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GUEST OBSERVER
The title of this conference is long. Ten words: ‘Financial Cycles, Systemic Risk, Interconnectedness, and Policy Options for Resilience’.
It is also challenging. I say this because just below the surface of these 10 words lies a host of complex and difficult issues. The proper functioning of our modern economies depends on us understanding and addressing these issues as best we can.
If we get things wrong here, the outcomes can be really bad: our economies will be more volatile, job security will be less and people's hard-earned savings will be at greater risk. The global financial crisis was a powerful reminder of this. So the issues that we will discuss at this conference really matter.
It is appropriate that the discussion is taking place at an international conference, which features distinguished speakers from the region and elsewhere. After all, financial stability is a global issue: instability in one country can ripple right around the world. And many of the reforms to address instability are best accomplished internationally. We can also learn a lot from one another's experiences.
In my remarks this morning I would like to highlight three specific questions that are suggested to me by the conference title and papers. These questions are:
How can we make our financial systems more resilient, particularly in a world in which capital flows easily across borders?
How should we characterise and respond to episodes of financial boom and bust – the financial cycle?
What determines the amount of systemic risk we are exposed to, and how can we identify and analyse it?
The positive news is that in each of these three areas much has been learnt since the crisis. The not-so-positive news is that our answers to these questions are still incomplete and, just as one issue is resolved, too often another seems to emerge. I would like to reflect on each of these three questions, highlighting the progress that has been made and offering a few thoughts on some of the work that remains.
Resilience
First, to the issue of resilience.
Looking back at the experience of the past 20 years, I am struck by the fact that large financial disturbances are repeatedly caused by the same factors. Three stand out:
<ol>
<li>poor asset quality, particularly in the area of commercial property development</li>
<li>inadequate attention to liquidity management</li>
<li>the build-up of unhedged foreign currency exposures.</li>
</ol>
Not surprisingly then, it is these areas that have received the most attention from the international regulatory community. Over recent years, the most extensive of the global reforms has been the Basel III package.
This package means that, globally, banks now have more and better-quality capital, so they are better placed to absorb losses. In addition, minimum standards for banks' liquidity management are now more rigorous and transparent.
The stronger liquidity standards also help reduce vulnerabilities from foreign currency exposures, by giving supervisors new ways of monitoring liquidity requirements on a per-currency basis. Other reforms have helped increase resilience in other parts of the financial system, including derivative markets and shadow banking.
But the reforms remain incomplete and challenges remain. The last chapter of the Basel III package is being finalised this year. While some of the reforms have helped address the too-big-to-fail problem, there are still considerable challenges in developing recovery and resolution plans for the largest global financial institutions. And, in the area of over-the-counter (OTC) derivatives market reform, legal restrictions sometimes still make it difficult to share information across borders.
The Basel Committee and the Financial Stability Board are both reviewing the overall calibration of the reforms. This is essential because with so many new metrics and requirements, we need to ensure they do not interact in unintended ways. Of course, some of the effects that market participants comment on are intended. Maturity transformation has become more expensive.
So too, has providing market making services in some financial instruments, generating concerns about a lack of liquidity in bond markets. More broadly, the cost of many forms of financial intermediation across banks' balance sheets has become more expensive. The promised benefit of this additional expense is that the system is now more stable. But we need to keep an eye on this trade-off, because a well-functioning system needs to be able to take risk at a reasonable price.
A well-functioning system also needs to be resilient to the shifting flows of capital across borders. Collectively, global investors can deploy funds on a much larger scale than many markets can absorb without large price movements. In some countries this has led to discomfort with the free flow of capital. But at the same time, access to foreign capital can help drive prosperity and economic development, and allows people to hold more diversified portfolios.
The challenge we face then is to design arrangements that allow us to all capture the considerable benefits that open capital markets can deliver, while minimising the attendant risks. The work on the global financial safety net being undertaken in international policy circles is an important contribution here. One of the questions still to be resolved is how extensive that safety net should be and what form it should take.
The Financial Cycle
An important theme of this conference is that of ‘financial cycles’. Identifying and understanding these cycles has become an active area both for academic research and policy development.
As a concept, the financial cycle has considerable intuitive appeal. It has long been observed that financial systems seem to be subject to boom–bust dynamics. We have repeatedly seen credit and leverage build up over time in response to some initial impetus, only to generate excesses that ultimately unwind, sometimes painfully.
One question we face is how to define and measure these cycles. It has become common practice to start by looking at cycles in credit growth. But there are limitations here. Not all credit cycles end in a financial crisis; indeed in industrialised economies, only a minority have done so. And in some cases a period of fast credit growth, followed by a period of slower growth, might be exactly what is required, and so should not be viewed as problematic.
This means that we need to move beyond a focus on credit only. In my view, it is probably more useful to start with the question: are balance sheets in the economy being strengthened or weakened? If credit is growing quickly, we need to think about whether the credit is being used to create new productive assets or simply to finance current consumption. The implications are quite different. A protracted period of balance sheet weakening might reasonably be viewed as problematic, particularly if it increases the probability of future balance sheet strains and weak economic growth.
So a research challenge here is to find ways of systematically measuring the quality of balance sheets across the economy, taking into account the myriad influences that are at work. Close analysis and good judgement are both needed to do this.
A related research question is how policy should respond to a systematic weakening of balance sheets. This question is the subject of a lot of research at present, much of it prompted by work at the Bank for International Settlements (BIS). The work at the BIS, though it has focused heavily on aggregate credit as the indicator, has advanced the hypothesis that, in some circumstances, the build-up of financial imbalances may be a better guide to the sustainability of growth in the economy than is the current rate of inflation.
Clearly, this hypothesis needs to be tested. If it were found to be valid, it would have implications for policymakers in a number of spheres, including monetary policy, prudential policy and even fiscal policy.
Systemic risk: interconnections and spillovers
Systemic risk is another theme of the conference, and again, a topic inspiring a great deal of academic research, some of which is being presented at this conference. Systemic risk cannot be seen, nor can it be easily measured. So we need to explore a range of indicators. Academic research is helping ensure that we are looking at the right ones.
The aspect of systemic risk that I would like to highlight is the interconnections between banks, firms and countries that lie at the heart of the contagion that can turn a small disruption into something much bigger. In the global financial crisis, when one entity became distressed their counterparties incurred mark-to-market losses on the value of securities issued by that entity. Investors also often started refusing to deal with those counterparties that had – or merely were thought to have – significant exposures to that entity.
So, contagion could and did occur because of both direct and supposed interconnections. It can occur even as a reputational effect when two entities or economies are perceived to be similar: once investors have reassessed the risks in one institution or country, they often start to probe similar vulnerabilities elsewhere. We cannot escape the conclusion that greater interconnection is a prominent marker of increased systemic risk.
The global policy response to the financial crisis has recognised the importance of interconnections and built that into the design of regulatory reforms. Some of the design details are quite technical, but their essence is to create incentives against excessive interconnected exposures between banks, or between banks and other parts of the financial system such as so-called ‘shadow banking’.
Contagion is most likely to occur when information is not equally available to all parties. Opacity and a lack of information about exposures were endemic to OTC derivative markets during the crisis, making these markets an important locus of contagion. Following the post-crisis reforms, derivative markets have functioned more effectively. Regulatory mandates and supervisory incentives are resulting in a larger share of derivatives transactions being cleared through central counterparties and more are being collateralised and are therefore safer.
Policymakers also have more visibility about financial market infrastructures now that they play a more central role in financial markets. There are, though, some information-sharing issues in this area that still need to be worked out.
One other outstanding issue is how the multiplicity of indicators of systemic risk can inform policymaking, and how one might use the signal provided by an indicator to develop a particular policy response. This is no easy task. The insights of research such as the work presented at this conference will certainly be welcome.
Conclusion: the role of supervision
In all three areas I have spoken about – namely, resilience, the financial cycle and systemic risk – it is easy to focus mainly on the regulatory initiatives. Regulation can be printed, measured and enforced. But history teaches that regulation cannot solve all problems. The financial system evolves, so no set of rules can deal with all risks and problems.
This is an important reason why there needs to be a parallel focus on strong and effective supervision. My view is that a strengthening of supervision is at least as important as are the post-crisis regulatory reforms. Rigorous, inquiring supervision that takes a holistic view of the environment is essential to maintaining financial stability and good outcomes for consumers. I encourage you to consider how the research agenda can be expanded to consider how to best balance regulation and supervision.
Philip Lowe is deputy governor, RBA and was addressing the <a href="https://www.rba.gov.au/speeches/2016/sp-dg-2016-09-08" target="_blank">Institute of Global Finance International Conference</a>. 
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jchancellor-FAypfDUnLy

History teaches that regulation cannot solve all problems: RBA's Philip Lowe

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Apartment prices in capital cities could fall between 15 to 20 percent over the next two years, AMP Capital's chief economist Shane Oliver has forecast.
Dr Oliver says "there was a massive multi-dwelling building boom going on in Brisbane, Sydney, Melbourne and Perth". 
"There's a real risk of oversupply," he told Money News.
"I wouldn't be surprised to see outright price falls in apartments in Sydney, Melbourne, Brisbane and Perth," he said in his earlier note to clients. 
"So people are better off waiting until the dust settles to see if there are any opportunities to buy apartments with a lower price tag." 
"Obviously if you are buying in an area where there are lots of cranes around, the price falls are going to be greater," he said. 
A "heat map" of cranes would show the concentration of cranes were highest in the Melbourne CBD whereas Sydney's apartment construction was more spread out, he added. 
Dr Oliver said a slump in the Australian housing market would be driven by a glut of supply rather than investors defaulting, unlike the subprime crisis in the US in 2007.
"I don't think one should get too alarmed here because you've first got to put this in context," he said. 
"We've just had a massive run up in home prices across Sydney and Melbourne across the last four years, and that includes apartment prices."
"Just bear in mind that comes on the back of 30 to 40 percent gains over the last four years, so we really need to put this in context."
He said that investors or home buyers looking to buy a home should be cautious.
"Just allow that there is a lot of supply coming on, that's already putting downwards pressure on rents."
Shane suggested that he thinks supply in Australia over the next couple of years will put a major downwards pressure on prices in certain areas.
"At some point I think is that supply continues to mount and don't forget we saw another spike up in approvals to build new apartments just a month or so ago that's still continuing.
"If you are in the market for a home, try and go for those areas where there is stronger demand relative to the supply that's coming on."
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Apartment prices to tumble by up to 20 percent: AMP Capital's Shane Oliver

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<img src="https://counter.theconversation.edu.au/content/64213/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The European Commission’s latest Quarterly report on electricity markets makes sobering reading down under.
Over the last year wholesale electricity prices have been falling just about everywhere across the developed world except here in Australia, where they are skyrocketing.
Australian prices are now above the European average, well above the US and rapidly converging with Japan, which is still recovering from the shock of Fukushima in 2011 when prices rose to over eight times Australian.
With Japan now reactivating nuclear power production, and Australian LNG exporters putting the squeeze on domestic gas markets, it can be anticipated that Australia will soon be top of the price tree. Indeed, with 2016 Q2 and Q3 Australian prices rising at unprecedented rates, it probably already is.
Combined with exorbitant power distribution costs, the alarming trends highlighted by the EC’s report will be exercising the mind of our new Federal Minister for the Environment and Energy, Josh Frydenberg.
<h2>How fast are Australian prices rising?</h2>
The trends highlighted by the EC’s report are expressed in Euros, so they somewhat obscure local dynamics. In reality, Australian wholesale prices are rising more steeply than ever before, having risen by around 45 percent over the last year. Prices over the last six months are now higher in aggregate than at any comparable time during the carbon tax period, which added around 50 percent to wholesale prices in the period 1/07/2012 - 17/07/2014. When the impact of the carbon tax on 2014 prices is removed, prices are up by more than 65 percent in just 2 years. 
Compared to the same period one year earlier, wholesale prices have risen across all seasons and all jurisdictions in the last year, excepting summer in Queensland. The rate of increase has risen steadily from the spring 2015 through to the winter 2016. For the winter period of 2016, prices were up by an average by 85% compared to the previous winter, with the increase ranging from 65 percent in Queensland to 115 percent in South Australia. 
<h2>Why are electricity prices falling everywhere but Australia?</h2>
The reasons for wholesale electricity price falls in Europe and Japan are straightforward.
Both are dependant on imported gas, and with the oil-linked price for gas falling, so too are electricity prices. In the US market, the flood of shale gas greatly exceeds export capacity, so there is a continuing glut of cheap gas [1].
The story in Australia is quite different. Despite a three fold increase in gas production in the last few years, due to the opening up of new coal seam gas (CSG) fields in Queensland, the Australian domestic market is being squeezed as LNG exporters struggle to meet supply contracts.
In the Australian CSG industry it is an open secret that some exporters agreed punitive clauses in contracts should they fail to fill their LNG trains. Despite strong opposition from former industry champions such as John Ellice-Flint, exporters such as Santos stretched themselves on production by committing to two LNG trains. Now gas is being diverted from domestic markets to avoid industry collapse. The consequence is that Australian gas consumers are increasingly subject to scarcity pricing when domestic prices can rise to many times that which international buyers have contracted for the same gas.
Not surprisingly, steep rises in the cost of gas is causing a reduction in gas use in domestic electricity markets. In Queensland gas fired power output in the winter of 2016 was down about 250 megawatts or 20% on the year before. Meanwhile black coal generation was up 450 megawatts, with Queensland’s CO2-production from the electricity sector increasing by 5%.
An insight into the impact of the rising cost of gas on our electricity market is provided in the figures below, which show how market prices varied with gas dispatch in Queensland over the winters of 2015 and 2016, respectively. In winter 2015, when gas dispatch averaged 1076 megawatts, there was no correlation between wholesale prices with the amount of gas dispatch, consistent with gas generation being a price taker. Then the average price of electricity was $39.6 per megawatt hour.
By winter 2016, when gas dispatch averaged 833 megawatts, a strong price correlation had established as gas generators increasingly set the price. Average prices had risen to $65.2 per megawatt hour with spot prices increasing almost $100 per megawatt hour for each additional gigawatt of gas dispatch. 
<h2>We really need to talk about gas</h2>
In 2015, the availability of “ramp” gas made Queensland settings somewhat analogous to the US, where cheap gas increasingly fuels electricity generation. By winter 2016 when more LNG export trains had been commissioned, scarcity pricing was manifesting in our domestic gas markets impacting our electricity market big time.
As the EC’s quarterly market report flags, the historical competitive advantage Australia has had as a cheap provider of electricity has been obliterated in a little over a year. And that is without any carbon tax. It is hurting most severely in South Australia which has always been more exposed to gas prices than other states by virtue of its limited coal reserves.
While several compounding factors have played out in extreme electricity price rises in South Australia, as discussed in my last post, the broader rises across Australia have their underpinnings in the rising domestic gas market prices as well as contractual arrangements in gas piping. The smoking gun is the resent steep rise in Queensland electricity prices - a market that remains essentially a  renewable free zone.
The damaging reality of the situation is highlighted by a recent post on the tech website Whirlpool.
“We are a business in SA [South Australia] with high usage (use up to 14MW), on spot pricing since June 1st – and are turning everything off when a spike hits – but the last 5 minute spike was at the end of the half hour pricing cycle (price is averaged in half hour periods). We just chewed through $75,000 worth of power in a half and hour! (we are used to paying $1000). This period while the interconnector is down could effectively burn about 3 years of profits in 4 working days if the forecast prices come to fruition.”
One might ask why such energy users exposed themselves to spot (wholesale) pricing (the norm is via the contract market). Whatever, the cautionary is that 14 MW represents 1% of average South Australian power consumption. Ten such business at threat of going under would be devastating, with potential to reduce South Australian electricity demand by 10%.
<h2>The horse has bolted, so what next?</h2>
The EC’s quarterly market report was already flagging in Q1 2016 that Australian electricity production was expensive by international standards. Since then, further steep price rises across the NEM in autumn and winter 2016 have further exacerbated price differentials, surely now placing Australia amongst the most expensive producers of electricity in the world.
No doubt the gas lobby will absolve the industry from any responsibility for the recent events that have transpired on our electricity markets, arguing the solution lies in even more gas production, and that renewable energy policies are more to blame.
To be sure, eastern Australia is short on supply of cheap conventional gas from the offshore Gippsland Basin and a few other locations. Expanding the gas base by exploiting unconventional resources such as CSG was always going to come at a price, since such resources are inherently more expensive.
But developing the new CSG fields at such scale was always going to risk that production would fall short of targets. As much was acknowledged by the joint Department of Industry and Bureau of Resources and Energy Economics study into Eastern Australian gas markets.
The current development of LNG in eastern Australia and the expected tripling of gas demand are creating conditions that are in stark contrast to those in the previously isolated domestic gas market. The timely development of gas resources will be important to ensure that supply is available for domestic gas users and to meet LNG export commitments. Such is the scale of the LNG projects that even small deviations from the CSG reserve development schedule could result in significant volumes of gas being sourced from traditional domestic market supplies.
The hope is that the events of 2016 are transients, related to temporary development schedule difficulties. If they are not, then god help domestic consumers, not just those exposed to electricity prices but also right across the gas sector. A broader question for our gas exporters is just how much risk from any such development schedule difficulties is appropriate to defray onto domestic consumers? As the Eastern Australian Gas Markets Study highlights, it is not as though such circumstances were not anticipated.
In prosecuting the case to deliver more of our national gas resources to market, perhaps it is not too much to ask that domestic gas consumers are offered some insurance against any further development schedule difficulties incurred by our exporters? After all, it is our gas.
Domestic reservation, anyone? - at least while transitional issues work through the system.
[1] Shale gas economics in the US is linked to co-produced liquids, and thus differs markedly from the CSG fields in Australia where there is no liquid hydorcarbon production.
Mike Sandiford is chair of Geology &amp; Redmond Barry Distinguished Professor, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/mike-sandiford-228" target="_blank">here</a>.
 
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We must talk about gas

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GUEST OBSERVER
The Australian economy has just completed 25 consecutive years of economic growth. The last recession ended in June 1991.  
Solid growth: The economy grew by 0.5 percent in the June quarter with annual growth lifting from 3.0 percent to 3.3 percent.  
Contribution to growth: The biggest contributions to growth came from public investment (+0.7 percentage points) (pp), government consumption and inventories (both +0.3pp), household spending (+0.2pp), dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (-0.8 percentage points) and net exports (-0.2pp).  
Income: Real gross national income rose by 0.6 percent in the June quarter to be up 2.5 percent on the year. In nominal terms GDP lifted 1.3 percent in the quarter and rose by 3.4 percent over the year.  
<a href="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.32.47%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.32.47%20AM.png" alt=""> 
Productivity: Gross value added per hours worked in the market sector rose by 1.5 percent in the June quarter and by 2.9 percent over the year.  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to overall growth. The Mining sector fell by 3.5 percent in the quarter and cutting 0.3pp from overall growth.  
What does it all mean?  
 There are no signs that Australia’s record economic expansion is coming to an end. Far from it – annual growth has lifted to 4-year highs. Australia has now notched up 100 quarters without a recession. Netherlands holds the record for the longest expansion at 103 quarters. Over the next year Australia should pick up the gold medal for the longest economic expansion of a developed economy in the modern era.  
It’s worth reflecting on Australia’s economic position. Economic growth is the fastest in four years and above long- term averages. Inflation stands at 1.0 percent. Interest rates stand at 1.5 percent. Unemployment stands at 5.7 percent. The mining construction boom may be over, but it has been replaced by a housing construction boom. There is much to like and celebrate about Australia’s economy.  
Could we be doing even better? There is always room for improvement. For instance, we could have even lower unemployment but still keeping inflationary pressures contained. The challenge for the authorities is to keep the expansion intact.  
The Reserve Bank could still cut rates – that is, if inflation remains low, rates could be cut to allow the economy to grow even faster. We continue to pencil in a rate cut in November. The question though is whether rates are already low enough to boost growth.  What do the figures show?  National Accounts:
Economic Growth: The Australian economy grew by 0.5 percent in the June quarter after a downwardly-revised 1.0 percent increase in the March quarter (previously up 1.1 percent). Forecasts had centred on 0.5 percent growth in the economy in the quarter. The economy still hasn’t experienced a recession for 25 years.  
The economy has grown 3.3 percent over the past year, above the decade-average growth rate of 2.8 percent and above the 15-year average of 3.0 percent. Annualised growth over the past six months has been 3.2 percent.  
The non-farm economy grew by 0.6 percent in the June quarter after a rising by 1.0 percent in the March quarter. Annual growth stands at 3.4 percent.  
Farm GDP fell by 4.3 percent in the June quarter after expanding by 3.4 percent in the March quarter. Farm GDP fell 3.3 percent over the year.  
At current prices, GDP rose by 1.3 percent in the June quarter to be up 3.4 percent on the year. The annual growth rate is still well below the decade average of 6.2 percent. Over the year to June 2016, the Australian economy was valued at $1,650 billion.  
<a href="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.34.01%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.34.01%20AM.png" alt="">
Growth drivers: The biggest contributions to growth came from public investment (+0.7 percentage points), government consumption and inventories (both +0.3pp), household spending (+0.2pp) and dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (- 0.8 percentage points) and net exports (-0.2pp).  
Inflation: In terms of domestic price pressures, the household consumption implicit price deflator rose by 0.4 percent in the June quarter after a 0.1 percent fall in the March quarter. Annual growth stands at just 0.9 percent – the lowest rate in 17 years. Real non-farm unit labour costs fell by 0.8 percent in the June quarter after a flat result in the March quarter. Real non-farm unit labour costs fell by 0.6 percent over the year.  
Productivity: Gross value added per hour worked market sector rose by 1.5 percent in the quarter and by 2.9 percent on the year. GDP per hour worked rose by 1.2 percent in the quarter and by 2.7 percent over the year. And hours worked in the market sector fell by 1.1 percent in the quarter to be up 0.1 percent on the year.  
States &amp; Territories: The only data available is state final demand (more accurate data would include net exports but it is not available for all states and territories). The ACT had the fastest annual growth rate in the June quarter (up 6.0 percent), followed by NSW (up 3.8 percent), Victoria (up 3.5 percent), Tasmania (up 1.9 percent), South Australia (up 1.7 percent) and Queensland (up 0.4 percent). The Northern Territory contracted by 10.4 percent,   followed by Western Australia (down 7.3 percent).
<a href="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.37.35%20AM.png" target="_blank"> Click to enlarge</a>
<img src="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.37.35%20AM.png" alt="">
Only five State and Territory economies had data on exports and imports. If you add in the trade figures, the ACT economy was up 6.3 percent over the year with NSW up 5.2 percent, Victoria up 4.5 percent, South Australia up 3.0 percent and Queensland up 1.3 percent.  
Consumer spending lifts. Household spending rose by 0.4 percent in the June quarter to be up 2.9 percent for the year. Only six of the 17 sectors recorded weaker spending in the quarter. Spending fell most in in Cigarettes &amp; tobacco (down 2.3 percent) and Electricity, gas and other fuel (down 2.2 percent). Spending rose most in Purchase of vehicles (up by 2.8 percent) and Health (up 2.1 percent).  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to growth. The Mining sector fell by 3.5 percent in the quarter cutting 0.3pp from overall growth.  
Other points:
Profit share rises. In seasonally adjusted terms, the ratio of profits to total factor income rose from 24.5 percent to 24.9 percent in the June quarter. The wages share was steady at 54.1 percent.  
Household savings ratio steady. The household saving ratio was steady at 8.0 percent in seasonally adjusted terms in the June quarter. In trend terms household saving was steady at 7.9 percent in the June  quarter.  
Imports rose as a share of spending. The imports to sales ratio rose from 0.373 in the March quarter to  0.377 in the June quarter.  
The inventory to sales ratio was steady at 0.622 in the June quarter.  What is the importance of the economic data?  
The quarterly National Income, Expenditure and Product release (national accounts) from the Bureau of Statistics is the most complete assessment of Australia’s economic performance. Detailed estimates are provided on incomes (wages, profits), spending (such as household, dwelling investment and trade (exports and imports) and production (comparing industry performance). Other data includes household saving and the economic performance of States and Territories.  
The main use of the national accounts figures is as a historical record of economic performance. The information has little forward-looking value for currency, interest rate or share markets.  What are the implications for interest rates and investors?  
The national accounts data is backward looking. But the data is taken into account by the Reserve Bank, serving as a base for forecasts. The Reserve Bank uses six-month annualised growth figures to ascertain how the economy is travelling. And in that context growth annualises at around 3.2 per cent. The Reserve Bank had assumed growth of 3.25 percent in the June quarter.  
<a href="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.39.59%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/08/Screen%20Shot%202016-09-08%20at%208.39.59%20AM.png" alt="">
Labour costs are falling, meaning that there probably hasn’t been a better time to be taking on staff. Inflation remains low but real wage gains are still occurring – wages are growing faster than prices. So there is also good news for consumers.  
Productivity calculations are more problematic. Hours worked in the market sector fell. But gross value added per hour worked market sector rose 1.5 per cent in the June quarter to be up a healthy 2.9 per cent over the year. Ideally you would like to see more employment and hours worked as well as higher output. As always, there is   scope for improvement.
GDP per capita continues to edge higher in real terms, indicating that our standard of living continues to rise. Perhaps growth is slower than in the past, but it is still rising.  
Should the Reserve Bank cut rates again?
There is nothing in the data to prevent the Reserve Bank cutting rates again. The debate to be had though is whether rate cuts at historically-low levels are actually still stimulative. The only real sign of inflation is the “ownership transfer costs” or costs associated with buying or selling a home – up 9.5 per cent over the year.  
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Happy 25th birthday Australian economy: CommSec's Craig James

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A prime three hectare Townsville CBD waterfront development site is being offered for sale again. 
It is being marketed again on behalf of receivers Ferrier Hodgson. 
The Saltwater, Airlie Beach site is adjacent to The Ville Resort Casino having been one part of the extensive portfolio amassed by former Gold Coast developers Resort Corp. 
There are views across the Coral Sea to Magnetic Island from the site at 48 Sir Leslie Theiss Drive.
The site consists of five community title lots, totalling 29,638sqm of land area with 440 metre of water frontage.
The site has a preliminary approval for a mixed residential development that allows for up to an estimated 61,000sqm of Gross Floor Area (GFA) across the site offered to market through Colliers International.
In 2011 the Resort Corp receivers marketed the troubled company's last major asset which was consolidated at a $49.5 million cost in 2007 when bought from Consolidated Properties.
The original project was earmarked to develop 570 apartments.
In 2007, Resort Corp boasted a development portfolio on the northern NSW and Queensland coasts totalling $1.35 billion.
Linked to Paul Brinsmead and Peter Madrers, the group was placed in voluntary administration in March 2009, declaring debts of more than $300 million.
The site also failed to sell after an expressions-of-interest campaign in 2010.
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Townsville development site listed again

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The Victorian government is seeking community and stakeholder feedback on the Better Apartments Draft Design Standards until 19 September.
The final apartment design standards will be introduced in December.
To view the draft standards, <a href="https://haveyoursay.delwp.vic.gov.au/better-apartments" target="_blank">click here</a>.
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Property 101: Feedback sought for Victorian apartment standards

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Bowral's modern Duck Crossing estate has been sold for $4.15 million to the Liu family.
Set on 6245 sqm, the luxury home furnishings have Ralph Lauren fabrics.
With English oak floors, the Centennial Road property was listed through Unique Estates agent Phillip Dwyer and Drew Lindsay at Drew Lindsay Real Estate. 
All of the home's four bedrooms have ensuites, there's a media room, grand office and two gourmet kitchens.
The property comes with a detached self-contained one-bedroom guest cottage and pavilion with spa and steam room in landscaped grounds, adjoining Craigieburn golf course.
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Duck Crossing at Bowral sold

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<img src="https://counter.theconversation.edu.au/content/63192/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Retail sales data showed growth in the sector falling flat last week, and it remains a tough time to be a retailer in Australia.
Overall, shoppers are expecting more for less, abandoning any sense of loyalty. However, there are bright sparks of success in the moribund sector that point towards what works and what doesn’t in making profits in retail.
Australia’s overall inflation, currently at historical lows, is only kept above zero by the increasing prices of services like health and education, not by retail goods. Retail staples like food, clothing and footwear are all cheaperthan this time last year. Price competition, and pressure on margins in the grocery and clothing markets is intense.
The deflation in “food and non-alcoholic beverages” prices recently reported by the ABS can be most readily explained by the Aldi effect. Aldi’s continued expansion throughout regional Australia and continued push westward to South Australia and Western Australia is playing havoc with the retail margins of both Coles and Woolworths. Both have fallen to around 4.7 percent of sales as price declines have been outstripped by operational cost efficiencies. The major challenge for both Coles and Woolworths, however, is to address the fundamental difference in their cost of doing business versus the lean operations of Aldi.
<a href="/images/2016/09/07/Screen%20Shot%202016-09-07%20at%209.05.55%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/07/Screen%20Shot%202016-09-07%20at%209.05.55%20AM.png" alt="">
Away from groceries, as the seasons turn, Australia’s bulging wardrobes continue to make room for yet more clothes and shoes. Despite this, prices are falling. In clothing and footwear, deflation is better explained by the ascendant online marketplace and consumer preferences, shopping traits and experiences.
Overall online clothing retail sales growth continues to far outstrip bricks and mortar retail, with small online retailers (sales less than A$2.5 million) seeing strong growth of more than 20 percent per annum on the back of more agile systems and shopper convenience.
<h2>Green shoots</h2>
Looking below the “sectoral” numbers to some examples of individual businesses provides some interesting evidence of these trends - both supportive and contradictory.
<h4> </h4>
Online surfwear and sportswear retailer Surfstich, for example, saw its share price savaged after it posted a massive loss on the back of a flagging acquisition strategy and management upheavals. In a closely related market, however, Kathmandu is performing relatively well, flagging higher margins and earnings to come. CEO Xavier Simonet attributes these outcomes to “product newness and careful management of promotional activity” – basically selling a more narrow range of more appreciated goods with less discounting.
Premier Investments continues to outperform. Controlled by Solomon Lew and led by the colourful former CEO of David Jones, Mark McInnes, Premier seems to have the right portfolio of products and store-based and online business strategies to maintain growth and margins. Its Smiggle business is a case in point. It sells cheap things at high prices to a demographic of adoring tweens, while the quality Peter Alexander brand works as a sales generating all-rounder in the family clothing sector.
Another somewhat bright spot seems to be Kogan – the online electronics retailer that recently listed on the ASX. It is a business that is hard to categorise. It has a portfolio of own-branded electronics, operates a channel of grey imported products from its offshore subsidiary, and is branching into services including travel. Trading at a discount to its IPO, it is fair to say the market is watching with interest rather than enthusiasm before it decides on the longevity of this idiosyncratic retailer.
One of the most resilient of retailers, Harvey Norman, also reported last week. Its result was stellar and its share price soared. Sceptics wonder, though, how much of this can be attributed the the exit of Dick Smith and the rather topsy housing market which all but the most optimistic spruiker sees at or near its zenith.
Both Premier and Kogan point to an emerging trend – innovation matters in retail more than ever. Strong growth among small online retailers is showing consumers want variety and novelty in their baskets and wardrobes rather than generic and cheap (or worse, generic and expensive). Globally, firms like Threadless (a T-shirt company whose customers design its logos) are trying new things and creating products that appeal to narrow yet loyal customer groups. In Australia, niche online retailers like Babes in the Shade are showing they have a business model that can work over time.
But innovation is both risky and expensive. More often than not supermarket trialled novelties do not last, with the same true in clothing and elsewhere. This can explain the emergence of firms like Premier Investments that combine retail smarts, relatively deep pockets and novel ideas. Premier can afford the odd disaster when balanced with successes like Smiggle.
In the future, we expect more innovation and variety and thus more turblulence in the sector. Occasional narrow-brand innovators like Noni B will succeed, but a more likely model for success will be the porfolio players. They can ride out the ups and downs of retail’s various sub-markets and sustain profitability and growth.
John Rice is professor of management, University of New England and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-rice-93120" target="_blank">here</a>.
Nigel Martin is lecturer, College of Business and Economics, Australian National University and author for The Conversation. he can be contacted <a href="https://theconversation.com/profiles/nigel-martin-117971" target="_blank">here</a>.
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Company results wrap: retail sales flat, but some retailers buck the trend

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GUEST OBSERVER
<div>
As expected the Board of the Reserve Bank decided to leave the cash rate unchanged at 1.50 percent.
We were most interested in how the Governor assessed the housing market in the light of strong auction clearance rates and some evidence of higher price growth in Sydney and Melbourne.
Recall that the key assertion in the statement following the August cut was that “the likelihood of lower interest rates exacerbating risks in the housing market has diminished”. It is not surprising that this sentence was not repeated in the September statement. Arguably if we had not seen the evidence in the Sydney and Melbourne markets the Governor would have been sufficiently emboldened to repeat that assertion.
The other key theme around housing in the August statement was that “dwelling prices have been rising only moderately over the course of this year”. This statement repeats that assertion with an important qualification: “dwelling prices OVERALL have risen moderately over the past year”. That would appear to be recognition that the term “moderate” no longer applies to some parts of the country, specifically Sydney and Melbourne.
There have been some other subtle changes of language in this statement. In August, overall growth was described as continuing “at a moderate pace”. In this statement growth is described as: “overall growth is continuing”, arguably leaving out the word moderate indicates that he is not prepared to commit until tomorrow’s release of the GDP report. Equally, in August, areas of domestic demand were described as “expanding at a pace at or above trend”. In this statement areas of domestic demand are merely described as growing.
There is no change in the assessment of the key policy variables – inflation and employment. Inflation continues to be described as “quite low” and is expected to remain so for some time. Labour market indicators are still described as “somewhat mixed”.
The global outlook remains the same. The global economy is expected to grow at a lower than average pace and “China’s growth appears to be moderating”.
The final paragraph in the statement is a replica of the statement used in June following the May rate cut with a very clear neutral bias being signalled. While this is an accurate assessment of current thinking it seems highly unlikely that the outgoing Governor would have left the new Governor with any particular commitment. Better to allow total flexibility over the next few months.
Conclusion
Since the beginning of 2013 when interest rates had dropped to 3.00% the Bank has cut rates on six occasions and all of them have been in the months February, May, August and November. These dates are significant in that they coincide with an update on the inflation outlook and also the release of the Bank’s quarterly Statement on Monetary Policy when the Bank’s forecasts are reviewed. This means that the next possible time of a rate cut would be November this year.
We expect that rates will remain on hold in November. Our forecast for underlying inflation in the September quarter is 0.5% which, following a 0.5% for the June quarter, allays concerns that the Bank may have had( following the 0.2% print for the March quarter) that inflation was tumbling out of control.
We would also like to think that the new Governor might adopt a slightly wider target band (1-3%) when he reaches agreement with the Government on the new Inflation Target. A decision like that would take further pressure off a  pursuit of a 2.50% inflation print given current global conditions. It would not be a good policy approach to pursue an unrealistic inflation target at the possible expense of destabilising asset markets and a further increase in in household debt ratios.
This expectation is not contingent on our forecast of steady rates in November given that we have to reluctantly recognise that a change in target is not likely.
Other factors that might prompt a rate cut in November would be a rampant AUD in response to further evidence that the Fed will remain on hold in December. However, whilst we think that decision by the Fed is unlikely we also expect that commodity prices will be weighing on the fair value of the AUD by that time.
Today’s statement really only provides a reasonable signal that the confidence around housing we saw in August has been shaken a little, slightly lowering the chances of that November cut.
Developments in the real economy will also be important. We expect tomorrow’s GDP report to print 0.5% for the quarter and 3.3% through the year. That will be the most up to date real sector information for the November meeting and of course represents around half a percent faster growth than the RBA’s current trend assessment.
While the Governor continues to describe labour market indicators as “somewhat mixed” our own research is more encouraging with employment growth likely to hold in the 1.5-2 percent range.
Overall we do not expect any change at the October meeting and are also anticipating steady rates in November.
 
</div>
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA sees housing risks more apparent than expected: Westpac's Bill Evans

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GUEST OBSERVER
Having just cut rates again last month and with the economy running okay and nothing new on inflation in the last month, it was no surprise to see the Reserve Bank of Australia leave rates on hold at 1.5 percent at its September meeting.
This was the consensus and our own expectation.
The Statement accompanying the RBA’s decision to leave interest rates on hold was little changed bar a bit of tweaking here and there…maybe Philip Lowe will do a bigger re-write when he takes over for the next meeting. 
The RBA continues to see the global economy growing, financial markets functioning effectively and the Australian economy continuing to grow but labour market indicators being somewhat mixed, inflation remaining quite low, an appreciating $A complicating the adjustment in the economy and seems rather sanguine regarding the housing market.
While the RBA’s statement lacks a clear easing bias it is noteworthy that its June statement  (the RBA having just eased in May) was also largely interpreted as neutral with an easing bias only returning (expressed via a reference to the Bank awaiting “further information”) in July ahead of inflation data to be released later that month. So if history is any guide the October statement should be watched for any return to an easing bias ahead of September quarter inflation data due later that month.
Perhaps a surprising aspect of the RBA’s statement is its relatively sanguine comments regarding the housing market. I would have thought the bounce back up in auction clearance rates in Sydney and Melbourne and renewed strength in housing finance would suggest that this year’s rate cuts have reinvigorated the already hot property markets in those cities suggesting the case for another bout of RBA “jaw boning” and possible APRA action to cool things down again. At this stage the RBA appears more comfortable in waiting for surging apartment supply to cool things down.
We remain of the view that the RBA will cut rates again at its November meeting when it reviews its economic forecasts after the release of the September quarter inflation data in late October. The risks to inflation are on the downside thanks to underlying deflationary pressures globally and record low wages growth domestically and the $A is still too high and at risk of further appreciation given the Fed’s endless delays in raising rates again.
However, with economic growth holding up very well – data for public spending, sales, profits and inventories released over the last few days points to June quarter GDP growth accelerating further to 3.5 percent year on year – this is a close call and is now critically dependent on seeing a lower than expected September quarter inflation result. Either way a cut in the cash rate to 1% or below and the adoption of quantitative easing looks very unlikely in Australia.
<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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RBA relatively relaxed about the housing market: AMP Capital's Shane Oliver

A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

Joel Robinson

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.

In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.

The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.

The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments

The site currently comprises three commercial properties.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" />

The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.

The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" />

A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.

Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.

Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.

First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

<a href="https://www.apartments.com.au/new-apartments/otium-parkdale-123-125-como-parade-east-parkdale-vic-3195">Otium Parkdale</a>, the 13-residence boutique development by&nbsp;<a href="https://www.apartments.com.au/developers/huxtable-property">Huxtable Property</a>, has entered its final stages of delivery, with completion expected within the coming month and more than half of the residences sold.

The Como Parade East project is nearing the finish line at a time when opportunities to purchase new apartments in <a href="https://www.apartments.com.au/developments/parkdale-vic-3195">Parkdale</a> remain exceptionally limited. Fewer than 10 per cent of dwellings in the bayside suburb are apartments, making developments like Otium a relatively rare addition to a market traditionally dominated by detached housing.

[smartcode_project:default project_id=134974 project_image_fid=5427]

The three-level development comprises 13 residences, including ten two-bedroom apartments and three larger three-bedroom homes, all positioned above a secure basement car park.

Designed by <a href="https://www.apartments.com.au/architects/almeida-architects">Almeida Architects</a> with a strong connection to its coastal surroundings, Otium combines red brick, exposed concrete and dark metal detailing with integrated landscaping and greenery. Expansive glazing, generous balconies and terraces have been incorporated throughout the design to maximise natural light and reinforce indoor-outdoor living.

Inside, the residences feature engineered European oak flooring, natural and reconstituted stone benchtops, Bosch kitchen appliances, ducted heating and cooling, lift access and secure entry systems. The larger three-bedroom residences on the upper level have been designed with house-like proportions, while the two-bedroom apartments prioritise functionality, flexibility and low-maintenance living.

[smartcode_project:default project_id=134974 project_image_fid=5421]

The project is now in its final stages, with <a href="https://www.apartments.com.au/builders/labco">Labco</a> completing the remaining landscaping and external finishing works following the completion of the residences' interiors.

Otium's location within the heart of Parkdale continues to underpin its appeal. Residents will be just steps from local cafés, restaurants, shops and the newly elevated Parkdale Station, while the beach is less than a kilometre away.

With the project tracking ahead of schedule, buyers can currently secure a residence with a five per cent deposit and benefit from settlement terms of up to eight months. The advanced stage of construction also provides buyers with the opportunity to walk through the near-complete residences and experience the quality and finishes firsthand ahead of completion.

[smartcode_project_cta:default project_id=134974]

Otium Parkdale enters final month before completion as rare apartment opportunity nears sellout

A new boutique apartment development is entering the market in <a href="https://www.apartments.com.au/developments/chermside-qld-4032">Chermside</a>, with Brisbane-based developer <a href="https://www.apartments.com.au/developers/ausdev">Ausdev</a> bringing 33 residences to a well-connected pocket of Brisbane's north.

<a href="https://www.apartments.com.au/new-apartments/parkdrive-apartments-chermside-25-sammells-drive-chermside-qld-4032">Parkdrive Apartments</a>, at 25 Sammells Drive, will comprise a mix of one- and two-bedroom residences positioned within walking distance of Westfield Chermside, The Prince Charles Hospital, and Bradbury Park.

Established in 1989, Ausdev has a long-standing presence across both development and construction, with Parkdrive Apartments representing its latest residential project in Brisbane's northern suburbs.

[smartcode_project:default project_id=152125 project_image_fid=363778]

The development has been designed around open-plan living and natural light, with residences featuring stone benchtops, timber cabinetry, BOSCH appliances, and private balconies that extend the living areas outdoors.

Kitchens are positioned as the centrepiece of the homes, incorporating natural material palettes and integrated appliances, while bathrooms have been designed with a focus on functionality and understated finishes.

Residents will have access to a communal barbecue and entertaining area on Level 3, providing shared outdoor space within the development. Secure parking and lift access are also incorporated into the building.

The project will deliver a limited collection of 33 apartments, with one-bedroom residences priced from $749,000.

[smartcode_project:default project_id=152125 project_image_fid=363782]

Beyond the building itself, the location places residents within easy reach of several of Chermside's key amenities. Bradbury Park is around 350 metres away, while Westfield Chermside is approximately 1.3 kilometres from the site. The Prince Charles Hospital is located within 750 metres, and the Chermside Bus Interchange is around 1.5 kilometres away, providing connections across Brisbane.

Parkdrive Apartments adds to the growing residential pipeline in Chermside, a suburb that continues to evolve as a major retail, healthcare, and transport hub for Brisbane's north.

[smartcode_project_cta:default project_id=152125]

Ausdev introduces boutique Parkdrive Apartments to Chermside's growing centre

<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.

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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.

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Jonathan Chancellor

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