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The Reserve Bank's announcement that it will leave interest rates unchanged in June at 4.75% and toned-down rhetoric on future rates has been greeted with relief.
A 25 basis points increase, as some economists were predicting, would have meant an increase of $50 per month for a homeowner with a typical $300,000 mortgage and basic variable rate of 7.17% (the average of the four major banks' basic variable rate mortgage).
The rhetoric in the statement following the decision by RBA governor Glenn Stevens suggests further rate rises could be further away than have been forecast.
Stevens pointed to a number of reasons why the bank’s “mildly restrictive stance of monetary policy remained appropriate”.
Most notably, he says that although CPI inflation has risen over the past year (currently at 3.3%), it reflects the effects of extreme weather and rises in utilities prices.
“The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months,” Stevens says.
Bill Evans, chief economist at Westpac, says the RBA's rhetoric indicates that its commitment to an early rate hike has been significantly diluted.
“Indeed, even the May statement was more hawkish than this one today. Most importantly, a paragraph in the May statement that included the observation 'over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected' was eliminated from this statement,” Evans says.
Aaron Gadiel, CEO of industry lobbying body the Urban Taskforce, draws a similar conclusion. 
According to Gadiel, fears that the RBA has an “itchy trigger finger on interest rates have already caused some building plans to be shelved or delayed".
“We hope the bank will be less keen to raise the spectre of new interest rate rises in future monetary policy statements.”
Real Estate Institute of Australia (REIA) president David Airey says the decision is the right one, given the state of housing affordability in Australia.
Airey says the RBA has “accurately assessed the property market”.
HIA senior economist Andrew Harvey says the decision “reflects a rare bit of good news amidst mounting pressure on home affordability and fast-declining activity in the residential building sector”.
“It just gives a touch of relief to those Australians paying off mortgages and also to those trying to enter the housing market, amidst the less predictable environment households face in the post-GFC era,” he says.
Laing+Simmons general manager Leanne Pilkington also welcomes what she called “the only option available” to the RBA but remains perplexed at “persistent talk of a rise in the next few months”.
“The recent March quarter contraction can be dismissed as being a result of the natural disasters, but the figures are more than just a blip on the radar. 
“Remembering that another consecutive quarter of negative growth places us in recession and the need to support struggling families becomes even more apparent,” Pilkington says.
“House prices are declining in value in some markets, many homeowners are finding themselves in a position of negative equity, and clearance rates are down.”
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Relief greets interest rate decision and RBA’s softer position

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The RBA has kept interest rates on hold in June at 4.75%, marking the seventh month that rates have remained unchanged.
Yesterday a poll of 28 economists by Bloomberg found that just five expected the Reserve Bank to move on rates. An increase in rates is expected over the next few months, with July or August the likely date.
Michael Yardney, director at Metropole Property Investment Strategists, says today’s decision is just a reprieve.
“It’s not a question of ‘if’ but ‘when’ rates go up. Borrowers should be budgeting for another interest rate rise or two later on this year,” Yardney tells Property Observer.
“Three weeks ago people were certain of a rate rise in June or July. Then the latest (March quarter) GDP figures came out. That’s the major thing holding back the RBA now,” he says.
Yardney says the RBA will not want to wait too long to raise rates. “If it leaves it too late, it will have to announce too many increases too quickly. Their approach has been to do things pre-emptively.”
He says future rate rises will depend on the next round of inflation and GDP figures. To date the RBA has managed to keep inflation within the 2% to 3% range.
According to Yardney, market fundamentals remain sound – the economy is good, wages are rising, there is an undersupply of property and a rising population. The issue is weak market sentiment. An increase in rates will only worsen this situation.
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Interest rates hold steady at 4.75%

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New mortgage sales figures for May point to investors returning to the Queensland market.
More than a third of loans (36.5%) processed in Queensland in May were investment loans, the highest figure for more than a year, according to the latest AFG Mortgage Index.
This is just below the proportion of investment loans processed in Victoria (38.8%) and NSW (37.9%)
Mark Hewitt, general manager of sales and operations at AFG, tells Property Observer the Queensland market has reached a point where house prices have come down in past 12 months, meaning investors are seeing value in the market. 
“We are not anticipating a massive rush, but there are positive signs in both Queensland and WA,” Hewitt says. “That there is a lot of stock available, especially on the Gold Coast.”
Looking at the overall market, Hewitt says property investment has remained at consistent levels throughout the ups and downs of the property cycle, but strengthened significntly in May.
“It is certainly a buyer’s market right now, and investors looking at rising yields are probably better insulated from the impact of rising interest rates than other types of buyers.”
Overall, mortgage sales increased by 18.8% in May Australia-wide.
Total mortgage volume for May was $2,517 million – only 1.7% lower than the figure recorded for May last year ($2,561 million), a strong result according to AFG in light of the natural disaster-hit first quarter, and subdued figures for April.
The release of AFG figures coincides with figures put out today by mortgage broker Mortgage Choice.
According to Mortgage Choice’s May figures, the most popular mortgage types are ongoing discount interest rate home loans, with one in three borrowers signing up for the product in May.
This is 3% higher than the 30% take-up of the product recorded a month ago and almost double the number who were approved for the product in November 2010.
The loan is particularly favoured in NSW, where it makes up 42% of all approvals. However, demand for these variable rate loans rose in all states apart from South Australia last month.
The second most popular loan type for May was standard variable rate, at 24%, closely followed by basic variable rate, at 23%.
Variable rate products accounted for 89% of approvals. Fixed rate loan demand dropped one percentage point from April to May, to 11% of approvals.
<img src="/images/stories/mortgage1.gif">
Source: Mortgage Choice
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Investors returning to Queensland

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Australian corporate real-estate executives are the most optimistic in the world, according to a new report by Jones Lang LaSalle. 
Demand for corporate office space in Australia will remain strong over the next three years, sentiments expressed in the new global report suggest. 
Nearly half (48%) of Australian corporate real-estate executives are expecting their office portfolios to grow over the next three years, compared with the global average of 38%, the Jones Lang LaSalle Global Corporate Real Estate Survey 2011 has found. 
A quarter of executives expect their retail portfolios to grow over the next three years, compared with the global average of 20%. 
Only 16% of respondents in Australia expected to see a decline in their office portfolios over the next three years, compared with the global average of 34%.
The banking sector has the highest growth outlook among Asia Pacific nations. The report says 62% of respondents in the banking sector expect to see growth in their office portfolios during the next three years, and 48% expect their retail portfolios to expand over the same period. 
The report is sync with CBRE forecasts made in February that demand for Australian office space is continuing to recover in the wake of the Global Financial Crisis, with vacancy rates expected to continue their downward trend over 2011. 
According to the Property Council of Australia, the national office vacancy rate has dropped from 10% in July 2010 to 9.5% in January 2011. 
The Jones Lang LaSalle report also found that cost pressures will continue to be the single biggest driver of CRE strategy over the next three years. Australian and European respondents both placed cost pressure slightly ahead of growth as the most important influencer of real-estate strategy, whereas American and Asian respondents see growth as the driving force of their real estate strategies over the next three years.
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Aussie commercial property executives like their chances

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Super prime rents in the Sydney CBD have risen as high as $13,000 per square metre as a result of a resilient luxury brands market, according to a new retail report by Colliers. 
This top-of-the-market price was paid by a retailer in the Pitt Street mall. On average, high street retailers on Pitt Street Mall in the CBD are paying between $8,000 and $10,000 per square metre. 
Nora Farren, director of research at Colliers, told Property Observer “normal levels of growth are expected in the short to medium term”. 
“There has just been so much growth on the back of the completion of Westfield Sydney and Mid-City Centre [both on Pitt Street],” she says. “I do not expect to see similar growth until we see new developments.” 
During the past few years, strong rental growth was driven by the lack of space and reshuffling that occurred during the construction of Westfield Sydney. The report says rents are now expected to stabilise, with higher incentives returning to the market. 
While Castlereagh Street has traditionally been the heart of the luxury precinct in Sydney, a number of retailers are now choosing to locate on George Street, including Burberry at 343 George Street and Louis Vuitton at 70 King Street. As a result a new luxury precinct is forming on George Street between Martin Place and King Street. 
Melbourne has also enjoyed a strong luxury market of late, with the likes of Jimmy Choo, TAG Heur, Prada, Tiffany &amp; Co and Miu Miu all opening stores in Melbourne during 2010. 
Collins Street is still the major luxury shopping destination in Melbourne, with rents reaching as high as $6,500 per square metre. 
In the Perth market, luxury retailers can be found around the Hay Street precinct between William and King streets in the CBD.
 In Brisbane, there are a cluster of luxury retailers at Queens Plaza on Queens Street Mall, and on Edward Street in the CBD, where rents as high as $7,500 per square metre have been achieved. 
The growth of luxury brands is attributed to a flight to quality over the past few years, “with consumers showing a preference for investment pieces, making fewer, but more expensive purchases,” Farren says. 
The sale of luxury goods rebounded strongly last year. The Luxury Goods Worldwide Market Study by consultants Bain &amp; Company estimated that the global luxury market grew by 15% in 2010.
The report also notes the expansion of the luxury brands market into the suburbs with Chadstone shopping centre in Melbourne, and Westfield Bondi Junction in Sydney having recently introduced new international luxury brands. 
According to Colliers, a legacy of the GFC is that consumers are a lot more value-conscious and now prefer to shop either high or low. 
This is resulting in a polarisation of retail with the bargain and premium sectors benefitting most, and middle market retailers losing ground.
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Luxury retailers push up Sydney super prime rents

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Ahead of the RBA’s June 7 meeting, economists says the case for an increase has not been made – but an increase is nevertheless likely in the coming months.
A Bloomberg survey of 28 economists found that just five expect rates to increase in June.
The cash rate has remained unchanged since November 2010, when the RBA lifted rates by 25bps to the current level of 4.75%.
HIA chief economist Harley Dale told Property Observer on June 1, following the release of March quarter GDP figures showing a 1.2% contraction in the economy, that he expected rates would nonetheless increase in the next few months.
However, this did not mean they should.
Dale says the presumption that a clinical, narrow focus on hiking interest rates is the right course of action is inappropriate in the post-GFC environment.
"Australia’s economic growth reflects a range of sectoral pulse rates at present, and the idea that Australia will somehow fall in a ditch if short-term action is not taken by the RBA to address potential pressures in one sector is nonsense," Dale says.
"The weather-distorted March quarter is well behind us, but partial indicators for the June quarter are so far weighted towards negative updates," Dale adds.
Westpac economist Bill Evans says the fall in GDP in the March quarter, the weakest since March 1991, along with the weaker data flow (an upswing in domestic demand of 1.3% for the March quarter offset by the savings rate rising from 9.5 to 11.7%), will make it very difficult for the RBA, “from a public relations perspective, to push up rates in June”.
ANZ economists Julie Toth, Riki Polygenis and Andrew McManus expect an interest rate rise in either July or August.
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Economists say the RBA should not raise rates, but five think it will

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At the same time as overseas investors are buying up Australian real estate, cashed-up superannuation funds are looking to invest in offshore property.
These two investment trends have emerged in the latest CBRE Global Capital Market View Report for the first quarter of 2011.
Despite the strength of the Australian dollar, overseas investor interest in Australian real-estate assets remains high.
Kevin Stanley, head of research for Australia and New Zealand at CBRE, told Property Observer investor interest is from “right around the world” based on strong economic forecasts.
“Australia remains attractive by global standards. Investors are looking beyond the most recent quarter and looking at the overall picture,” he says.
Another factor, Stanley says, is that Australia is a generally more transparent market than others and one where it is easy to do business.
“Rental increases and capital growth is expected in all sectors, especially in the offices sector,” he says.
The report says that Australia’s industrial and office markets have the largest potential for increasing returns in the short term, relative to other sectors of the market.
The CB Richard Ellis Prime Office Capital Value Index for Asia Pacific increased 18.9% year over year in the first quarter of 2011 – the largest increase since the second quarter of 2008 and twice the next-largest increase for the period, which was in the Americas.
Although this growth was driven by Hong Kong, Singapore and China, CBRE says rising rents in the Melbourne market in the first quarter of the year are expected to spread to the rest of the country in 2011.
It also says that potential for strong growth remains in Australia, New Zealand and Japan, with these countries facing delayed economic and employment growth as a result of natural disasters.
The report found a 44.8% decrease in transaction volumes in the Asia Pacific region year on year. The typically slow start to the year was exacerbated by the string of natural disasters late in 2010.
The report also notes that Australian pension funds are growing strongly and starting to make acquisitions in Europe with this expected to spread to North America and Asia in the medium to long-term.
Stanley expects that superannuation funds will look to invest in the established, big US markets such as New York, Washington Chicago and Los Angeles. Asian markets likely to attract interest include Hong Kong and Japan.
Transaction volume in Asia Pacific as a whole rose 5.5% year over year to US$21.3 (A$19.8 billion) in the first quarter of 2011.
Globally, capital investment values are increasing, with the CBRE Global Office Capital Value Index increasing 12% year over year in the first quarter of 2011.
Investors in Asia Pacific real estate are made up of private equity firms, REITs, insurance companies and corporations, according to CBRE, with capital sourced within the region.
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Australian real estate drawing overseas investors, but locals are looking elsewhere

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Investors looking for the next retail property hotspots should keep a close eye on which markets are attracting migrants and growing employment, experts say.
According to Leigh Warner, national retail analyst at Jones Lang LaSalle, Melbourne’s retail property market has outperformed most other parts of the country, as reflected in current retail vacancy rates.
“At the end of 2010, Melbourne had just 0.2% specialty store vacancy in regional centres, 1% vacancy in sub-regional centres and 1.3% in CBD centres, which were all substantially below national averages” Warner told Property Observer.
He says this performance has been “consistent with a robust Victorian economy over the past few years and with particularly strong state population growth”.
<img src="/images/stories/vacancy%20rates.jpg" style="display: block; margin-left: auto; margin-right: auto;">
According to the Australian Bureau of Statistics, from June 2009 to June 2010 the Victorian population grew by 99,300 people, or 1.8%. Melbourne, which has been the fastest-growing capital city in Australia for nine years running, added 79,000 people, or 80% of the total. In comparison, NSW’s population grew by 105,400, or 1.5%, during the same time period. As of June 2010, Sydney’s population was 4.58 million, with Melbourne rapidly catching up at 4.08 million.
Victoria currently attracts 30% of all migrants into Australia and accounts for 58% of growth in migrant numbers.
The arrival of new migrants has translated into rising building approvals and increased household spending: in the first quarter of 2011 Victoria accounted for 37% of building approvals nationally, and spending on household goods grew by 7.4% in Victoria for the year to March 2011.
Population growth and confidence
Earlier this year CBRE negotiated the sale of the Bundoora Square Shopping Centre in Melbourne for $20.9 million.
 Justin Dowers, who along with Mark Wizel negotiated the sale as part of CBRE’s Victorian retail investments team, says there appears to be a lot more confidence in the Victorian retail market than in other states, “primarily due to economic influences such as the city’s continued population and job growth”.
Dan White from Ray White Invest agrees with this line of thinking
“Australian capitals have similar amounts of retail floor space per capita, so new retail development will be driven by population growth and from changes to city dynamics,” he says.
 Since Melbourne is the fastest-growing city in percentage terms (though not in gross population), White says it will be the most active market in terms of new retail developments.
 Furthermore, he says Melbourne has “probably the best planned urban expansion strategy – planning for and establishing growth corridors and new suburbs – thereby creating the demand for new shopping centres”.
 He also notes the impact of the residential market on retail spending: “Melbourne also has, by quite a margin now, Australia's strongest residential property market, generating household wealth and confidence to support consumer retail spend.”
 As to why people are coming to Melbourne, the respected Economist Intelligence Unit ranks Melbourne as the world’s second most liveable city (behind Vancouver), with strong employment prospects and relatively affordable housing. Sydney managed eighth place.
 State market forecast
As in the general economy, the resource-rich states of Western Australian and Queensland have the best retail prospects over the next few years.
 Western Australia
WA is undoubtedly the state hotspot when it comes to retail growth over the next few years. NAB expects the market to rise strongly as business confidence grows in line with the mining bonanza. It is expected to be the top-performing state over the next two years, and the longer-term view is also favourable, with undersupply to be most prevalent in WA over the next three to five years. Capital values are expected to rise by 5.6% cent over the next two years, and rents are predicted to increase by 5% over this time.
 Queensland
Although the Queensland market is currently subdued, the NAB forecast is for “significant gains” over next two years. However, the Queensland CBD retail market and the market for shops that sell bulky goods, such as whitegoods, furniture and automotive parts, are considered the weakest in Australia. Over the next two years, capital values are expected to rise by 1.7% while rents climb by 1.5%.
 NSW/ACT
The outlook is subdued, with NAB reporting declining long-term business expectations. The CBD and regional retail property have the brightest prospects, and bulky goods retailers the gloomiest. Over the next two years, capital values are expected to decline by 0.5% and rental growth by 0.6%. Sydney is the exception, with CBRE forecasting a revival in its prime shopping strips.
Victoria/Tasmania
Outside of Melbourne, the sentiment and outlook is similar to that of NSW/ACT. The CBD is the best place for retail property, following by retail strips. Bulky goods is the poorest sub-sector. A small increase in capital values (1.7%) and rents (1%) is expected over the next two years.
South Australia
According to CBRE, the forecast is for a year of consolidation in Adelaide. Several shopping centre projects are due for completion or to commence construction in 2011, and yields in this sector are forecast to be steady. Yields are also expected to remain steady in the bulky goods sector. Retail rentals in the Adelaide CBD are expected to come under pressure.
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Retail sector looks strong in Melbourne

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Stephen Nell, CEO of Ray White NSW, has expressed surprise at comments made by LJ Hooker executive chairman L. Janusz Hooker that it is focusing on property management to ensure a steady income base through the downturn.
“Our network now has 117,000 properties under management … arguably the biggest in the market. Many of our offices have fixed overheads covered by property management income so they can weather these cycles,” Hooker told the Australian Financial Review.
Hooker made the comments in response to estimates by Real Estate Institute of Australia president David Airey that the number of estate agents across Australia had dropped from 60,000 to 50,000 over the past year.
In 2006 a census found there were 72,000 estate agents in Australia.
Nell tells Property Observer Ray White has always understood property management to be a critical part of the business and has never shifted away from it.
But, he adds: “It’s critical not to drop the ball in the sales arena. Properties need to be sold, and people are still in the market to buy them.”
Nell says Ray White sales staff numbers in NSW, where the company has a significant market share, have held firm. “In last two years we have had no change in number of sales people,” he says.
“We have in excess of a thousand sales people and we are growing,” Nell says, adding that Ray White is currently processing applications from 27 businesses looking to join its network.
In making his estimate, Airey noted a new trend of business closures exceeding the number of new REIA members.
“There’s been a huge reduction over the past year,” he said.
According to Australian Property Monitors, since June 2010 the value of property sold has fallen by up to 27% monthly, compared with the corresponding month in 2009.
By contrast, the value of real estate sold climbed steeply through 2009, according to APM, reaching a record of $27 billion in 2010.
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Agents' attrition leads to shift in focus

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Retailers are soon to be in a better position to negotiate rental terms, according to consultant Business Development Company.
BDC director Vaughn McGuinness says the closure of book chain Borders and some Angus &amp; Robertson stores means “quality sites are becoming available in quality centres”.
Borders stores to close this year include those in Sydney’s Bondi Junction shopping mall, the Jam Factory on Chapel Street in Melbourne, Chadstone Shopping Centre in Melbourne’s suburbs and a shop on Pitt Street Mall in Sydney’s CBD.
McGuinness expects further retail chain closures over the next 12 months, increasing the pool of quality sites available to the market.
“A correction is occurring in the rental market now that we have access to those kinds of sites,” he says. “Couple this with the planned extension and redevelopment of many existing shopping centres, we will start seeing more sites available, easing up the demand and leading to better rents.”
A report put out by Jones Lang LaSalle in April broadly agrees with this sentiment, but expects rental growth to pick up in 2012 and 2013 as retailers’ confidence picks up throughout the year and turnover growth recovers.
Jones Lang LaSalle reports that retail property demand “is still very patchy and is likely to remain so over most of 2012”.
According to the report, the potential entry of several international retailers could assist centre owners in maintaining high occupancy, but will further add to competitive pressure in the sector and may dampen rental growth potential since many international retailers are used to paying lower occupancy costs.
Overall, due to a “two-speed retail environment persisting through much of 2011”, Jones Lang LaSalle expects relatively moderate speciality rental growth of near or slightly below the rate of inflation to continue.
In addition to the closure of all the Borders book stores, the Colorado fashion group also collapsed earlier this year.
McGuinness says the closures won’t translate automatically into favourable conditions. He says retailers will need to educate themselves about market conditions and have enough options available to be able to negotiate.
He says business owners will always be at a disadvantage in terms of market knowledge, as shopping centre owners have access to tenancy schedules detailing what deals have been done with which retailers and with what incentives.
“This is why it is so important to make sure you give yourself enough options when negotiating to be able to walk away from a site if you are not getting a good enough deal,” McGuinness says. “You should have four or five alternative sites as a backup and make sure you are in a financial position to be able to relocate if necessary.”</body></html>

Retail rents expected to fall as chains collapse

Eddy Haddad's <a href="https://www.apartments.com.au/developers/level-33">Level 33</a> is levelling up its approved Wollongong development, as the coastal city south of Sydney continues to prove popular in the high-density development space.

Level 33, a longtime developer in the Wollongong area, has gone through the NSW Government's Housing Delivery Authority to upsize its approved two-tower development on the corner of Crown Street and Gladstone Avenue, just 100 metres from Wollongong Station.

The developer currently has approval for 252 apartments across two buildings rising to 19 storeys. It is now seeking approval for 33 and 38-storey towers that would deliver 467 apartments, including 67 affordable homes.

Designed by <a href="https://www.apartments.com.au/architects/bka-architecture">BKA Architecture</a>, the development would comprise apartments above a three-level podium with around 1,100 sqm of retail space, along with basement parking for 448 vehicles.

According to the Urban Design Report by BKA, the proposal has the capacity to "reinforce the precinct's identity by strengthening links between health, education, and transport services, while also contributing to Wollongong's ongoing evolution as a key regional centre."

Wollongong is somewhat in vogue. Between Level 33 and Urban Property Group, the two developers have several thousand apartments planned across the city.

Level 33 is currently delivering Easterly Wollongong, one of its most boutique projects to date with just 21 high-end apartments, as well as Atchison &amp; Kenny, a 329-apartment development due for completion later this year. The developer also plans to redevelop the 13,088 sqm WIN Grand megasite into a new $500 million precinct with nearly 600 apartments and has more than 900 apartments planned for the former Bunnings Warehouse site at the intersection of Gipps and Flinders streets.

Urban Property Group is also playing a major role in the city's transformation. Its five-tower Keira Place precinct will deliver more than 800 homes, and it has recently lodged plans for a further 300 apartments near Wollongong Station.

Joel Robinson

First look: Level 33 upsizes Wollongong apartment towers

Just a week after filing plans for the final stage of its major Keira Place masterplan, <a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has unveiled another significant housing proposal in Wollongong, this time targeting a prominent site opposite North Wollongong Station.

The developer has lodged a State Significant Development Application for a 38-storey mixed-use tower at <a href="https://www.apartments.com.au/new-apartments/4-4a-flinders-street-north-wollongong-nsw-2500">4-4A Flinders Street</a>, around one kilometre north of the <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place precinct</a> currently taking shape on the edge of the CBD.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="2b6428f1-6405-4038-8476-897de440e90d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium.png?VersionId=QLqEvK0OuCEwRC47oHNftrw2B1YqaHF8" />

Designed by Studio.SC, the proposal comprises a 38-storey mixed-use development containing 303 apartments, including 45 affordable housing units, alongside 174 co-living residences. The scheme also includes ground-floor retail space, extensive landscaping and public domain improvements.

Studio.SC noted in the proposal it "outlines a vision for a landmark transit-oriented mixed-use development centred around North Wollongong Station, designed to support the city’s future growth while responding to the NSW Government’s housing and planning reforms."

The architecture firm said the proposal responds to the opportunities and constraints shaping future growth within the 400-metre catchment of the station and represents "a coordinated and future-focused approach to urban intensification, contributing to the long-term evolution of North Wollongong as a connected, walkable and high-density station precinct."

The site occupies a strategic corner bounded by Flinders Street, Station Street, Stafford Street and the Princes Highway, directly opposite North Wollongong Station.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="7863adad-1f71-4022-b850-f44b252738fd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium%20a.png?VersionId=WsU7av0g8_8R2tGHWxgHeFSlhu7yeY1V" />

The proposal follows Urban Property Group's recent submission for the second and final stage of Keira Place, which would deliver a further three buildings comprising 657 homes opposite Beaton Park. It builds on the first stage, which features 150 apartments across two towers and recently commenced construction.

Urban Property Group CEO Patrick Elias said breaking ground on the first stage marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/urban-property-group-unveils-trio-of-towers-for-next-stage-of-new-wollongong-precinct-keira-place">Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place</a>

First look: Urban Property Group plans next major Wollongong tower

<a href="https://www.apartments.com.au/developers/arada">Arada</a> has wasted little time expanding its ambitions in Campsie, lodging plans for a second major project in the rapidly transforming town centre just months after unveiling its three-tower One Campsie proposal on Beamish Street.

The UAE-backed developer has now taken aim at one of the suburb’s most strategically positioned sites, filing a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/10-north-parade-campsie-nsw-2194">33-storey mixed-use tower</a> at 10 London Street and 43 North Parade, directly opposite the future Campsie Metro Station. The proposal is currently on public exhibition and represents another significant vote of confidence in Campsie's emergence as one of Sydney’s key transit-oriented growth centres.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the development would deliver 156 apartments above a podium containing retail and commercial space, creating a new residential and commercial gateway to the town centre. The scheme also includes a four-level above-ground parking podium and a dedicated residential amenity floor featuring wellness and recreation facilities. At least 10 per cent of the apartments would be allocated as affordable housing for a period of 10 years.

The proposal occupies a 1,631 sqm site bounded by London Street, North Parade and Dispensary Lane, immediately adjoining the future Metro station precinct and just metres from Beamish Street’s retail and dining strip. According to the Urban Design Report, the project seeks to deliver "a great place that prioritises human-scaled experience and provides spatial improvements to the area."

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="175a8324-015b-4856-abe3-ce6f23199fa7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium%20campsie.png?VersionId=742UGwXFhFBX4GEl6wX4PYIWREAgn6il" />

Woods Bagot describes the tower as a key marker within Campsie's next phase of growth.

"Located directly opposite the new Campsie Metro Station on North Parade, 10 London Street is a thoughtfully composed 33-storey mixed-use tower that contributes to the ongoing transformation of the town centre," the Architectural Design Report states. The report says the project is intended to provide "high-quality homes within a vibrant, connected urban environment, while helping define Campsie's future skyline."

A strong emphasis has been placed on the public realm. The ground floor incorporates over 500 sqm of retail space and active frontages along both London Street and North Parade, while the podium is wrapped by extensive landscaped planting intended to soften the building's scale and strengthen the pedestrian experience. The development would also widen surrounding footpaths and improve connections between the Metro station and the broader town centre.

Above the podium, residents would have access to more than 1,400 sqm of communal amenities, including a pool, gym and landscaped recreation spaces. A distinctive green-wall treatment extending across four podium levels forms a major architectural feature, helping differentiate the project within the emerging high-density precinct.

The tower's design is closely tied to the broader Campsie Town Centre Master Plan and the arrival of Sydney Metro. The Urban Design Report notes the proposal "directly supports the Campsie Town Centre Master Plan by delivering new homes in a location explicitly identified for growth, improved accessibility, and high-quality urban renewal." It adds that the project contributes to the master plan's vision for a strengthened town centre supported by thousands of new homes around the future Metro station.

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="bfd17654-253e-489a-bade-6278d63db412" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/base%20campsie.png?VersionId=3roJPMQGs36dazpkhvpvbDDP73Ld.Ica" />

The application follows Arada's recently lodged One Campsie project at 124–142 Beamish Street and 16–18 Ninth Avenue, where the developer is seeking approval for 346 apartments across three towers rising 24, 32 and 39 storeys. Together, the two proposals would cement Arada as one of the most influential developers shaping Campsie's future urban form.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-arada-files-for-trio-of-apartment-towers-in-campsie-town-centre">First Look: Arada files for trio of apartment towers in Campsie town centre</a>

Arada entered the Australian market in 2024 and has rapidly assembled a significant development pipeline across Sydney. Alongside its Campsie holdings, the developer is soon to launch <a href="https://www.apartments.com.au/new-apartments/wattle-green-2-fishburn-crescent-castle-hill-nsw-2154">Wattle Green</a> in Castle Hill, and has expanded its local operations following its acquisition of construction firm Roberts &amp; Co.

Located around 14 kilometres south-west of the Sydney CBD, the site sits at the centre of one of Sydney's fastest-changing middle-ring precincts. The Metro conversion of Campsie Station, combined with Canterbury-Bankstown Council's master planning framework, is driving significant residential intensification around Beamish Street and North Parade, with thousands of new homes expected over coming decades.

First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans

For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

Larry Schlesinger

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