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GUEST OBSERVATION
Australia’s private debt dynamics have been thoroughly <a href="https://www.macrobusiness.com.au/2014/10/australias-addiction-to-private-debt/">explored elsewhere</a>, but less well understood is the country’s position relative to the <a href="https://en.wikipedia.org/wiki/Organisation_for_Economic_Co-operation_and_Development" target="_blank">OECD</a> and <a href="https://en.wikipedia.org/wiki/BRIC" target="_blank">BRIC</a> nations.
Thankfully, the Bank for International Settlements (<a href="https://www.bis.org/" target="_blank">BIS</a>) provides a useful database of unconsolidated household, non-financial business and total sector debts to enable a meaningful comparison.
The difference between consolidated and unconsolidated debts is an important consideration. The former constitutes debt that is netted out within the sector, and only records debts owed to other sectors, while the latter is the actual debt a sector owes, irrespective of to whom. Unconsolidated debts are typically larger than consolidated debts.
Caution must be taken when using measures of consolidated debts as it assumes intra-sector solvency; an assumption the global financial crisis (GFC) revealed to be precarious. Consolidated debts disguise the risk of intra-sector debts that can metastasise and threaten financial stability.
In retrospect, Ireland, Spain and the US are three countries that clearly experienced debt-financed housing bubbles, thus providing a useful benchmark for comparison. Australia’s household debt to GDP ratio is clearly higher than both Spain and the US at their peaks, and remains only slightly below Ireland’s peak. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_01.png" alt="">
In the BIS dataset comprising 34 nations, Australia has the unenviable status of ranking fourth-highest, only below that of Denmark, Switzerland and the Netherlands. Ironically, the pathology of financial capitalism drove the world’s leading social democratic state into accumulating the largest household debt ratio, peaking at close to 140% in Q2 2009.
A range of factors may have boosted the income flows of Danish households and enabled such accumulation: a low unemployment rate relative to the Eurozone nations, very low income inequality, the world’s highest minimum wage, and a generous social welfare system.
As of Q2 2014 (the latest available BIS data), the Netherlands is just 0.3% higher than Australia. As the former deleverages, Australia should rank third-highest by the next quarter. The ratios have remained stubbornly high in both Denmark and the Netherlands despite deleveraging, as their weak economies have resulted in falling nominal GDP (the denominator).
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_02.png" alt="">
Australia’s total debt to GDP ratio peaked at 190% in Q2 2009, before falling slightly as the non-financial business debt ratio fell. As of Q2 2014, the total debt ratio was 189%, and is expected to set a new peak in the next quarter or so.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_03.png" alt="">
The following table lists the debt ratios for the OECD and BRIC nations. For some nations, household and non-financial business sector debts are not available, but total debt data are available for all. The non-financial business sector debt ratios are on the high end for Ireland, Luxembourg and the Netherlands, likely reflecting their generous international business taxation policies.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_04.png" alt="">
The BIS has done a commendable job in gathering long-term unconsolidated data from the OECD and BRIC nations and making it publicly available. It would be helpful if the data was further classified into categories of personal, mortgage and non-banking financial sector debt, as the latter is important when analysing banking and financial cycles.
As household debt has boomed exponentially over the last two decades, the savings of the household sector has plunged. According to the official household savings ratio provided by the ABS, it briefly became negative during the early 2000s, and then rebounded as the GFC shocked households into saving more. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/EganSoos5.png" alt="">
In 2013, <a href="https://www.macrobusiness.com.au/2013/11/is-australias-high-household-savings-rate-an-illusion/" target="_blank">analysis</a> by Credit Suisse revealed that the official ratio included superannuation contributions and extra principal repayments, which arguably should not be counted as disposable savings. After controlling for these two artefacts, the ratio falls significantly, exhibiting a persistently negative trend since 1997.
The household sector’s savings situation is dire, as reported by <a href="https://www.mebank.com.au/media/1518946/213737-HFCR_FINAL-iPAD.pdf" target="_blank">ME Bank</a> in a 2014 report:
<ul>
<li>Only 46% of households reported the ability to save each month;</li>
<li>Only 32% would easily be able to raise $3,000 in an emergency;</li>
<li>50% aren’t confident they have enough savings to last if unemployed for three months;</li>
<li>35% reported having less than $1,000 cash on hand;</li>
<li>17% have less than $100 in savings;</li>
<li>60% have less than $10,000 in savings; and</li>
<li>In 2009, Australians were saving a median $300 per year (<a href="https://www.melbourneinstitute.com/downloads/hilda/Bibliography/Other_Publications/pre2010/AMP.NATSEM_Saving_Tomorrow_Report.pdf" target="_blank">AMP/NATSEM</a>).</li>
</ul>
Australia’s private sector is grossly over-indebted, especially the household sector. The hysteria surrounding Australia’s non-existent public budget ‘emergency’ is a smokescreen cloaking the critical household budget crisis. The fictional narrative concerning public debt arises from an unshakeable adherence to <a href="https://www.propertyobserver.com.au/https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926" target="_blank">pseudo-scientific economic theory</a> and class war, such as ‘justified’ public austerity policies which target the poor and marginalised.
Meanwhile, the public is distracted from the true threat: the unrestrained private spending spree that further enhance the power, profit and authority of the horde of private monopolists, usurers, speculators, rent seekers, free riders, financial robber barons, control frauds and indolent rich.
The current dynamics of the political and economic system means private debts will continue to spiral out of control, until the catastrophically-inefficient FIRE sector inevitably implodes. Nevertheless, the current housing booms in Melbourne and Sydney show no sign of abating in the short-term, with 2012 an opportune time to purchase according to the ‘<a href="https://www.macrobusiness.com.au/2014/12/property-speculation-to-boom-in-2015/" target="_blank">Speculative Index</a>’, which measures the irrational exuberance embedded in prices.
If the real estate fever gripping the nation does not break soon, Australia may well secure the top OECD ranking for the most over-indebted household sector. A financial crisis beckons, for history documents that extraordinary over-lending routinely precipitates chaos; falsifying expert claims that ‘this time is different’.
Paul D. Egan was previously employed as a supervisor and policy officer at the state government level. He holds a BSc Hons (Class I) and co-authored, with Philip Soos, Bubble Economics: Australian Land Speculation 1830 – 2013. He may be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/paul.egan@openmailbox.org" target="_blank">paul.egan@openmailbox.org</a>
Philip Soos is a postgraduate candidate at Deakin University, and holds IT and MBA degrees from Swinburne and RMIT Universities. His website is<a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/www.philipsoos.com" target="_blank"> https://www.philipsoos.com/</a> and can be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/psoos@deakin.edu.au" target="_blank">psoos@deakin.edu.au</a>
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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Australian private debt points to a potential financial crisis

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One of Australia's most well-known franchisors says he also offered to buy pie franchise Pie Face while it was in administration but administrators Jirsch Sutherland failed to follow up on his bid.
Tom Potter is best known as the founder of pizza chain Eagle Boys but he has a wealth of other franchising experience under his belt.
Potter has served on the board of several retail companies, including bakery franchise Brumby's. More recently he has built the Crusty Devil Bakehouse franchise, while also serving as chairman of burger chain Burger Urge.
Speaking to SmartCompany this week, Potter says he contacted Jirsch Sutherland on multiple occasions to attempt to speak to the administrators about his interest in purchasing the franchise.
Potter's revelation comes after Franchised Food Company chief executive Stan Gordon told SmartCompany he also had difficulty reaching the administrators to discuss buying the company, which entered voluntary administration in late November.
This week Gordon labelled the administration process as "disgraceful", after Pie Face creditors voted to support a Deed of Company Arrangement (DOCA) to save the company from liquidation in late December.
But Jirsch Sutherland managing partner Sule Arnautovic told SmartCompany Jirsch Sutherland only received one offer for part of the Pie Face group, but the offer was not "remotely close" to the proposed returns to creditors under the DOCA.
In emails seen by SmartCompany, Potter clearly stated to Jirsch Sutherland that he was an "interested buyer".
Potter also expressed an interest in acting as an adviser or management consultant to the administrators "on various areas of the business including franchising, production, overall profit and future options evaluation, marketing".
"I wanted to advise you over the last few years other than being partially retired I have built the Crusty Devil Bakehouse model from scratch ... and have intimate knowledge of the pie, café, bakery business," Potter wrote in one email.
Potter sent emails to Jirsch Sutherland on December 9, 10, 11, 15 and 23. On one occasion he received a response to say his details had been passed on the administrators managing Pie Face but says it wasn't until Christmas Eve that he received a phone call to inform him that a sale process would not proceed.
Potter told SmartCompany he was serious about his offer and he wouldn't have contacted Jirsch Sutherland if he wasn't.
"I made multiple approaches to buy Pie Face but I was ignored three times," Potter says.
"I received one email saying 'I'll pass on the information to the person handling the administration' but I didn't hear a word until Christmas Eve."
Potter says he was unable to specify an amount he was willing to pay for Pie Face as he did not receive an information memorandum.
Jirsch Sutherland managing partner Sule Arnautovic confirmed this to SmartCompany, saying Potter never made a formal offer for the business.
"They never signed a non-disclosure agreement, they never even got to the first formal stage of the acquisition process," Arnautovic says.
"They never paid the $40 fee to receive the summary information memorandum, they never made any offer, they never did any detailed due diligence via us or the Pie Face management team."
"Mr Potter offered his services as a consultant to Pie Face and any interest he had in acquiring the business appeared to be secondary to his desire to provide services to the Pie Face Group."
While Potter says it is "hard to know" what improvements are needed to the Pie Face business, he says he would have "looked at it as a turnaround".
"I would have worked at turning around the business quickly and then decide what to do. It would not have been a long-term interest."
And like Franchise Advisory Centre executive director Jason Gehrke, Potter also questioned the benefit to Pie Face creditors of the DOCA that was accepted at the end of December.
"The big question is why the creditors would accept a deal that would pay them 14 cents in the dollar in two years' time," he says.
This article was originally published on Smart Company.
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Eagle Boys founder also offered to buy Pie Face amid administration woes

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 Don’t let January slow you down, say our back on deck property commentators Jonathan Chancellor and Margie Blok.
While the real estate market eases off towards the end of the year holiday, especially after an action packed, hectic year for buyers, sellers and agents, sales do continue right up until Christmas Eve, and now throughout January.
So here are some tips on how to make the most of the new year.
Buyers:
<ul>
<li>Follow up on those properties that failed to sell at auction during November and December 2014. The owners of these properties might just be getting a little anxious, especially if they have already bought another property. With their properties languishing on the market for weeks, these vendors could be more willing to now accept a reasonable offer. </li>
<li>Auction clearance rates trended down a tad through Spring, so keep an eye out for those passed in prospects and, where appropriate, put in a tough offer because you never know what sort of pressure a vendor will be under.</li>
<li>Use this time to research sale prices of end-of-year listings – the late Spring/early Summer auction market was quite frenetic, so take the time to assess where values now sit, and then you can be knowledgeable about pricing the offers you make.</li>
<li>Hot summer weather, and families away on holidays, usually means a decrease in the number of attendees at inspections – so this could work to your advantage because competition for properties in popular price brackets may not be so strong. </li>
<li>Be ready for the next opportunity by creating daily or weekly alerts for new listings on real estate websites.</li>
</ul>
Sellers:
<ul>
<li>Choose an experienced local agent, who isn’t on their annual ski holiday - along with their hyper executive assistant who isn’t spending all their time on Julian Tobias’s The Island. Hopefully, the agent already knows the likely buyer from their database of unsuccessful bidders at their recent auctions. </li>
<li> Make the most of your time off in the New Year period to tidy up your property and get it ready for a marketing campaign commencing late January. Spruce up the inside of your home, as well as outside for it’s a lovely time of year to be in the garden. </li>
<li>Take down the Christmas tree, and ensure there is no sign of Christmas decorations in any of the marketing.  </li>
<li>If your property failed to sell at auction in the run up to Christmas, instruct your agent to indicate your willingness for extended settlement terms in the  internet advertising of your property, for this could be very attractive for buyers.</li>
<li> Remember the old saying “the early bird catches the worm” – rather than wait until the February auction season, tell your agent to immediately advertise your property as a "forthcoming auction" on the internet because buyers will be on the prowl for the latest offering.</li>
<li> Be mindful, especially with the dollar hovering around the low 80 cent mark: cashed up expats, who are home for holidays, could be house-hunting. </li>
</ul>
Agents:
<ul>
<li> Although agents may have had an exhausting year, they should be keen for new or repeat business. The local papers are devoid of property advertising, but the internet operates 24/7, and you never know who is around and what they might want to buy or sell.</li>
<li>Securing transactions without interfering with your family holiday plans is achievable, especially as most agents now have executive assistants who can do some of the legwork.</li>
<li>It can also be a good time to take advantage of social and networking opportunities, so that as the sales year heads towards the early April 2015 Easter break, you’re armed with fresh prospects. Keep networking, but in a relaxed fashion – schedule lunches, drinks or coffee with friends, past clients and vendors.</li>
<li>Get back to the office during early January and use the time to stay in touch with your clients by phoning to wish them a Happy New Year. Even if you make just 10 calls each day from Mondays to Fridays, this will add up to a large number of people over four weeks.</li>
<li>When you get back to office, update your databases and declutter your computer files, as well as other unnecessary paraphernalia lying around the office. Use this time to organize yourself in readiness for the year ahead. Evaluate your office systems and if these are not supremely efficient, then update software and set up new systems.</li>
</ul>
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Property marketing tips for hitting the ground running this January: He Said/She Said

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Guest observation
Losing a close relative or friend is a difficult time for anyone, and dealing with the deceased’s estate — although a necessity — can add to your suffering. Whether you have been bequeathed a property or made responsible for its sale, there are a few simple but vital steps you can take to ensure the process is as smooth as possible.
Change the locks 
It’s a good idea to change all the locks in the house as soon as possible. It’s likely that your relative has given spare keys to friends, neighbours, cleaners or repairmen, and it’s important that you know who has access to the property. This way you can take charge of who has a key, including home staging professionals and your real estate agent.
Have mail forwarded 
Even if you have access to the deceased’s property, you should still arrange for mail to be forwarded to your own address for the foreseeable future. This means you will be able to tie up any outstanding matters relating to the property, such as water charges, council rates and mortgage repayments. Forwarding mail also means you can let friends and family know of the death when their mail arrives.
Arranging to forward mail should be done in-person at a post-office, using a Mail Redirection application form. More info can be accessed <a href="https://auspost.com.au/parcels-mail/redirecting-your-mail">here</a>.
Gather important documentation
If you’ve been left in charge of the deceased’s estate, there are financial matters that you will need to attend to as quickly as possible. You should attempt to collect all of the following documents and ensure they are dealt with accordingly. All of these documents may already be with a solicitor that you can contact directly, but the responsibility to attend to any outstanding issues may fall upon you.
<ul>
<li>Rates notices and statements</li>
<li>Creditor letters</li>
<li>Bank account information</li>
<li>Home insurance — contact the provider to inform them of the death and arrange cover accordingly</li>
<li>Any documentation relating to ownership or maintenance of the home</li>
<li>Mortgage statements</li>
</ul>
Maintain payments 
Many mortgages are issued with the condition that adequate life insurance is in place, which will pay off the mortgage upon death. However, this doesn’t always happen automatically and you may need to contact the bank or mortgage company to inform them of the change in ownership status. You may also need to maintain repayments until the matter is resolved. If you are the legal owner of the property, you will need to keep up to date with council and water rates. These issues can be time-consuming, stressful and costly, so if you don’t intend to keep the house, securing a quick sale can be important.
Hire a real estate agent  
Given that the deceased relative may not have lived nearby to you, you will need a real estate agent who you trust and who you know will take a proactive approach when selling the property. For the best results, you should look for an agent who has specific experience selling homes quickly — and remotely, if that is your case. Particularly if you are in a different state, you should do your research to compare several agents in the area to get a good idea of their sales history and what their previous customers have to say about them.
Prepare the house for sale 
If you don’t intend to keep the property, achieving a quick sale at a fair market price is essential. Holding onto the house for too long could cost you money, so you and your real estate agent should select a listing price that represents value and attracts buyers. If you sell the property via the private treaty route, the original listing price just acts as a guide and if you can instil competition between buyers, you can drive up the price. You can ensure real certainty in terms of timescale by selling at auction. This decision can be made with the help of your agent.
If you’re looking to sell quickly, you should ensure to the best of your ability that it is ready to move into. This may require some quick repairs and alterations.
<ul>
<li>Remove old and tired furniture, and possibly temporarily furnish with some simple, modern items (you may consider hiring a professional staging company)</li>
<li>Remove personalised photos</li>
<li>Give the walls a lick of paint, and stick to neutral shades to appeal to broadest range of buyers</li>
<li>Make the rooms look as light and spacious as possible by removing unnecessary drapes and curtains.</li>
<li>Repair leaky taps, wobbly doors, and replace light bulbs.</li>
<li>Spruce up the garden as it’s often the first thing people see</li>
<li>Ensure your agent has access to the property at all times, especially if you don’t live close by</li>
</ul>
Selling the property of a deceased relative isn’t something most people are prepared for, and can often be someone’s first experience selling. Following the tips above will hopefully take some of the stress out of the process, so it’s important to surround yourself with people that you can trust have your best interests at heart.
Marta Higuera is the co-founder and co-CEO of real-estate startup <a href="https://www.openagent.com.au/" target="_blank">OpenAgent</a>.
 
 
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How to cope with selling the home of a deceased relative

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Guest observation
Dozens of homes and outbuildings have been destroyed in bushfires that have <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-01-06/adelaide-hills-bushfire-temperatures-rise-crews-flight-blaze/6001568">ravaged parts of South Australia</a> reminding us again how poorly adapted we are to bushfire prone landscapes.
With 15 years experience in design and planning to mitigate bushfire risk I have found that the two main barrier to affordable bushfire-responsive housing are:
<ol>
<li>misinformation on the cost of building in bushfire prone areas</li>
<li>difficulties delivering an holistic design approach that integrates buildings and their landscapes in one risk mitigation/dwelling environment.</li>
</ol>
Misinformation on cost
There is a growing public perception that building to the Australian Standard for construction in a bushfire-prone area – <a href="https://infostore.saiglobal.com/store/Details.aspx?ProductID=1101539">AS 3959:2009</a> – is unaffordable.
This can be attributed to published construction cost premiums applied to each of the six bushfire attack levels (BAL) outlined in AS 3959, from BAL-Low, BAL-12.5, BAL-19, BAL-29, BAL-40 to BAL-FZ (Flame Zone). The source of these costings is the Australian Building Codes Board’s <a href="https://www.abcb.gov.au/~/media/Files/Download%20Documents/Archived/Consultation/Bushfire%20Construction%20Final%20Decision%20RIS.ashx">Regulatory Impact Statement</a> for AS 3959:2009.
This costing matrix, which has been represented on various state and local government websites around Australia such as <a href="https://www.swan.wa.gov.au/Our_City/Have_Your_Say/Bushfire_Amendment_Amendment_No_99/Bushfire_Amendment_FAQs">City of Swan</a>, in Western Australia, puts the extra cost of complying to the standards as up to A$20,885 for a “base home”.
These premiums have been derived from simplistic calculations where, for example, fibreglass fly screen mesh is upgraded to stainless steel ember mesh, or float glass is replaced with toughened safety glass.
The problem with this costing approach is that it assumes as a given, generic base house styles such as weatherboard construction and elevated lightweight construction. Elements are then substituted or added, such as the addition of bushfire shutters over conventional windows.
It is a very rudimentary costing exercise to take a generic home type and then substitute elements and ignores factors that contribute significantly to costs when building in bushfire prone areas.
Often the greatest contributor to cost is not the bushfire standards but the national energy rating requirements. This is because bushfire prone areas are both quite cold in winter and very hot in summer.
In these climate zones you need a building with mass – such as masonry – but also an open building with sufficient glazing to capture the winter sun and openings for natural cross ventilation.
The constraint against integrated design
Good design is about cross purposing – achieving more with less. So what designers should be looking for here are opportunities to integrate the otherwise disparate aspects of topography, thermal mass, radiant heat protection, insect control, flame contact, thermal comfort, sun shading, site access and escape into one holistic design.
One very practical example of this design approach is to eliminate veranda overhangs and eaves – which are proven weak links in bushfires – and replace these with perforated metal retractable shutters over windows.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68323/area14mp/image-20150106-18604-1xxtduw.jpg"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68323/width668/image-20150106-18604-1xxtduw.jpg" alt=""></a> A house the author designed with the perforated shutters to protect against bushfires, built to BAL-29. Andrew Halsall, Author provided
These shutters then control the sun, insects, glare and wind as well as embers and radiant heat. Our research has found that this delivers a significant cost saving, but importantly, the bushfire risk mitigation device is used on a daily basis rather than once in an emergency. That is, it is integrated into the daily life of the home – it is not a rarely used add-on.
Standards and planning
What further impedes the integrated design approach is a disconnect between AS 3959 and the bushfire-specific site planning regulations of our state and local governments.
For example, there is no provision in AS 3959 for the design of escape routes from dwellings.
More concerning is that there is usually no requirement to apply this building standard at all unless the site has first been formally declared as a Designated Bushfire Prone Area. WA is about to declare all areas within 100 metres of bushland that is greater than 1 ha in area as bushfire prone.
Once declared, it is virtually impossible to mandate the application of the standard to existing dwellings via retrofitting. So we can have the now not uncommon situation where a well designed bushfire responsive house has a neighbouring property with a fire prone timber bungalow.
The False-Sense-of-Security myth
Perhaps the greatest constraint to the integrated design approach is the reticence of fire authorities and local governments across the country, to support the two highest levels of bushfire design BAL-40 and BAL-FZ.
The perception here is that for home owners to build to these levels would create a false sense of security, placing them in unexpectedly high levels of danger.
The reality is that every level of BAL represents the same level of risk – the lower the BAL the greater the distance between a dwelling and the bushfire prone vegetation. The higher the BAL the closer that vegetation can be to that dwelling.
But agencies encourage the building of conventional houses with low to mid-range BAL level features – no higher than BAL-29 – and then expect the homeowner to actively manage the vegetation hazard.
The problem that we see every fire season is that these active measures are frequently not carried out despite the many annual warnings for home owners to be prepared for bushfires.
For the fire authorities to promote this approach is somewhat paradoxical because the first principle of risk mitigation is to prioritise passive protection (such as building better bushfire protection) over active measures (keeping hazard vegetation cleared). Compared to permanent building features, landscapes are highly dynamic and far less dependable.
The reticence within agencies to promote better design reflects misconceptions about costs of implementing the building standard and the underlying risk mitigation principle.
An integrated approach places emphasis on active vegetation management where this can be practically achieved and building design solutions that deal with the many aspects associated with living in bushfire prone areas.
Only then will we start to see a reduction in the number of homes and properties destroyed when bushfires strike again.
<img src="https://counter.theconversation.edu.au/content/35899/count.gif" alt="The Conversation" width="1" height="1">
<a href="https://theconversation.com/profiles/ian-weir-130364">Ian Weir</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology">Queensland University of Technology</a>
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/we-can-build-homes-to-survive-bushfires-so-why-dont-we-35899">original article</a>.
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We can build homes to survive bushfires, so why don't we?

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Guest observation
The wheels of justice grind exceedingly slow and nowhere slower than in the Sydney headquarters of the Australian Securities and Investments Commission (ASIC). A recent <a href="https://www.smh.com.au/business/anz-traders-sidelined-during-asic-inves">report</a> appears to show that ASIC is still, just under two years after the events, following leads on possible manipulation of the Australian interest rate benchmark, the Bank Bill Swap Rate (BBSW).
We know the BBSW was manipulated as evidenced by an <a href="https://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2014-releases/14-014mr-asic-accepts-enforceable-undertaking-from-bnp-paribas/">enforceable undertaking</a> by the French bank BNP-Paribas almost one year ago. What we don’t know yet is whether there was any evidence of involvement by Australian banks and, if so, to what extent? But it would not come as a complete surprise if <a href="https://theconversation.com/dont-believe-the-hype-our-own-libor-scandal-could-be-in-the-wings-12652">local banks had been involved</a>.
However, the question of whether Australian banks were involved or not in manipulation is irrelevant. There was indeed manipulation and it went unreported to ASIC until overseas regulators began to investigate manipulation of the widely used <a href="https://theconversation.com/watching-the-dominos-fall-in-the-libor-crisis-11358">LIBOR</a>benchmark. There are two scenarios. First, local bankers (as the major players in the BBSW market) knew there was manipulation and did nothing, benefiting from the outcomes. Alternatively, they did not know of the manipulation, in which case they come across as provincial dopes. Either way the Masters of Martin Place do not come out of the scandal very well.
After strenuously denying for years that the BBSW could possibly be manipulated, the Australian Financial Markets Association (AFMA) changed the BBSW <a href="https://www.afma.com.au/standards/market-conventions/Bank%20Bill%20Swap%20%28BBSW%29%20Benchmark%20Rate%20Conventions.pdf">calculation methodology</a> in July 2013 to one which collected live rates from the market, rather than expert opinion, to calculate the benchmark. Supposedly this would be <a href="https://theconversation.com/is-there-egg-on-the-rbas-face-13136">less prone</a> to manipulation. How wrong they were.
Just last November, in what was obviously a coordinated effort, regulators in three countries <a href="https://www.bloomberg.com/news/2014-11-12/banks-to-pay-3-3-billion-in-fx-manipulation-probe">announced fines</a> of more than US$4.3 billion on six banks found to have manipulated the most widely used benchmark in the global Foreign Exchange (FX) market. As with LIBOR, manipulation of the London “WMR 4 o’clock FIX” was long running, widespread and profitable. But unlike LIBOR, the “FIX” was calculated from live market rates, and supposedly manipulation-proof. But human ingenuity and greed finds ways around such trivial obstacles.
The regulators found that traders from the world’s largest banks colluded, through conversations in internet chat rooms, to “nudge” the FX market in a particular direction to benefit their own positions rather than their customers. Traders found that it was sufficient to manipulate the market for only about 60 seconds “around the FIX” to generate illicit profits.
In its <a href="https://www.bis.org/publ/rpfx13.htm">latest triennial survey</a> of activity in the FX market, the Bank for International Settlements (BIS) found that the Australian dollar was one of the top five most traded currencies accounting for some 8.6% of overall volume. Although the initial fines concentrated on manipulation of the major currencies (the US dollar, the Euro and the British Pound) it stretches credibility to believe that traders did not also manipulate the Aussie benchmark rate. In fact, because of the time at which the benchmark was calculated (4pm GMT), the local markets would have been closed and hence, because there was less competition, the benchmark would have been easier to fudge.
Why is such manipulation important? Australian superannuation funds that have an international component, such as US shares, are regularly revalued against the market, often on a daily basis. Any manipulation will then directly affect the value of the funds, sometimes up and sometimes down, but most often to the benefit of the banks rather than pensioners.
Under Chairman Greg Medcraft, ASIC has announced <a href="https://www.ft.com/intl/cms/s/0/51e79260-af26-11e3-bea5-00144feab7de#axzz3NusDo4TK">an investigation</a> into possible manipulation of FX benchmarks, which is due to complete sometime early this year. And in a recent chat with journalists, Medcraft declared that Australia was a “<a href="https://www.afr.com/videos/national/medcraft-australia-paradise-for-white-collar-criminals-4yadc5ctryjjokkc4gd3biiv2dka_a0q">paradise for white collar criminals"</a> a comment he <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-10-23/asic-backtracks-on-corporate-crime-paradise-comments/5835194">then backed away from</a> after being contacted by the finance minister Mathias Cormann.
At this stage it would be customary to call for an in-depth inquiry into the banking industry and its ethics, but in the wake of the toothless tiger that was the <a href="https://fsi.gov.au/publications/final-report/">Murray Inquiry</a> which had only one reference to LIBOR (in relation to Withholding Tax), such a suggestion would fall on deaf ears. Medcraft has repeatedly made a strong push for additional funding for ASIC and heeding him, the Murray Report has recommended that an “industry funding model” be introduced - that is, “abuser pays”.
If the ASIC inquiry finds evidence of misconduct (and arguably even if it doesn’t in this particular case), the government should promptly allocate all of the funding that the corporate regulator needs. And, more controversially, ASIC, because it is too thinly spread, should be broken up to allow it to concentrate on preventing misconduct in the Australian financial system, if indeed it is such a paradise for white collar criminals.
Less controversially, AFMA is a trade association, governed by its members, the largest banks in Australia and the world. There is an obvious conflict of interest in also being the administrator of the BBSW benchmark. As in the UK, that responsibility should be delegated to <a href="https://www.theice.com/iba">an independent body</a>.
It is also a conflict of interest for any industry body to set the code of conduct for its members’ employees. Though AFMA’s <a href="https://www.afma.com.au/afmawr/_assets/main/lib90010/afma%20code%20of%20ethics%20code%20of%20conduct.pdf">code of conduct</a> specifically forbids market manipulation, the Board contains senior representatives of banks that have been fined for both FX and LIBOR manipulation. Furthermore, the AFMA code has not been updated since the revelations of wide-spread market manipulation; it is bland and ineffectual. ASIC should ensure that proper conduct including financial benchmarks is part of each firm’s corporate code of conduct and is strictly enforced by them.
Pat McConnell is Honorary Fellow, Macquarie University Applied Finance Centre, at Macquarie University.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/years-on-asic-still-grappling-with-swap-rate-fixing-scandal-35851">original article</a>.
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Years on, ASIC still grappling with swap rate fixing scandal

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GUEST OBSERVATION
One of the more noteworthy features of Xi Jinping’s presidency has been his apparently genuine and effective efforts to crack down on corruption. Like everything else in China, the scale of the problem is epic. But the number of “tigers” that have been caught in the net and the fact that prominent diplomats are now being ensnared suggests that efforts to combat graft are both serious and having the desired effect.
At one level, it’s not hard to see why China’s leaders want to be seen as “doing something” about corruption. If there is one topic that outrages many ordinary Chinese and threatens to send social media into meltdown, it is the idea that corrupt officials enrich themselves and go unpunished. More than 80% of people in China think that the rich get richer while the poor get poorer, according to a recent Pew survey.
This might be an uncomfortable public policy problem for any government. It is especially acute in the People’s Republic at a time when Xi appears to be trying to revive some of the key principles of Chinese-style socialism. China’s leaders are, after all, supposed to be representatives of the masses, not the executive committee of the bourgeoisie. That so many prominent political figures and their families have accumulated extraordinary wealth is not a good look for the vanguard of the people.
Disgraced former provincial governor Bo Xilai was the first of a string of high-profile leaders who have been brought down in the ongoing purge. The downfall of former security czar Zhou Yongkang was, perhaps, an even more remarkable scalp, given his former membership of the Politburo Standing Committee – China’s highest governing body.
The fact that Bo and Zhou were seen as allies and potential political opponents of Xi’s has led some to question whether the current campaign is more about Xi consolidating his remarkable personal power than it is about corruption per se. After all, corruption has become an entrenched part of doing business in China, with around 20% of firms reporting that they expected to give “gifts” to public officials to obtain things like import licenses and construction permits.
It is no surprise that China was rated as 80th out of 178 countries in Transparency International’s 2013 corruption perceptions index as a consequence. The big – generally neglected – question is whether it actually matters if “China” is judged to be corrupt. Plainly it has not stopped the “international investment community” from continuing to pouring money into China, despite the apparent difficulties of doing business there and the need to subscribe to local norms.
It is also clear that pervasive corruption has been no obstacle to growth. This is especially important given that the reason we all pay such keen attention to China is because it has been an historically unprecedented economic development success story. It is also a story with profound importance for dependent trade partners like Australia.
China’s experience with corruption is not unique either. One of the most striking features of Japan’s development – the previous holder of Asia’s developmental crown, let’s not forget – was that it was not inhibited by corruption or “money politics”. The corruption scandals that eventually engulfed former Japanese prime minister Tanaka Kakuei did little to hold back Japan’s economic renaissance.
A not dissimilar story can be told about Indonesia under Suharto. For all the Suharto family’s rampant corruption, economic development did take place. Cynics say that the one benefit of Suharto’s rule was that everyone knew who to bribe. Following a process of decentralisation urged by the international financial institutions, things are a good deal less clear-cut.
There is a serious point in all of this, but one that is normatively unpalatable. If we think of corruption as an informal type of taxation it becomes more understandable, if not more acceptable. In countries where the taxation system is ineffective and where wages may be low, the growth of corruption is predictable and difficult to eradicate.
What is more surprising is the persistence – even the growth – of corruption as living standards rise. It is not something that is exclusively a problem in Asia or the “developing world” either. On the contrary, recent revelations of the extent of corruption in New South Wales, not to mention Wall Street and the City of London, are a sobering reminder of the pervasive nature of corrupt practices.
China’s attempts to wrestle with this problem are, therefore, of particular interest and importance. It remains to be seen whether Xi will have any more success in rooting out powerful, corrupt vested interests than we have in this country. Likewise, it will be interesting to see what impact – if any – success or failure in this endeavour has on China’s development trajectory.
Ultimately, corruption may have more impact on the possible development of a collectively held sense of justice and equity than it does on economic growth. Still a good reason to do something about it, of course.
Mark Beeson is professor of international politics at University of Western Australia.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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Corruption in China: does it matter?

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GUEST OBSERVATION
Several Australian cities, such as <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-01-01/south-australia-to-swelter-as-heat-spell-looms/5995690" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;">Adelaide</a> and <a href="https://www.perthnow.com.au/news/western-australia/heat-warning-as-temperatures-in-perth-forecast-to-soar-to-41c/story-fnhocxo3-1227174069845?nk=c20318fc5326e96c7db65d276cba3cb3" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;">Perth</a>, have greeted 2015 with scorching weather as summer hits its stride – the kind of conditions that leave us crying out for an air conditioner, rather than dreaming of barbeques and beach trips.
Yet new research shows that Australians could end up feeling even hotter than expected over the next few decades, as changing weather conditions make climate change feel even more severe than it is. That’s bad news for Sydney and Brisbane, where sweltering humidity is set to rise.
In contrast, freshening summer winds in Perth, Adelaide and Melbourne could grant residents some relief by mitigating the apparent effects of rising temperatures. The mercury will still rise, but perhaps it won’t feel quite as sweltering as we would expect.
Feeling the heat
Days upon days of extreme heat make us feel irritable, uncomfortable and, in the worst cases, unable to cool down at all. Stifling conditions during the day, with no relief at night, place <a href="https://theconversation.com/how-heat-can-make-your-body-melt-down-from-the-inside-out-22042" target="_blank">physical stress on our bodies</a>. During heatwaves, vulnerable citizens such as the elderly, young children and the physically ill have a higher risk of adverse health effects. In some cases the stress can become too much, resulting in death.
In January 2009, a week before the devastating Black Saturday bushfires, <a href="https://docs.health.vic.gov.au/docs/doc/F7EEA4050981101ACA257AD80074AE8B/%24FILE/heat_health_impact_rpt_Vic2009.pdf" target="_blank">374 people</a> lost their lives as a result of heat-related stress during a three-day record heatwave in Melbourne. This was more than twice the number that died during the fires. Despite the implementation of <a href="https://docs.health.vic.gov.au/docs/doc/479050E85C879831CA257D8C0015FD87/%24FILE/Heat%20health%20alert%20system_guidance%202014%20-%202015.pdf" target="_blank">heatwave alert systems</a> in some Australian cities, many people are still vulnerable. An estimated <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-10-13/january-victorian-heatwave-deaths-up-24-per-cent/5810176" target="_blank">167 people</a> lost their lives during Melbourne’s heatwave in January 2014.
Keep your cool
The human body’s ability to withstand heat stress depends on being able to shed excess heat, often through sweating, to keep our core temperature at an optimal 37C. Very warm outdoor temperatures, or excessive exposure to the sun, heat our bodies. However, shedding that heat depends not only on the surrounding air temperature, but also on factors such as humidity and wind speed, both of which affect our ability to sweat effectively.
This can mean that the heat we think we feel is not necessarily the same as the air temperature we measure. That’s why a 35C day in Brisbane can feel so much worse than a 35C day in Melbourne!
Taking account of these factors allows meteorologists to predict what the weather conditions will “feel like” to an average person. For example, the Bureau of Meteorology uses a measure called the <a href="https://www.bom.gov.au/info/thermal_stress/" target="_blank">apparent temperature</a>. Measuring weather conditions in this way provides a better idea of when conditions are dangerous to health, so that appropriate warnings can be issued.
This article continues on the next page. Please click below.
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Which cities will fare the best?
Many recent studies show that <a href="https://theconversation.com/climate-council-heatwaves-are-getting-hotter-and-more-frequent-23253" target="_blank">extreme heat is increasing</a> around Australia, <a href="https://theconversation.com/human-hands-are-all-over-australias-hottest-ever-year-32267" target="_blank">mostly as a result of human-induced climate change</a>. But are we actually feeling any hotter? <a href="https://www.sciencedirect.com/science/article/pii/S0921818113001343">Recent work</a> by one of us (S.J.) showed that alongside the increase in air temperature, the apparent temperature (how we feel), has also changed across Australia.
In Sydney and Brisbane, the apparent temperature has increased by 1C since the 1950s, but the actual temperature has only increased by 0.5C. This means that what felt like 29C in the 1950s now feels like over 30C, on average. This is because the humidity has increased and it is slightly less windy on average in both locations. These muggier conditions make the weather feel hotter, as the body is unable to shed excess heat as effectively.
Perth, Adelaide and Melbourne fared better. Although, on average, it is nearly 1C warmer now than in the 1950s, people in these cities may not actually feel warmer. This is because it is also typically windier, so sweat can evaporate more effectively when it is hot, making us feel cooler than the real temperature suggests.
The largest trends in apparent temperature were found in Western Australia, with the Pilbara and the Wheatbelt hit hardest. In these regions, what felt like 38C in the late 1970s now feels like 41C, on average, potentially increasing the risk of heat stress to miners and farmers alike.
It’s getting hot in here
In the future, Australian heatwaves will likely become <a href="https://theconversation.com/more-angry-more-often-march-heatwave-signals-a-new-normal-13068" target="_blank">hotter, longer and more frequent</a> as the climate changes. But what are the consequences for the risk of heat stress?
Future changes in apparent temperature are somewhat uncertain. While we are confident of the forthcoming increases in temperature, we are less certain about how humidity and wind will change. Regardless, the data suggest that apparent temperatures will increase in most Australian regions – so wherever you are, it’s likely you’ll feel the rise in temperatures.
But the speed of the perceived warming is also important if humans are to adapt. If things get too hot to handle too quickly, communities will have little time to adjust, resulting in a dangerous situation for health.
The largest changes will be in Australia’s southeast, where climate models suggest that for the millions of people in Melbourne and Sydney, future summers will feel like they are warming even faster than the real temperature suggests, because of an increase in humid days. Residents in these cities will therefore be at a higher risk of heat stress when a heatwave strikes.
Meanwhile, in the southwest, Perth’s drying climate will act to slow the rate of perceived warming, enabling residents to adapt more easily to the new conditions.
Human-induced climate change is happening and we are already starting to feel the effects. Coping with the infamous Australian summer is already difficult, but in the future it might become even more stressful for some.
Stephanie Jacobs is a PhD candidate at Monash University.
Ailie Gallant is a ARC DECRA Fellow, School of Earth, Atmosphere and Environment at Monash University.
This article was originally published on <a href="https://theconversation.com" target="_blank" style="line-height: 1.3em;">The Conversation</a>.
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Bad luck, Brisbane: muggy cities will feel future heat even more

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GUEST OBSERVATION
The last two years have been somewhat of a testing ground for making property price forecasts informed by <a href="https://ckmurray.blogspot.com.au/2011/07/murrays-retrospective-indicator-for" target="_blank">my indicator</a>, which has a new name – the Speculation Index.
It is the ratio of housing gross yields to mortgage interest rates and captures the degree of price growth speculation embedded in current prices.
<a href="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" rel="lightbox[335668]"><img class="alignnone wp-image-337022 size-full" src="https://www.macrobusiness.com.au/wp-content/uploads/2014/12/buySellLongTerm1.png" alt="buySellLongTerm" width="700" height="352"></a>
Source: Cameron Murray and Philip Soos.
Above is a new long-term series of this Index using data compiled by Philip Soos. It offers a number of insights into the history of housing credit, the durability of cycles in periods of apparent macroeconomic stability, and offers a warning about the future of residential property markets to those who hold out hope that maybe now is the beginning of that elusive era of stability.
The primary lesson from the long-term Speculative Index is that the easy money era since the late 1960s has been qualitatively similar to the pre-WWII period in terms of cyclical patterns, but far different in terms of scale. Whether this has to do with the openness of credit markets, dual incomes, or the development of private investor markets in Australian housing, it is best to consider this period a unique conflation of institutions that cannot be compared to prior periods.
Or it could just be terrible data. Take your pick.
We can gaze back at the early part of the 20th century, which followed a massive housing boom and slump, particularly in Melbourne, during the 1890s. The first decade, by this measure, was a period of relative stability for property prices in Australia.
After WWI a property boom took hold, peaking around 1921 as yields fell and interest rates crept upwards, and followed by a long slump that continued through the Great Depression. During WWII the market was completely unmoved as resources were sucked out of domestic private markets into the war effort and various administrative controls kept prices and rents steady.
The renowned stability of the 1950s and 1960s is on display in this metric as well, with housing capitalisation rates very stable compared to yields, with almost no price speculation built into prices. Perhaps this was primarily a product of tight credit to households, coordinated construction efforts, and relatively high levels of non-housing investment.
Post 1970 the modern finance era <a href="https://www.econ.mq.edu.au/Econ_docs/research_papers2/2004_research_papers/Abelson_9_04.pdf" target="_blank">kicked off with a Sydney boom</a>, which <a href="https://ckmurray.blogspot.com.au/2011/07/sydney-housing-boom-ripple-effect" target="_blank">rippled</a> across states and was over by about 1974. Then the 1980s saw another round of smaller surges of speculation, ultimately collapsing in 1989 and leading to a recession a few years later. The end of the 1990s recession ended appeared to be the best time to buy property in the past two decades, as this index and a whole host of property-related <a href="https://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/" target="_blank">metrics indicate</a>.
The massive 2000s boom then rippled across the nation, and as interest rates where ratcheted up on falling property yields we see another index peak in 2008, which plunged back in response to substantial stimulatory interest rates cuts.
In essence, housing prices were rescued by the RBA during this period. Historically low mortgage interest rates, the influx of foreign investment into the housing market (and mining) and the Rudd government’s bailout of the banking and financial system saved the day.
As I <a href="https://www.macrobusiness.com.au/2013/05/melting-towards-the-bottom-of-the-housing-cycle/" target="_blank">wrote early last year</a>, my Speculative Index again showed it was an opportune time to buy Australia housing. Prices are up over 10% nationally since, and around 17% in Sydney. Currently this Index suggests there is more to run in the national price cycle. Prices being more likely to rise than fall in the near future.
I add a dashed prediction line to show what might be the next moves in this Index, jointly arising from a number of evolving trends including
<ul>
<li>Rising mortgage interest rates 
</li>
<li>Flat or falling rents 
</li>
<li>Rising prices</li>
</ul>
For example, if prices rise by 10%, mortgage rates rise by 0.75%, while rents are flat, the Index will shift up to 2.1. That’s still a long way off the type of irrational exuberance we normally see, taking us only halfway from the buy line to the sell line.
Unless we see significant credit controls in the housing market, it is likely we will continue the property price cycle we have just started. This cycle itself will compress yields while rents are stable and result in a surge of the index, providing the boom for necessary for the next bust. The RBA, as usual, will be too late to increase interest rates. Governments at all levels will be too uncoordinated to increase public investment to smooth the transition to a higher rates or tighter credit environment.
If the Georgist 18 year average period of asset cycles has merit, then we are now likely living in a period much like mid 1990s – still cautious from recent experience and ignorant of the property cycle about to get under way. Remember though that this Index does not represent prices, but reflects the degree of speculative fervour in the market. The Index can rise without price price increases if rents are flat and mortgage interest rates are rising. Which of these factors we see play out will determine the scale of the price gains likely to be experienced.
Looking at the history of this index, coupled with the recent success of using its cyclical pattern to predict property market movements, suggests it is unlikely that ‘this time is different’.
Cameron Murray is an economist and PhD candidate at University of Queenland. 
Philip Soos is an economist and post graduate candidate at Deakin University. He has recently co-authored <a href="https://www.worldeconomicsassociation.org/files/Bubble_Economics_Egan_Soos.pdf" target="_blank">Bubble Economics: Australian Land Speculation 1830-2013 </a>with Paul D Egan.
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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Property speculation to continue boom, but will a bust follow?

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GUEST OBSERVATION
Ex-NSW Premier Nick Greiner has <a href="https://www.smh.com.au/comment/salt-and-pepper-sydney-social-housing-redevelopment-holds-promise-20141204-11uad3">proposed</a> that land value embedded in public housing estates be recycled to generate new social housing - by redeveloping the estates into higher density living. Greiner claims by using uplift in land values it won’t cost the government a cent.
A similar argument was made recently at the <a href="https://www.urbangrowthnsw.com.au/news/the-bays-precinct-sydney-international-summit-2014.aspx">UrbanGrowth NSW Summit</a> on Sydney’s Bays Precinct renewal project.
Have we finally found the Holy Grail for affordable housing? Is it really that simple – just target existing public land (or rundown estates), redevelop at unusually high density, and use the associated value uplift to secure a substantial slice of low cost homes within the overall project?
This is a neat political trick. It puts the onus on those in the community who might oppose greater density to do so at the expense of the most disadvantaged. How much affordable housing do you want? How much higher do you want the development to go? Government can effectively wash its hands of the decision. It’s a simple land deal.
But its not that simple, of course. More importantly, the solution to our affordable housing crisis lies not just with state governments, but is very much due to a failure at the top of our federal policy system.
A national issue
The current Senate committee <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Affordable_housing_2013/Terms_of_Reference">inquiry into affordable Housing</a>, due to report in March 2015, recognises housing policy is an issue of national significance that calls for national action. Many of the most significant government interventions in our housing market (think negative gearing and capital gains tax concessions, immigration and social security policy) are controlled at the federal level and not by the states and territories.
There are, of course, complexities to the Commonwealth government’s role in an area of “domestic policy” of this kind. Under our federal system, Canberra’s ability to impose housing system reforms would be limited, even under a government keen to do so. But neither is it tenable to claim that the Commonwealth has no remit or responsibly to lead and co-ordinate in this area.
State governments are (increasingly) starved of the resources necessary to run housing programs effectively and the essential coupling of housing, urban and infrastructure policies that should drive new residential development has been largely absent, another point recently lamented by Greiner.
Unfortunately, over a long period the scope for Commonwealth leadership in housing policy has been progressively undermined by vacillating political interest and a hollowing out of public service capacity in Canberra.
The US Housing and Urban Development administration is one example of how things could be done differently. It is resourced and empowered by the US government to play a role for America as a whole. Under the Abbott government, Commonwealth leadership capacity on housing policy has been further weakened by the abolition of the “housing minister” designation, and by the scrapping of the Housing Ministers Advisory Council. Scope for evidence-based policy in this area has been damaged by the disbandment of the National Housing Supply Council.
Although the majority of Australians are affordably housed, a rapidly growing minority is not. This is largely because what remains of our national policy framework was essentially created for an earlier age, when home ownership was a readily achievable goal for most households and property prices were not driven into the stratosphere by an overstimulated rental investment market. Moreover, housing policy has shifted substantially to a reliance on the market to supply the housing needs for all, including lower-income households.
Thanks to these changes our housing system is becoming increasingly dysfunctional. As well as undermining the welfare of lower income groups, this imposes growing economic costs on the whole country. Increasingly, for example, the working poor are being pushed to the fringes of our capital cities, remote from the job-rich inner areas, compounding their disadvantages in a difficult job market. While governments may sometimes speak of well-located “affordable housing” as desirable, there has been little or no effective action to counter intensifying spatial segregation to which housing markets are contributing.
Our federal politicians cannot absolve themselves of responsibility in this situation. It’s now over 20 years since Australia had anything resembling a national housing strategy. Since then, with only a brief exception around 2008, successive governments have turned a blind eye, failing to face up to the new social and economic challenges requiring housing policy reform.
And there are new dilemmas, such as growing numbers of people facing old age in rental housing as home ownership rates decline, especially among the Gen X and Y cohorts – the children and grandchildren of the Boomers for whom post-war housing policy created a previously unseen bonanza of property wealth. Similarly, with growing numbers of families living in private rental housing – many destined to remain there in perpetuity (the so-called “Generation Rent”) – the standard tenancy framework of short term lettings with no security and few rights to make a home is increasingly unsuitable. Sooner or later, this issue will gain political traction, demanding government intervention.
Article continues on the next page. Please click below.
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Market failure
Left to itself, the market does not generate well-located housing of reasonable quality that is affordable to less affluent Australians. Neither is there a simple answer to this in the form of increased gross housing supply, which some claim would be unleashed by further planning deregulation. The idea that a rapid upswing in new building sufficient to affect house prices would significantly improve affordability (even if the building industry could achieve this) is in any event laughable – how many developers would continue to build if prices were to fall? As history has shown time and again, only with active government intervention can a nation overcome the market’s failure provide adequate levels of affordable housing.
This issue is complex but not insoluble if addressed through smart policy. This should include:
<ul>
<li>national tax reform directed at achieving improved housing affordability</li>
<li>a national strategy for affordable housing supply</li>
<li>a national mechanism for financing affordable housing at scale via proven and cost-effective methods, such as a national housing supply bond</li>
<li>a larger role in housing provision for the non-profit sector</li>
<li>connecting infrastructure, housing and planning strategies at city and local scales to deliver integrated affordable housing outcomes on the ground.</li>
</ul>
The idea of simply achieving more affordable housing on the back of density bonuses, while a possible component of any local solution, is a myth that will not suffice long term. What happens when we run out of public housing estates to renew? And would this work in the lower value outer suburbs where much public housing is located?
The provision of affordable housing cannot be left to the market: it requires a commitment of government at all levels to develop a well-integrated and properly funded package of policies. With the “reforming Federation” debate under way, now is the time for these arguments to be had.
<img src="https://counter.theconversation.edu.au/content/35372/count.gif" alt="The Conversation" width="1" height="1">Bill Randolph is director, City Futures - Faculty Leadership, City Futures Research Centre, Urban Analytics and City Data, Infrastructure in the Built Environment at UNSW Australia.
 Hal Pawson is associate director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice at UNSW Australia.
Vivienne Milligan is associate professor - City Futures Research Centre, Housing Policy and Practice at UNSW Australia.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. 
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Australia needs more than dense housing arguments

National Australia Bank (NAB) will fund <a href="https://www.apartments.com.au/new-apartments/palmera-residences-gold-coast-18-garfield-terrace-surfers-paradise-qld-4217">Palmera</a>, a $1 billion, 52-level luxury residential tower being developed by Central Equity in one of the Gold Coast’s most tightly held coastal locations at Northcliffe.

The project, launched recently by <a href="https://www.apartments.com.au/developers/central-equity">Central Equity</a>, one of Victoria’s largest private residential developers, comes at a time when construction funding for large residential developments has become increasingly competitive as lenders tighten exposure to the sector.

Multiplex has been appointed the builder, and construction is now underway.

[smartcode_project:default project_id=108274 project_image_fid=365784]

Since its first project, Central Equity has delivered more than 85 residential developments with a combined end value exceeding $8 billion.

Palmera reflects Central Equity’s growing focus on the Gold Coast luxury apartment market and continues a relationship between Central Equity and NAB that dates back to the late 1980s, when the bank funded one of Melbourne’s earliest inner-city residential towers at a time when high-rise apartment living in the CBD was largely unproven.

“NAB’s funding of Central Equity’s $36 million CBD development in the late 1980’s to the financing of the billion-dollar tower today highlights the long-term relationship between the two organisations in delivering major residential projects” said Central Equity Founder and Chairman Eddie Kutner.

He said NAB’s early support was instrumental in helping establish the company’s development model.

“When we commenced our first residential tower in the late 1980s the concept of funding off-the-plan apartments was still largely untested in Australia,” Kutner said.

“NAB recognised the opportunity early and supported the project when others were uncertain. That relationship has now continued for more than 37 years across many developments.”

[smartcode_project:default project_id=108274 project_image_fid=365771]

Central Equity was established in 1987 when Melbourne’s CBD and Southbank precinct were still dominated by warehouses and commercial buildings. Fewer than 100 residents lived in Southbank at the time, and large-scale residential development in the inner city was not widely considered.

Recognising changing demographics and lifestyle preferences, the company began developing high-rise residential projects designed to bring permanent residents into the city centre.

Central Equity has provided accommodation for approximately 40,000 residents across Melbourne’s CBD and Southbank, while also incorporating supporting infrastructure including essential lifestyle facilities like retail spaces, childcare facilities and neighbourhood activity centres.

Central Equity has spent many years assembling the Palmera development site on the corner of Garfield Terrace and Frederick Street in Northcliffe, creating a supersite of around 3,300 sqm.

The developer said the Palmera apartment tower reflects its long-term view of the Gold Coast as a growing and increasingly diversified economy.

[smartcode_project:default project_id=108274 project_image_fid=365768]

Supported by infrastructure including the light rail network, major road upgrades expanded education, hospital and medical facilities and continued expansion at the Gold Coast Airport with more internation and domestic flights.

Positioned in the tightly held Northcliffe precinct, the 52-level tower will deliver 347 apartments, targeting buyers seeking a high-end coastal lifestyle, from downsizers to interstate investors.

Designed by Marchese Partners with interiors by DBI, Palmera has been conceived as a next-generation residential offering, featuring a collection of oversized apartments, with premium three-bedroom residences offering sweeping northern views stretching from Surfers Paradise through to Burleigh Heads.

[smartcode_project_cta:default project_id=108274]

Joel Robinson

NAB funds $1 billion Surfers Paradise apartment development, Palmera

Two years after completing one of the newest developments in North Sydney, developer <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a> is turning its attention to the rapidly evolving St Leonards apartment market.

The developer, which completed AURA by Aqualand on North Sydney's Walker Street, has lodged plans for a 5,918 sqm site at <a href="https://www.apartments.com.au/new-apartments/33-37-herbert-street-st-leonards-nsw-2065">33-37 Herbert Street, St Leonards,</a> seeking approval for a pair of residential towers rising above a shared podium opposite Royal North Shore Hospital.

The proposal forms part of the broader transformation underway across the St Leonards-Crows Nest precinct, where former industrial and commercial sites are increasingly being redeveloped into high-density mixed-use projects tied to major transport infrastructure.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="2cc428cf-fe70-4cac-9cd5-264ad53af62c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.56%E2%80%AFAM.png?VersionId=otKSnHtbjAvAddOnovyXQMgcAwE6DMe1" />

According to the planning documents, the site sits “within the St Leonards–Crows Nest Strategic Centre, identified by the NSW Government as a key area for accommodating future jobs and housing across Sydney.”

The proposal has been designed by fjcstudio, formerly FJMT Studio, and is being progressed through the State Significant Development pathway due to its scale and affordable housing provision.

The scheme would comprise 413 apartments, including 46 affordable housing units, alongside retail and commercial uses fronting Herbert Street. The project would also include communal open space, landscaping, a swimming pool, gymnasium, children’s play areas and podium-level resident amenities.

Planning documents show the development would consist of a part-13, part-39 storey tower form positioned above a four-storey podium.

“The development comprises a unified podium that activates the street interface, and two setback towers to accommodate new housing supply while maintaining an appropriate human scale at ground level,” fjcstudio noted in its Design Report.

The northern and southern towers have been shaped to respond to the surrounding skyline while also limiting overshadowing impacts to nearby public open space, particularly Talus Reserve.

The design report said the differing tower heights were intended to “contribute to a varied skyline while responding to the surrounding built form context and solar access considerations.”

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="36da62dc-ff9e-41f2-a7e3-7be38373751c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.45%E2%80%AFAM_0.png?VersionId=Mo6Rp2r.XRLTzIfg_PEEpw8NepDH8UBs" />

The site sits directly opposite Royal North Shore Hospital and within walking distance of both St Leonards Station and the new Crows Nest Metro station.

While the site itself sits just outside the formal Crows Nest Transport Oriented Development boundary, the planning documents repeatedly reference its alignment with the broader TOD objectives reshaping the Lower North Shore.

“The site is located adjacent to St Leonards Station and in close proximity to Crows Nest Metro which is within the Crows Nest Transit Orientated Development Accelerated Precinct which has been identified by the NSW Government to support housing delivery,” the Design Verification Statement noted.

According to fjcstudio, the project has been designed to respond to the broader transition occurring across St Leonards, where increasing residential density is being concentrated around transport infrastructure and employment hubs.

“The broader precinct is undergoing significant change, with a mix of existing mid-rise buildings and newer high-density developments,” the report stated.

“Recent and approved projects indicate a consistent shift toward taller built form, typically organised as tower-and-podium typologies with more active ground levels.”

The proposal includes close to 6,000 sqm of retail and commercial space across the ground floor and podium levels, designed to create a more activated street edge along Herbert Street.

Aqualand’s plans would also introduce a landscaped podium shared between the two towers, with communal open space in the form of a podium rooftop designed to support resident interaction and improve urban greening outcomes. The scheme would also introduce pocket parks at the northern and southern ends of the site, including a landscaped area at the corner of Herbert and Ella streets designed to improve pedestrian amenity and soften the streetscape.

&nbsp;

The proposal is being progressed through the NSW Government’s Housing Delivery Authority pathway, which was introduced to accelerate housing supply across the state. The application was declared State Significant Development in April 2025 following an expression of interest process.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="faf6d97d-2671-454f-b85a-fe1c6a7be608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.49%E2%80%AFAM.png?VersionId=diVd28OBVr5.YV.7prrOz.uAanwwwm7a" />

St Leonards has been particularly active with new developments in recent weeks. Developer SP Setia’s <a href="https://www.apartments.com.au/news/nsw/first-look-sp-setia-targets-st-leonards-skyline-with-40-storey-tod-tower">plans for a new 42-storey tower</a> recently went on exhibition through the same pathway, while <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">Stockland’s 52-storey tower proposal</a> was also recently unveiled.

Aside from the St Leonards project, which is expected to take around nine months to move through the approvals process ahead of a potential 2027 launch, Aqualand is also preparing to launch Boronia, a new apartment project in Roseville comprising around 111 apartments on Larkin Street.

The developer also has approvals in place for the next stage of the Barangaroo precinct, which will feature new residential, retail, hospitality and community uses, alongside a new metro entry across the five-hectare site.

More than 50 new retail destinations are planned for Central Barangaroo, alongside a 270-metre-long boulevard connecting Hickson Park to Nawi Cove. Together with Harbour Park, more than 50 per cent of the precinct will comprise public open space and parkland.

First look: Aqualand joins St Leonards apartment party

<section data-scroll-anchor="false" data-testid="conversation-turn-5" data-turn="user" data-turn-id="e65dbe94-e3b6-47f7-b62a-9cbb30c9bf79" data-turn-id-container="e65dbe94-e3b6-47f7-b62a-9cbb30c9bf79" dir="auto">Time &amp; Place’s plans to transform the former David Jones factory building in Surry Hills into a mixed-use residential precinct have gone on exhibition through the NSW Government’s In-fill Affordable Housing pathway.</section>

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:f4d533b7-64a5-413d-86fd-5c99649c2b73-2" data-turn-id-container="request-WEB:f4d533b7-64a5-413d-86fd-5c99649c2b73-2" dir="auto">
The Marlborough House proposal, lodged for the <a href="https://www.apartments.com.au/new-apartments/marlborough-house-47-97-marlborough-street-surry-hills-nsw-2010">47-97 Marlborough Street</a> site, would see the adaptive reuse of the heritage-listed warehouse building alongside the construction of new residential additions and a separate apartment building on the northern portion of the site.

The proposal seeks approval for 172 apartments across three buildings, including 15 per cent affordable housing managed by a community housing provider for at least 15 years from occupation.

<img alt="Marlborough" data-entity-type="file" data-entity-uuid="5d1d3c2a-bf13-47d6-a335-7c01102cdee1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.36%E2%80%AFAM.png?VersionId=cjMYrbR.BLUlWH4dar0RVDDo0bG.u2YT" />

Interior view from the Northern Building Penthouse overlooking the park

&nbsp;

The redevelopment is planned for the prominent 3,413 sqm site bounded by Marlborough Street, Goodlet Street and Lansdowne Street, directly opposite Eddie Ward Park and around 200 metres from the Surry Hills light rail stop.

Time &amp; Place acquired the former David Jones building in 2024, marking the first time the property had changed hands in around 50 years.

Designed by Wardle, the proposal centres around the adaptive reuse of the former David Jones factory, originally constructed between 1913 and 1935 in the Inter-War Chicagoesque architectural style.

Wardle noted in its Architectural Design Report that the building “occupies a significant place in the industrial and cultural history of Surry Hills” and at its peak was “the largest department store manufacturing facility in Australia, employing over 800 people and fuelling the growth of Sydney’s fashion and retail industries.”

The practice said the project positions itself “not as an isolated intervention, but as a contributor to the civic, social, and architectural grain of the precinct.”

The proposal would deliver 75 apartments within the retained southern heritage building, 59 apartments within the central addition, and a further 38 apartments within the new northern building fronting Lansdowne Street.

Planning documents show the scheme would comprise a mix of heritage apartments, new-build apartments, townhouses and penthouses.

<img alt="Marlborough" data-entity-type="file" data-entity-uuid="57758518-40a3-4b83-958c-d06e96a2cffa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.42%E2%80%AFAM.png?VersionId=VerlX9ST5xgBi8.1_YRsqdWTJeT6ygjs" />Interior View of the Heritage Building Apartment

The development would also include a ground-floor retail tenancy on the corner of Marlborough and Lansdowne streets, rooftop communal open space, a landscaped pedestrian link along the western edge of the site, and basement parking accessed from Lansdowne Street via a car stacker system.

&nbsp;

The scheme emerged from a competitive design process run by Urbis, with Wardle ultimately selected as the winning architect ahead of FJC Studio, TZG, Architectus and Wilkinson Eyre.

The Design Integrity Panel later described several aspects of the Wardle scheme as fundamental to the project, including “the stepped character of the new addition to the north of the site”, the landscaped western pedestrian link, and the “garden arrival” experience separating the original Marlborough House from the heritage addition.

Wardle’s design heavily references the site’s industrial and heritage history, while also responding to the surrounding Surry Hills streetscape.

The Architectural Design Report describes Surry Hills as “a finely grained neighbourhood with beautiful and expressive brickworks throughout the suburb,” with the proposal introducing a material palette intended to sit comfortably alongside the existing warehouse fabric and neighbouring terraces.

The report also outlines the project’s relationship with Eddie Ward Park and the broader landscape context of the area.

“Marlborough House occupies a site of deep cultural memory and the neighbouring Eddie Ward Park is of local ecological significance, where natural systems, topography, and stories have long shaped human experience,” Wardle noted in the report.

The architects said the proposal sought to “rebind built form to Country” through landscape, materiality and the adaptive reuse of the heritage structure.

<img alt="Marlborough House" data-entity-type="file" data-entity-uuid="9ae3f2f9-c85f-477a-a6f8-b43f6cb97c41" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.29.53%E2%80%AFAM.png?VersionId=B.qUCLqRvJOR.n9CvYcTpaknIX9LuqKZ" />

The project is also being progressed under the NSW Government’s in-fill affordable housing provisions, allowing developments that include affordable housing to access additional height and floor space incentives.

Under the plans, 2,593 sqm of the project’s floor space would be dedicated to affordable housing, slightly exceeding the required 15 per cent threshold.

In its Design Excellence Strategy, Urbis said the project aimed to “sensitively adapt and enhance the heritage-listed building on site through alterations and additions that preserve its historical significance” while delivering “high-quality market and infill affordable housing development in Surry Hills.”

Time &amp; Place has been one of the most active developers nationally in the last 12 to 24 months. Late last year they completed&nbsp;The Queensbridge in&nbsp;<a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>, a mixed-use tower with 353 apartments and a hotel. They are currently selling Park Modern, 246 apartments near the famous Botanic Gardens in&nbsp;<a href="https://www.apartments.com.au/developments/south-melbourne-vic-3205">South Melbourne</a>, and have future projects, <a href="https://www.apartments.com.au/new-apartments/the-wilmot-173-burke-road-28-hope-street-glen-iris-vic-3146">The Wilmot</a>&nbsp;in&nbsp;<a href="https://www.apartments.com.au/new-apartments/glen-iris-vic-3146">Glen Iris</a>, the redevelopment of the Northcote Plaza, and another tower in South Melbourne.

The developer broke into Sydney just a few years ago with Two Tides in Manly. They have another project nearby, which is at the ultra-luxury end of the market on&nbsp;<a href="https://www.apartments.com.au/buildings/shoreline-manly-beach-89-90-north-steyne-manly">North Steyne</a>, fronting the beach.

It is also continuing to work through the <a href="https://www.apartments.com.au/news/nsw/first-look-time-place-settles-on-design-for-the-chimes-potts-point-redevelopment">redevelopment of The Chimes building</a> on Macleay Street in&nbsp;<a href="https://www.apartments.com.au/developments/potts-point-nsw-2011">Potts Point</a>, as well as a project on <a href="https://www.apartments.com.au/news/nsw/time-place-to-take-on-mosman-apartment-market">Mosman's Redan Street</a>.
</section>

First look: Time & Place unveils Marlborough House redevelopment designs for former David Jones warehouse in Surry Hills

The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

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