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GUEST OBSERVER
Federal Opposition Leader Bill Shorten has announced plans to change negative gearing and the capital gains tax discount if Labor wins the next federal election.
Under costings released from the Parliamentary Budget Office, Labor’s proposed changes could save the budget $32.1 billion over 10 years once they come into force.
Key measures include:
<ul>
<li>Negative gearing to be restricted to "newly constructed homes"</li>
<li>Capital gains tax discount reduced from 50% to 25%</li>
<li>Both measures would come into force from July 2017</li>
<li>All existing investments under the scheme would be fully "grandfathered" and protected against the changes</li>
</ul>
With pressure on the current government to reduce the growing Budget deficit, and Treasurer Scott Morrison's refusal to rule out any changes in policy across the board, negative gearing would seem to be the one area squarely in the sights of both the government and the opposition, especially when you look at the statistics…
<ul>
<li>There are currently 1.2 million people who have negatively geared property, and most of these people are middle class Australians.</li>
<li>Australian Tax Office statistics show negatively geared property investors claim over $13 billion in losses each year, and the average loss per negatively geared investor is over $11,000</li>
<li>The average loss per negatively geared property doubles for people earning more than $180,000, to over $24,000.</li>
</ul>
Should our governments look beyond the numbers? Is it a false economy just to think that by tinkering with negative gearing it will solve the budgetary problem?
5 Reasons Why the Government Shouldn't Change Negative Gearing
1. Growing Population
With Australia's population set to grow significantly over the coming decades, our governments should be asking "How will we house these people?"
The government does not have the capacity, nor the finance, to provide public housing for the growing population so this is left to the private sector.
Negative gearing allows more Australians to invest in property, as the tax benefits assist with the cash flow to invest and hold onto that property. If negative gearing is changed and CGT concessions are reduced, it will mean less investors, less demand and less houses, and it will place further pressure on the government to fund and provide housing.
2. Financial Pressures of the Ageing Population
There are currently 1.2 million middle class Australians investing in property to generate a capital gain and increase their asset base for retirement, to subsequently ensure that they can maintain a standard of living in their retirement without having to solely rely on the aged pension.
If the government creates a blockage into entry for property investment by chipping away at the tax benefits or reduce capital gain concessions, property investment becomes less attractive. In the long term, this will see more Australians relying on government pensions, meaning less self-funded retirees and therefore further pressure will be placed on future budgets.
The government needs to take a long term view and look beyond today. A change to negative gearing and capital gain concessions will only make matters worse in the future.
3. A Drop in Property Prices
Will a change in negative gearing and capital gain concessions disincentivise investors and, if so, what impact will this have on property prices?
In the short term, we may see a dip in property prices due to lower demand and increased supply – which will impact on the economy across the board. State governments will miss out on a large chunk of revenue (via loss of stamp duties), which could mean less funding to spend on things such as education, hospitals and infrastructure at a state level. The federal government will then have to fork out more to state governments to compensate.
4. Knock On Effect to the Economy
Will the changes deter people from investing in property?
Due to the loss of the tax benefits, people will not be able to fund the cash flow of an investment property, meaning they simply won’t buy investment properties. This will cause a knock on effect similar to what we have seen in the mining industry after the boom.
It could also mean a rise in unemployment in the building sector and associated industries such as white goods, electrical and service related industries like real estate and everything that goes with it. As previously mentioned, state governments will be impacted with less revenue from stamp duties to spend on state infrastructures – which would also mean less jobs.
5. Short Term Thinking
For all of the reasons above, I can understand why the government might look at the numbers in front of them and think changing the rules around negative gearing and capital gain concessions is a win for budgetary reasons, but it is simply a case of short term thinking. The government really needs to take a deep breath, sit back and carefully consider what impact this will have on the economy long term.
Any changes made may increase revenue today, but they – or should I say we – could end up paying for this 10, 20 or 30 years down the track. To put it bluntly, a short term gain for long term pain is not good business.
With 1.2 million middle class Australian property investors impacted, changing the rules are negative gearing and capital gains concessions would be highly unpopular – and it could be a game changer for either political party.
David Naylor is co-founder &amp; non-executive director, Chan and Naylor National Accounting Group and can be contacted <a href="https://www.chan-naylor.com.au/" target="_blank">here</a>.
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Property 101: Five reasons why the government shouldn't change negative gearing

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GUEST OBSERVER
Recent statements from the Reserve Bank of Australia about a potential oversupply of apartments in Sydney will act as a brake on bank loans for new housing when much more supply is needed.
The NSW Department of Planning says that 33,200 new homes are needed each year for 20 years in Sydney but last financial year only 27,348 new homes were completed.
With a shortfall of nearly 6,000 new homes during the boom times it is essential that more homes are built across Sydney. Our concern is that the RBAs warnings will encourage banks to tighten up on lending for new homes particularly for apartments. Sydney already has housing approvals slowing down due to the council amalgamation process. The amalgamations mean that developers must obtain approval from two councils for planning agreements, a situation which slows down approvals.
Our members believe the market is still strong for new apartments in key parts of Sydney where cosmopolitan living is becoming the norm. They are concerned however that the market could be destabilised by a series of negative actions that combine to lower confidence in the industry.
As well as banks being tighter on lending there is a slow-down in investment from China due to local issues, the local government amalgamations are making approvals more difficult, statements from federal and state governments that hefty value capture taxes will be added to residential development in the near future, all will lessen confidence in the housing industry despite the clear need for more supply. 
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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Banks must support more housing for Sydney: Chris Johnson

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GUEST OBSERVER
The Reserve Bank Board minutes make it clear that policymakers are waiting on more timely economic data to gauge how the economy is tracking. 
However the minutes have also set the scene for next week inflation data and the subsequent May 3 Board meeting – highlighting potential triggers for an interest rate cut.
What makes the prospect of another rate cut a possibility in coming months is the discussion on the Australian dollar. Board members noted that the rising Australian dollar might “complicate ” the economic recovery –essentially hamper the rebalancing efforts “towards non-mining sectors of the economy ”.
A super low inflation result would pave the way for the Reserve Bank to cut rates again. However it would need to feel confident that a rate cut would have the desired impact in driving the Aussie dollar lower. Most central banks that have eased monetary policy in the past few months have seen their currency continue to strength. In addition it is difficult to justify another rate cut in light of unemployment falling to a 2ó-year low. No doubt if a slowdown due to the Federal election took place it could just tip the balance towards a rate cut.
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Consumer confidence rose for the first time in five weeks. The Aussie dollar is holding near US77 cents; interest rates are stable; and petrol prices are low. However the deciding factor for the decent lift in confidence last week would have to be the upbeat employment data last week and the rally in sharemarkets.
Unemployment fell to a 2ó-year low, while the ASX 200 index rose by 4.5 per cent – marking the strongest weekly rally since October last year.
The good news for retailers is that consumers are seemingly looking forward to the next year with a healthy level of optimism.
Consumers continue to believe it is a good time to buy a car, fridge, washing machine or television. The estimate of whether it was a good time to buy a major household item was at the best levels in since early January. Certainly retailers don’t seem to be  in a rush to lift prices, so affordability is good.
It may be that the looming discussion of a potential July 3 Federal election will dampen confidence levels in the next few months. In fact Qantas announced that the upcoming Federal election had resulted in “some softness in demand”. However the fundamentals are still sound.
What do the figures show?
Consumer confidence
The weekly ANZ/Roy Morgan consumer confidence rating  rose by 3.8 points (3.4 per cent) to 115.8 in the week to April 17. Confidence is up 6.4 per cent over the year and above the average of 112.1 since 2014. Four of the five components of the index rose in the latest week:
The estimate of family finances compared with a year ago was up  from +3 to +7;
The estimate of family finances over the next year was down  from +29 to +26;
Economic conditions over the next 12 months was up  from -6 to +1;
Economic conditions over the next 5 years was up  from +3 to +9;
The measure of whether it was a good time to buy a major household item was up  from +31 points to +36 points.
The key quotes from the Board minutes:
International conditions: “Indicators of global economic activity had eased a little over recent months, but were still consistent with growth in Australia's major trading partners remaining at a slightly below-average pace in the March quarter.” … “Members observed that these measures had been particularly weak for the Asian region.”
Domestic economy: “More recent data had suggested that the Australian economy had continued to grow at a moderate pace in early 2016 and that activity had continued to rebalance towards the non-mining sectors of the economy.”
Australian dollar:  “The Australian dollar had appreciated by almost 7 per cent against the US dollar over the past month. It had appreciated by 4 per cent on a trade-weighted basis, reflecting stronger domestic economic data, the rise in commodity prices and the fact that the renminbi (which has the highest weight in the trade-weighted basket) had depreciated by only slightly less against the Australian dollar than had the US dollar. At the time of the meeting, the Australian dollar was around its highest level since mid 2015.”...
“Members noted that an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy”.
Monetary policy:  “Members judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate. New information would allow the Board to reassess the outlook for inflation and decide whether the improvement in labour market conditions evident last year was continuing. Continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand.”
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.
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The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings. What are the implications for interest rates and investors?
CommSec doesn’t expect any change in the cash rate for the foreseeable future. Underlying inflation remains at the bottom of the 2-3 percent target band but should lift over 2016.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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RBA concerned by rising Aussie dollar: CBA's Savanth Sebastian

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Bell Potter have retained its buy recommendation on its recent sponsored float, McGrath Estate Agents, but now suggest $1.50 is the 12 month price target for the stock that was trading at sub $1 in trade for almost of Tuesday. In Wednesday trade it has been bought at between 99 cents and $1.02.
The prior stock price target suggested only mid-last week by Bell Potter was $2.25, which would have seen it trade at above its December 2015 IPO price at $2.10.
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However yesterday McGrath (MEA) downgraded its forecasts on the back of weaker than expected market conditions and now expects EBITDA to be $4-5m lower than the prospectus forecast.
"The downgrade is disappointing given the company was tracking to budget for the first nine months of FY16 and more so given it was largely attributed to the recently acquired Smollen Group," Bell Potter noted.
Bell Potter have downgraded its EPS forecasts in FY16, FY17 and FY18 by 15 percent, 25 percent and 24 percent respectively.
"Our revised FY16 EBITDA forecast of $26.5m is within the guidance range of $26-27m.
"Given the severity of the 4Q slowdown our earnings downgrades are higher in FY17 and FY18.
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"We now expect FY16 revenue of $137m compared to the revised guidance range of $136-140m, and EBITDA of $26.5m compare to revised guidance of $26-27m.
"We have updated each valuation we use in the determination of our price target for the earnings changes as well as market movements and the time creep.
"We have also increased the discount we apply in the relative valuations from 7.5% to 20% and the beta we apply in the WACC calculation used in the DCF from 1.35 to 1.60.
"The net result is a 33% reduction in our price target from $2.25 to $1.50.
"We retain our BUY recommendation given a 12 month total return of greater than 15%," the stockbroker told clients today.
<div>
JP Morgan has also slashed its year-end McGrath share price expectations from $2.20 to $1.60.
The investment bank and broking house Bell Potter were joint lead managers and underwriters on the December McGrath float. 
JP Morgan's new target price revalues the company at $215 million, 24 per cent lower than its $282 million December prospectus, which priced shares at $2.10. 
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<div>Shares in McGrath rallied on Tuesday, closing up 9.4 per cent at 99¢.</div>
<div> </div>
<div>The JP Morgan note was sub-headlined "Smollen Group sales drag down prospectus" a reference to McGrath agreeing to pay to acquire the 10 Smollen Sydney franchise offices, though some of the cash component – about $2.63 million in 2016 – can be clawed back due to under-performance.</div>
 
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McGrath Estate Agents is still a buy: Bell Potter

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GUEST OBSERVER
Today’s RBA Minutes are similar in most respects to the Statement following the April meeting. But the wording around the considerations for monetary policy implies to us that the easing bias is stronger.
Mainly because the higher Australian dollar (AUD) will “complicate” the economy’s adjustment to different growth drivers.
It may be that the RBA has decided that the fundamental drivers of the AUD, like global bulk commodity prices, are now more likely to be higher over the rest of the 2016.
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The minutes have a comment that the terms of trade is set to rise modestly because of the pick-up in bulk commodity prices. It means the risks on the AUD may be rebalancing to the upside, and away from the more comfortable (for the economy) levels under USD0.75. A higher AUD complicates lots of things, especially the inflation outlook. Lower inflation outcomes could justify lower cash rate settings than current. Especially if some more downside growth risks, like significant global financial market volatility, become reality.
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The minutes indicate a number of positive developments in the domestic economy. Established house price growth has continued to ease, reducing the risks around the property sector. The strong lift in supply of new apartments has also resulted in an easing of their prices. But demand conditions across the country vary considerably. Surveys of national business conditions have been more favourable recently, with signs of a pick-up in non-mining profits. But non-mining investment intentions remain broadly unchanged even though business credit growth has lifted over the past six months.
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Employment growth in the non-mining sectors has been strong. While the recent jobs data was weak, the RBA said it needed to be compared to the unusual strength of activity through late 2015. The unemployment rate looks to have peaked in mid-2015 and leading indicators of the jobs market are mixed. Wages growth remains subdued despite firm jobs growth. Unit labour costs growth has been negligible for the past four years.
There was no RBA commentary on the AUD that indicated that it was out of line with fundamentals. The minutes list the reasons for the AUD moving higher since late 2015. Namely, higher bulk commodity prices and above-trend GDP growth for 2015 of 3% and easy US monetary policy.
We expect the RBA to keep the cash rate at 2 percent over coming months. The domestic economy is rebalancing towards different growth drivers and employment growth is firm. The major issue is the trend to lower inflation outcomes. The higher AUD complicates the picture. So a very low underlying inflation result, say near 0.3%q/q and 1.7%pa, next Wednesday could support a rate cut.
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Michael Workman is senior economist, <a href="https://www.commbank.com.au/corporate/research?ei=mv_research" target="_blank">Commonwealth Bank</a>.
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RBA adopts stronger easing bias as higher AUD complicates economic adjustment

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GUEST OBSERVER
The headline CPI lifted 0.4 percent in Q4 compared to Westpac’s and the market’s 0.3 percent forecast. The annual rate is reported as 1.7 percent/yr compared to 1.5 percent/yr in Q3.
The core measures, which are seasonally adjusted and exclude extreme moves, rose 0.5 percent/qtr on par with the market’s expectation (Westpac was slightly higher at 0.6 percent/qtr). In the quarter, the trimmed mean gained 0.57 percent while the weighted median lifted 0.47 percent. The annual pace of the average of the core inflation measures is now 2.0 percent from 2.1 percent in Q3 (Q3 was revised from 2.2 percent).
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Of note in Q4 was some signs of pass through from a weaker AUD in the stronger than expected rise in clothing &amp; footwear (1.6 percent/qtr). However, in the quarter this was more than offset by the weaker than expected print from housing (0.1 percent/qtr). 
The March quarter brings solid “knowns” but many ‘unknowns’ linger.
 The March quarter will bring the usual inflationary pressure from health and education. We also see meaningful seasonal increases in tobacco. Another solid known is the significant offset from the fall in automotive fuel prices. But, as always, a large number of unknowns remain. We don’t have access to a lot of the data the ABS uses and, in many cases, it is not possible to replicate the survey process the ABS uses causing many small errors along the way. We use many alternative sources and surveys to guide our forecasts but in the end a large part of the forecast remains a judgement call.
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Automotive fuels are again a significant negative.
One of the most obvious events in the last few quarters has been the extreme volatility in the pump price of automotive fuels. From a peak at the start of the quarter of $1.20/l, the pump price fell to a low of $1.04/l by the end of February before finishing the quarter around $1.12/l. In terms of the quarterly averages, we forecast that the price of automotive fuels will fall around 11percent producing a significant —0.39ppt drag on the CPI. Fuel is again the most significant negative we have found for the December quarter CPI.
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We have noted before that the fall in Australian pump prices has lagged behind the Australian dollar price of Singapore gasoline. But at the end of the March quarter there was a lift in the AUD value of Singapore gasoline that was not reflected in the pump price. We previously had wondered if Australian prices had room to fall further, even with no additional fall in Singapore prices, as the spread returned to more normal levels. For now, at least, that spread has been normalised by rising Singapore prices.
Fruit &amp; vegetables set to be a modest drag.
This quarter our forecast for a 3 percent rise in vegetable prices is more than offset by the 7 percent fall in fruit prices. All up the 2.4 percent fall in fruit &amp; vegetable prices will provide a 0.07ppt drag on the CPI.
There are the usual seasonal rises in cereal products, pork and food additives. However, we are careful to contrast the ongoing price discounting we are seeing in the very competitive groceries space against the ongoing pass through of the weaker AUD to import foodstuffs. Our forecasts see food &amp; non-alcoholic beverages contribute less than 0.1ppt to the CPI.
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Seasonal rise in tobacco prices.
There is no indexing of tobacco in the March quarter but historically this quarter has tended to see strong rises anyway. We have taken the view that there is a clear risk of a strong rise in tobacco prices again this March quarter. We also note that the Inflation Gauge also reported solid price rises for tobacco in Q1.
Holiday travel costs will be reversed in Q3.
Holiday travel was a touch stronger than expected in Q4 following on from a weaker than expected print in Q3. So it would be tempting to put in a softer than usual forecast for Q1 but BITRE (Bureau of Infrastructure, Transport &amp; Regional Economics) data on best price economy airfares is pointing to just a modest decline, as good as flat. So with the Inflation Gauge highlighting some modest gains in domestic holiday travel we have pencilled in a 2percent rise in domestic holiday costs, added to the small 0.5percent rise in international holidays. The rise in international holidays is due to the trickle through impact of the depreciation of the AUD offsetting the usual out of season discounting.
Dwelling prices have moderated.
Dwelling prices have been very volatile of late. Melbourne dwelling prices were particularly volatile in 2015 but as the year ended we were surprised by a 0.2percent decline in Sydney dwelling prices - the softest print since Q4 2011. Just as we saw in Melbourne in 2014, we don’t expect this to be repeated and, in fact, a bit of a bounce 
Sydney dwelling prices is very likely.
Westpac is expecting dwelling prices to hold their more modest pace in Melbourne and Brisbane with the mix of outcomes in the other cities pointing to a 0.6percent gain in Q4.
Housing overall makes a positive contribution of 0.11ppts.
Rents are expected to remain on a very benign path with a gain of just 0.3percent (was 0.2percent in Q1 so there are downside risks to this forecast) with modest gains in other housing costs and utilities.
AUD depreciation will have a modest impact.
We also expect to see more, if still modest, pass through of the inflationary impact of the AUD depreciation. This will appear as a moderation to the usual seasonal discounting of household contents and services; our forecast for a 0.7percent fall follows on from a 0.6 percent rise in Q4 and an average fall of 1.1 percent in the previous three March quarters. We also expect to see more modest than usual discounting for clothing &amp; footwear, –1.1 percent/qtr compared to –2.5 percent/qtr in the last three March quarters.
Overall seasonality tends to be negative in Q1.
Despite the usual seasonal rise in pharmaceutical, heath services and education in Q1, the ABS now reports Q1 with a seasonal negative as our seasonally adjusted estimate, using the current ABS seasonal factors for March 2016, is 0.1ppt stronger at 0.5 percent than our headline CPI forecast. In fact rounding hides the full impact of the seasonal adjustment, 0.15ppts at two decimal places. Seasonal discounting in clothing &amp; footwear and household contents are now having a greater impact on seasonality in the survey than the annual price resetting in administrative prices.
There is an important caveat however: the ABS conducts concurrent seasonal re-analysis and the revisions to the seasonal factors can sometimes be quite significant. As such, we caution that we can’t be sure what the ABS will estimate as the seasonal impact in Q1. This matters as the components of the CPI are seasonally adjusted before they are trimmed for the core measures. As such, revisions to the seasonal factors can impact not just the current estimate of core inflation but also historical estimates.
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Core inflation to remain at the bottom of the band, just.
Westpac is forecasting the average of the core measures to rise 0.6percent in Q4 with the annual pace holding flat at 2.0percentyr.
Traded goods &amp; services are forecast to fall 1.3 percent/qtr moderating the annual pace to 0.7 percent/yr from 0.8percentyr; non-traded prices are also forecast to rise 1.2 percent/qtr lifting the annual pace to 2.5 percent/yr from 2.3 percent/yr. Non-traded prices remain the key source of inflationary pressures with the focus still on housing and recreation.
Risks balaced for headline, downside for core.
A seasonally soft March quarter is a recent phenomena that emerged during the time of a very robust AUD which appears to have inspired greater post-Christmas sales discounting. This March, we are expecting some modest pass through from the weaker AUD but falling petrol prices and modest gains in housing costs will keep the lid on both headline and core inflation. While the Melbourne Institute Inflation Gauge points to a robust Q1 CPI print, we acknowledge downside risks to our core inflation forecast as core inflation has recently tended to surprise us on the soft side. 
 
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Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.\
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Australian Q1 CPI preview: Westpac's Justin Smirk

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The new assistant minister for cities and digital transformation, Angus Taylor, spoke last week of his enthusiasm for a “new vehicle” for creating partnerships between all three levels of government to drive the sustainable growth of our cities.
This “tried and tested” vehicle is based on the UK government’s City Deals model, which has been running in England since 2012.
In a nutshell, this model encourages city councils or groupings of councils to work together more effectively in identifying local economic development opportunities. They then strike a deal with the central government to secure the funding necessary to realise these opportunities.
Part of the UK government’s so-called “localism agenda”, this approach was designed to give more power and freedom to localities so they could do what they thought best to achieve growth in their area.
This approach has been heavily spruiked in Australia by KPMG and by the Property Council of Australia to Taylor and his ministerial predecessor, Jamie Briggs. The Property Council’s Ken Morrison and KPMG’s Paul Low helpfully set out in their joint pamphlet nine reasons why this approach provides a model for Australian urban policy.
How do the City Deals stack up?
So let’s look at each of these reasons. How do they stand up to scrutiny? That includes the scrutiny of the UK National Audit Office (NAO), which in July 2015 published a progress review of the first wave of English City Deals.
<ol>
<li>It’s a contract – the deal is a deal! In Australia the deals will be more complicated if the partners have to come from each of the three levels of government. And, as we know, federal and state governments have been known to tear up deals struck by their predecessors.</li>
<li>The focus is on productivity and growth. The NAO review found that deal partners can struggle to agree on measures of growth and productivity. The Treasury and the Greater Manchester partnership took two years to agree the terms of their “earn back” deal.</li>
<li>They encourage local leadership and good governance. While it is a sensible move for some local councils to come together in combined authorities, some of these now look remarkably similar to the English Metropolitan Country Councils abolished in 1986 by a previous Conservative government. Creating a more efficient profile of local governments in Australia is a challenge many state and territory governments shy away from.</li>
<li>They use smarter tools for making infrastructure investment decisions. There is certainly scope for making infrastructure decisions on the basis of more comprehensive and rigorous criteria. It is somewhat incongruous, though, to prosecute a localism agenda while at the same time insisting on assessment by a central unit located within the Treasury.</li>
<li>They unlock innovative financing. The NAO review found that ministers often quickly published high-level ambitions, sometimes before departmental officials had agreed to specific funding packages. Haven’t we learnt to be cautious of policy rhetoric outstripping careful implementation planning?</li>
<li>They help join up economic, social and sustainability goals. While the goals might be joined up – an excellent ambition – it has proved extremely difficult to set up evaluation frameworks that can demonstrate with any rigour what the long-term impacts are and what would have happened without the deals.</li>
<li>They promote powerful political leadership. Directly elected mayors are already common in some parts of Australia and local councils are typically much smaller than in the UK. Whether a formal partnership of local councils in Australia would find it easy to allow one mayor to be first among equals is a moot point.</li>
<li>They promote financial literacy skills at the local level. City Deals did not provide any extra funding to build local management capacity. Local partners were expected to pool their resources to achieve this. The NAO concluded that this approach was not sustainable in the context of continuing reductions in central funding to local government.</li>
<li>They rely less on inefficient taxes. Without specifying what these inefficient taxes might be, we can safely assume this approach won’t involve any reform of negative gearing or capital gains tax on property holdings.</li>
</ol>
New titles, same old song
City Deals have been sold in the UK as a significantly new approach to urban policy, but they look remarkably similar to measures that have been promoted over the last 40 years.
Every UK urban policy initiative introduced since the mid-1970s has spoken of the importance of partnerships, cross-departmental co-ordination, multi-sectoral intervention and local leadership. While the titles of these initiatives may have changed, the song has remained the same.
And here lies the biggest challenge. We know that:
<ul>
<li>the problems are inter-related and the all levels of government need to work productively together and with other sectors;</li>
<li>departmental silos within government get in the way of strategic planning; and</li>
<li>scarce public resources need to be invested wisely.</li>
</ul>
And we know that to overcome these problems we need a much greater degree of policy stability and long-term, bipartisan commitment. What we do not need is to jump on yet another urban policy bandwagon from overseas – one that is already being tinkered with in its country of origin.
 
Paul Burton is professor of Urban Management and Planning &amp; Director, Urban Research Program, Griffith University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/paul-burton-5155" target="_blank">here</a>.
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City Deals: nine reasons this imported model of urban development demands due diligence

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An undisclosed developer in Erskineville in Sydney's inner-west has told the Australian Financial Review that an increasing number of her clients were getting knock backs from banks, even though they were pre-approved to buy apartments.
"Even with buyers who can pay, the banks are changing their minds, so of course there'll be a settlement problem," she said.
"If bank policies are consistent, they should honour what they have agreed to lend."
The developer said the local market was "fast retreating" as banks rein in their lending.
Overseas demand is still strong, but banks were stepping up their limits on those sales to as low 10 to 30 per cent.
It reported newly arrived migrants, who are one of the biggest groups of buyers, were being rejected because they have either little wage history or very new businesses.
"It doesn't make sense. The government and economists talk about growing population to fuel demand. But that demand is made up of new migrant families and business migrants who need homes.
"Of course they don't have much credit history in Australia."
The developer said the banks had mitigated their risks by reducing loan valuation ratios to about 70 to 80 percent. 
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Erskineville developer sees apartment settlement problems with bank lending

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Port Melbourne's 1 Dairy Lane premises have been listed with $3 million hopes.
The property was the Barry family’s <a href="https://www.realestate.com.au/property-house-vic-port+melbourne-121966490" target="_blank">Ideal Dairy</a>, dating from 1931.
Architect Jackson Clements Burrows has since transformed it into a warehouse-style urban oasis with brick walls, exposed trusses and beams.
There's now under-floor hydronic heating, car turntable, parents’ retreat with study and open-plan indoor/ outdoor living spaces.
It is listed through Hocking Stuart agent David Wood.
When is a pre-purchase building inspection a must?  What do they entail?  How does one interpret the results?  What defects can be fixed and which ones should prompt you to walk away. Jarrod McCabe, associate director, Wakelin Property Advisory and Peter Alexander, building inspector, Safehome Building Inspections present a webinar for Victorian home buyers on April 20. <a href="https://wakelin.com.au/inspection" target="_blank">Click here to register</a>.
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Ideal Dairy offering in Port Melbourne

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The world class winery Sweetwater, located in the rolling hills of the Hunter Valley, was withdrawn when listed to been auctioned today.
It was marketed at half the earlier price expectations.
Inspired by southern European vineyard estates, the<a href="https://jurds.com.au/listings/rural_sale-319321-pokolbin/" target="_blank"> 48 hectare Pokolbin holding now comes with $12 million plus hopes</a>.
Chinese buyers have heard of the repricing which triggered a spate of recent inspections by international visitors. But listing agent Alan Jurd said it was withdrawn because he didn’t have anyone willing to bid under auction conditions.
<div>"The vendor is very realistic however and has just given me instructions to reduce the price to above $12million," he said.</div>
Cabernet Sauvignon and Shiraz vines cover a third of the estate which dates back to the colonial 1840s.
Not just a winery and olive grove, the main residence is a stunning Mediterrean style construction that features private and guest wing accommodations.
Duncan Hardie's Sweetwater Wines purchased the land in 1997 with most of the vineyards dying or being grazed by cattle.
Hunter Valley wine veteran Brian McGuigan provided early advice on the layout and planting, having worked on the vineyard when he was about 18 years old.
It is being marketed by Alan Jurd of Jurds Real Estate as the "most significant country vineyard estate in Australia."
Alan had initially been asked to list it at over $30 million last year, then $15 million plus in the lead up to the auction.
Sweetwater Wines, part of the Hardie Holdings group, purchased the land in 1997 in Belford from Belford Pastoral Company, which was originally granted to the pioneering Richard Jones, a merchant and pastoralist.
In 1829 Jones had received 10,000 acres at Singleton in the Hunter Valley from where he established one of his finest vineyards in the Patrick Plains Shore at Sweetwater Creek off Old North Road. 
In 1844 from Jones’s first plantings, his vineyard produced a total of 2,000 gallons of wine. 
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Pokolbin's Sweetwater winery withdrawn from auction

A who's who of Australian surfing, business and entertainment has emerged on title records following the completion of Esprit Rainbow Bay, the latest boutique beachfront apartment development by former professional surfer Paul Gedoun's S&amp;S Projects.

The completed project has attracted an enviable collection of owners, many with long-standing ties to the southern Gold Coast and the surf culture that has helped define Rainbow Bay and neighbouring Kirra for generations.

Given Gedoun's own background in surfing, it perhaps comes as little surprise that some of Australia's most recognisable surfers have chosen to buy into the development overlooking one of the country's most celebrated stretches of coastline.

Pezet Matheson directors Jayde Pezet and Todd Matheson launched the project in late 2021, and have managed the sales campaign all the way through to its sell-out and recent completion.

<img alt="Esprit" data-entity-type="file" data-entity-uuid="08fc6261-b84e-4b09-8a44-66d3067fd0d1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-29%20at%208.51.05%E2%80%AFAM.png?VersionId=4AOcb6ETZwNUnMPdTtz1B3pZAIB_jgZ2" />

Former world champion Mick Fanning, who grew up in Coolangatta, secured an apartment in 2023. He paid&nbsp;$2.07 million. Last year he sold his Bilinga home for over $16 million.

Three-time world champion Joel Parkinson also purchased in the development, alongside big wave surfer Mark Mathews. Mathews bought the most expensive apartment in the building, spending just over $4 million.

Joining them is Rip Curl founder Doug Warbrick, whose company helped shape Australia's global surfing industry over the past five decades.

The appeal of Rainbow Bay has extended well beyond the surfing community.

International DJ Paul Fisher purchased an apartment through his investment vehicle, YLB Developments, an abbreviation of his trademark phrase "You Little Beauty".

The purchase comes as Fisher and his wife Chloe are developing their own luxury apartment project further north in Palm Beach. Their boutique beachfront development, Pescado, comprises just seven apartments on Jefferson Lane, which start from just shy of $6 million. The couple intend to retain the two-level penthouse as their Australian base between international touring commitments.

Melbourne Storm coach Craig Bellamy and his wife Wendy have also invested in Esprit, purchasing two apartments after spending decades holidaying on the southern Gold Coast. They also have a luxury apartment in Joe Adsett's Rockpool, less than 400m away from Esprit.

<h2>Boutique project draws owner-occupiers</h2>

Esprit launched in 2021 and sold strongly, with buyers drawn to its boutique scale, beachfront position and contemporary design.

The completed development comprises 94 apartments across 11 levels, offering expansive floorplans designed primarily for owner-occupiers rather than the investor market.

Crowning the building is Club Esprit, pitched as being the Gold Coast's first residential rooftop wellness centre. The roof features a&nbsp;25 metre magnesium lap pool, which is surrounded by wet daybeds and poolside cabanas,&nbsp;multiple barbecue areas,&nbsp;a yoga and relaxation play lawn, and a private dining room with a kitchen scullery, bar, lounges, and an outdoor terrace.

The wellness centre is&nbsp;fully equipped with a Technogym, ice bath, infra-red sauna, steam room, thermal room, and treatment room. The roof has views spanning&nbsp;Rainbow Bay, Snapper Rocks and the Pacific Ocean.

<h2>S&amp;S Projects continues to shape Rainbow Bay</h2>

S&amp;S Projects founder Paul Gedoun has become one of the key figures behind Rainbow Bay's evolution over the past several years.

After establishing S&amp;S Projects, Gedoun has focused on delivering lifestyle-driven apartment developments designed primarily for owner-occupiers seeking a permanent coastal home.

Esprit is Gedoun's third completed project in Rainbow Bay, following Flow and Awaken, both of which achieved record prices for the suburb.

He is now delivering <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, a 38-apartment development on Boundary Street that is currently selling, and has no plans to leave the precinct anytime soon. S&amp;S Projects has also lodged plans for its fifth Rainbow Bay development, an 88-apartment project on Boundary Street featuring a strong wellness focus.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">First look: S&amp;S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street</a>

&nbsp;

&nbsp;

&nbsp;

Joel Robinson

Who's who of buyers revealed as Esprit Rainbow Bay settles

Nature Based Cities (NBC), the not-for-profit organisation focused on improving biodiversity and nature outcomes in urban development, has launched its latest industry design guidelines and accreditation framework, this time targeting precinct-scale residential communities.

The move extends NBC’s influence beyond its initial focus on medium and high-density residential developments. Several projects have already achieved NBC accreditation since the launch of its Medium &amp; High-Density Residential Guidelines in early 2025.

The expansion into masterplanned communities and new residential precincts reflects the growing need for stronger nature-positive benchmarks as Australia’s outer suburban growth corridors continue to expand at pace.

Paul Hameister OAM, NBC Founder and the Executive Chairman of Melbourne developer Hamton who itself leans heavily into nature and biodiversity in its developments, says the&nbsp;nature-first approach to mitigate the effects of climate change has become standard in other parts of the world such as the UK, but Australia is lagging.&nbsp;Australia’s environmentally sustainable design (ESD) rating tools have no minimum mandatory requirements for living landscapes.

“We’ve always wanted to do more, and we know other developers who want to do more, but the ESD rating tools just aren’t there,” Hameister says. “In Australia, you can have a five-green-star rated building that’s concrete and glass with not a blade of grass. 
 
“The focus is on reducing emissions, which is laudable, but there hasn’t been enough attention paid to protecting and re-establishing nature. We need both for the health of the environment and for communities.”

He says that having now&nbsp;made good progress in supporting developers of medium and high-density residential projects, NBC is now looking to bolster better nature-based decision-making and recognise developers of greenfield projects in the outer ring and large inner-ring brownfield precincts, who want to champion nature and living landscape as a defining feature.

Since 2022, the not-for-profit has sought to remove the roadblocks preventing developers from incorporating nature and living landscapes into their projects, shifting the conversation from the reduction of emissions and grey infrastructure, toward recognising nature as an essential infrastructure.

The New Communities Design Guidelines and Scorecard arm developers with the tools needed to deliver a nature positive outcome for their new communities. Intended to be adopted at the outset of the planning process, the guidelines are designed to help create communities that are cooler, healthier and more resilient while also enhancing social wellbeing and long-term economic value.&nbsp;

New Communities developers seeking accreditation will be independently assessed across a range of key criteria including ecology, tree canopy, biodiversity, and walkability. Once the masterplan is complete and submitted for approval, the scorecard is formalised based on proposed outcomes. Projects that meet the NBC criteria will receive either Commended or Exemplary accreditation outcomes, creating a clear benchmark for nature-positive new communities in Australia.&nbsp;

Janis Fischer, Director at Tract and NBC Advisory Council member, said the development of new communities in our suburbs can have a substantial impact on nature and biodiversity.

"By incorporating nature-based design principles at the inception of a project, developers and their design teams can achieve nature positive outcomes that are good for both people and the planet.’’&nbsp;

NBC accredited New Community projects will gain access to NBC branding and marketing tools to help communicate their nature-based credentials to purchasers and the broader market.&nbsp;

Nature Based Cities: A new Australian benchmark for developing nature-positive new communities

Apartment buildings are increasingly being designed around how people actually live day to day, not just how they want a building to look.

For buyers, that shift is showing up in practical inclusions that respond to changing habits. Work-from-home spaces, EV charging, wellness amenities, secure bike storage and parcel management are becoming part of the broader apartment conversation, reflecting a move toward buildings that reduce friction in everyday life.

Online shopping has become one of the clearest examples of that change.

Australians spent a record $82.6 billion online in 2025, with nearly one in four retail dollars now spent online. That has made parcel delivery a regular part of apartment living, rather than an occasional inconvenience.

For apartment residents, however, the delivery process can be less straightforward than it is for detached homes. Parcels may be left in lobbies, redirected to Post Offices, missed entirely, or placed under the responsibility of building managers and concierge teams.

That is why secure parcel infrastructure is increasingly being considered alongside more familiar apartment amenities.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/-VjjLwoViX0?si=A3k7ws9NX35Uac7_" title="YouTube video player" width="560"></iframe>

Australia Post Parcel Lockers offer one way to address the issue. When a parcel arrives, residents receive a notification through the AusPost app or SMS, then collect it using a QR code or one-time PIN. The parcel is kept secure, accessible and removed from common areas.

The broader Parcel Locker network now includes more than 1,500 locations across Australia, positioned at Post Offices, shopping centres, supermarkets, transport hubs and other accessible locations.

For new apartment projects, the relevance is clear. A building’s amenity offering is no longer only about lifestyle spaces, but also about convenience, security and functionality.

As buyer expectations evolve, secure parcel delivery is becoming part of the same design conversation as flexible working, sustainable transport and resident wellbeing.

It is one less thing for residents to worry about, and another example of apartment design adapting to the way Australians now live.

Apartment design is adapting to the way Australians shop

While school holidays and trips to Europe tend to define the winter property market, there's been no cold snap at <a href="https://www.apartments.com.au/new-apartments/the-walden-north-sydney-177-walker-street-north-sydney-nsw-2060">The Walden</a> in North Sydney.

Developer-builder&nbsp;<a href="https://www.apartments.com.au/developers/aland">ALAND</a> sold more than $35 million worth of apartments throughout June, including a $6.8 million apartment that now ranks among the highest apartment sales ever recorded in North Sydney.

SRM Residential agent Ben Stewart said buyer demand throughout June reflected a mix of improving market confidence and longer-term thinking from owner-occupiers.

"We're seeing strong demand from owner-occupiers who are taking a longer-term view," Stewart said.

"Many recognise the opportunity to secure an apartment in an iconic building and premium location while values remain attractive. They may initially lease the property, but the intention is to eventually move in themselves, rather than purchasing purely as an investment."

[smartcode_project:default project_id=134323 project_image_fid=367129]

Located at 177 Walker Street, The Walden will deliver 161 one, two, three and four-bedroom residences across a 30-storey tower designed by Rothelowman. Every apartment occupies a corner position, maximising natural light, cross ventilation and views across Sydney Harbour, the Opera House, Sydney Heads and the northern districts.

Rather than a traditional balcony, the residences feature winter gardens that seamlessly extend the open plan living areas, creating versatile spaces for relaxing or entertaining throughout the year. Floor-to-ceiling glazing draws in natural light while showcasing sweeping views from the building's elevated Walker Street position.

Every apartment features high-end Calacatta marble, bespoke joinery, and fully integrated appliances.

The larger residences have been planned with distinct entertaining and private zones, with many master suites positioned on corners to capture natural light and harbour views. Walk-in dressing rooms, freestanding baths and refined stone finishes reinforce the house-like feel that has resonated with downsizers and owner-occupiers.

[smartcode_project:default project_id=134323 project_image_fid=6393]

Rothelowman Principal Ben Pomroy said the project was designed to make the most of its unique position overlooking the harbour.

"The Walden is a celebration of all things beautiful, curated for those who expect nothing less than exceptional," Pomroy says.

"Meticulously designed entertaining spaces and light-filled living areas that capitalise on capturing the natural beauty of Sydney's iconic harbour."

Residents will also have exclusive access to The Pavilion, a dedicated amenity building featuring a rooftop pool, wellness studio, gymnasium, sauna, concierge service, residents' lounge, private dining spaces and work-from-home facilities.

[smartcode_project:default project_id=134323 project_image_fid=6402]

The project marks ALAND's first major luxury apartment development in Sydney's inner-city market after more than two decades delivering residential communities across Greater Sydney.

Founder and CEO Andrew Hrsto previously said the rarity of the Walker Street site made it an opportunity the company could not overlook.

"This is a rare opportunity to bring a truly exceptional project to life in one of Sydney's most iconic locations, and to showcase our craftsmanship and design expertise at a world-class level," Hrsto said.

[smartcode_project:default project_id=134323 project_image_fid=6383]

The Walden has been introduced to the market at a time when demand for living in North Sydney is at an all-time high. Billions of dollars have been invested in infrastructure, including the recently opened Victoria Cross Metro station, located just 300 metres from The Walden, providing residents with direct access to the Sydney CBD in just minutes.

Private investment has also transformed the area through the arrival of new retail and dining destinations, elevating the lifestyle offering in what was once considered primarily a commercial precinct rather than an aspirational residential address.

The Walden is currently under construction and is scheduled for completion in 2028.

[smartcode_project_cta:default project_id=134323]

ALAND records $35 million in sales in North Sydney as The Walden bucks quiet winter selling season

The long-awaited redevelopment of the former Eastlakes Shopping Centre site has reached a major milestone, with Conquest's plans for a new mixed-use precinct officially placed on public exhibition.

The State Significant Development Application would transform the 1.7-hectare site at <a href="https://www.apartments.com.au/new-apartments/19a-evans-avenue-eastlakes-nsw-2018">19A Evans Avenue</a> into one of Sydney's largest urban renewal projects, delivering 736 apartments above a new shopping centre anchored by Woolworths, alongside specialty retail, dining, commercial space and new public open spaces.

The public exhibition marks the next chapter for the project after <a href="https://www.apartments.com.au/developers/conquest">Conquest</a> acquired the stalled Stage Two development from Crown Group, who completed the first stage across the road prior to their voluntary liquidation.

<img alt="First look: Conquest unveils plans for 736-home Eastlakes Shopping Centre redevelopment" data-entity-type="file" data-entity-uuid="5fca22c5-d1ed-4e2c-8801-03f7df1eafc8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/eastland%20podium.png?VersionId=uomwr41nF8CmLUZRDcu3mHQechlbxucS" />

&nbsp;

Designed by DKO Architecture, the proposal comprises four residential buildings ranging from 14 to 18 storeys above a two-level retail podium. The development would deliver 736 apartments, including 74 affordable homes, 215 Build-to-Rent apartments and 521 market residences. Provision has also been made for dual-key apartments, which could increase the total number of dwellings to 877.

At ground level, the shopping centre has been designed as the suburb's new meeting place, anchored by a full-line Woolworths and complemented by a curated mix of fresh food retailers, cafés, restaurants, health services and everyday convenience shopping. Generous pedestrian links and landscaped public spaces will connect the retail precinct through to Jack Mundey Reserve, creating a more walkable and connected neighbourhood.

Conquest CEO Michael Akkawi said the redevelopment was about far more than replacing a shopping centre.

"Eastlakes has been overlooked for too long, and this is the community’s moment. We are building a shopping centre and homes, a genuine heart for the suburb, and we genuinely want locals to help shape it."

"We enrich communities through the creation of homes, places, and experiences designed for life, built to last, and owner for generations. That starts with listening, so we warmly encourage everyone with a connection to Eastlakes to view the plans and share their thoughts."

<img alt="First look: Conquest unveils plans for 736-home Eastlakes Shopping Centre redevelopment" data-entity-type="file" data-entity-uuid="22f6fb20-54fb-4bd7-8a92-48fafdd00608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/eastland.png?VersionId=cugp7s9hrMHGJJdYzkeAkrFoQgnF4GXf" />

DKO said the design had been shaped by the site's landscape setting and surrounding open space.

"Our vision for the site embraces its unique Bidjigal identity by blending the residential living with generous landscaping and a material palette inspired by the Bidjigal locality, and celebrating the panoramic views to Botany Bay and the wetlands reserves."

"Taking cues from Country, we seek to harmonise built form with the landscape and lightly touch the earth. By reconnecting, retaining and regenerating existing ecology, and weaving in natural elements, we can deepen our connection to Country."

The landscape strategy extends across the podium and rooftops, incorporating communal gardens, children's play areas, lawns, community gardens, family gathering spaces and extensive tree planting. New landscaped links will also strengthen the connection between the precinct and Jack Mundey Reserve, while publicly accessible open spaces have been integrated throughout the development.

The proposal builds on Conquest's broader placemaking strategy for the site. Through an ongoing partnership, local artist Joe Rashbrook has been appointed Urban Art Curator, working alongside young residents to transform the project's site hoardings into a public art gallery that allows the community to engage with the redevelopment before construction is complete.

Conquest has rapidly expanded its development pipeline since acquiring the Eastlakes site, with more than $6 billion worth of mixed-use projects now in planning across Sydney, including Stanmore, Castlecrag and Waterloo.

Conquest CEO Michael Akkawi said the redevelopment was about far more than replacing a shopping centre.

Jonathan Chancellor

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