<html><body>
The Wollongong CBD, being located 90 kilometres south of the Sydney CBD in the Illawarra property market, rides on the coat tails of Sydney’s property market, according to Herron Todd White.
The valuation firm said with a substantial boom taking place in Sydney since 2012 many people have been looking outside the capital cities for housing accommodation, with affordability a big driver.
"One region that has benefited is the Illawarra," it noted.
"Combined with access to established and developing infrastructures and a coastal lifestyle, it’s not hard to understand why people are putting up with a 60 to 90 minute commute across Sydney when they can live close to some of the state’s best beaches for a more affordable price with a similar commute time.
"It is Wollongong’s northern suburbs that get impacted the most directly," their latest report added pinpointing Helensburgh, which is only a 50 minute train ride to Sydney’s Central station.
It signalled the geographic proximity also has had a flow on effect to Sydneysiders who have a preference for a weekender down the South Coast.
"Hot spots such as Kiama, Gerringong and Huskisson all experience a significant boom when times are good.
"A trend has also developed recently where young Sydney singles or couples are priced out of the first home market in their desired location in Sydney.
"They are happy to continue to rent and live close to their work but are also eager to get into the property game.
"They are therefore looking to invest in a more affordable region and properties in the Illawarra are able to meet their requirements of price, return and capital growth potential.
"It’s often been said by property professionals that there can be anywhere from a one to six month lag between the Sydney and Illawarra property markets.
"If this is true, those in the region will benefit from a heads up when the market eventually steadies itself."
Traditionally a steel region, the Illawarra property market has often ebbed and flowed with the strength of the mining and steel industries.
But HTW said these are diminishing as the local economy transitions to a region whose emerging and substantial drivers are education, tourism and aged care.
Recent growth in the health and aged care industry and further development of world class tertiary education infrastructure attracting domestic and international students are testament to this successful regional strategy.
It also suggested Nowra township and surrounds, (Shoalhaven City Council) traditionally a region underpinned by defence force employment, has benefited in particular from its recent discovery by Sydney buyers, which is assisting in diversifying the workforce so that the property market no longer feels the effects of a downturn within a particular industry so acutely.
A two bedroom cottage, 17 Hay St Helensburgh (above), recently sold for $712,000.
The median price for a home in Helensburgh is $770,000, according to CoreLogic.
</body></html>

jchancellor-FAypfDUnLy

Sydney singles finding Illawarra property investments affordable

<html><body>
The Canberra residential market is complex with many factors interacting to affect demand, supply and ultimately prices, according to the latest Herron Todd White report.
The valuation firm suggested on a macro level, the Canberra residential market - aided by historically low interest rates - has a number of underlying positives including generally strong employment and a perception of good job security.
"With a transient population and periods where government departments employ graduates and new staff, both rental and sales demand increase.
"Population growth and interstate migration are considered main market drivers.
It suggested demand for family homes is a local market driver, second and third home-buyers with families are looking for centrally located housing in close proximity to schools and services.
Affordability remains an issue for this section of the market, HTW advised.
"With the sitting Liberal government re-elected, public service employment prospects remain steady, although some caution was evident in the lead up to the result.
"Winter is also traditionally slightly slower, so there is an expectation that Spring conditions and improved certainty after the election result will improve the overall market position."
</body></html>

Affordability an issue for Canberra property upgraders

<html><body>
Offshore investors had been concerned about their investment through Macro Realty especially since the closure of its Singapore office.
"About time someone puts a stop to this unbridled licence by Macro Group to borrow money from tens of hundreds of investors all over the world," one source advised yesterday after the ASIC announcement.
ASIC advised Perth’s Federal Court has made the interim orders against Desiree Veronica Macpherson that required her to surrender all passports. 
"Many from our part of the world, namely Hong Kong, Malaysia and Singapore have invested significant portions of our life savings because of our high regards for the Australian financial regulatory system, natural justice and common laws.
"We have been following this development for almost a year now with little in the way of information since Macro closed their office in Singapore after fellow investors complained about not getting paid their monthly interest, and hope the authorities will take the appropriate actions in an expedient manner to ensure borrowers' interests are fully protected."
The website reports it was "proud to announce that MACRO Realty Developments has been awarded the REIT Manager of the Year Award – Singapore 2016 as part of The European Global Banking &amp; Finance Awards."
The European Global Awards recognises organisations and individuals achievements based on leadership, innovation and attention to sound corporate governance.
Earlier this year the WA State Administrative Tribunal (SAT) announced that it has granted a supervision order in relation to Macro Realty Pty Ltd following an application by Consumer Protection.
“Macro Realty is suspended from carrying on its business and controlling the agency’s bank accounts. The supervisor, Alan Ferris of BDO, will now take control of the agency’s financial operations and begin the process of winding up the agency,” the WA Department of Commerce said.
The action follows the company’s failure to appoint a person in bona fide control of the agency as required by the Real Estate and Business Agents Act. The previous person in control of the agency resigned on 9 February 2016 and Macro Realty requested a three-month grace period to find a replacement.
The three-month grace period was granted by the acting commissioner for Consumer Protection, David Hillyard, on condition that the agency submitted its monthly reconciliation summary reports for their three trust accounts for February, March and April 2016.
“The agency’s failure to adequately adhere to these conditions was cause for action to be taken to have a supervisor appointed in order to safeguard the money and property of consumers,” Mr Hillyard said.
“It is extremely important that agents understand and fully comply with any condition placed on their licence, especially relating to three-month grace periods. The risk for doing otherwise, as in this instance, can be fatal to their business,” he said.
“Immediate and decisive action will always be taken to safeguard the money and property of consumers where we believe, on reasonable grounds, that an agent is either unable or unwilling to fulfil their obligations under the Act.”
</body></html>

Offshore Macro investors seek answers and assurances on funds 

<html><body>
Nine's renovation reality show The Block is set for serious competition this year, as Ten have Australian Survivor, set to go to air this Sunday August 21 at 7.30pm.
Both coincide with the end of the Olympics where Channel Seven have understandably absorbed the strongest audience over the last two weeks.
Seven will attempt to hang on to some of their Olympic audience with new cooking show Zumbo's Just Desserts, which airs Monday, and could create a three-way reality battle, although whispers are that it is not likely to impress.
Australian Survivor sees 24 people marooned on the tropical island of Samoa with little more than clothes on their back.
Having to fend for themselves, the contestants must compete with each other, yet also build relationships so they don't find themselves being voted off the island.
The winner will earn half a million dollars at the end of the 55 day show.
The Block is again in Melbourne.
Lizzie Young, Nine Entertainment's director of innovation, partnership and customer experience, suggested she wasn't worried about the potential impact on The Block's performance.
“My view is The Block is the biggest reality format coming to television for the remainder of the year," she told Mumbrella.
"We absolutely believe in The Block. 
"We have complete confidence that it will deliver,” she said.
“It’s been a year and we know that Blockheads are hugely loyal fans, so that puts us in a really good position.”
The Block's grand finale audiences have been decreasing since 2010, and last year The Block posted its lowest finale audience to date, with 1.57 million tuning in for the grand final.
“We’ve spent this year addressing that and ensuring our content distribution strategy meets what the audience wants and to that end we launched 9Now, our live-streaming and video on demand product in February, and we’ve got 1.5m signed up subscribers to that product – and that means for this season of The Block it is available to the entire audience anytime, anywhere, on any device,” she said. 
</body></html>

The New Block Port Melbourne seeks to survive against rivals in ratings chase 

<html><body>
GUEST OBSERVER
Across Australia’s capital cities, price growth has slowed with house prices up 6.1 percent in the year to July 2016 and unit prices increasing by 6.0 percent.
Since the low point in 2012, capital city house prices have increased by 40.0 percent in aggregate while unit prices rose by 29.8 percent. Unit prices started to recover a few months earlier than house prices;
Since bottoming out, the divergence between dwelling price growth in the different capital cities has been remarkably wide. The biggest uplifts have been in Sydney (+61.3 per cent) and Melbourne (+42.0 per cent). At the other end of the scale, Perth (-8.3 per cent) and Darwin (-12.7 per cent) prices have fallen substantially since peaking in 2014;
Despite the considerable variation during the current cycle, price growth across the capital cities has been quite uniform over the past two decades. In real terms, house prices have increased by 5.3 per cent annually compared with 3.9 per cent growth in unit prices;
The ratio of the median dwelling price to average earnings has increased substantially over the past two decades. Much of this is explained by structural changes in household size, economic participation rates, earnings patterns and the level of mortgage interest rates;
During the June 2016 quarter, the price to earnings ratio was 6.96 for houses and 5.80 for units. The highest ratios were in Sydney and Melbourne, with the lowest in Hobart and Perth. With the exception of Sydney, affordability is more favourable than the 15-year average in all capitals;
With respect to wider economic and financial conditions, dwelling prices across Australia appear to be proportionate. However, the wide geographical variation in current conditions means than some markets are likely to experience significantly stronger price growth than others over the medium term. 
<div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
This is an update of the HIA Economics note on dwelling prices which was released in November 2015. 
That piece of research then reported on how annual dwelling price growth across Australia’s eight capital city markets reached 10.1 per cent during October 2015. Since then, the pace of dwelling price growth has slowed and latest data show that dwelling prices increased by 6.1 per cent during the year to July 2016. Over this period, detached house price growth (+6.1 per cent) was almost exactly the same as the growth in unit prices (+6.0 per cent). Later, we explore in greater detail the relationship between house price growth and unit price growth over time in each of the capital city markets. 
As was the case late last year, the variation in dwelling price growth trends is very large when comparing capital cities. The chart below illustrates the changes in house and unit prices in each of the capital cities over the year to July 2016. House prices saw the largest increase in Sydney over the year (+9.0 per cent) followed by Melbourne (+8.0 per cent). Over the same period, the largest increase in unit prices occurred in Hobart (+12.9 per cent) and Sydney (+9.4 per cent). Despite the strong uplifts in several markets, house prices fell quite significantly in both Perth (-5.6 per cent) and Darwin (-5.9 per cent). Over the year, unit prices declined in three capital cities: Perth (-5.8 per cent), Darwin (-14.6 per cent) and Canberra (-0.4 per cent). 
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.46.14%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.46.14%20AM.png" alt="" width="730" height="350">
 
<div class="page" title="Page 2">
<div class="section">
<div class="layoutArea">
<div class="column">
Aggregated data for the eight capital cities indicate that dwelling prices bottomed out during May 2012 and have since expanded fairly consistently in all capitals apart from Perth and Darwin. The chart below summarises the cumulative increase in detached house prices in each market during the current cycle. Overall, detached house prices increased by 40.0 per cent across the eight capitals between May 2012 and July 2016. The largest house price rise occurred in Sydney over this period (+65.7 per cent), followed by Melbourne (+45.2 per cent) and Brisbane (+18.6 per cent). In contrast, house prices in Perth and Darwin have fallen back since reaching their peaks in 2014. Perth house prices have declined by 8.3 per cent while Darwin house prices are down by 11.8 per cent. Of the cities that have experienced consistent price growth, Canberra has seen the smallest increase in house prices since the 2012 trough (+13.0 per cent). 
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.47.24%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.47.24%20AM.png" alt="" width="717" height="373">
 
<div class="page" title="Page 3">
<div class="section">
<div class="layoutArea">
<div class="column">
The comparison between prices for detached houses and units in terms of growth is illuminating in several respects. The increase in unit prices has been significantly less pronounced during the current cycle. Also, the upturn in unit prices appears to have commenced about six months earlier than the recovery in detached house prices. Whereas detached house prices have increased by 40.0 per cent during the current cycle, unit price growth has been about 10 percentage points lower (+29.8 per cent). Over the same period, detached house prices have outpaced unit price growth in every single capital city apart from Hobart. This may be related to the smaller sample size in Hobart, as well as the shorter timeframe being analysed for the city.
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.49.27%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.49.27%20AM.png" alt="">
 
<div class="page" title="Page 3">
<div class="section">
<div class="layoutArea">
<div class="column">
The pace at which detached house prices have outrun unit prices during the current cycle is greatest in Brisbane (18.6 per cent v 6.7 per cent), followed by Canberra (13.0 per cent v 5.5 per cent) and Melbourne (45.2 per cent v 20.1 per cent). It is also worth noting that in the Perth and Darwin markets where prices are falling, unit prices have dropped considerably faster than detached house prices. Hobart is the only capital city where unit prices have increased by more than detached house prices in the current cycle (+27.3 per cent v +16.1 per cent). The behaviour of prices in the current cycle underlines the great degree of heterogeneity both across and within the capital city markets. 
How do dwelling prices behave over the long run? 
Assessing dwelling price growth over time allows us to net out the effects of cycles and temporary factors and capture a sense of long-term trajectory of price dynamics. The chart below illustrates the real annual average growth rate for both detached house and unit prices over the 20-year period to the June 2016 quarter (due to data availability constraints, a 15-year timescale is used for both Hobart and Darwin). These data suggest that growth in real detached house prices tends to outpace unit price growth over the long run (5.3 per cent v 3.9 per cent per year). This was the case in each of the eight capital cities, with the single exception of Hobart. 
Perhaps the most striking takeaway is that real dwelling price growth rates across each of the eight capital cities tend to lie within a relatively narrow band over the long run, especially in the detached house market. Real detached house price growth was strongest in Melbourne over the two decades in question (+6.4 per cent annually) and weakest in Brisbane (+4.3 per cent) over the same period. However, six of the eight capital cities were all less than one percentage point apart in terms of real detached house price growth on an annual basis (ranging from 4.4 per cent to 5.3 per cent per year). 
</div>
</div>
</div>
</div>
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.50.38%20AM.png" target="_blank"> Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.50.38%20AM.png" alt="">
 
 
<div class="page" title="Page 4">
<div class="section">
<div class="layoutArea">
<div class="column">
Compared with detached house prices, the divergence in real unit price growth has been wider from city to city. Over the long term, Hobart units have experienced the largest increase in real terms (+5.6 per cent annually) with the slowest pace of growth in Brisbane (+2.2 per cent per year). In the other six capitals, real unit price growth has been concentrated in a relatively narrow range of between 3.0 per cent and 4.7 per cent annually. 
Despite the considerable differences in economic structure, geographies and the regulatory framework across Australia’s eight capital cities, real dwelling prices still behave in remarkably similar ways from city to city over long periods of time with detached house prices consistently growing more strongly than those of units, although there tends to be much greater price variation on the unit side of the market. 
A possible implication of this is that those markets which have seen recent the strongest price growth exceed the long term average in the recent past are most at risk of below par price performance over the coming years. By the same token, the markets that have recently seen price growth underperformed the long term average rate performed weakest in terms of price are most likely to see future acceleration in price growth. 
Price to Earnings: the relative price of housing 
While median disposable household income is the most conceptually sound indicator for benchmarking dwelling prices relative to income in the economy, the fact that these data are released only once per year with a long lag means that other measures must be utilised for more timely and frequent updates. Accordingly, this note uses average earnings as a barometer for household income due to the fact that earnings data are produced twice yearly (for the May and November ‘quarters’) in a relatively timely fashion. However, it is important to note that earnings data are an imperfect gauge of households’ financial resources, as no account is taken of direct taxation, unearned income (such as pensions, etc.) and income in kind.1 
Based on the average earnings data available from the ABS, the chart below provides an overview of the median dwelling price to earnings ratio across Australia since 1995, including data for detached houses and units. Over this period, the ratio has increased from 3.79 in the June 1995 quarter to 6.57 during the June 2016 quarter. The median detached house price is now 6.96 times earnings, compared with 3.83 in June 1995. On the unit side of the market, the price to earnings ratio has increased from 3.73 to 5.80.
<div class="page" title="Page 5">
<div class="section">
<div class="layoutArea">
<div class="column">
At first glance, this suggests that dwelling prices have lost touch with prices and incomes in the economy. However, the big uplift in the price to earnings ratio can largely be explained by two structural changes over the past 20 years. First, the number of employees per household has risen significantly over the two decades due to higher female labour force participation rates, a trend towards taking retirement at older ages and changes in the structure of some households involving greater numbers of young professionals in ‘share’ housing. The secular reduction in interest rates over this period has also permitted dwelling prices to grow faster, due to the fact that homebuyers can affordably service much larger mortgages at current interest rates than was the case when the interest burden was much higher. It is worth noting that the RBA’s Official Cash Rate in August 2016 of 1.50 per cent is only one quarter of the 6.00 rate in August 2006 and an even smaller fraction of the 7.00 per cent cash rate of August 1996. 
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.52.04%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.52.04%20AM.png" alt="" width="793" height="337">
 
<div class="page" title="Page 5">
<div class="section">
<div class="layoutArea">
<div class="column">
Given the wide variation in dwelling price levels across Australia, it is useful to compare the ratio of dwelling price to earnings in the eight capital cities. This is shown in the chart below for each city during the June 2016 quarter for both detached houses and units. In Sydney, the detached house price to earnings ratio continues to be the highest in the country but eased back to 9.55 during the June 2016 quarter, after reaching an all-time high of 10.31 during the final quarter of last year. Detached house price to earnings ratios are also elevated in Melbourne (7.72) and Canberra (6.96). The ranking in terms of unit price to earnings ratios is similar: it is highest in Sydney (7.31), followed by Melbourne (6.03), although Brisbane is in third place (4.86). 
<a href="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.54.10%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/18/Screen%20Shot%202016-08-18%20at%208.54.10%20AM.png" alt="" width="772" height="375">
 
<div class="page" title="Page 6">
<div class="section">
<div class="layoutArea">
<div class="column">
The detached house price to earnings ratio is lowest in Hobart (4.53), followed by Perth (5.50) and Adelaide (5.92). In terms of unit prices, the pattern is similar. The price to earnings ratio is lowest in Hobart (3.67), followed by Perth (4.29) and Canberra (4.65). Across the eight capital cities, the detached house price to earnings ratio in the June 2016 quarter was 6.96 with the median unit price at 5.80 times average annual earnings. The tendency of dwelling price growth rates to converge implies that the capacity for future dwelling price growth is most limited in those markets where the ratio of dwelling prices to earnings is high, and vice versa. 
The importance of affordability 
While the dwelling price to earnings ratio is a useful snapshot of valuations, it does not take account of changes in financing costs which have fallen sharply over the past decade. The chart below provides an estimate of affordability in both the detached house and unit segments of the market, which is calculated as the ratio of mortgage repayments to gross average earnings of an individual (note that the average household earnings is are greater than the earnings of an individual in the vast majority of cases) on the purchase of a median price dwelling2. With the exception of the GFC period, affordability has shown rather steady improvement over the past decade. The eventual reversion to higher mortgage interest rates over the long term, however, is likely to put affordability under some pressure given that average housing debt levels are high by historic standards. 
Shane Garrett is senior economist for HIA and can be contacted <a href="https://hia.com.au/en/BusinessInfo/economicInfo/EcoGroup.aspx" target="_blank">here</a>.
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</body></html>

Dwelling prices and the current state of play: HIA's Shane Garrett

<html><body>
GUEST OBSERVER
The June quarter Wage Price Index rose 0.5 percent quarter on quarter or 2.1 percent year on year. This was as expected and leaves wages growth at a record low for the Wage Price Index (which dates back to 1997).
Private sector wages are up 2 percent yoy and public sector wages are up 2.4 percent yoy.
By industry, wages growth ranges from just 1.3 percent yoy in the mining sector (the big surprise is that it’s not negative!) to a high of 2.5 percent yoy in the utilities and health care sectors.
By state, wages growth ranges from 1.8 percent yoy in WA to 2.2 percent yoy in NSW and SA.
<a href="/images/2016/08/17/image006.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/17/image006.png" alt="">
Source: ABS, AMP Capital
Ultra-low wages growth reflects ongoing spare capacity in the labour market (with unemployment and underemployment at 14.2%) and low corporate revenue growth which is flowing through to low budgets for wages growth. 
Continuing record low wages growth means ongoing downwards pressure on inflation as it contains cost pressures for businesses. As such it adds to the risk that inflation will stay below the RBA’s target range for longer than the RBA is currently projecting. 
Low nominal wages growth also means ongoing softness in growth in household income which in turn limits consumer spending. Fortunately, real wages are rising because inflation is even weaker, but they are only rising by 0.5 percent yoy and its likely that nominal growth has a greater impact on how households feel.
The continuing weakness in wages growth and the risks it poses to inflation are consistent with our assessment that the RBA will cut interest rates again this year, but probably not until November when we see the cash rate being cut by another 0.25 percent taking it to 1.25 percent.
<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.
</body></html>

Wages growth drives expectation for one more RBA rate cut: Shane Oliver

<html><body>
The outgoing RBA Governor Glenn Stevens says the entry hurdles for first home buyers "may be getting worse."
He suggests it was likely parental assistance was "almost the only way" for some to enter Sydney market, in an exclusive interview with The Australian and The Wall Street Journal.
"I think that a lot of people of my generation are actually going to find themselves, if they haven't already, helping their children into the housing market because that may be almost the only way that their children can enter the Sydney market anyway," he said. 
"That, of course, means that for people of my age, that the wealth we think we have in our house, actually, we don't have quite as much as we thought because we're going to have to give some of it to the next generation."
The 58-year old suggests that there are a lot of generational issues in the housing area that need resolving.
"I think that's actually a bigger question than questions like is there a bubble or not, that sort of thing that people tend spend a lot of time be debating.
"That said its hard to be that cohort about trying to enter the market, there's always been a hurdle.
"It may be getting worse, but there's a lot of things happening here, about where we want to live and how far out we want to live," he said.
"There are decision about zoning, transportation, infrastructure, and all those sorts of things that go to make up what's I think a pretty complex problem." 
Stevens suggested that you need to own a home to pass the equity.
"Of course if we come from a rental household ourselves then we're not going to have that equity to pass to the next generation and certain types of disadvantaged therefore are going to be perpetuated into that next generation," he said.
"A bit of food for thought, but I don't have the answers to all these problems," he advised.
</body></html>

Glenn Stevens says FHB hurdles maybe getting worse - parents help likely only way to enter Sydney property market

<html><body>
APRA’s attempts to tame the excesses of the housing market had been more successful than the RBA boss Glenn Stevens expected, but he says attempting to contain the growth in credit with regulatory tools over the long term, while low interest rates remained, would eventually fail.
“That’s really what we were trying to do in this country for quite a long time up until financial deregulation occurred,” the outgoing RBA governor said in an exclusive interview with The Australian and The Wall Street Journal.
“If we sought to contain credit growth for a lengthy period with regulatory tools, we probably would end up relearning those lessons.”
He advised that the efforts by the Australian Prudential Regulation Authority and Australian Securities &amp; Investments Commission to rein in the growth of housing credit were working.
“I would say that the things that have been done have probably been more effective than I had hoped at the margin, so that’s good,” Mr Stevens said.
But he said the most effective step was APRA’s insistence that institutions raise their lending standards, rather than the more publicised 10 per cent cap on growth in investor loan portfolios.
</body></html>

RBA's Glenn Stevens says taming the housing markets has worked

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
GUEST OBSERVER
The six month annualised growth rate in the Westpac- Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, rose from –0.15 percent in June to –0.12 percent in July. 
The signal from the reading for the Index in July is consistent with the message from June.
While the growth rate of the Index remains below zero, indicating a continuation of the below trend momentum seen over the last 15 months, it has improved significantly since the start of the year. Indeed, this latest reading suggests growth over the next three to nine months will be almost around trend. That outlook is more consistent with Westpac’s forecast for growth holding steadily around a 3 percent pace over the course of both this year and next year.
The Leading Index growth rate has lifted from being 0.92% below trend in February to 0.12 percent below trend in July.
<a href="/images/2016/08/17/Screen%20Shot%202016-08-17%20at%2010.59.16%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/17/Screen%20Shot%202016-08-17%20at%2010.59.16%20AM.png" alt="">
The main contributors to this growth improvement are: commodity prices (+0.64ppts); the sharemarket (+0.52ppts); US industrial production (+0.19ppts); and dwelling approvals (+0.04ppts). Partially offsetting these improvements have been a deterioration in aggregate monthly hours worked (–0.40ppts); the Westpac MI Consumer Sentiment Expectations index (–0.10ppts); and the Westpac –MI Unemployment Index (–0.06ppts). The yield curve spread exerted slightly more downward pressure over the period (–0.03ppts).
In assessing the components of the Index that have contributed to the lift since the start of the year, improving international conditions have been largely responsible for the result. These components (the share market, commodity prices and US industrial production) have been consistently supportive despite global shocks and uncertainties particularly associated with ‘Brexit’; the US election; Fed interest rate policy; and China’s efforts to deal with a structurally slowing economy. 
The Reserve Bank Board next meets on September 6. Having, as expected, cut rates at its August meeting to 1.5 percent we expect that it will hold rates steady next month.
Markets are not anticipating another move until November. At this stage we expect rates will be held steady in November. The two recent rate cuts have been in recognition of the sharp downgrade in the inflation outlook. No improvement can be expected in that outlook although the September quarter inflation report is likely to confirm that prospects for a further deterioration in the inflation environment are limited.
Momentum in the domestic economy, particularly around the labour market, is likely to improve over the next few months. Furthermore, developments in the commodity markets and the outlook for US interest rates are likely to take some pressure off the Australian dollar allowing the Reserve Bank to be patient.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
</div>
</div>
</div>
</div></body></html>

Leading Index consolidates further: Westpac's Bill Evans

<html><body><div class="page" title="Page 1">
<div class="layoutArea">
<div class="column">
GUEST OBSERVERS
The RBA minutes suggest a higher degree of uncertainty around the Bank’s outlook, with board members concerned about the labour market, potential negative feedback from the housing market into the CPI, and the effect of easy international monetary policy on the exchange rate.
While we still expect the RBA to keep the cash rate on hold at 1.5 percent as it assess the impact of the May and August rate cuts, we continue to see the risks as tilted firmly to the downside.
DETAILS
The RBA remains more than usually uncertain about the labour market. “Members noted that there continued to be considerably uncertainty about momentum in the domestic labour market and the extent to which domestic inflationary pressures would rise over the next few years.”
These concerns relate to the degree of slack currently in the labour market, with measures of underemployment suggesting that overall labour underutilisation remains high. Moreover, the Bank is concerned that while the expansion of LNG export capacity will make a significant contribution to growth over the coming years, its low labour intensity will not see a similar boost to employment.
The Board is concerned about a negative feedback loop from housing into inflation. The minutes note that the risk of housing oversupply was “important for the inflation outlook because housing costs make up a significant share of the CPI basket”.</div>
<div class="column"> </div>
<div class="column">The pressure on housing costs as measured by the CPI is likely to come through in both rents, which are barely growing, as well as new house purchase costs. Together, rents and new house prices make up 16 percent of the inflation basket and are the two largest components of the CPI.</div>
<div class="column">
 The impact of international monetary policy on the exchange rate continues to be a bugbear. The Board noted that “changes to expectations about central banks’ policies continues to have an important influence on global exchange rate developments”, after acknowledging that a rate risk in the US was not priced in until late 2017 and further easing was likely in Europe and the UK.</div>
<div class="column"> </div>
<div class="column">They reiterated the comment that “an appreciating exchange rate could complicate the necessary economic adjustments”.</div>
<div class="column">
 OUTLOOK</div>
<div class="column">
 While the minutes did not include any explicit forward guidance, we think that the RBA retains a strong easing bias. With inflation set to remain below or at the bottom of the Bank’s 2-3 percent target band for the entire forecast period, we expect that the easing bias is quite strong, particularly when banks passed on only half the August rate cut to variable home loan customers.</div>
<div class="column">
 Our central case is that the cash rate will remain unchanged at 1.5 percent, but we see a clear risk of further easing given the low inflation outlook, where there is a lack of drivers for a meaningful pickup in prices.</div>
<div class="column">
 We think that the RBA will want to assess the impact of the May and August cuts on the labour market and housing market, while inflation data come into play when the Q3 CPI is published on 26 October. The exchange rate also will continue to be an important input into monetary policy deliberations given that it appreciated after the August rate cut and is near the high reached in April. 
</div>
<div class="column">Felicity Emmett co-head of Australian economics, ANZ Research and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/felicity-emmett/5a/3ba/256" target="_blank">here</a>.</div>
<div class="column"> </div>
<div class="column">Kieran Davies is an economist for ANZ and can be contacted <a href="https://www.anz.com/personal/" target="_blank">here</a>.</div>
</div>
</div></body></html>

Uncertainty reigns in August RBA board minutes: ANZ 

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.

[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]

Jonathan Chancellor

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News