<html><body><div class="field field-name-body field-type-text-with-summary field-label-hidden markets">
<div class="field-items">
<div class="field-item even">
<div class="field field-name-body field-type-text-with-summary field-label-hidden markets">
<div class="field-items">
<div class="field-item even">
Claims that thousands of Brisbane apartments are at risk of not settling over the next 24 months due to tighter lending conditions and the large number of units involved are being rejected by researchers, according to Lachlan Walker, director of Place Advisory and Place Projects. 
The claim did not give consider decisions by the major banks to pull out of development funding throughout inner Brisbane, says Diana Howes, director of Resolution Research, according to his recent writeup in www.therealestateconversation.com.au.
Furthermore, claims that banks are no longer lending to overseas buyers as a blanket statement are also generalised claims, with banks willing to lend, however at a higher 60 per cent LVR.
Howes does not anticipate settlement valuations falling short of the contract prices for off-the-plan units.
“We reject the notion that the market is currently on the cusp of a major valuation risk phase – with developers still reporting valuations at, or close to contract values,” she said.
“With negligible price growth across the off-the-plan market over recent years, apartments currently under-construction should, in theory, be valued in line with their recently completed counterparts.
“Although we have seen an estimated 15 per cent rise in construction costs over the past three months, which has translated into lifts in off-the-plan values, many of these apartments are yet to even start construction and given the pull back in development finance, a large proportion are unlikely to. This further strengthens our argument that thousands of apartments within inner Brisbane are NOT at valuation risk.”
Howes said investor sentiment in the Brisbane market remained solid and there was no evidence of a trend towards speculative investment; in fact quite the contrary.
Resolution Research's research examined the mind and mood of the investor market and revealed the following key opinions and attitudes:
* Buyers have an average hold strategy of 5 years
* Buyers are risk averse and shop the market to ensure they are securing a solid value proposition
* Speculative (short-term) investments are felt to be more likely to have upside in the share market as opposed to the property market
An analysis of resales across six major high density developments over an 18-year period (1997 through to 2015) in Fortitude Valley and Brisbane’s CBD reveals an average annual rate of capital appreciation of 6% across the market. This is a healthy rate of appreciation and clearly highlights a long-term hold strategy for inner Brisbane apartment developments yields high returns, it says. 
Importantly, although resales do fluctuate over both the medium (five-year) and long terms, average annual median price growth has been recorded. It is equally important to note that across these timeframes owners of these apartments have been through the GFC and two periods of speculation of market oversupply (in 2003 and again in 2007).
In essence, a conservative approach to purchasing in inner Brisbane, on average, results in an appreciation in values. This study shows that ownership spanning across the GFC and speculative times of oversupply in 2003 and again in 2007 have failed to have a negative impact on market values over a longer term hold period.
The claim by CoreLogic RP Data  that 81,696 apartments would be delivered into Brisbane’s market over the next two years was unfounded. This figure assumes that 100 per cent of all stock will be funded which is not the case in an environment where three of the big four banks state that they are no longer funding apartment developments within inner Brisbane.
"Brisbane’s apartment market is heavily influenced by lending conditions and we expect to see the future supply environment contract considerably," it said.
Inner Brisbane’s current pipeline of new apartments was 20,456 including those yet to be approved.
If we use inner Brisbane as the benchmark, which is where the overwhelming majority of stock is to be developed, we currently have 3,886 apartments which are now deferred.
 
</div>
</div>
</div>
</div>
</div>
</div></body></html>

jchancellor-FAypfDUnLy

Brisbane's apartment settlement fears not credible: Lachlan Walker

<html><body>
<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Agriculture Minister Barnaby Joyce has announced a package of concessional loans and facilitation of access to assistance for the beleaguered dairy industry.
The government will make available immediately A$55 million in concessional loans for Murray Goulburn and Fonterra suppliers, and access to $500 million of such loans over 2016-17 and 2017-18. These recovery loans will be for terms of ten years.
They will be funded by expanding the drought concessional loan scheme to include criteria that are specific to the dairy industry.
Dairy farmers have been squeezed as milk processors Murray Goulburn and Fonterra cut prices after they over-estimated returns from exports. Farmers have been faced with having to pay back advances that had already been given to them.
There has been considerable public support for their plight, with some consumers favouring the higher-priced brands of milk rather than the cheaper home brand in supermarkets.
The government has resisted calls for a levy on milk.
The government says opposition agriculture spokesman Joel Fitzgibbon was consulted in the development of the package under the convention of the “caretaker” period. But Fitzgibbon rejected this. “A vague letter last Friday might be Barnaby Joyce’s idea of consultation, but it is not mine,” he said.
The package includes a number of other measures, focused especially on helping farmers get access quickly to assistance.
There will be $900,000 for an extra nine rural financial counsellors in Victoria, Tasmania, South Australia and New South Wales, and $900,000 to Dairy Australia to continue rolling out one-on-one business advisory support under the Tactics for Tight Times programs.
Applications for the Farm Household Allowance will be fast-tracked, with a decision made almost immediately in cases of real hardship when the necessary information is available. Case officers will be available to talk with the farmer’s accountant or financial adviser to speed up obtaining the information.
One-stop-shop mobile service centres are now travelling through dairy areas of Victoria and South Australia to give direct access to a full range of government services.
A Dairy Industry Liaison Officer will be appointed to work on the ground with farmers and communities to co-ordinate support and services.
Joyce said that in a sign of “strong confidence in the industry’s future”, a re-elected Coalition government would commit $20 million to build the upgrade of the Macalister Irrigation System in Gippsland. This would upgrade the 1920s and 1950s era Southern-Tinamba area irrigation network, delivering almost ten gigalitres in water savings that could be put back into growing the region’s agricultural production, he said.
The Coalition would also work with the industry to establish a commodity milk price index, to help ensure the domestic industry did not in future find itself in a situation where processors unexpectedly reduced farm gate milk prices late in the season.
“The index would introduce greater transparency and market signals in domestic and global milk prices. The Coalition will consult with the industry on the design of the index that would provide dairy farmers with valuable information for use in supply negotiations with processors and to assist in following international price trends,” Joyce said.
Fitzgibbon said he supported everything that was in the package but it was not enough. It fell well short of farmers' expectations and they would be “bitterly disappointed”.
He said the key issue was delivering a cash flow improvement but the package “does very little for cash flow” and so would be of little assistance.
Michelle Grattan is professorial fellow, University of Canberra and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/michelle-grattan-20316" target="_blank">here</a>.
</body></html>

Dairy farmers get $555 million in concessional loans

<html><body>
<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Companies could improve their profits by 2-10 percent each year by saving energy. That’s just one of the findings of ClimateWorks Australia’s Energy Productivity Index, a world-first attempt to assess companies' energy performance and help investors make better decisions.
Investors are increasingly engaging with companies to address the risks associated with climate change. Extreme weather events, carbon-intensive assets and greenhouse gas emissions are becoming part of a routine risk assessment on the impact of a company’s profitability.
While a company’s energy use can have a significant impact on its bottom line and environmental credentials, energy productivity and efficiency have traditionally been difficult for investors to assess. This is mainly due to a lack of tools to measure and assess energy use and poor levels of disclosure by companies.
My colleagues and I have developed a guide to help investors figure out how potential investments are performing. We assessed 70 companies across six industrial sectors: airlines, automobiles, paper, steel, chemicals and construction.
<h2>Saving energy …</h2>
Many industrial companies spend a huge part of their operating expenditure on energy – typically more than 15 percent.
Energy productivity generally refers to the amount of revenue per unit of energy, so improving energy productivity can greatly improve a business’s investment value.
We found that more than 70% of the companies analysed have significant room for improvement in their energy use. Even more startling is the wide variation between companies in the same sector.
In some sectors, the leaders are achieving energy productivity levels up to five times the levels of poorer performers.
For example, in the automobile sector, Toyota produces eight times more vehicles per gigajoule of energy used than the least productive company, Daimler.
<h2>… making money</h2>
We also found that improving energy efficiency (by using less energy) could significantly boost a company’s profit. Of all the sectors analysed, airline companies reported the largest savings.
United Continental reported annual savings of US$343 million in 2014. This was achieved through initiatives that reduce fuel use, such as improved flight planning, replacing old planes, washing engines and installing winglets.
And despite operating in an energy-intensive sector, steel company Arcelor Mittal achieved almost US$200 million in energy savings in 2014.
The analysis also shows that one-third of the companies analysed could boost their profit margins by more than 5% a year if they matched the performance of leaders in their sector.
Even accounting for upfront capital costs needed to achieve best practice, energy efficiency can still increase profits by 2-10% each year. Most energy initiatives could be paid off in less than three years.
Even a 2% improvement in profits for companies in the automobile sector would be equal to about US$100 million. To achieve an equivalent increase in profits from revenue growth, a company would need to sell an extra 90,000 cars each year.
<h2>Ranking companies</h2>
Several factors affect a company’s energy performance. We looked at three:
<ul>
<li>
Resilience to energy costs measured through how much a company spends on energy and its profitability. A company that spends less on energy and has greater profitability is more resilient to changes in energy prices.
</li>
<li>
Energy productivity measured by a company’s current ability to generate revenue or increase its production per unit of energy used.
</li>
<li>
Energy efficiency measured by a company’s efforts in identifying and implementing energy savings. We included the extra financial gain of a company matching the energy efficiency of leading performers.
</li>
</ul>
While we were able to rank many companies, we found that many others are not disclosing sufficient data on energy use to be assessed. Of 181 companies that reported in the six sectors analysed, 73 had incomplete or insufficient data for benchmarking. Much improvement is needed on data availability and data quality.
<h2>The global goal</h2>
While improving energy performance may be great for the bottom line, there’s another big reason energy use is so important. According to the International Energy Agency, energy-efficiency gains could achieve about 40 percent of the emissions reductions required by 2050 to limit global warming to less than 2℃.
Engaging with companies in their portfolios to improve their energy productivity is a measurable and profitable way to reduce emissions and avoid dangerous climate change.
Improving energy productivity has benefits not just for those investors and companies directly involved, but for all of us.
Wei Sue is business analyst, ClimateWorks Australia, Monash University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/wei-sue-269412" target="_blank">here</a>.
</body></html>

Reducing energy use is a big winner for business and the climate

<html><body><div class="page" title="Page 2">
<div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">GUEST OBSERVER </div>
<div class="column">
 The ‘baton pass’ from engineering to residential building is clear for all to see.</div>
<div class="column"> </div>
<div class="column">Engineering work continues to recede while home building has hit new highs. Interestingly the gap between building (residential and commercial) and engineering in terms of total work is the largest in almost for six years. The results are even more staggering when you consider that just over two years ago engineering work surpassed total building by more than $11 billion. The speed of the turnaround has shown up in the patchiness across the national economy and in effect highlights the difficulties faced by policymakers in trying to shore up growth.</div>
<div class="column"> </div>
<div class="column">Interestingly inflation in the building sector seems to be more subdued than in the past year. Granted the annual rate of construction inflation is the fastest in almost five years. But it is largely due to a couple of outsized inflation in the September and December quarters last year. In fact the more sedate 0.5 per cent March quarter inflation reading resonates with the modest consolidation taking place in the housing sector and adds to the lack of inflation across the broader economy. The lack of inflation in the rest of the economy is likely to keep the Reserve Bank focussed on supporting price growth. </div>
<div class="column">
 <a href="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%203.53.34%20PM.png" target="_blank">Click to enlarge</a>
</div>
<div class="column"><img src="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%203.53.34%20PM.png" alt=""></div>
<div class="column">
 
The data is unlikely to alter the Reserve Banks thinking when it comes to rates.
The focus now turns to the March quarter business investment data released tomorrow. And while the Reserve Bank will be particularly interested in estimates of completed non-mining investment, there will be a much greater focus on future spending plans. In the March quarter the first estimate of investment in 2016/17 was just $82.57 billion (weakest result since 2007/08), and 19.5 per cent lower than the first estimate for 2015/16 – marking the largest fall for a first estimate reading in records going back 25 years.
While policymakers will continue to discuss the merits of another rate cut, it really comes down to the inflation outlook. CommSec expects a low inflation result over the June quarter should result in the central bank cutting the cash rate in August.
What do the figures show?
Construction Work
Construction work done fell by 2.6 percent in real (inflation-adjusted) terms in the March quarter after sliding by 2.9 percent in the December quarter. 
Work done is down by 6.7 percent on a year ago. Public sector construction work rose by 2.5 percent in the quarter while private sector activity fell by 3.7 percent. 
Construction work fell in five of the states and territories in the March quarter. Leading the falls was Northern Territory (down 10.2 percent), followed by Western Australia (down 9.3 percent), South Australia (down 3.2 percent), Queensland (down 2.9 percent) and Victoria (down 1 percent). Construction rose in NSW (up 2.6 percent), the ACT (up 2.3 percent) and Tasmania (up 1.9 percent).
Engineering work fell by 4.2 percent in the March quarter. Engineering construction is down by 13.7 percent on a year ago.
Commercial (non-residential) building fell by 5.5 percent in the March quarter to be down 7.2 percent over the year. 
Residential building rose by 1.5 percent in the March quarter and was up by 5.7 percent over the year. Alterations &amp; additions rose by 1.1 percent in the quarter while new residential work rose by 1.5 percent.
The measure of inflation in the construction sector (deflator) rose by 0.5 percent in the March quarter. The annual rate of construction inflation rose from 1.9 percent to 2.3 percent – matching the fastest annual growth rate in almost five years.
Engineering prices rose by 0.6 percent in the quarter (up 1.9 percent over the year) while building prices rose by 0.4 percent in the quarter (2.3 percent over the year).
What is the importance of the economic data?
The Bureau of Statistics releases quarterly estimates of Construction work done. The estimates are based on a survey and cover around 85 per cent of the construction work done in the period. Revised estimates will be released in coming months. The data is useful largely for historical purposes but the work yet to be done estimates provide an early warning signal of future activity. The residential work figures give a good early guide to the strength of residential investment in the national accounts. 
What are the implications for interest rates and investors?
There is plenty of work in the construction sector. But there are winners and losers across states and industry sectors. The Reserve Bank will not be overly concerned with the current trends in construction. Overall activity is correcting as expected and adjusting to the new realities. We expect the Reserve Bank to cut rates once again in August.
</div>
<div class="column"><a href="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%203.58.10%20PM.png" target="_blank">Click to enlarge</a></div>
</div>
</div>
</div>
<div class="layoutArea">
<div class="column"><img src="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%203.58.10%20PM.png" alt=""></div>
<div class="column">Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></div>
</div>
</div></body></html>

Construction eases, home building at record highs: CommSec's Savanth Sebastian

<html><body>
<img src="https://counter.theconversation.edu.au/content/59607/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The history of the dairy cooperative Murray Goulburn and its farmer suppliers shows how a close relationship of trust has developed and been broken with the collapse of the farmgate milk price. Roots of the current crisis can be traced all the way back to the deregulation of the dairy industry at the start of the century.
Murray Goulburn was founded in Victoria in 1950 and grew steadily over the next two decades to become the nation’s largest dairy company by 1973. In its 2015 annual report it recorded total assets of over A$1.84 billion and total revenues of A$2.88 billion. It holds a large portion of the dairy market, in 2016 it was estimated by IBISWorld to have just over 42% of the national market for milk powder and 31% of the national market for milk and cream.
Over half its revenue comes from exports, primarily into Asia. It’s also the nation’s largest buyer of raw milk, employing around 2,400 people and with approximately 2,500 members.
<h2>Deregulation and the “keystone” role of cooperatives</h2>
The deregulation of the Australian dairy sector started in 1999 and rolled out over the following year. It saw the repeal of existing state legislation regulating the supply and pricing of milk.
The impact of this deregulation was mixed across Australia but it led to the decline in the total number of dairy farmers, from around 10,000 in 2000 to about 6,061 in 2016. It is likely to fall even more over coming years.
Despite increases in the overall size of dairy farms, most remain small-scale, family owned businesses. Dairy farming requires higher levels of capital investment than most other agricultural sectors, with major expenses being automated milking machines.
Milk is now essentially a global commodity and dairy farmers are price takers. With the need to invest more into capital equipment, fuel and stock feed, profit margins in the sector have been squeezed.
Over the past five years the average profit margin for dairy farms has fallen. Any decline in the farmgate milk price will only put many producers into unsustainable losses unless they can increase economies of scale by having larger herds or lower input costs.
Another consequence of the deregulation of the dairy industry has been the decline in cooperatives. The Dairy Farmers Cooperative was sold to National Foods (now Lion) in 2008, and Bega Cheese demutualised in 2011 and listed on the ASX. Today there are about nine dairy cooperatives active in Australia, the largest of these are Murray Goulburn and Norco Ltd from northern NSW.
A dairy farmer feeds his cows on a QLD dairy farm. Dan Peled/AAP
Cooperatives like Murray Goulburn are different from other businesses. The cooperative should be focused primarily on its members’ welfare and as such it is unusual for them to be able to satisfy the often competing interests of members as patrons and outside investors from the ASX.
A well-run cooperative can be sustainable and profitable. It can serve as a “keystone” business that helps sustain its members. Keystone businesses are those firms that serve as a major buyer or supplier for many smaller “niche” firms, helping to keep the smaller firms more sustainable for an entire industry.
The approach taken in terms of milk supply and pricing is an example. Since the dereguation of the dairy industry Murray Goulburn has effectively set the farmgate milk price across most of the Australian dairy sector. It also takes all the milk its members wish to supply.
This stabilising and coordinating or “keystone” role within the dairy industry has been a feature of Murray Goulburn since market deregulation. Given the size of the cooperative anything that might affect its long term operations will have significant impact on the Australian dairy industry.
<h2>The issue of trust in a cooperative</h2>
Cooperative enterprises are owned by their members who also have a trading or patronage relationship with them. What differentiates them from other businesses is the democratic governance of the business, with member-owners having a say in major strategic decisions.
Management of a cooperative is therefore more complex and the board and executive leadership team must maintain the trust and loyalty of the members to keep the business strong. They also need to balance the member’s interests as suppliers (patrons) and as investors, while encouraging them to see themselves as owners of the cooperative and members of a community of purpose.
The financial strength of the cooperative is only as important as the financial strength of its members. To survive the cooperative must maintain a clear social and economic purpose with the members' interests first and foremost.
Gary Helou, then CEO, was part of a new management team brought into Murray Goulburn in 2011 to modernise and strengthen the cooperative’s leadership. However, his management style appears to have been more in keeping with that of a regular firm.
Recent revelations by Fairfax Media suggest that Helou and the senior management of Murray Goulburn had evidence of declining export sales as early as July last year. However, they continued to promise farmers a “guaranteed” high farmgate milk price and share price.
Although a capital restructure at Murray Goulburn was endorsed by the board it raised some concerns in the financial press and among former directors. The financial crisis that the cooperative has found itself in is something of a self-inflicted wound.
It has sought to “walk both sides of the street” with its ASX listing and overconfident pronouncements of keeping the farmgate milk price at around $6 per kg/MS.
Dairy farmers who are or once were members and shareholders have lost money. Many retired farmers who had their preference shares converted to the ASX listed ordinary shares have seen the value of their stock collapse. For their younger active counterparts the loss of share value is compounded by the lower milk price with many facing debts of A$100,000 to A$120,000.
Former CEO Gary Helou and former CFO Brad Hingle have departed Murray Goulburn leaving the cooperative’s board and Chairman Philip Tracy to face down angry farmers and shareholders, plus a class action led by legal firm Slater and Gordon.
Murray Goulburn’s members have been essentially turned from owners and members of a democratic community of purpose, into suppliers and investors whose share value is linked to the price of a litre of milk. That’s where the problem lies.
This is not necessarily the end of Murray Goulburn, however, they will need to regain the trust of their members and demonstrate that as a cooperative their primary focus is on the well-being of their farmer members.
As a business it must be frugal and focused on delivering its members the best prices at the lowest costs it can. Any investment and growth should be designed to provide its members with the best long term returns to their businesses as suppliers or buyers, not just to see the value of its share capital appreciate.
Of equal importance is the cooperative’s ability to keep its members loyal not just through the prices or dividends that it offers, but because they feel a sense of ownership and being part of a community of purpose that would be lost if the cooperative disappeared.
Tim Mazzarol is Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy, University of Western Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/tim-mazzarol-1526" target="_blank">here</a>.
</body></html>

Murray Goulburn saga has roots in deregulation

<html><body>
GUEST OBSERVER
Construction work is trending lower from historic highs, led lower by the mining investment downturn.
With the sector accounting for 14 percent of the economy this is a material headwind.
Total construction work fell by 2.6 percent in Q1, broadly as we expected (Westpac f/c -2.2 percent and market median -1.5 percent).
Over the past year, construction activity is down by 6.7 percent.
In dollar terms, work fell by $1.3bn in the quarter, of which $1.2bn was due to a drop in private infrastructure activity. 
The detail was also broadly as anticipated.
Private infrastructure work fell sharply, albeit not as rapidly as in Q4, as work on major mining projects nears completions.
Public infrastructure advanced for a 3rd consecutive quarter as work on key transport projects gets underway.
The new home building boom continues, although the rate of growth is moderating.
The private commercial building cycle has turned, consistent with the 20% drop in approvals over the past couple of years.
Details
Total construction                –2.6 percent Private construction            –3.7 percent Public construction             +2.5 percent
Private - by segment
Infrastructure                        –6.8 percent Dwelling, new                      +1.5 percent Dwelling renovations          +0.9 percent Non-res. building                 –7.6 percent
Public - by segment
Infrastructure                        +2.2 percent Building                                 +3.5 percent
 
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>. 
</body></html>

Australian Q1 construction work down 2.6 percent: Westpac's Andrew Hanlan

<html><body>
The RBA governor Glenn Stevens yesterday acknowledged the RBA had been paying quite a bit of attention to what's been happening in the housing market. 
He says the bank focuses not just on prices, but also on housing credit, adding that APRA's regulatory curbs on investment lending have worked effectively in parts of the market that were showing signs of "exuberance".
Stevens noted that households are managing the record levels of debt "quite well".
But he warned that investing in housing isn't a one-way bet, saying house price can also fall.
"The assumption that there is an easy road to riches through the leveraged holding of real estate, that is not a great strategy," he remarks at the Trans-Tasman Business Circle boardroom briefing in Sydney.
"While I've been in this job we've seen them (house prices) fall two or three times."
The ABC noted the Reserve Bank governor warning that the next government faces years of hard budget repair work, and inflation will be difficult to lift.
Asked about his views on Treasury's economic forecasts versus the bank's own predictions, Mr Stevens said there was little difference between them.
However, he also warned that whichever party is elected on July 2 faces a long and difficult task of budget repair.
"The budgetary situation will be OK if nothing else goes wrong, but you can't really assume in life that nothing will go wrong over an extended period.
"So I suspect that there's quite some years of hard repair work ahead for whoever is the government over the period ahead."
</body></html>

Glenn Stevens warns house prices can fall

<html><body>
GUEST OBSERVER
An election may be just over a month away, but it is so far, so good for the economy. Consumer confidence hasn’t fallen in the past four weeks, and hopefully that means that people are just quietly getting on with life. Usually election periods are viewed with suspicion – with uncertainty about the likely outcome causing people to delay spending, investing or hiring staff.
But consumer sentiment remains positive and above long-term averages. Importantly, the outlook for family finances remains well above long-term averages.  
In terms of consumer confidence, the Reserve Bank is keenly focussed on the outlook for family finances. Simply, if the outlook for finances is positive, consumers are more likely to spend. The good news is that Aussie consumers positively view the outlook for their finances with the latest survey result not far off the best level seen in six years.  
<a href="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%209.58.57%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%209.58.57%20AM.png" alt="">
The Reserve Bank Governor covered a lot of ground at today’s question and answer “unplugged” session. Amongst the topics discussed were inflation and inflation targeting; China’s economic transition; industries of the future; household finances; and the supply of housing and home prices. The key takeaway is that while growth is good – but could be better – and unemployment has come down, inflation is too low. That by itself doesn’t point to lower rates ahead. The Reserve Bank Governor also indicated his belief that inflation will eventually lift and be back in the 2-3 percent target band.  
The Reserve Bank Governor noted that ‘leverage’ was a factor being monitored closely when assessing the state of the housing market. While households were holding more debt and were doing a good job with managing their finances, the Reserve Bank Governor indicated that debt couldn’t continue to rise much further from current levels.  
Asked about what industries will provide future economic growth, Governor Stevens said that growth would come from a variety of places. He indicated for that to happen it was important to have the “right overall policy settings”. Policy settings include the labour market, competition policy as well as those encouraging innovation and risk taking.  
<div class="page" title="Page 2">
<div class="layoutArea">
<div class="column">
What do the figures show? 
Consumer confidence 
The ANZ/Roy Morgan consumer confidence rating rose by 0.5 per cent to 115.7 in the week to May 22. Confidence is up 1.9 per cent over the year, up 3.6 per cent over the past four weeks and above the average of 112.1 since 2014. Three of the five components of the index rose in the latest week:</div>
<div class="column"> </div>
<div class="column">The estimate of family finances compared with a year ago was up from +4 to +5; The estimate of family finances over the next year was up from +26 to +29; Economic conditions over the next 12 months was unchanged at +3; Economic conditions over the next 5 years was down from +10 to +7;</div>
<div class="column"> </div>
<div class="column">The measure of whether it was a good time to buy a major household item was up from +33 points to +34 points.</div>
<div class="column">Reserve Bank Governor Remarks
The appearance by the Reserve Bank Governor was termed an “unplugged” session – involving him answering questions from a facilitator as well as the audience.
The Reserve Bank Governor reiterated his defence of the current 2-3 per cent inflation target band.
Governor Stevens suggested there would be “quite some years of hard repair work ahead” for the Federal Budget.</div>
<div class="column">The Australian economy was regarded in good shape: growth was good, but could be stronger; unemployment had fallen and had been better than the Reserve Bank expected a year ago; but inflation was too low.</div>
<div class="column">
 The Reserve Bank Governor said that China was "making reasonable progress" with the shift from manufacturing to services and consumption-led growth. The Aussie dollar was currently "doing what you expect it to do". The Governor seemed comfortable with the current level of the currency.</div>
<div class="column"> </div>
<div class="column">While a lot of housing supply was set to come on to the market, the Governor noted that this was necessary as for a period of time not enough homes were being built. If the lift in housing supply met the level of demand with little change in prices, the Governor noted that this was the desired outcome from an economic standpoint. He didn’t make any observation on future home prices. He repeated his advice, though, that Aussie home buyers and owners shouldn’t expect that home prices would always rise. The Reserve Bank Governor noted that leverage was a key issue when assessing the current state of the housing market.
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank. 
What are the implications for interest rates and investors?</div>
<div class="column"> </div>
<div class="column">It is clear when looking across all the key economic indicators that the economy remains in good shape. If rates are to be cut again, Reserve Bank Board members may take some persuading that a rate cut is in the interests of the economy. The state of the housing market would provide a key input into the discussion process.</div>
<div class="column">
 The encouraging readings on the outlook for family finances are positive for retailers and other consumer- focussed businesses. The Aussie dollar broadly fell from US72.20c to US71.95c in response to the Governor’s remarks. The Governor didn’t close the door on future rate cuts.  
</div>
<div class="column"><a href="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%2010.00.42%20AM.png" target="_blank">Click to enlarge</a></div>
<div class="column"><img src="/images/2016/05/25/Screen%20Shot%202016-05-25%20at%2010.00.42%20AM.png" alt=""></div>
<div class="column"> </div>
<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
</div>
</div>
</body></html>

Confident Aussies, RBA Governor “unplugged”: CommSec's Craig James

<html><body>
GUEST OBSERVER
Australian companies can greatly boost their profitability by making industrial property decisions in strong consultation with supply chain and logistics directors.
There is a growing trend – and it seems to be happening with more urgency – that industrial property companies who’ve traditionally only done deals within their industry need to be made more aware of the growing influence and control of supply chain directors in making property-related decisions.
Within that space, a lot of automation and trends coming down from North America and Europe have the fundamental ability to disrupt how people go about planning their warehouses and distribution centres in Australia today.
By both driving costs and service, supply chains are also being used to add value to the customer experience. Automation allows companies to reduce warehouse footprints, lower head count and improve overall performance. 
Property is an enabler; it’s not a primary decision. So, we basically look at what the company wants to achieve in terms of the customer-service requirements and the competitive landscape. We then provide them with fact-based recommendations to assist their decision on the best infrastructure to support the company’s customer promise – at least cost.
In addition, Siecap regularly conducts studies for the property sector on site logistics implications. Key supply chain cost drivers which need to be taken into account include: site occupancy encompassing real estate, facilities and overheads; labour and handling; inbound freight; inventory and outbound freight and potential surrounding infrastructure changes which could influence these elements.
Companies which have factored logistics into their property decisions have enjoyed network operating cost reductions in the range of 10 to 16 per cent, as well as infrastructure cost reductions and logistics cost and service improvements.
David Irvine is chief executive officer of Brisbane project management and advisory firm Siecap and can be contacted <a href="https://www.siecap.com.au" target="_blank">here</a>.
</body></html>

Property supply chains key to success: David Irvine

<html><body>
A local Melbourne investor has secured a sushi bar in the seaside town of Rye on the Mornington Peninsula in Victoria.
It fetched $1.565 million at auction.
The 194sq m retail property tenanted by Sushi Express at 2379 Point Nepean Road sold at a yield of 3.3 per cent.
CBRE negotiated the sale for a local family vendor.
</body></html>

Rye sushi sells at 3.3 percent yield

The Victorian Government has secured the passage of the Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026, introducing a suite of reforms aimed at improving consumer protection and confidence in the apartment market.

Resilience Insurance, Australia’s leading Latent Defects Insurance (LDI) provider, has welcomed the move.

The LDI elements of the Bill passed with bipartisan support and now moves to the Legislative Council where debate and passage are expected later this month. It represents a significant milestone in the national shift toward stronger, longer-term protection for apartment buyers.&nbsp;

The reform would deliver practical benefits across the housing system. Apartment owners will have stronger protection if major defects emerge, developers and builders will have a clearer quality framework to work within, and the State will reduce the risk of serious building failures becoming a long-term financial and social burden for households, communities and government.&nbsp;

LDI helps support apartment delivery while providing stronger protection for buyers and encouraging better construction outcomes.&nbsp;

Resilience LDI provides apartment owners with 10 years of insurance-backed cover for major structural defects from completion, with direct claim access to the insurer. This means owners are not required to first pursue developers or builders through costly legal action before accessing protection.&nbsp;

Resilience Insurance has been operating in Australia since 2022 and has already insured hundreds of development projects covering many thousands of apartments across Australia.&nbsp;

At approximately 1.8 per cent of build cost, it is a cost-competitive alternative to the traditional two per cent Strata Bond, bond while delivering significantly broader and longer protection.&nbsp;

“The Victorian Lower House vote shows that reforms like this succeed when they are practical, evidence-based and supported by industry," says Corey Nugent, CEO of Resilience Insurance.

"Victoria is moving quickly on a reform that will make a real difference for apartment buyers, while supporting better building outcomes and greater confidence in apartment delivery.

“This is step one. We look forward to the Bill completing its passage through the Legislative Council and to working with government and industry to implement the framework effectively.”&nbsp;

Fast Facts: What is Resilience LDI?&nbsp;

<ul>
	<li>Resilience Latent Defects Insurance (LDI): Covers major structural defects for 10 years from completion.&nbsp;</li>
	<li>Consumer-first: Direct claim access, no need for lengthy legal action.&nbsp;</li>
	<li>Cost advantage: At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.&nbsp;</li>
	<li>Market leader: Resilience Insurance is the first approved LDI provider in NSW.</li>
</ul>

The Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 has passed the Victorian Lower House, putting Victoria on track to become the first state to legislate an industry workable LDI framework as a formal alternative to the Strata Building bond. 

Joel Robinson

10-year Latent Defects Insurance for new apartment buyers set to land in Victoria

Just a few months after acquiring a prime Broadbeach site on the corner of First Avenue and Surf Parade, family-run developer <a href="https://www.apartments.com.au/developers/raptis">Raptis</a> has filed fresh plans for a new apartment development.

Raptis is seeking to deliver a <a href="https://www.apartments.com.au/new-apartments/17-19-first-avenue-broadbeach-qld-4217">29-storey tower with 73 apartments</a> on the 818 sqm site. It will be the developer's seventh project in the suburb, as they are approaching completion of The Sterling on George Avenue.

There will be a pool, barbecue and outdoor dining area, residents lounge and dining, sauna and steam room, gym, and a Yoga and Pilates studio.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="b554da3f-7344-49aa-b1c9-44cf459af0d7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%2010.41.45%E2%80%AFAM.png?VersionId=zzjWu1iO1wnuYv4EV4fyOyf5nSXjGYut" />

Raptis Joint Managing Director, Evan Raptis, says they remain&nbsp;committed to developing quality infill sites across the Gold Coast in the lead-up to the 2032 Brisbane Olympics.

"This project continues our long track record of delivery in Broadbeach, and we look forward to bringing another premium development to this thriving precinct."

The announcement follows strong delivery momentum for Raptis, with The Sterling Broadbeach nearing completion and construction well underway on the final stage of the Waterpoint community adjacent to Harbour Town. The developer's continued investment in the Gold Coast reflects confidence in the region's apartment market fundamentals, underpinned by sustained Southeast Queensland population growth.&nbsp;

The outlook for the region is further bolstered by infrastructure investment tied to the Brisbane 2032 Olympic Games, which is expected to drive continued economic and population growth across the SEQ corridor.&nbsp;

Subject to a favourable response from Gold Coast City Council, construction on the new First Avenue tower is targeted to commence before the end of 2026.&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/it-s-all-in-the-family-four-decades-later-raptis-continues-to-shape-the-gold-coast-skyline">It’s all in the family: Four decades later, Raptis continues to shape the Gold Coast skyline</a>

Read more: <a href="https://www.apartments.com.au/news/qld/raptis-secures-prime-surf-parade-site-for-next-broadbeach-apartment-development">Raptis secures prime Surf Parade site for next Broadbeach apartment development</a> 
&nbsp;

Gold Coast developer brings seventh Broadbeach project to market, targeting construction commencement before year end

First look: Raptis lodges plans for new 29-storey Broadbeach tower 

Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368853]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available.

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

Jonathan Chancellor

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News