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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>Developer <a href="https://www.apartments.com.au/developers/bottega-property-group">Bottega House</a> has secured council approval for its first Brisbane project - a $270 million luxury residential development on an absolute riverfront site in leafy St Lucia.&nbsp;</p>

<p>The 15-storey project, known as <a href="https://www.apartments.com.au/new-apartments/st-lucia-by-bottega-house-180-macquarie-street-st-lucia-qld-4067">St Lucia by Bottega House</a> , will occupy a prime north-facing site at 178-180 Macquarie Street, directly fronting the Brisbane River in the established inner-west suburb known for its rowing clubs, golf courses and sprawling University of Queensland campus.&nbsp;</p>

<p>St Lucia by Bottega House will feature a suite of amenities including dedicated wellness spaces, a mineral pool and cold plunge. The project has been positioned to attract affluent owner-occupiers seeking high-quality, house-sized apartments.&nbsp;</p>

<p>Bottega House has been set up by co-directors Nick Malloch, Louis Mennes and Craig Marsh.</p>

<p>Malloch said the project drew inspiration from its Brisbane River setting and leafy inner-west surrounds, while responding to the demands of discerning locals looking to transition from freestanding homes into apartment living.&nbsp;</p>

<p>"With an expansive river frontage and lush green surrounds, we knew we had to create something special that reflects the natural beauty of the location while offering residents masterfully crafted homes," said Malloch.&nbsp;</p>

<p>"Our intent was to complement the project's quiet, private setting by introducing residences that offer a calm retreat and sanctuary from the everyday. The result is a harmonious blend of architecture, interiors and amenity that emphasises wellbeing, comfort and beauty without excess."&nbsp;</p>

<p>Malloch added that project consultants had been carefully selected in alignment with Bottega House's commitment to care, quality and attention to detail. The design team includes architects <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, interiors practice <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and landscaping by <a href="https://www.apartments.com.au/architects/urbis">Urbis</a>.&nbsp;</p>

<p>Three-bedroom apartments are expected to start around $5 millio. Selling agents Keenan &amp; Byrne said the pricing strategy for the project was anticipated to achieve upwards of $25,500 per square metre.&nbsp;</p>

<p>The project's development approval this week follows the success of Bottega House's inaugural Queensland project - a 22-storey collection of full-floor sky homes at Broadbeach on the Gold Coast which included the sale of a two-storey penthouse at a record price for a beachside residence.&nbsp;</p>

<p>St Lucia by Bottega House is expected to launch to market in November, with construction anticipated to be completed mid 2029.</p>

<p>[smartcode_project_cta:default project_id=151826]</p>


Joel Robinson

Bottega House to make Brisbane debut with St Lucia riverfront apartment development

<p><a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> is advancing its affordable apartment model into Brisbane with the acquisition of another site at Cordelia Street in South Brisbane for $27 million.</p>

<p>Sherpa, which has a $1.7 billion pipeline across Southeast Queensland, intends to bring a cohort of apartments exclusively for first homebuyers into its proposed 186-apartment project to be built at 2 Cordelia Street.</p>

<p>The Sherpa model has already been incredibly well received from their Gold Coast projects, where Sherpa Group set aside a number of apartments exclusively for first homebuyers.</p>

<p>The new $320 million project marks Sherpa Group's second development in Brisbane, following its $255 million Symphony project, also on Cordelia Street, which is currently under construction.</p>

<p>Symphony will deliver 146 apartments across 28 levels, offering a mix of one, two and three-bedroom apartments. With 114 already sold, construction by <a href="https://www.apartments.com.au/builders/lps-group">LPS Group</a> is scheduled for completion in 2028.</p>

<p>[smartcode_project:default project_id=7574 project_image_fid=351654]</p>

<p>Sherpa Founder, Christie Leet, said the company was excited to be venturing into Brisbane for its second residential project.</p>

<p>“We’re big believers in the future of Brisbane as we lead into the 2032 Olympics and beyond,” Leet said.</p>

<p>“The success of Symphony has guided us into what will be our second project and we look forward to submitting our plans with council soon so we can deliver yet another quality project to the inner city residential market.</p>

<p>“Our Flourish model has been very well received both in Brisbane and the Gold Coast, and we’re excited to be able to offer some of these apartments again exclusively to first homebuyers to help get them into the property market.</p>

<p>“The model has been extraordinarily well received in our previous projects and it is something we are committed to moving forward.”</p>

<p>2 Cordelia Street will be designed by <a href="https://www.apartments.com.au/architects/hal-architects">HAL Architects</a> &amp; Finegrain and will include Sherpa’s signature residential amenities including pool, gym, recreation, wellness and work from home spaces.</p>

<p>The project will feature ground-floor commercial space, creating a vibrant amenity for residents and the surrounding community.</p>

<p>A development application will be lodged with Brisbane City Council in August on the code compliant site and will be launched to the market early 2027.</p>


Sherpa acquires new site for second Brisbane apartment tower

<p>One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.</p>

<p>Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.</p>

<p>The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.</p>

<p><img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" /></p>

<p>Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.</p>

<p>Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.</p>

<p>The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.</p>

<p>Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.</p>

<p>The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.</p>

<p>That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.</p>

<p>The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.</p>

<p>"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.</p>

<p><img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" /></p>

<p>Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.</p>

<p>The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.</p>

<p>The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.</p>

<p>According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.</p>

<p>The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.</p>

<p>A significant component of the proposal is the revitalisation of Blue Street Plaza.</p>

<p>The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.</p>

<p>Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.</p>

<p>Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.</p>

<p>Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.</p>

<p>Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.</p>

<p>The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.</p>

<p>Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.</p>

<p>&nbsp;</p>

<p>FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.</p>

<p>Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.</p>

<p>Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.</p>


First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

<p>Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.</p>

<p>The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.</p>

<p>The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.</p>

<p>The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.</p>

<p><img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" /></p>

<p>The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;</p>

<p>PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.</p>

<p>The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.</p>

<p>Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.</p>

<p>"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.</p>

<p>Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.</p>

<p>A major focus of the design has been the public domain.</p>

<p>The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.</p>

<p>The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.</p>

<p data-end="239" data-start="66">Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.</p>

<p data-end="442" data-start="241">Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.</p>

<p data-end="661" data-start="444">Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.</p>

<p data-end="909" data-start="663">Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.</p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a></em></p>

<p data-end="1339" data-start="1019">Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.</p>

<p data-end="1339" data-start="1019">[smartcode_project:default project_id=30959 project_image_fid=292863]</p>

<p data-end="1398" data-start="1341">It has since quietly assembled its next wave of projects.</p>

<p data-end="1805" data-start="1400">Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.</p>

<p data-end="1805" data-start="1400">[smartcode_project:default project_id=152095 project_image_fid=373685]</p>

<p data-end="1991" data-start="1807">The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.</p>

<p data-end="2303" data-is-last-node="" data-is-only-node="" data-start="1993">Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.</p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a></em></p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a></em><br />
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

<p data-end="492" data-start="327">Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.</p>

<p data-end="843" data-start="497">At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.</p>

<p data-end="1109" data-start="848">The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.</p>

<p data-end="1109" data-start="848">[smartcode_project:default project_id=152022 project_image_fid=375528]</p>

<p>Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.</p>

<p>The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.</p>

<p>"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375531]</p>

<p>The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.</p>

<p>The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375524]</p>

<p>Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.</p>

<p>Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.</p>

<p>[smartcode_project:default project_id=152022 project_image_fid=375530]</p>

<p>The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.</p>

<p>The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.</p>

<p>The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.</p>

<p>"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.</p>

<p>"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."</p>

<p>Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.</p>

<p>[smartcode_project_cta:default project_id=152022]</p>


Jonathan Chancellor

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