming year. </div>
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<div class="column"><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></div>
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Subdued business investment, healthy home prices: CommSec's Savanth Sebastian

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<p><img src="https://counter.theconversation.edu.au/content/68677/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>Throughout the Presidential campaign Donald Trump repeatedly criticised the United States Federal Reserve, accusing it of creating a “big fat ugly bubble” through its monetary decisions, among many other things. Trump’s consistent attacks have created worries for the Fed’s independence.</p>
<p>These worries intensified after the election, as President Trump will be in a position to make big changes at the Federal Reserve over the next few years. There are two existing vacancies on the seven-member board of governors of the Fed, and the terms of both the current Chairwoman, Janet Yellen, and Vice Chairman, Stanley Fischer, expire in 2018.</p>
<p>But there is more to good central bank governance than independence.</p>
<h2>Why do we care about central bank independence?</h2>
<p>Among orthodox economists, there is a long-standing belief that central bank independence is a sacred precept for any market economy. Independence gives the central bank some freedom from the politicians who might otherwise print money for political reasons. Orthodox economists worry that politicians are susceptible to political moves that are deleterious to stable economic environments, and that their ideologies often have little economic grounding.</p>
<p>Politicians, by this logic, will compromise monetary stability just so they can trumpet to their electorate that they are “driving growth”. There are some merits to this theory, as a long history of bubbles fuelled by short-sighted politicians amply demonstrates.</p>
<p>However, the problem for these orthodox economists, in addition to failing to either predict, explain, or prevent global financial catastrophes, is that the exact faults they attribute to politicians also manifest in unaccountable central banks, most notably the United States Federal Reserve.</p>
<h2>Good governance requires more than independence</h2>
<p>In order for the independence of central banks to work effectively, they need to be self-critical, intellectually honest, and adaptable institutions, as the banks of Canada and New Zealand have a track-record of demonstrating. The importance of a critical approach cannot be overstated. Central banking is an art, not a science, which is why humility is also an important attitudinal factor explaining the success of some central banksas opposed to others.</p>
<p>There is also a cultural aspect that has fuelled the impunity of central banks – it comes from their monopolisation of prestige in economics. Take this example: the Nobel Prize in Economics is given out by the Central Bank of Sweden. Is it really so surprising that a central bank will continually bestow this prize on the guys who argue for central banks to be made all-powerful?</p>
<h2>Central banks must be accountable</h2>
<p>A point that was advanced by both Donald Trump and Bernie Sanders is that there must be some form of accountability for so large an institution, which has such a disproportionate impact on the well-being of people all over the world. If the Federal Reserve were like any central bank whose sphere of influence was relegated largely to domestic monetary authority, then a robust and independent Central bank would not just be desirable but crucial to prevent capture by the short-termism of politicians. However, the US central bank is the printer of the world’s reserve currency and so writes the economic destiny of much of the planet.</p>
<p>Given the global impact of the Fed, there must be some form of mechanism by which it is made answerable for its choices. In a time of “rabid populism,” the idea that a small group of unelected people virtually dictate the price of money (which is basically what interest rates are), is not just abhorrent but downright anathema, and that is what Trump has <em>capitalized</em> on (pun intended).</p>
<h2>Lessons for other central banks</h2>
<p>There are two other central banks that have a disproportional global impact – the European Central Bank [ECB] and the People’s Bank of China [PBOC]. They too have to cater to their domestic economic needs,but find themselves exerting enormous influence over the global economy. And like the Fed, they are also not subject to a consistent oversight mechanism.</p>
<p>Although the PBOC does not face substantial domestic criticism, it continually draws the ire of its international trading partners for its domestic monetary policies. Meanwhile, the ECB is now the equivalent of an economic piñata that is berated by many EU members, for a variety of reasons. The ECB has a very difficult mandate in that it must try to strike a balance between the stable Euro-countries and those that are crisis-afflicted. Its democratic accountability has also been repeatedly called into question.</p>
<h2>What next?</h2>
<p>So what is next for the Fed? As with many Trump “promises,” there seems to be some dithering on whether Trump would actually go after the Fed. However, if pursued, Trump’s impact on the Federal Reserve could be huge. The impact on global equity and bond markets, on the value of the US Dollar, on the money supply, and on ordinary American lives, would be tremendous. </p>
<p>However, the fact remains that independence alone doesn’t ensure good policymaking. And as populist fervour takes hold, a more accountable mechanism for overseeing monetary authority might be necessary.</p>
<p><em><span class="fn author-name">Usman W. Chohan is d</span>octoral candidate, Policy Reform and Economics, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/usman-w-chohan-182272" target="_blank">here</a>.</em></p>
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There is more to good central bank governance than independence

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<p>Billionaire Lindsay Fox has plans to replace his corporate offices on Melbourne's St Kilda Road with a prestige apartment tower.</p>
<p>It is the first residential project for the trucking magnate.</p>
<p>Fox has submitted plans for a 20-storey apartment tower on a prime site overlooking the nearby Fawkner Gardens.</p>
<p>The project will deliver 148 upmarket apartments across 32,000 square metres of space.</p>
<p><em>Fairfax Media</em> say the development value of the project has been listed as $90 million.</p>
<p>The low-rise building at 493 St Kilda Road was bought in 2007.</p>
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Lindsay Fox plans St Kilda Road apartment highrise

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<p><span>GUEST OBSERVER</span></p>
<p><span>For the past five years, the Australian economic story has been about rebalancing growth away from being driven by mining investment at the end of the commodity prices </span><span>‘</span><span>super-cycle</span><span>’</span><span>. </span></p>
<p><span>Between 2011 and early 2016 a 60 percent fall in commodity prices weighed on tax revenues, corporate profits, and wages growth. </span></p>
<p><span>Mining investment also fell from 9 percent of GDP in 2013 to around 4 percent of GDP currently. </span></p>
<p><span>The main factors offsetting the drag have been falling interest rates </span><span>– </span><span>which supported local disposable incomes and asset prices </span><span>– </span><span>and a lower AUD </span><span>– </span><span>which improved the competitiveness of the non-mining sectors, like tourism and education exports. A housing boom and rising services exports have supported growth. </span></p>
<p><span>Three key factors are now changing the story. First, the mining investment decline is almost done, with only a couple more quarters to run. Second, commodity prices have lifted, in some cases significantly. Third, the election of Donald Trump and the expectation of faster US growth and inflation means that more Fed rate hikes are now expected, which has strengthened the USD, conversely weakening the AUD. </span></p>
<p><span>The first two elements have been in train for some time and have helped to underpin our view that the RBA is unlikely to cut its cash rate below 1.50%. However, the stronger-than-expected lift in bulk commodity prices combined with the now faster- than-previously </span><span>expected lift in US rates (HSBC’s view is now for a Fed Funds rate at </span><span>1.375% by mid-2018), mean that we now expect the RBA to lift its cash rate in 2018. </span></p>
<p><span>Although local inflation is currently below </span><span>the RBA’s 2</span><span>-3% target and wages growth is sluggish, we expect both to gradually lift from here. Supporting this, we see the rise in commodity prices as likely to support national incomes, tax revenues and corporate profits and to flow through to wages growth. Non-mining business investment is also already showing signs of rising and, on the labour market, it is worth keeping in mind that these indicators tend to lag the cycle, rather than lead it. </span></p>
<p><span>Previous concerns that any increase in the cash rate by the RBA might put upward pressure on the AUD are less of a concern if the Fed is hiking.</span></p>
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<p><span>Commodity prices have risen; some quite significantly </span></p>
<p><span>Commodity prices appear to be past the trough, with the price of </span><span>Australia’s commodity export basket </span><span>having risen by 40% in USD (30% in AUD terms) since the beginning of the year (Chart 1). In particular, Chinese policy measures have supported the iron ore price and sharply lifted coal prices (Chart 2) (for more on this see </span><span>Commodity Economics Comment: Watching the coal price spike</span><span>, </span></p>
<p><span>27 September 2016). Although we do not expect coal and iron ore prices to stay at current high levels, we do see them holding well above previous lows. For example, the Q4 coking coal export contract price was US200 a tonne, up from US92 a tonne in Q3. </span></p>
<p><span>The election of Donald Trump has also supported the outlook for global infrastructure investment and lifted base metal prices. I</span><span>n our view, Trump’s </span><span>election has also increased the risk that the Chinese authorities boost infrastructure investment in the face of downside risks to exports (see </span><span>Commodity Economics Comment: Trump and hard Commodities</span><span>, 16 November 2016).</span></p>
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<p><span>From the RBA’s perspective</span><span>, the lift in commodity prices should support growth in export values, which should lift income growth (see </span><span>Downunder Digest: A</span><span>ustralia’s strong export outlook</span><span>, 29 September 2016). Importantly, there is also a strong positive correlation between commodity prices and local nominal GDP growth (Chart 3). For the RBA, more income should support corporate profits and tax revenues and, if history is a good guide, some of this will feed through to wages growth. There is a strong positive correlation between commodity prices and unit labour costs (Chart 4) (for more on this see </span><span>Downunder Digest: Commodity prices and inflation</span><span>, 12 October 2016). </span></p>
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<p><span>The drag from falling mining investment is also set to wane in the coming quarters. Mining investment has already fallen from a peak of around $25bn a quarter to its current rate of AUD10bn (Chart 5). The RBA has recently noted that the fall in mining investment is around 80% done. We expect that mining investment will stop being a drag on GDP from mid-2017. </span></p>
<p><span>The expected levelling out in mining investment is expected to occur at around the same time that housing construction starts to become a drag on GDP growth (Chart 6). Importantly, the swing in mining investment is expected to be far larger than the drag from falling apartment building. In addition, although we expect that there may be a modest shake-out in the Brisbane and Melbourne apartment markets, we do not see a national housing price decline (for more on this see </span><span>Downunder Digest: Australia’s many housing markets in 2017</span><span>, 25 November 2016). </span></p>
<p><span>Non-mining business investment is rising modestly </span></p>
<p><span>Recent revisions by the statistics bureau to the annual national accounts numbers show that non-mining business investment has been on a modest upward trend for the past couple of years (Chart 7). The NAB business survey has also shown a more promising outlook for non- mining business investment recently (Chart 8). Looking into 2017 and 2018, we expect non- mining business investment to continue to lift, supported particularly by ongoing Asian demand </span><span>for Australia’s services exports, including tourism and educ</span><span>ation. </span></p>
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<p><span>The labour market still has spare capacity, but it also lags </span></p>
<p><span>The key challenge to our view is that spare capacity in the labour market has continued to weigh on wages growth, which, in turn, is weighing on domestic inflation. Although the unemployment rate has been edging lower over the past 18 months, the recent fall has been largely due to declining l</span><span>abour market participation. At the same time, the ‘underemployment’ </span><span>rate has not been declining recently. </span></p>
<p><span>Spare capacity in the labour market has been one of the factors weighing on wages, with growth in the wage price index falling to a new record low in Q3 2016 of 1.9% y-o-y (Chart 10). Importantly, however, the slowdown in wages growth also reflects the response of the economy to the fall in commodity prices. As we showed in chart 4, unit labour costs are correlated with commodity prices. In addition, there are other measures, such as the national accounts measure of wages, which is already showing a modest lift in wages. At a more fundamental level, it is worth keeping in mind that the labour market, and particularly wages, tend to lag the cycle. In short, the recent commodity price rise is yet to have its effect on the labour market. </span></p>
<p><span>Inflation should lift as </span><span>the ‘</span><span>rebalancing act</span><span>’ </span><span>ends </span></p>
<p><span>Our central case is that </span><span>underlying inflation is likely to lift next year and head back to the RBA’s </span><span>2-3% target band over time (Chart 11). As we see underlying inflation climbing only slowly, we doubt a cash rate rise will be needed in 2017 but now think that hikes in 2018 are likely. </span></p>
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<p><span>Fed hikes mean AUD may be kept at bay </span></p>
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<p><span>Another factor that has changed the story for Australia has been developments in the US. The election of Donald Trump has driven the expectation that US policymakers will deliver fiscal stimulus in 2017 and that this is likely to put upward pressure on inflation. This has shifted markets expectation for the Federal Reserve, with more hikes now priced in. Our Chief US Economist, Kevin Logan, has revised up his GDP forecasts for 2017 to 2.3% (from 2.1%) and for 2018 to 2.7% (from 2.2%) on the expectation of greater fiscal stimulus. Our Chief US Economist now expects the Federal Reserve to lift its policy rate to 1.25-1.50% by mid-2018 (see </span><span>US Economic Outlook: Higher GDP forecasts; more Fed tightening</span><span>, 21 November). </span></p>
<p><span>The expectations of faster US growth and inflation and more Fed rate hikes than previously thought, have seen the USD strengthen recently. For Australia this has meant that the AUD has held broadly steady despite the lift in commodity prices. A stronger USD is good news for Australia as it supports the competitiveness of the traded sectors, particularly services exports, such as tourism and education. As Chart 1 showed, because the lift in USD commodity prices has not been matched by a rising AUD, </span><span>the AUD value of Australia’s commodity index has rise</span><span>n sharply in recent months, boosting local incomes.</span></p>
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<p><span>RBA on hold for 2017 and may be hiking in 2018 </span></p>
<p><span>As we expect the transition from mining investment to non-mining led growth still has a few </span><span>more quarters to run and inflation is currently below the RBA’s 2</span><span>-3% target band, any upward movement in the cash rate seems unlikely any time soon. By the same token, the RBA has made it clear that it has little appetite for further rate cuts. </span></p>
<p><span>Governor Phil Lowe noted in a recent speech that it is </span><span>‘unlikely to be in the public interest, given </span><span>current projections for the economy, to encourage a noticeable rise in household indebtedness, even if doing so might </span><span>encourage slightly faster consumption growth in the short term’. </span><span>The recent revival in investor interest in the housing market, albeit modest, is likely to also dissuade the RBA from cutting its cash rate further in the short run, even if inflation is lower than the central bank would like (Chart 12).</span></p>
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<p><span>For the RBA, 2018 is a long time away and there would be little (if any) discussion about likely policy settings that far out. The uncertainties are huge. Interestingly, though, given that the RBA now assumes the market path for the cash rate in its forecasts, the central bank will now also need to consider what hikes in 2018 would mean, given that the market is (just barely) pricing them in. </span></p>
<p><span><em><a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. </em></span></p>
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Commodities and Trump a game changer: HSBC's Paul Bloxham

<p><a href="https://www.apartments.com.au/developers/skymark-group">Skymark</a>'s boutique Cronulla development Solis has secured a 10-year Latent Defects Insurance policy through Resilience Insurance, providing buyers of the 16-residence building on Ewos Parade with structural and waterproofing protection that extends a decade beyond the building's completion.</p>

<p>Currently under construction and due for completion in late 2027, <a href="https://www.apartments.com.au/new-apartments/solis-cronulla-8-ewos-parade-cronulla-nsw-2230">Solis</a> is one of a small number of new developments in the Sutherland Shire to carry Resilience LDI coverage, a distinction that carries increasing weight as buyer confidence in the off-the-plan sector continues to be shaped by how developers stand behind their product.</p>

<p>Latent Defects Insurance, which entered the Australian market in 2022 when Resilience Insurance was approved to offer the cover, protects buyers against major structural or waterproofing defects for ten years post-completion. Unlike traditional statutory warranties, it operates as a first-resort policy, if a covered defect arises, the insurer responds directly, without the buyer needing to pursue the builder or developer through a lengthy claims process.</p>

<p>Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.</p>

<p>"The overarching feedback from prospective buyers in the new development space is that they want more confidence and assurances around the quality of the build," Nugent says.</p>

<p>"Resilience Insurance Latent Defects Insurance not only gives them complete peace of mind for 10 years, but it shows the developer they are buying from is standing by their product."</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370898]</p>

<p>For Solis, the Resilience LDI policy adds a meaningful layer of accountability to an already considered project. The development comprises nine two-bedroom and seven three-bedroom residences, including one dual-level three-bedroom apartment, across a five-storey building on Ewos Parade, positioned between Shelly Beach and South Cronulla.</p>

<p>Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;</p>

<p>All 16 residences include at least one balcony or courtyard, and select apartments on the upper floors feature bar areas and secondary flexible living spaces.</p>

<p>Hiba Sander, Managing Director of Skymark, says Solis offers a rare balance, nestled between the quiet beauty of secluded beaches and the lively charm of South Cronulla's esplanade.</p>

<p>"It's a place to choose your pace and live gracefully, seaside'," Sander says.</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370900]</p>

<p>The architecture, designed by <a href="https://www.apartments.com.au/architects/ida-design-group">IDA Design Group</a>'s Michael Trinh, draws from the natural erosion patterns of <a href="https://www.apartments.com.au/developments/cronulla-nsw-2230">Cronulla</a>'s sandstone headlands, translating the organic forms of the coastline into soft curves, pavilion-style massing, and a material palette chosen for longevity in a salt-tinged environment.&nbsp;</p>

<p>Textured natural stone, soft renders, and timber-look battens reference the tones of the surrounding cliffs, while the building has been oriented to maximise natural light and passive ventilation, with primary living spaces facing north and east to capture morning sun and sea breezes.</p>

<p>"At Solis, our aim was to create architecture that feels quietly confident, grounded in natural materials like stone and timber, and elevated by light and landscape," Trinh says.&nbsp;</p>

<p>"The buildings are designed to sit gently within their coastal surrounds, with expansive glazing and abundant greenery creating a seamless dialogue between inside and out."</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370897]</p>

<p>Interiors by <a href="https://www.apartments.com.au/architects/hot-black">Hot Black</a> carry the same material language through to every room. Kitchens feature integrated Gaggenau appliances, sculpted stone benchtops, and Lo &amp; Co joinery, while bathrooms feature natural stone, timber, and brushed metal finishes.&nbsp;</p>

<p>Hot Black Founder and Design Director Sophie Safrin describes the intent as one of considered restraint: "At Solis, every detail has been thoughtfully considered to create a timeless coastal retreat, calm, refined, and effortlessly liveable. From natural finishes to seamless indoor-outdoor flow, Solis offers a quiet elegance that's deeply connected to its surroundings.</p>

<p>The landscape, designed by Julian Brady of <a href="https://www.apartments.com.au/landscape-architect/sitedesignstudios">Site Design Studios</a>, treats green space as an integral part of the resident experience rather than an afterthought.&nbsp;</p>

<p>"Gentle curves and layered native plantings mirror the ebb and flow of the ocean," Julian Brady says, "creating a serene connection between architecture and place."&nbsp;</p>

<p>Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.</p>

<p>[smartcode_project:default project_id=150499 project_image_fid=370899]</p>

<p>Skymark has an established track record in the Sutherland Shire, with a portfolio spanning Cronulla, Woolooware and Burraneer that includes Isla, Sylva, Bask, Shells, Sula and Mist. Securing LDI on Solis reflects a broader shift in how the developer is positioning its buildings to buyers, at a time when Resilience Insurance expects the policy to become mandatory in New South Wales by 2028.</p>

<p>Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.</p>

<p>[smartcode_project_cta:default project_id=150499]</p>


Joel Robinson

Skymark takes out 10-year Resilience Insurance LDI at Solis Cronulla

<p>Investors may soon find themselves with fewer reasons to buy established property and more incentives to look towards the new apartment market.</p>

<p>Proposed changes to negative gearing and capital gains tax concessions would see new and off-the-plan apartments retain access to the tax benefits, while established properties would miss out, creating a clear advantage for buyers purchasing newly built housing.</p>

<p>The policy direction aligns with what many developers have been saying for several years. Australia needs more housing supply, and governments are increasingly looking for ways to encourage investment into new stock rather than existing homes.</p>

<p>The challenge for investors is that suitable product is becoming harder to find.</p>

<p>For much of the last decade, one-bedroom apartments were the cornerstone of investor demand. They offered a lower entry price, strong rental appeal, and were a common feature across most apartment developments.</p>

<p>Today, the development pipeline looks very different.</p>

<p>Across both New South Wales and South East Queensland, developers are increasingly targeting owner-occupiers and downsizers, delivering larger two, three and four-bedroom apartments in response to changing buyer preferences. While one-bedroom apartments still exist, they now form a much smaller portion of many new projects.</p>

<p>That shift has created a shortage of investor-friendly stock, particularly in well-located projects close to transport, employment hubs and lifestyle amenity.</p>

<p>At the same time, rising apartment prices have pushed many new developments beyond the reach of traditional investors. On the Gold Coast and across South East Queensland, it's becoming increasingly difficult to find new apartments priced around the $1 million mark, particularly those offering strong rental fundamentals and long-term growth prospects.</p>

<p>We've rounded up four new apartment developments where investors can still secure a foothold in the market for around $1 million or less.</p>

<h2 data-end="1140" data-start="844">Flourish Soleira</h2>

<h2>Priced from: $1.07 million</h2>

<p data-end="1140" data-start="844">Popular Palm Beach developer Sherpa is soon to officially launch its newest local apartment development, Flourish Soleira.</p>

<p data-end="1140" data-start="844">The one-bedroom apartments in the building were only offered to first home buyers rather than investors, and all of those have been snapped up. The two-bedroom apartments will start from $1.07 million, and the three-bedrooms, still a good investment given the popularity of Palm Beach for owner-occupiers, starting at $2,045,000.</p>

<p data-end="1140" data-start="844">&nbsp;</p>

<p data-end="1140" data-start="844">[smartcode_project:default project_id=150017 project_image_fid=370964]</p>

<p data-end="1140" data-start="844">Flourish Soliera will comprise 153 apartments across two buildings, connected by a skybridge, the first ever delivered in the suburb.</p>

<p data-end="1140" data-start="844">True to Sherpa's booming Flourish brand of apartment projects, Flourish Soleira will have extensive rooftop amenity across both buildings including a&nbsp;wellness centre with gym, work from home, yoga, pilates, a&nbsp;heated pool, private dining rooms, pizza oven and barbecues, basketball court, and golf simulator.</p>

<h2><strong>Corallo, Palm Beach</strong></h2>

<p><strong>Priced from: $841,500</strong></p>

<p>Nearby Flourish Soleira is Changfa Group's beachfront-inspired Corallo development. They still have some one-bedroom apartments remaining, priced from $841,500.</p>

<p>The 105-apartment project on Palm Beach Avenue is otherwise dominated by larger two and three-bedroom residences, many of which are aimed at owner-occupiers and downsizers.</p>

<p>[smartcode_project:default project_id=112194 project_image_fid=808]</p>

<p>For investors, the appeal lies in Palm Beach's continued transformation from a laid-back beachside suburb into one of the Gold Coast's most sought-after residential markets. Residents at Corallo will be within walking distance of Palm Beach's surf beaches, the recreational amenity of Tallebudgera Creek, and the increasingly popular collection of cafes, restaurants and boutique retailers along the suburb's central dining precinct.</p>

<h2><strong>Corner House, Stones Corner</strong></h2>

<h2><b>Priced from: $880,000</b></h2>

<p>One of only two Brisbane apartment developments to make the list with prices under $1 million is DeMartini Fletcher's Corner House development in Stones Corner.</p>

<p>One-bedroom apartments start from $880,000 within the 88-apartment development, providing investors with exposure to one of Brisbane's most established inner-south locations.</p>

<p>[smartcode_project:default project_id=149098 project_image_fid=330594]</p>

<p>Stones Corner has long been supported by strong tenant demand due to its proximity to major employment and education destinations. The suburb sits less than five kilometres from Brisbane's CBD and is within easy reach of the Princess Alexandra Hospital, Greenslopes Private Hospital, Queensland Children's Hospital and several university campuses.</p>

<p>The project's location within a walkable urban village environment, surrounded by retail, dining and public transport infrastructure, continues to attract both professionals and healthcare workers seeking accommodation close to work.</p>

<p><strong>Parkdrive Apartments, Chermside</strong></p>

<p><strong>Priced from: $749,000</strong></p>

<p>The most affordable apartments across Brisbane's new and off the plan market are in Chermside where developer AusDev is selling one-bedroom apartments from $749,000, and two-beds from $929,000, at its recently launched Parkdrive development.</p>

<p>The development is strategically positioned in one of Brisbane's largest employment and retail precincts, placing residents within easy walking distance of Westfield Chermside, The Prince Charles Hospital, St Vincent's Private Hospital Northside and the suburb's major bus interchange.</p>

<p>[smartcode_project:default project_id=152125 project_image_fid=363782]</p>

<p>Already under construction and scheduled for completion in early 2028, Parkdrive benefits from Chermside's ongoing evolution into Brisbane's northern metropolitan centre. The suburb continues to attract significant public and private investment, supporting population growth and underpinning long-term rental demand.</p>

<p>For investors focused on yield and tenant depth, the combination of healthcare, retail and transport infrastructure within close proximity provides a strong foundation for occupancy and rental performance.</p>


Investors to turn to new apartments after Federal Government changes spark hunt for Queensland's best $1 million apartments

<p>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.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=364156]</p>

<p>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.</p>

<p>“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.</p>

<p>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.</p>

<p>The absence of holiday letting within the building has also resonated strongly with purchasers.</p>

<p>“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.”</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=366491]</p>

<p>The strong demand comes amid broader shifts in the high-end apartment market following the Federal Budget announcements in May.</p>

<p>“We were already seeing strong enquiry from high-net-worth buyers, but that has only accelerated since the policy changes,” Bourke says.</p>

<p>“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.”</p>

<p>[smartcode_project:default project_id=150454 project_image_fid=366486]</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>&nbsp;</p>

<p>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.</p>

<p>[smartcode_project_cta:default project_id=150454]</p>


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

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371009]</p>

<p>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.</p>

<p>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.</p>

<p>Pace says the project has been designed to appeal to buyers seeking inner-city convenience without sacrificing space, flexibility, or amenity.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371016]</p>

<p>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.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371017]</p>

<p>Landscape architecture studio Acre has introduced a layered rooftop garden designed to soften the urban setting while creating a more communal environment for residents.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=139552 project_image_fid=371025]</p>

<p>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.</p>

<p>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.</p>

<p><sup>*Conditions apply in relation to the deposit match offer.</sup></p>

<p>[smartcode_project_cta:default project_id=139552]</p>


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

<p data-end="181" data-start="0">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.</p>

<p data-end="484" data-start="183">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.</p>

<p data-end="657" data-start="486">Stephen Abolakian, joint managing director alongside Troy, has spent more than two decades in the business, overseeing development, planning, finance, marketing and sales.</p>

<p data-end="806" data-start="659">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.</p>

<p data-end="871" data-start="808">“We know the buyer profile exceptionally well,” Abolakian says.</p>

<p data-end="1097" data-start="873">“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.”</p>

<p data-end="1169" data-start="1099">That buyer has historically been overwhelmingly owner-occupier driven.</p>

<p data-end="1434" data-start="1171">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.</p>

<p data-end="1533" data-start="1436">“Historically, investors have been a much smaller portion of our demand profile,” Abolakian says.</p>

<p data-end="1665" data-start="1535">“We design for owner-occupiers. We don’t design for yield, we design for comfort, amenity, family living and long-term usability.”</p>

<p data-end="1721" data-start="1667">That philosophy extends well beyond apartment layouts.</p>

<p data-end="1966" data-start="1723">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.</p>

<p data-end="2051" data-start="1968">“There was probably a period where having an approved project in market was enough,” he says.</p>

<p data-end="2154" data-start="2053">“There wasn’t as much competition and if you built it, buyers would come. That’s no longer the case.”</p>

<p data-end="2386" data-start="2156">“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.”</p>

<p data-end="2386" data-start="2156">[smartcode_project:default project_id=110379 project_image_fid=311393]</p>

<p data-end="2549" data-start="2388">The shift has forced developers to become more sophisticated in how they approach apartment design, particularly as owner-occupier expectations continue to rise.</p>

<p data-end="2678" data-start="2551">For Hyecorp, that means thinking beyond who the buyer is today and designing for who they may become in five or 10 years' time.</p>

<p data-end="2757" data-start="2680">“People buying now often aren’t moving in for several years,” Abolakian says.</p>

<p data-end="2949" data-start="2759">“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.”</p>

<p data-end="3219" data-start="3163">That thinking also shapes Hyecorp’s approach to amenity, which positions wellness at the forefront.</p>

<p data-end="3219" data-start="3163">[smartcode_project:default project_id=149594 project_image_fid=362634]</p>

<p data-end="3454" data-start="3221">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.</p>

<p data-end="3546" data-start="3456">“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.”</p>

<p data-end="3919" data-start="3669">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.</p>

<p data-end="4005" data-start="3921">“It’s about creating something that feels special without being excessive,” he says.</p>

<p data-end="4112" data-start="4007">“Good gardens, quality apartments, thoughtful amenity. Creating that resort feeling in a metro location.”</p>

<p data-end="4112" data-start="4007"><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" /></p>

<p data-end="4243" data-start="4114">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.</p>

<p data-end="5230" data-start="5149">“We’ve always believed in keeping a lot of the process in-house,” Abolakian says.</p>

<p data-end="5392" data-start="5232">“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.”</p>

<p data-end="5674" data-start="5394">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.</p>

<p data-end="5723" data-start="5676">“There are definitely people waiting,” he says.</p>

<p data-end="5902" data-start="5725">“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.”</p>

<p style="text-align:start">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.</p>

<p style="text-align:start">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.</p>


Jonathan Chancellor

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