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GUEST OBSERVER
The Australian Prudential Regulation Authority (APRA) has moved away from its non-prescriptive “principles based” regulatory approach to a one size fits all explicit guidance but it doesn’t appear to be encouraging lenders to be more prudent. 
The housing market may be getting away from APRA and the Reserve Bank of Australia (RBA). In late 2015, both regulators voiced concerns about the “horribly low” standards of the mortgage lending sector and the risks to financial stability. Even bankers are getting jittery.
There has also been well-publicised problems with brokers originating dodgy mortgages that lenders have not picked up. In its existing guidance (which has not been changed in the latest version), APRA requires lenders to have all sorts of procedures to catch dodgy mortgage applications from brokers including procedures to verify the accuracy and completeness of provided information.
But APRA has not named and shamed the lenders who failed to catch dodgy mortgage applications, not imposed capital sanctions or reprimanded directors and management. It hasn’t required that lenders change their broker process.
What APRA is asking is that banks slug first time buyers even more. In the new rules, home buyers are now required to prove they can service a 7 percent mortgage interest rate on a loan to value ratio of less than 90 percent with less income being taken into account. This is on top of trying to save a deposit that is disappearing every day as house prices boom.
It is going to take a lot more than forgoing a few smashed avocado toasts to make up for the additional burden imposed by APRA.
There are a few important questions raised by APRA’s sudden conversion to pragmatic rather than purely principled regulation.
First, the numbers. Where did the 7 percent come from? APRA doesn’t disclose this, but in an era of almost zero interest rates, it’s big. And maybe in time, when the RBA announces its changes to interest rates, the 7 percent may be changed in-line and economists will begin to bet on whether it will go to 6.5 percent or 7.5 percent. 
In looking at a borrower’s income, APRA notes that it is “prudent practice is to apply discounts of at least 20 percent on most types of non-salary income”. No explanation also on why this particular percent. It’s also not specific on what “most” means.
If banks are indeed lending imprudently surely the banks themselves should suffer. First by naming and shaming, then if necessary, requiring additional capital buffers, thus driving down dividends – a real market based solution.
<h2>APRA is changing the way it regulates</h2>
Throughout the turmoil of the global financial crisis and the regulatory mayhem that followed, APRA held fast to its “principles based” approachto regulation:
"To be principles-based is to give emphasis to the achievement of sound prudential outcomes in setting regulatory requirements and expectations, without necessarily seeking to specify or prescribe the exact manner in which those outcomes must be achieved."
In short, APRA lays out the high-level principles that it will use to supervise the banks and insurance companies that is responsible for, and then will check that those principles are being adhered to. It did not believe in a “one size fits all” approach.
But this week, there appears to have been a back-flip. In a consultation paper for an update to APRA’s guidance on mortgage lending, the regulator has been very specific indeed. It notes:
“Prudent serviceability policies should incorporate a minimum floor assessment interest rate of at least seven percent.” 
This very specific guidance replaces an earlier guidance that was more general. From a regulatory perspective, an important question is why abandon principles-based regulation? If it hasn’t worked in the past, then a rethink of the role and approach of prudential regulation is needed. 
This has happened overseas, where the UK Financial Conduct Authority, while retaining 11 principles that firms should adhere to, has become much more intrusive. Unlike our regulators, the authority has even going so far as to impose massive fines for misconduct. It states:
“We also adopt a markets-focused approach to regulation, both in our work as a competition regulator and more broadly to deliver regulation that works with the market to improve consumer outcomes. Interventions at the market level are an effective and powerful way of tackling and mitigating problems across a large number of firms, which in turn benefits a large number of consumers.”
Rather than APRA slipping in such a major change like this latest one into a consultation paper, it might be appropriate to have a transparent debate about such a potentially significant change in prudential regulation in Australia.
<div class="hover tooltip bottom">Pat McConnell is honorary fellow, Macquarie University Applied Finance Centre, Macquarie University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/pat-mcconnell-13137" target="_blank">here</a>.</div>
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jchancellor-FAypfDUnLy

New APRA guidance on lending will hurt home owners when it should be the banks

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GUEST OBSERVER
The federal government’s proposal to amend paid parental leave may result in short term fiscal gains, but overlooks the fact that well-functioning families provide long-term economic and social benefits to the community.
The paid parental leave scheme was designed to enhance the well-being of families by providing a strong foundation in the months following the birth of a child. The 2016 Bill limits the entitlements of women who receive some level of support from their employer by restricting the Commonwealth support to a top-up payment that would be a maximum of 18 weeks at the minimum wage. 
The current scheme entitles the primary carer to claim up to 18 weeks at minimum wage, of which two weeks can be claimed by the carer’s partner (Dad or Partner Pay). Women earning more than A$150,000 per annum are not eligible for the government scheme. The minimum provisions of the National Employment Standards further allow a parent to take up to 12 months of unpaid parental leave.
This original scheme was not designed as a top-up scheme, but to complement payments available under existing employment arrangements. It recognised that some new parents had rights under their existing employment agreements, so the policy was explicit that the parental leave pay can be received in addition to other entitlements including employer-provided parental leave. 
Before fiddling with the design of paid parental Leave, we need to be clear about the purpose of the policy. Family policies, including child care, early education, paid parental leave and family benefits are not just about economics and productivity: they are also about ensuring children get a good start in life. The broad reach of this policy is set out by the diverse range of women’s groups who have signed the call to protect paid parental leave. 
<h2>What the experts say</h2>
Health experts are unanimous about the benefits of parental bonding in the first weeks of life. The International Labour Organisation recommends mothers be entitled to at least 18 weeks of leave, on the equivalent of their normal rate of pay.
The World Health Organisation further recommends that infants should be breastfed for the first six months of life, with supplementary breastfeeding until at least the age of two. These recommendations were critical in the design of the 2010 paid parental leave policy, with the Productivity Commission noting that:
"a leave period of 18 weeks of postnatal leave (as proposed in the draft report), combined with adequate payment levels appropriately balances the above considerations. Such a duration would provide the overwhelming majority of parents, more than 90 percent according to preliminary estimates, the option of taking at least 26 weeks of leave without undue financial stress."
The current proposals will meet the 18 week benchmark, but payments are limited to the basic wage. This is about half of average weekly earnings for women. If paid parental leave cannot be combined with other leave entitlements, the amount the parent receives will be inadequate to give many parents the option of taking the recommended 26 weeks of leave to bond with and care for the newborn baby.
WGEA data shows that in 2015, less than half of employers (48.2 percent) provided paid parental leave. Of those, 80.9 percent offered full pay and 8.6 percent topped up the government scheme to full pay. The average period of paid leave was 10.2 weeks. 
The most highly feminised industries of health, childcare and primary education are more likely to provide leave on full pay, but the duration of the leave remains around the average. This is a long way from the 26 weeks that the WHO and the Productivity Commission recommended as being in the best interests of the child. 
Under the current arrangements, a new parent who is entitled to claim 10 weeks on full pay from their employer would be entitled to dad and partner pay of two weeks and 16 weeks of Parental Leave Pay. This would enable the family to get to 26 weeks, although they would need to budget carefully to get through this period.
Under the proposed changes, the family would be restricted to eight weeks of parental leave pay following the employer-funded leave. This leaves the family with the choice of either returning to work or remaining on unpaid parental leave for the balance of the recommended 26 weeks. 
When deciding whether to return to work, other practical issues must be considered. 
If adequate breastfeeding facilities are available in the workplace, 18 weeks would meet the ILO standards, but the WGEA data also shows that less than half of employers (45.7 percent) provide private breastfeeding facilities. If this can be addressed, the family will then need to find a place in a childcare centre for a child under six months old. The cost of childcare takes a further chunk out of the family earnings.
Paid parental leave policies need to consider a range of objectives. The economic objectives include encouraging women to remain active participants in the workforce. But the overriding objective is to improve the well-being of families, including the health, social and cognitive development of the child.
Helen Hodgson is associate professor, Curtin Law School and Curtin Business School, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/helen-hodgson-94553" target="_blank">here</a>.
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Paid parental leave plan ignores economics of well-functioning families

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GUEST OBSERVER
Minister Dominic Perrottet’s proposal to replace the transaction tax of stamp duty with a broad based land tax will help housing affordability. 
The Urban Taskforce has previously advocated for the replacement of stamp duty with a land tax and it is good to see the NSW Finance Minister raising the potential for this to occur.
Adding around $40,000 to the cost of buying a home discourages sales and increases the cost of housing.
Clearly state governments have come to rely on stamp duty income with NSW expecting $8.7 billion this year. The stamp duty will provide more funds in boom times and this will diminish as the market slows down. A land tax however will give consistent income that grows with the value of land.
Land tax, especially if it is distributed across all land, is a good way for governments to capture value from the uplift in land value through the impact of new infrastructure like a metro rail line.
Stamp duty is also contributing to an even bigger issue by discouraging owners of large homes to downsize to a smaller home. NSW Planning Minister, Rob Stokes, has raised the issue of the large number of unused bedrooms in large houses occupied by one or two older people. The removal of stamp duty would be an incentive for these people to downsize leaving the larger home for a family.
Housing Affordability is clearly a big issue across Sydney and the Urban Taskforce has recently proposed an approach that could yield 4,000 new affordable rental homes a year by modifying the NSW Affordable Rental Housing SEPP. We also support a speeding up of the planning system to boost supply and the removal of stamp duty. These three measures, using the Affordable Rental Housing SEPP, speeding up the planning system and replacing stamp duty would go a long way to helping with housing affordability in Sydney.
Recent demographic data from the NSW Department of Planning has shown that the population is increasing faster than expected. This means Sydney must average 37,000 new homes a year but in the current boom times this should be around 40,000 homes. Last financial year only 30,000 homes were built which is 10,000 below what is needed. The Urban Taskforce proposal to allow housing projects to add 20 percent more area for affordable homes would also boost supply in Sydney by around 4,000 a year.
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The Urban Taskforce is keen to work with all levels of government to find ways to help with housing affordability. As the major providers of new housing stock it is the developers who must be incentivised to provide the thousands of affordable homes Sydney desperately needs.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au" target="_blank">here</a>.
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Replacing stamp duty with land tax will help housing affordability

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GUEST OBSERVER
Australian consumer price data for Q3 2016 indicates that while inflation remains below the Reserve Bank of Australia’s (RBA) target band, there are signs of stronger price growth, indicating we may be near the inflation low for this cycle. This provides mixed signals for Australian commercial property.  For the retail sector, the data indicate both tradeable and non-tradeable goods inflation appears to have stabilised, suggesting improved pricing may support retail sales growth. However, this is likely to be limited by soft wages growth and ongoing competition in the supermarket and apparel sectors. Stronger inflation may also put upward pressure on bond yields, limiting demand for Australian commercial real estate and A-REITs. However, thecommercial real estate bond yield spread remains very large andAustralian commercial real estate continues to look attractive compared to many overseas markets, suggesting investment demand should remain solid.
<a href="/images/2016/10/27/unnamed.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/unnamed.jpg" alt="">
 
What happened?
Consumer price data for Q3 2016 was released today by the Australian Bureau of Statistics (ABS). Theheadline inflation data show annual growth of 1.3%, up from 1.0% in June and price growth over the quarter rose to 0.7% from 0.4% in June. The growth was stronger than expected with the consensus estimates at 0.5% quarter on quarter (QoQ) and 1.1% year on year (YoY)
The headline figure includes some items with volatile pricing, so the RBA tends to keep a closer eye on measures of ‘core’ inflation such as the Trimmed Mean and Weighted Median. These rose by an average of 1.5% over the year. At 1.5%, the figure remains below the RBA’s target range of 2%-3%, the low price pressure being a factor in the RBA’s decision to cut the cash rate to 1.5% in August. The market, as indicated by ASX 30 Day Interbank Cash Rate Futures, was yesterday pricing in the chance of another rate cut at next Tuesday’s RBA meeting at just 16%. The low core inflation data may increase the odds of another rate cut, however, emerging signs of price growth in some areas may temper this.
Unlike previous quarters in 2016, price growth across the various categories was generally positive (Figure 1). 
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.28.08%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.28.08%20AM.png" alt="">
While most price growth continues to appear in non-discretionary categories such as health andeducation there was also growth in a number of ‘retail’ categories including appliances, furnishings andapparel. The strongest price growth was in the alcohol and tobacco category and was largely due to tobacco tax increases. Food price growth picked up on a surge in fruit and vegetable prices, up 11.6% QoQ. Falling utility prices had been dampening overall CPI increases, however in Q3 utility costs had their strongest increase since the end of carbon pricing with electricity costs rising 5.4% QoQ (Figure 2).
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.29.17%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.29.17%20AM.png" alt="">
Tradeable and non-tradeable goods price growth appears to have stabilised after several quarters of slowing growth (Figure 3).
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<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.30.11%20AM.png" alt="">
Tradeable goods price growth was 0.7% over the year. Still low, though it had averaged zero growth over the previous six quarters. Tradeable goods inflation is usually correlated with changes in the Australian dollar (AUD), however, this relationship has broken down recently (Figure 4). 
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The break appears correlated to the relatively soft petrol prices, which now appear to be stabilising (Figure 5). 
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.32.49%20AM.png" target="_blank"> Click to enlarge</a>
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Weak apparel price growth also contributed to low tradeable goods inflation. While apparel price pressure is still soft, the 1.2% YoY growth recorded this quarter is the strongest since March 2012. The soft growth is likely due to increased price competition from new international retailers such as H&amp;M, UNIQLO and Zara as well as increased use of mobile technology for price comparison.
What does it mean?
Retail
Areas of increased competition such as apparel and supermarkets have contributed to weaker retail price growth though there are signs prices are stabilising. Sectors with stronger price growth, such as household goods, are continuing to benefit from the strong east coast housing market and small business tax deductions. This suggests the downward pressure on moving annual turnover growth will begin to dissipate and sales growth improve (Figure 6).  
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.33.45%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.33.45%20AM.png" alt="">
That said, the upside is likely to be limited by factors such as weak income growth. Employment data, released last week, show a spike in part-time employment.  This is part of a continuing trend associated with the end of the mining boom and is correlated with relatively weak wages growth (Figure 7).
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.34.42%20AM.png" target="_blank">Click to enlarge</a>
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Investment demand
A low inflation, soft economic growth environment has resulted in very low interest rates across the globe. This led to a global hunt for yield and relatively strong demand for Australian commercial property. Therelatively wide property income – bond yield spread has supported the demand for Australian commercialproperty. Whilst today’s data suggest we may be near the low point for inflation in this cycle and put upward pressure on bond yields, they would need to increase significantly before Australian commercial real estate begins to look relatively expensive (Figure 8).
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.35.42%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.35.42%20AM.png" alt="">
In addition, Australian commercial real estate appears relatively attractive compared to many overseas markets, which should also support ongoing demand from international investors. 
A-REIT performance has been linked to changes in bond yields. Figure 9 indicates the increase in theS&amp;P/ASX 200 A-REIT index has been correlated with the fall in bond yields since 2011. If bond yields continue to increase from their recent lows, this is likely to limit A-REIT stock price growth.
<a href="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.36.43%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/27/Screen%20Shot%202016-10-27%20at%208.36.43%20AM.png" alt="">
John Sears is national director, research, Cushman and Wakefield and can be contacted <a href="https://www.cushmanwakefield.com.au/en-gb/" target="_blank">here</a>.
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CPI and the impact on commercial property: John Sears

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GUEST OBSERVER
September quarter inflation was slightly higher than expected at 0.7 percent quarter on quarter or 1.3 percent year on year (up from 1 percent yoy).
However, this was driven by sharp price rises for only a handful of items with fruit and vegetables up 11.6 percent/qoq, electricity prices up 5.4 percent/qoq, tobacco prices up 2.3 percent/qoq and property rates and charges up 4 percent/qoq.
Underlying inflation was actually lower than expected at 0.3 percent/qoq or 1.5 percent/yoy. Deflationary pressures remain significant across a range of areas with clothing prices up only 1.2 percent/yoy, rents up just 0.7 percent/yoy, household appliances up only 1.3 percent/yoy, motor vehicle prices down 1.6 percent/yoy and ongoing weakness in prices for recreation and culture (up 0.6 percent/yoy). 
Both tradeable and non-tradable inflation remain weak at 0.7 percent/yoy and 1.7 percent/yoy respectively.
<a href="/images/2016/10/27/image004.png" target="_blank">Click to enlarge </a>
<img src="/images/2016/10/27/image004.png" alt="">
Source: ABS, AMP Capital
 
Implications for the RBA 
While it’s a close call, the September quarter inflation result was probably not low enough overall to trigger another rate cut from the RBA at next week’s Board meeting. Both headline and underlying inflation are in line with the RBA’s inflation forecasts and the rise in headline inflation may reduce the short term downside threat to inflation expectations and at the same time economic growth in Australia looks reasonable with the worst of the mining investment slump behind us and a rise in commodity prices set to boost growth in national income. As such, the RBA can afford to be patient in waiting for inflation to head back to target and thereby avoid the risk of adding to financial instability (read a further acceleration in Sydney and Melbourne home price gains) with another rate cut for now.
However, inflation is still very low, it’s not clear that it has bottomed yet and the $A remains uncomfortably high so it’s premature to close the door on another rate cut.
Overall, we think that the RBA will leave rates on hold when it meets again next week, but that another cut (more likely next year) cannot be ruled out.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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Another low reading on Australian inflation, but probably not enough to push the RBA to cut again next week

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GUEST OBSERVER
The Q3 CPI printed 0.7 percent compared to Westpac’s forecast for 0.9 percent. The market median was 0.5 percent. The annual rate is now 1.3 percent/yr compared to 1.0 percent/yr in Q2 and 1.3 percent/yr in Q1. The June quarter was the lowest rate of annual inflation since June 1999.
The core measures, which are seasonally adjusted and exclude extreme moves, rose 0.3 percent compared to the market’s expectation of 0.4 percent rise. Westpac’s forecast was also 0.4 percent. In the quarter, the trimmed mean gained 0.35 percent while the weighted median lifted 0.28 percent. The annual pace of the average of the core inflation measures is now 1.5 percent/yr from 1.6 percent/yr in Q2 (originally reported as 1.5 percent/yr) and Q1 (Q1 has been revised from an original estimate of 1.4 percent/yr).
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The six month annualised pace of core inflation came in 1.7 percent/yr pace, a lift from 1.5 percent/yr in Q2 and the fifth quarter in a row it has been below the bottom of the target band; lowest six month annualised pace since the 1.3 percent/y print in March (a seventeen year low).
Our top of the market forecast was based on large contribution from fresh fruit &amp; vegetables boosting a solid contribution from electricity bills. Fresh &amp; fruit &amp; vegetables rose as expected (11.6 percent) but total food was slightly softer at 1.7 percent (our forecast was 2.1 percent) due to softer prices elsewhere in this grouping. We suspect the ongoing competition from new entrants is keeping disinflationary pressure in this sector.
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The lift in electricity bills was there but it was about half of what we had expected with utilities lifting 2.5 percent vs our expectation for 5.7 percent. Rents rose 0.3 percent (0.2 percent expected) while dwelling purchases lifted 0.4 v (as expected). All up housing rose 1.0 percent vs our expectation for 1.4 v (a 0.23ppt contribution vs 0.31ppt forecast).
Two areas of upside surprise were clothing and footwear (0.3 percent vs –0.1 percent expected) and household contents &amp; services (1.1 percent vs 0.8 percent expected). While this is only a modest upside surprise it does suggest we are finally seeing some pass–through from the earlier devaluation of the AUD and higher raw input costs.
The modest gain for housing has been key to holding down core inflation. The large rise in electricity bills is trimmed out of the core measures while the subdued gains for dwellings and rents remain in. In the quarter dwelling price gains eased back in Sydney (0.5 percent from 1.5 percent in Q2 and 0.5 percent in Q1) as did Brisbane (0.4 percent from 0.9 percent in Q2 and 0.4 percent in Q1) while Melbourne has picked up the pace (0.8 percent from 0.9 percent in Q2 and 0.5 percent in Q1). Dwelling prices continue to decline in Perth falling 0.4 percent (from –0.1 percent in Q2 and –2.2 percent in Q1).
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<img src="/images/2016/10/26/Screen%20Shot%202016-10-26%20at%201.40.06%20PM.png" alt="">
Non-traded prices rose 0.5 percent in Q3 from 0.4 percent in Q2 which has seen a modest lift in the annual pace to 1.7 percent/yr from 1.6 percent/yr. Given the lift in power bills that boosted this quarter result, and remembering that the September quarter get the usual seasonal boost from the annual repricing of administrated prices, then this is a subdued print.
Traded goods prices rose 1.0 percent/qrt following a 0.6 percent/qtr gain in Q2 and a very weak –1.4 percent in Q1. The September quarter saw something of a reversal for the auto fuel prices (–2.9 percent/qtr vs. +5.9 percent/qtr Q2 and –10% in Q1) while fresh fruit &amp; vegetables build on the modest Q2 gains (11.6 percent compared to 1.7 percent Q2 and –4.3 percent in Q1). However, excluding fuel, food and tobacco traded goods lifted 0.6 percent which is a modest gain from run of softer numbers (–0.3 percent in Q2 and 0.1 percent in Q1). This left this ‘core’ measure of traded goods prices at a very modest 0.9 percent/yr.
So the September quarter was a mixed update with some softness continuing in the non-traded sector but signs of AUD (and rising input costs) inflationary pass-through to clothing &amp; footwear as well as household contents &amp; services. But offsetting this is the clear ongoing competition in the groceries space which is holding down food prices overall. So while we may argue we have seen the low point for core inflation, any acceleration from here is going to be a very mild one. 
Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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Modest gain for housing key to holding down core inflation: Westpac's Justin Smirk

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GUEST OBSERVER
Low inflation: The Consumer Price Index – the main measure of inflation in Australia – rose by 0.7 percent in the September quarter, above expectations for a lift of 0.4-0.5 percent. In seasonally adjusted terms the CPI rose by 0.4 percent. The annual rate of inflation rose from a 17-year low of 1.0 percent to 1.3 percent (seasonally adjusted 1.4 percent).
Underlying measures: The Reserve Bank monitors three measures to derive the underlying inflation rate. The trimmed mean rose by 0.4 percent in the September quarter (1.7 percent annual); the weighted median rose by 0.3 percent (1.3 percent annual) and the CPI less volatile items rose by 0.5 percent (1.7 percent annual). Overall, underlying inflation rose by 0.4 percent in the quarter and by 1.6 percent over the year.
Main changes: Fruit prices rose by 19.5 percent in the quarter with electricity up by 5.4 percent, tobacco up by 2.3 percent, vegetables up 5.9 percent and property rates and charges up 4.0 percent. The CPI was dragged lower by a 2.9 percent fall in petrol prices and a 2.5 percent fall in telecom equipment and services.
What does it all mean?
Inflation has lifted from the canvas, albeit with a lot of help from higher prices for fruit and vegetables. Still, the higher headline rate of inflation will serve to lift key measures of inflation expectations and thus make it more likely that inflation will return to the 2-3 per cent target band in coming quarters.
Underlying inflation remains low: up 0.4 percent in the quarter to be up 1.6 percent for the year. But if recent floods cause more food inflation, this will drive headline inflation, and in turn, lift underlying price measures.
It is clear that inflation is still historically low. So, the Reserve Bank can still cut rates if it wants to take out some insurance on a stronger growth/stronger inflation outcome. So a rate can’t on November 1 can’t be totally ruled out. But financial markets are not betting on it – with pricing suggesting that there is a 6 per cent chance of a rate cut in November. And the Reserve Bank is indeed looking for reasons not to cut rates rather than reasons to reduce rates to new record lows.
It is clear that interest rates will stay low for an extended period. Global competition ensures that retailers can’t lift prices in the current environment. 
The Reserve Bank would also welcome the fact that coal, oil and iron ore prices are rising, the US economy remains in good shape, China is still expanding at a near 7 percent annual clip and that European growth is looking better. Inflation still faces challenges in returning to 2-3 percent, but prospects of getting back to the band are looking better.
<a href="/images/2016/10/26/Screen%20Shot%202016-10-26%20at%2012.30.11%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/26/Screen%20Shot%202016-10-26%20at%2012.30.11%20PM.png" alt="">
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Inflation edges its way higher from a 17-year low: CommSec's Craig James

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Elizabeth Brunton, who described herself as one of McGrath’s high performers with loyal dedication to the company for close to 20 years, has departed the estate agency.
She held the position of associate director projects.
There was no confirmation from the agency on the departure, although her profile no longer appears on the McGrath website.
<a href="https://webcache.googleusercontent.com/search?q=cache:hiSYlOIKQ28J:https://www.mcgrath.com.au/agent/1045-elizabeth-brunton+&amp;cd=1&amp;hl=en&amp;ct=clnk&amp;gl=au" target="_blank">The elite project marketer</a>, who declined to respond to approaches to comment on her intentions, had claims of notching up $2.5 billion of transactions.
Her success spanned the eastern seaboard of Australia with experience in the international markets of Asia and China. 
She was recruited to McGrath in 1995 from Ben Boyd Real Estate where she was a property manager.
Her departure was entirely predictable following the resignation of Stephen Chen, the head of projects.
Chen quit around the time that director of sales Matt Lahood departed after more than two decades at the agency. 
The departures of veteran agents appears at this stage to be mostly quarantined to a few of the eastern suburbs office although Derek Farmer, who had sold some 170 properties on the lower North Shore with his speciality Cammeray, has disappeared from the website recently.
A rumoured agency to be established by Lahood and Chen has yet to emerge. 
Nor has the rumoured "mass departure" which The Australian business gossip column, Margin Call has suggested would see 30 agents leave. The denied rumour was followed today by a slight dip in the share price in opening trade to hover around 99 cents, at three month lows.
Recently the Mark Redhill experiment at McGrath ended with the estate agent moving to another eastern suburbs estate agency.
Mark had been working in real estate for 23 years best known for his tenure at the Wentworth Courier before embarking on agency sales.
Mark worked with wife, Lorraine Crawford who "together leveraged their expertise in marketing and sales to offer a multidisciplinary approach."
Crawford remains at the agency.
The latest hiring at the agency is Walter Burfitt-Williams who is described as professional, reliable and highly experienced, an award winning sales agent. He was at BresicWhitney previously.
The group recently announced the opening of its new office in the bayside Melbourne suburb of Sandringham.
McGrath Sandringham is the sixth franchise office the company has opened since first launching in Melbourne in December last year.
The new office will be led by principals Mark Zammit and Fran Harkin with sales agents at the new office including David Picking, Simone Cumberlidge, Andrew Solomon and Melina Scriva.
Fran Harkin was at hockingstuart, as was Zammit who had a consultancy over the past year. 
It takes the number of McGrath offices to 93 on the East Coast.
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Elizabeth Brunton exits McGrath Estate Agents

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SPONSORED POST
Signing your business up for a property lease is a lot different than renting a home to live in.
Here’s nine things you should keep in mind when taking out a commercial lease.
1. Is the rent appropriate?
Exactly what space are you renting? Does it include common areas such as hallways, rest rooms, and elevators? How does the landlord measure the space –some measurement practices include the thickness of the walls. Also keep in mind that commercial lease agreements usually provide for an annual percentage-based rent increase.
2. Set cost parameters from the start
Negotiate with the landlord for a cap on the percentage increase to avoid unmanageable costs later on with the rent going up when you least need it. Check to see if there is a use clause. Many lease agreements will incorporate a use clause to define the activity the tenant can engage in on the premises.
3. Who’s responsible for what?
Who will maintain and repair the premises, including the heating and air conditioning systems? Responsibilities for the building and any equipment are often shared between landlord and tenant. The agreement should spell this out clearly.
4. Set your own timeframe
Most landlords prefer long-term lease agreements. If it’s a new business, it might pay to ask the landlord for a short-term lease with an option to renew. This may raise the rent you pay, but it could be a better alternative than agreeing to a lengthy term.
5. Can you make changes to the property?
A lease should address what improvements or modifications can be made to the property, which party will pay for the improvements, and whether the tenant is responsible for returning the unit to its original condition at the end of the tenancy. It should also spell out who will own the improvements when the lease expires.
6. Remember the little things
If the business needs it, make sure that the lease agreement does not prohibit putting up signs that are visible from the street. Agree on who is responsible for rates, taxes, insurance and other outgoings; for example, contents insurance or council and water rates. It’s also important to check if the lease agreement allows subletting. This is important because the lessee is still responsible for paying the rent if the business fails or relocates. An assignment or sublet clause in place allows the business to find someone else to cover the rent.
7. Know your rights
Does the lease have a Right of Assignment clause? If you have to sell the business, a Right of Assignment clause gives you the option of transferring the lease to a new tenant. Is there an option to renew the lease or expand the space you are renting? How would the lease be terminated? Is there a notice requirement? Are there penalties for early termination?
8. Seek financial advice
Before you sign, you should check the deductibility of rent and your tax liabilities with your financial adviser. If the agreement requires the business to purchase leased goods or equipment, it could invalidate your right to claim rent as a tax deduction. A financial adviser is essential here.
Check rent deductibility and tax liabilities with a financial adviser before you sign a lease.
9. Are there additional clauses?
If you are leasing premises in a shopping centre, it’s worth asking whether you have to comply with the centre’s fit out rules (shopping centres can often be more restrictive), whether you are required to contribute financially to the centre’s marketing and promotional activities and whether your business would be affected by any ownership plans to redevelop or expand the centre.
So there you have it: A solid checklist to get started.
For more information, <a href="https://bs.serving-sys.com/BurstingPipe/adServer.bs?cn=tf&amp;c=20&amp;mc=click&amp;pli=18755997&amp;PluID=0&amp;ord=%5Btimestamp%5D" target="_blank">click here</a>.
ABOUT REALCOMMERCIAL.COM.AU: realcommercial.com.au is the leading website in Australia for commercial property, attracting an average of 1.7 million visitors a month (Source: Nielsen Online Market Intelligence, Total Traffic, average calculation May-July 2015, includes app traffic from Omniture Site Catalyst as Nielsen doesn’t report on app). It is owned and operated by realestate.com.au Pty Ltd, a subsidiary of ASX-listed REA Group Limited ACN 068 349 066 (ASX:REA).
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9 things to remember when taking out a commercial lease 

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A Tamarama Marine Drive, Tamarama building block has been listed by Marco Rossi, chairman and founder of the construction company Built.
There have been <a href="https://www.realestate.com.au/property-house-nsw-tamarama-123910178" target="_blank">$15 million reported expectations</a>.
Rossi bought the property back in 2007 for $11 million through the Blacket Agency, setting a record for the suburb at the time.
He demolished the existing building and excavated at a cost of around $1 million.
Rossi has since moved to Bellevue Hill's Yoorami with his partner, Stephanie Stokes, as they wanted the family to be closer to schools.
Plans for the five bedroom home include an eight-car garage and a lift from the street frontage.
The plans are estimated to cost another $7 million.
They were designed by internationally renowned <a href="https://wallacecunningham.com/" target="_blank">architect Wallace E. Cunningham</a>.
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Tamarama's trophy home site with plans listed by Built's Marco Rossi

<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.

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.

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.

Resilience Insurance CEO Corey Nugent has noted that the product addresses something fundamental to the new apartment market.

"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.

"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."

[smartcode_project:default project_id=150499 project_image_fid=370898]

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.

Garden apartments connect directly to private landscaped courtyards, while upper-level homes capture beach views to the east from level four and above.&nbsp;

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.

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.

"It's a place to choose your pace and live gracefully, seaside'," Sander says.

[smartcode_project:default project_id=150499 project_image_fid=370900]

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;

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.

"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;

"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."

[smartcode_project:default project_id=150499 project_image_fid=370897]

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;

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.

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;

"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;

Coco Republic has provided bespoke furniture packages tailored to the project's coastal palette.

[smartcode_project:default project_id=150499 project_image_fid=370899]

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.

Sales at Solis are launching soon through Ray White Projects, with an official event scheduled for 11 June. Enquire for more information.

[smartcode_project_cta:default project_id=150499]

Joel Robinson

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

Investors may soon find themselves with fewer reasons to buy established property and more incentives to look towards the new apartment market.

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.

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.

The challenge for investors is that suitable product is becoming harder to find.

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.

Today, the development pipeline looks very different.

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.

That shift has created a shortage of investor-friendly stock, particularly in well-located projects close to transport, employment hubs and lifestyle amenity.

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.

We've rounded up four new apartment developments where investors can still secure a foothold in the market for around $1 million or less.

<h2 data-end="1140" data-start="844">Flourish Soleira</h2>

<h2>Priced from: $1.07 million</h2>

Popular Palm Beach developer Sherpa is soon to officially launch its newest local apartment development, Flourish Soleira.

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.

&nbsp;

[smartcode_project:default project_id=150017 project_image_fid=370964]

Flourish Soliera will comprise 153 apartments across two buildings, connected by a skybridge, the first ever delivered in the suburb.

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.

<h2>Corallo, Palm Beach</h2>

Priced from: $841,500

Nearby Flourish Soleira is Changfa Group's beachfront-inspired Corallo development. They still have some one-bedroom apartments remaining, priced from $841,500.

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.

[smartcode_project:default project_id=112194 project_image_fid=808]

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.

<h2>Corner House, Stones Corner</h2>

<h2>Priced from: $880,000</h2>

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.

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.

[smartcode_project:default project_id=149098 project_image_fid=330594]

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.

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.

Parkdrive Apartments, Chermside

Priced from: $749,000

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.

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.

[smartcode_project:default project_id=152125 project_image_fid=363782]

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.

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.

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

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

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

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

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

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

Jonathan Chancellor

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