One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.

Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.

The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" />

Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.

Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.

The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.

Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.

The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.

That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.

The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.

"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" />

Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.

The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.

The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.

According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.

The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.

A significant component of the proposal is the revitalisation of Blue Street Plaza.

The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.

Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.

Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.

Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.

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fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.

Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.

The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.

Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.

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FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.

Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.

Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.

Joel Robinson

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.

The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.

The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.

The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.

<img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" />

The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;

PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.

The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.

Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.

"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.

Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.

A major focus of the design has been the public domain.

The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.

The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.

Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.

Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.

Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.

Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a>

Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.

[smartcode_project:default project_id=30959 project_image_fid=292863]

It has since quietly assembled its next wave of projects.

Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.

[smartcode_project:default project_id=152095 project_image_fid=373685]

The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.

Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a> 
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.

At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.

The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.

[smartcode_project:default project_id=152022 project_image_fid=375528]

Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.

The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.

"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.

[smartcode_project:default project_id=152022 project_image_fid=375531]

The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.

The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.

[smartcode_project:default project_id=152022 project_image_fid=375524]

Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.

Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.

[smartcode_project:default project_id=152022 project_image_fid=375530]

The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.

The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.

The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.

"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.

"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."

Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.

[smartcode_project_cta:default project_id=152022]

Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

Not all apartment amenities are immediately visible.

Swimming pools, gyms, rooftop terraces and residents' lounges have long featured on buyers' wishlists, but as the way Australians live has changed, so too have the features that make apartment living more convenient.

Increasingly, buyers are placing value on the practical aspects of day-to-day life. Fast internet, EV charging, secure bike storage, flexible workspaces and parcel management are becoming just as relevant as lifestyle amenities, reflecting changing habits and expectations.

Online shopping has been one of the biggest drivers of that shift.

Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally, making parcel deliveries a routine part of everyday life rather than an occasional convenience.

For apartment residents, however, receiving those deliveries isn't always straightforward.

Without someone home to accept a parcel, deliveries can be redirected to a nearby Post Office, left in building foyers or common areas, or require building management to temporarily store packages. As apartment living continues to grow across Australia's cities, parcel management has become an increasingly important consideration for both residents and developers.

Australia Post's Parcel Locker network is one response to that shift.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/KPZ9j5FRdsQ?si=Qztc1dNP3ZvEIUhb" title="YouTube video player" width="560"></iframe>

Rather than relying on home delivery, eligible parcels can be directed to a nominated Parcel Locker, where they're securely stored until collected. Once a parcel arrives, residents receive a notification through the AusPost app or SMS and can retrieve it using a one-time code or QR code at a time that suits them.

The network has expanded to more than 1,500 locations nationwide, with Parcel Lockers positioned at Post Offices, shopping centres, supermarkets, transport hubs and, increasingly, within or alongside residential developments.

That growing presence reflects a broader change in how apartment buildings are being planned.

Developers are increasingly considering the operational side of apartment living alongside traditional lifestyle amenities. Just as secure mailrooms, bicycle storage and EV charging have become more common inclusions, parcel management is emerging as another feature that supports everyday convenience.

It also helps preserve the arrival experience within a building. Carefully designed lobbies and communal spaces can quickly become cluttered when deliveries accumulate, while secure parcel solutions reduce the likelihood of missed deliveries or parcels being left unattended.

For buyers comparing apartments, these everyday details are becoming part of the decision-making process.

Location, floorplans and finishes remain fundamental, but the features that simplify daily life are carrying greater weight than they once did. As online shopping continues to shape consumer behaviour, secure parcel delivery is increasingly becoming another amenity worth looking for.

Parcel delivery is joining the apartment amenity checklist

Inca Property Group has lodged a State Significant Development Application (SSDA) for Dawn, a 53-apartment oceanfront development overlooking Mona Vale Beach.

The proposal, at 35-39 Darley Street East, would replace an existing 18-apartment strata building with a new owner-occupier-focused development comprising 53 two and three-bedroom apartments, including nine affordable built-to-rent residences delivered under the State's infill affordable housing scheme.

Positioned on a 2,679 sqm elevated site around 280 metres from Mona Vale Beach, the development has been designed to maximise panoramic ocean views while responding to the site's sloping topography.

<a href="https://www.apartments.com.au/developers/inca-property-group">Inca Property Group</a> Managing Director Josh Thompson said the State Significant pathway provided greater certainty for projects of this scale.

"This State Significant pathway gives the team real certainty to progress <a href="https://www.apartments.com.au/new-apartments/dawn-35-39-darley-street-east-mona-vale-nsw-2103">Dawn</a> through to completion," Thompson said.

"It allows us to acquire a one-off site, design it carefully and deliver the right offering for the suburb, assessed by the NSW Government's planning department."

The project is one of the first developments in the area to be assessed under the NSW Government's Low and Mid-Rise Housing policy, with the site sitting on the edge of the policy's designated inner area.

The proposal includes three basement levels providing 124 car spaces, alongside a range of resident amenities including a swimming pool, gym, sauna, wellness facilities and private plunge pools for selected ground-floor and penthouse apartments.

<img alt="Dawn" data-entity-type="file" data-entity-uuid="fc1a1daf-0ce4-4f12-9076-b1fa553c7a91" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-21%20at%208.42.11%E2%80%AFAM.png?VersionId=4GZ9h.gpNkTljbxyAET8Jfhv51XUamDm" />

Thompson said Dawn had been designed specifically for owner-occupiers and downsizers, a buyer profile that has driven demand across Inca's recent Upper North Shore developments.

"The majority of buyers in our recent North Shore projects have been downsizers, and we are learning exactly what this market is looking for. Beyond the location itself, we have included resort-style amenities to deliver a genuine lifestyle offering," Thompson said.

Located within walking distance of Mona Vale Beach, the town centre, Mona Vale Golf Club and the Royal Motor Yacht Club, Dawn represents Inca's first Northern Beaches project following the sell-out of Tara on Park in Waitara and Ellis Residences, currently under construction in St Ives.

Construction will be undertaken by Inca's in-house construction arm, GOP Constructions.

Dawn is the latest major apartment proposal for Mona Vale, with the suburb emerging as one of the key beneficiaries of the NSW Government's new Low and Mid-Rise Housing policy.

New developer One Living, led by industry veteran Joseph Scuderi, recently secured a site on Mona Vale Road, on the border of Mona Vale and Pymble, where it is planning around 140 apartments.

IPM is also planning its third project in Mona Vale, significantly increasing the scale of its previous developments with an 82-apartment proposal at <a href="https://www.apartments.com.au/new-apartments/159-167-darley-street-west-mona-vale-nsw-2103">159-167 Darley Street West</a>, opposite Bayview Golf Course and less than 800 metres from Mona Vale town centre.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/one-living-enters-sydneys-new-apartment-market-with-northern-beaches-site-acquisition">One Living enters Sydney's new apartment market with Northern Beaches site acquisition</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-ipm-plans-third-mona-vale-project">First look: IPM plans third Mona Vale project</a>

First look: Inca eyes Mona Vale with State Significant DA for Dawn apartments

Sydney’s property market is known for high prices, competitive bidding, and mounting pressure on first home buyers. But change is on the horizon.

From late 2025, eligible first home buyers in New South Wales will have access to a new federal government initiative aimed at addressing affordability: the Help to Buy Scheme.&nbsp;

<h2>What is the Help to Buy Scheme?</h2>

The program introduces a shared equity model intended to reduce the upfront cost of entering the property market, particularly in high-demand urban areas such as Sydney.

The scheme operates under a shared ownership structure in which the federal government takes an equity stake of up to 40 per cent for new homes, or 30 per cent for existing dwellings. This arrangement allows eligible buyers to significantly reduce their loan size and avoid the added cost of Lenders Mortgage Insurance (LMI).

Under this model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required. The government’s contribution is not a loan but a co-ownership stake in the property. As such, there is no interest or rent charged on its portion.

Because the government’s equity combined with the buyer’s deposit typically meets or exceeds the 20 per cent threshold, LMI does not apply. The remaining balance, generally between 60 and 70 per cent of the property’s value, is financed through a standard home loan with a participating lender.

The government's equity in the property remains in place until the buyer chooses to repay it voluntarily or until the property is sold. Buyers can buy back the government’s share over time, in increments of at least five per cent, depending on their financial situation.

There is no fixed repayment timeline, but the amount to be repaid will be based on the property's market value at the time of repayment, not the original purchase price.

<h2>How do you qualify for the&nbsp;Help to Buy Scheme?</h2>

To qualify for the Help to Buy Scheme, applicants must meet the following conditions:

<ul>
	<li>Be an Australian citizen at least 18 years of age.</li>
	<li>Be a first-home buyer who does not currently own property.</li>
	<li>Intend to live in the property as their primary residence.</li>
	<li>Earn less than $100,000 per year for individuals, or $160,000 for couples.</li>
	<li>Purchase a property within the regional price caps, currently $950,000 in Sydney, though this is expected to rise to approximately $1.3 million ahead of the program’s launch.</li>
</ul>

While the Help to Buy Scheme does not solve affordability challenges across the board, it does offer a more accessible pathway for a defined segment of the market, particularly younger buyers with moderate incomes who have been priced out of traditional lending routes.

The scheme is expected to commence in NSW in late 2025, as part of a national rollout.

Under the new model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required

Help to Buy Scheme: What first home buyers in NSW need to know

The First Home Owners Grant (FHOG) is a government initiative designed to help eligible first-time home buyers by offering financial assistance towards the purchase or construction of a new home.

While the FHOG is a nationwide program, it is administered separately by each state and territory, meaning the eligibility criteria, grant amounts, and property requirements can vary depending on your location. This means that the amount available and the conditions attached to the grant will differ, so it is important to check the specific guidelines for your state or territory.

It’s important to note that the FHOG is just one of several incentives available to first home buyers. In most states and territories, the grant is not linked to stamp duty exemptions or concessions, with the exception of the Australian Capital Territory (ACT). The FHOG is typically a one-off payment, reducing the overall cost of purchasing or building a new home before any stamp duty concessions are applied.

Below, we provide a breakdown of the First Home Owner Grants available across Australia, outlining the specific details for each state and territory.

<h2>New South Wales First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $600,000. For land purchases and owner-builders, the threshold extends to $750,000.

Stamp Duty Benefits: Provides full stamp duty exemption for homes valued up to $800,000, with concessions available for properties up to $1 million.

<h2>Victoria South Wales First Home Owner Grant</h2>

First Home Owner Grant: Provides a $10,000 grant for first-home buyers purchasing or building new homes valued up to $750,000.

Stamp Duty Benefits: Offers full stamp duty exemption for properties up to $600,000, with concessions available up to $750,000.

<h2>Queensland First Home Owner Grant</h2>

First Home Owner Grant: Offers $30,000 for contracts signed between 20 November 2023 and 30 June 2025. The FHOG applies to new homes valued up to $750,000.

Stamp Duty Concessions: Provides additional concessions for properties valued up to $800,000.

<h2>Western Australia First Home Owner Grant</h2>

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First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $750,000 in the southern regions and up to $1 million in the northern regions.

Stamp Duty Concessions: Available for homes valued up to $600,000 for transactions entered into on or after 9 May 2024.

<h2>Australian Capital Territory First Home Owner Grant</h2>

First Home Owner Grant: Replaced by the Home Buyer Concession Scheme, offering full stamp duty concessions for eligible buyers.

<h2>South Australia First Home Owner Grant</h2>

First Home Owner Grant: Provides up to $15,000 for new homes, including houses, apartments, and townhouses. As of 6 June 2024, there is no property value cap for eligibility.

Stamp Duty Relief: Available for new homes and vacant land purchases.

<h2>Tasmania First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes and off the plan purchases.

Stamp Duty Exemption: Between 18 February 2024 and 30 June 2026, first home buyers of established homes valued up to $750,000 receive a full exemption on property transfer duty.

<h2>Northern Territory First Home Owner Grant</h2>

First Home Owner Grant: The Northern Territory provides a $10,000 grant for new homes only. Additional government grants and concessions are available for first home buyers.

Stamp Duty Exemption: The only stamp duty exemption available to property buyers is the House and Land Package Exemption (HLPE).

Eligibility criteria and application processes differ across states. Prospective buyers should refer to their respective state revenue offices for full details on grant availability, conditions, and additional concessions.

Every First Home Owner Grant for new property by state

In the ever-evolving landscape of sustainable architecture and environmentally conscious design, systems and ratings in place can help determine the energy efficiency of residential buildings in Australia.

Australia has multiple building rating systems that evaluate energy efficiency and sustainability in existing and new building designs.

Some systems assess individual building components, while others provide an overall rating for the entire structure.

A rating system ensures that homes are comfortable and energy-efficient, whether you are buying, renovating, or building.

NatHERS (Nationwide House Energy Rating Scheme) is a common way for new homes to meet energy efficiency requirements.

As new developments continue to shape the urban environment, understanding NatHERS ratings becomes essential for developers and homeowners. This article delves into the concept of NatHERS ratings, their significance, and how they contribute to creating energy-efficient homes.

<h2>What is NatHERS?</h2>

NatHERS is a national initiative implemented by the Australian government to promote energy efficiency in residential buildings. The scheme aims to provide a standardised method for assessing the thermal performance of homes, considering factors such as insulation, orientation, ventilation, and building materials.&nbsp;

NatHERS ratings are the most common way new homes meet the National Construction Code's (NCC's) minimum energy efficiency requirements.&nbsp;

NatHERS assessments provide thermal and whole-home ratings for new homes, townhouses, and apartments.

The rating helps evaluate the energy performance of buildings, guides homeowners and developers to make informed decisions about the energy efficiency of their properties, and encourages the construction of more sustainable, comfortable, and cost-effective homes.

<h2>How NatHERS Ratings Work</h2>

NatHERS ratings are determined through four accredited software tools (AccuRate, BERS Pro, FirstRate5, HERO) using a calculation engine CSIRO developed to predict building temperature based on various factors.

The tools can model complex effects of building mass, insulation, window size, and other elements.

The outcome is a star rating that reflects the building's overall thermal efficiency, indicating how well it can maintain a comfortable indoor temperature without excessive reliance on heating or cooling systems.

The star rating scale ranges from 0 to 10, with a 6-star rating being the minimum requirement for compliance with the National Construction Code (NCC).&nbsp;

Achieving a higher star rating demonstrates a commitment to energy efficiency and sustainability, as the building is better equipped to minimise its environmental impact and reduce long-term energy costs.

Anyone can use NatHERS tools, but accredited assessors can provide certified ratings and professional advice.

<h2>Benefits of Higher NatHERS Ratings</h2>

Energy Efficiency: Buildings with higher NatHERS ratings are more energy-efficient, requiring less heating and cooling energy. This reduces the structure's carbon footprint and lowers occupants' energy bills.

Cost Savings: Homes with higher NatHERS ratings are generally more energy-efficient, resulting in reduced energy consumption for heating and cooling. This translates to lower energy bills for homeowners, making sustainable living environmentally friendly and economically viable in the long run.

Environmental Impact: Lower energy consumption directly translates to a reduced environmental impact. Buildings with higher NatHERS ratings contribute to the overall goal of mitigating climate change by lowering greenhouse gas emissions associated with heating and cooling systems.

Improved Comfort: Buildings with high NatHERS ratings offer better thermal comfort to occupants. Proper insulation, well-designed ventilation, and optimal orientation maintain a consistent and comfortable indoor temperature, providing occupants with a more enjoyable and healthier space.

Market Value and Desirability: Higher NatHERS ratings can enhance the market value of a property. As energy efficiency becomes a more significant consideration for homebuyers, a well-rated building may attract a premium price and stand out in the real estate market.

Compliance with Building Codes: NatHERS ratings are a vital component of the National Construction Code (NCC), and compliance with these ratings is often a mandatory requirement for new developments. Local councils and planning authorities may set minimum energy efficiency standards that must be met to obtain development approval.

The Nationwide House Energy Rating Scheme (NatHERS) is a crucial initiative shaping the future of energy-efficient, resilient, and cost-effective homes. With its recent upgrades, NatHERS has evolved into a world-leading tool for the building sector, supporting the global commitment to achieving net-zero emissions by 2050.

Staff Writer

What is a NatHERS rating in new off the plan apartment developments?

Mixed-use developments have gained significant popularity across Australia in recent years due to their unique blend of residential, commercial, and recreational spaces.

Unlike traditional single-purpose developments, mixed-use projects offer a harmonious integration of various functions within a single locale.

Residential units seamlessly coexist with commercial establishments, retail outlets, dining venues, entertainment hubs, and recreational facilities, with the combination not only enhances convenience but also fosters a vibrant lifestyle and a sense of community.

<h3>Convenience and accessibility</h3>

Mixed-use developments are designed with convenience in mind. They often integrate residential units with commercial spaces, retail outlets, restaurants, and recreational facilities, creating a self-contained community.

[smartcode_project:default project_id=114215 project_image_fid=204874]

The proximity allows residents to enjoy the convenience of having essential amenities and services within walking distance. Whether it's grabbing a cup of coffee, going grocery shopping, or accessing healthcare services, everything is conveniently located, saving residents time and effort.

<h3>Vibrant lifestyle and community</h3>

One of the major advantages of mixed-use developments is the vibrant lifestyle they offer. With a diverse range of amenities and communal spaces, residents have ample opportunities to interact, socialise, and build a sense of community.

[smartcode_project:default project_id=107714 project_image_fid=214122]

The presence of parks, community centres, and shared spaces fosters a lively atmosphere, encouraging residents to engage in various activities and events. The vibrant lifestyle within these developments creates a unique sense of belonging and camaraderie among the residents.

<h3>Potential for higher rental yields and property value appreciation</h3>

Mixed-use developments tend to attract a broad range of tenants and buyers due to their versatile nature. This high demand can result in higher rental yields for investors and potentially lead to property value appreciation over time.

[smartcode_project:default project_id=139989 project_image_fid=212887]

The integration of commercial and retail spaces attracts businesses, which can provide a stable rental income stream. Additionally, the popularity of mixed-use developments often drives up property values, making them a potentially lucrative investment in the long term.

<h3>Enhanced security and maintenance</h3>

Mixed-use developments typically have comprehensive security measures in place. With controlled access points, CCTV surveillance, and professional security staff, residents can enjoy enhanced safety and peace of mind.

[smartcode_project:default project_id=108019 project_image_fid=212658]

Additionally, these developments often have dedicated maintenance teams responsible for the upkeep of common areas, landscaping, and infrastructure. This ensures that the overall appearance and functionality of the development are well-maintained, creating a pleasant living environment for residents.

<h3>Live-work-play balance</h3>

One of the key attractions of mixed-use developments is the ability to achieve a desirable live-work-play balance. The integration of residential and commercial spaces allows residents to live closer to their workplaces, reducing commuting time and improving work-life balance.

The proximity to various amenities and recreational facilities encourages an active and healthy lifestyle. Residents can easily access fitness centres, parks, restaurants, and entertainment options, all within the same development, leading to a more fulfilling and convenient way of life.

alisonwarters@gmail.com

The top five reasons to buy in a mixed-use development

When buying a property, everyone needs to be aware of the additional costs that come as part of the buying process.

Often the largest outlay, after the deposit which goes to the bank, is stamp duty.

<h2 style="line-height: 1.38;">What is Stamp Duty?</h2>

Stamp duty is an extra tax to pay the government when you buy land, a property, and other certain assets.

It happens when the legal ownership is transferred. It can also be known as property transfer duty or transfer duty.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="415" src="https://www.youtube.com/embed/C32BWkB5--c" title="YouTube video player" width="660"></iframe>

<h2>Who pays Stamp Duty?</h2>

In some circumstances, you may get an exemption. For some states, you won’t have to pay for stamp duty if you are a first home buyer or a pensioner for houses under a particular price. There are also stamp duty concessions, where you may be entitled to a discount.

<h2>How much does Stamp Duty cost?</h2>

Each state has different rules which affect how much you need to pay. These rules can affect the rate you pay, and the timeframe you will need to pay in. Before you buy land or a property, make sure you check the up-to-date information for your state’s stamp duty.

You can use a free stamp duty calculator online to see approximately how much you’ll need to pay. Find out if you’re eligible for an exemption by enquiring on a project via Urban!

Overall, the stamp duty you need to pay will depend on:

<ul>
	<li aria-level="1">How much your land/property is worth</li>
	<li aria-level="1">Where your land/property is located</li>
	<li aria-level="1">What type of land/property it is</li>
</ul>

Want to find out more? <a href="https://www.youtube.com/@UrbanAustralia?utm_source=YouTube&amp;utm_medium=Video&amp;utm_campaign=Subscribe&amp;utm_id=Subscribe">Subscribe to our YouTube channel</a> for more property videos.

Ellen Walker

Off-the-plan property explained: What is stamp duty?

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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Heitman LLC (Heitman) a global real estate investment management firm, has acquired an Edward Street office building Brisbane.
They made the purchase on behalf of an affiliate, in a joint venture with Marquette Properties (Marquette), a Brisbane-based real estate asset manager.
Comprising 18,000 sqm of office space and 1,500 sqm of retail space across two floors Heitman and Marqueete plan on substantial ground floor and podium work, as well as upgrading the façade.
Situated at 288 Edward Street, it is positioned in the Central Brisbane CBD 
Brad Fu, Heitman Senior Vice President and Director of Asia-Pacific Acquisition “The asset’s irreplaceable location provides a compelling repositioning opportunity in the core of Brisbane’s CBD, which is benefiting from a strong revival in leasing demand, an expanding Queensland economy, and growing international investment interest.” 
Skip Schwartz, Heitman Managing Director and Head of AsiaPacific Private Equity said, “the investments in these Australian assets over the past 12 months provides our Asia-Pacific mandates, both for separate accounts and our dedicated fund, strong diversification across both property type and geography."
Not Heitman's first foray into the Australian or Brisbane market, During the past 12 months, Heitman has acquired more than AUD $700 million across Australia’s Eastern Seaboard. 
Including the Brisbane Barracks, on behalf of an affiliate, in a joint venture with Fortius Funds Management in January this year.
In January this year fully fitted office space was listed for rent at $300/sqm per week.
 
 
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j.ballantyne1990-6AQqhLzZaK

Heitman purchases Brisbane CBD Office

soliver-smf6LQXgW9

Hobart the only capital city seeing dwelling price growth: Shane Oliver

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GUEST OBSERVATION
Former federal trade minister Andrew Robb says he has quit his A$880,000-a-year consultancy job with Chinese-owned Landbridge Group because <a href="https://www.smh.com.au/politics/federal/andrew-robb-quits-china-linked-firm-before-foreign-interference-law-kicks-in-20190219-p50yv0" target="_blank">it didn’t have anything</a> for him do.
Former Victorian premier John Brumby says he has quit as a director of Chinese tech giant Huawei in Australia because <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2019-02-01/former-victorian-premier-john-brumby-resigns-from-huawei-board/10772144" target="_blank">he has too much else</a> to do.
Former federal foreign minister and ex-NSW premier Bob Carr has quit his job as director of the Australia-China Relations Institute, <a href="https://theconversation.com/the-australia-china-relations-institute-doesnt-belong-at-uts-78743" target="_blank">an organisation bankrolled by a Chinese billionaire</a> with a history of using donations to cosy up to politicians.
It might be just a coincidence that these decisions have come just days before new foreign influence transparency laws come into effect on March 1.
The new laws are supposed to make visible the “<a href="https://www.ag.gov.au/Integrity/foreign-influence-transparency-scheme/Pages/default.aspx" target="_blank">nature, level and extent</a> of foreign influence on Australia’s government and political process”. There is more than enough evidence that greater transparency is needed. But the extent to which the new rules will achieve this is questionable.
Money talks
Federal parliament passed the Foreign Influence Transparency Scheme Act (FITS) in December. The Act obliges individuals to register if they act on behalf of “foreign principals” – be they governments, government-related entities, political organisations or government-related individuals.
Failing to apply for (or renew) registration, providing false and misleading information or destroying records may lead to a prison term of up to six years for individuals and fines of A$88,200 for companies.
Registrable activities include:
<ul>
<li>parliamentary and political lobbying on behalf of a foreign principal</li>
<li>communications activities for the purpose of political or government influence</li>
<li>employment or activities of former cabinet ministers.</li>
</ul>
An example of the latter is Andrew Robb.
In February 2016 Robb resigned as federal trade minister and announced he would not recontest his seat. He left parliament in July. Three months later he had his new job, getting paid <a href="https://www.smh.com.au/politics/federal/at-528-000-a-year-turnbull-s-pay-is-highest-of-any-leader-in-oecd-20180526-p4zhp5" target="_blank">way more than the prime minister</a> as a consultant to the Landbridge Group.
It is always instructive to note the first jobs taken by politicians after they leave parliament. Those appointments generally reflect relationships already well-groomed.
Landbridge is a privately owned Chinese company, but like many Chinese companies has strong ties to the ruling Chinese Communist Party. Its substantial interests in petrochemicals and ports includes a 99-year lease over the <a href="http://theconversation.com/darwin-ports-sale-is-a-blueprint-for-chinas-future-economic-expansion-108254" target="_blank">Darwin port</a>, which is considered of strategic importance in China’s diplomatic dance with the United States.
Qualitative differences
China isn’t the only foreign power interested in having influence in Australia, of course. Historical ties have meant that Britain once dictated Australia’s foreign policy. Since World War II the United States has had almost as much power.
Now China, Australia’s largest trading partner, taking <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/AustraliaTrade" target="_blank">about 30% of our exports</a>, looms large. But the power exercised by the Chinese regime is qualitatively different.
For all its economic liberalisation since the death of Mao Zedong in 1976, China remains a one party state, with repression worsening under Xi Jinping. On <a href="https://rsf.org/en/ranking" target="_blank">freedom of the press</a>, for example, China ranks 176 out of 180 countries.
Commercial, military and political influences are wrapped up together. Lines between state and private enterprises are blurred. When Chinese business interests curry favour with foreign politicians and officials, there’s a high chance that statecraft is also being advanced. <a href="https://theconversation.com/soft-power-goes-hard-chinas-economic-interest-in-the-pacific-comes-with-strings-attached-103765" target="_blank">“Soft power” is used extensively</a>.
Agent of influence
This is what made the tawdry scandal involving former NSW senator Sam Dastyari so alarming.
Though a humble senator, Dastyari was a key Labor Party fundraiser and powerbroker. He later admitted that <a href="https://www.theaustralian.com.au/national-affairs/dastyari-reveals-how-huang-xiangmo-courted-politicians/news-story/85c0592569a3d4583108b9a1cd64c13d" target="_blank">vanity and arrogance</a> made him susceptible to the charm offensive of Huang Xiangmo – the billionaire <a href="https://theconversation.com/the-australia-china-relations-institute-doesnt-belong-at-uts-78743" target="_blank">who courted Bob Carr</a> to head up the Australia-China Relations Institute.
Dastyari accepted financial gifts from Huang’s company, including a A$44,000 payment to settle a legal dispute, along with payments from other donors connected to the Chinese Communist Party.
Such payments made it obvious why he defied his own party’s policy and defended China’s militant stance in the <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2017-11-29/sam-dastyari-secret-south-china-sea-recordings/9198044" target="_blank">South China Sea</a>. He was subsequently labelled a Chinese “<a href="https://www.afr.com/news/politics/sam-dastyari-is-a-chinese-agent-of-influence-exintelligence-chief-20171203-gzxktb" target="_blank">agent of influence</a>”.
These revelations resulted in Dastyari resigning from parliament in 2017. Earlier this month it was revealed the federal government had rejected Huang’s bid to become an Australian citizen and stripped him of his <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/radio/programs/pm/australia-denies-citizenship-chinese-businessman-huang-xiangmo/10787052" target="_blank">permanent residency visa</a>.
On the basis of these examples highlighted above, there’s a strong case for making influence peddling open and transparent.
Whether the new laws can achieve that is another matter. They may curtail flagrant scenarios where those leaving public office sell their wares to the highest bidder. But to work effectively, the laws and their enforcers will need to constantly adapt and evolve as agents look for creative ways to wield influence from the shadows.<img src="https://counter.theconversation.com/content/112403/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
John Garrick, Senior Lecturer, Business Law, Charles Darwin University
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/agents-of-foreign-influence-with-china-its-a-blurry-line-between-corporate-and-state-interests-112403" target="_blank">original article</a>.
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New laws can shine light on foreign influence, but agents will remain in the shadows

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GUEST OBSERVATION
Populism is driven by the view that everyday people are suffering economic hardship as the corporate and political elites prosper. A sense of rising inequality and injustice is the foundation stone of populist rhetoric.
In Australia, the <a href="https://theconversation.com/banking-royal-commission-no-commissions-no-exemptions-no-fees-without-permission-hayne-gets-the-government-to-do-a-u-turn-110974" target="_blank">financial services royal commission</a> has lent credence to these concerns across a large part of the Australian community. Its hearings and reports give weight to the view that Australia’s middle and working classes have been systematically ripped off by their financial service providers.
What is of concern for us here in Australia is not so much the lightning rod that has been the findings of the royal commission, but the prospect of much harder economic times ahead.
Australia is not used to tough economic times. It has been 27 years since our last major recession. In the past 26 years, the annual average unemployment rate has climbed on only five occasions. It has been steady or fallen in 21 of the past 26 years.
The economic tide could well turn against us over the next three years. This, as much as anything, will give vigour to the kinds of populist voices that are wreaking so much havoc in other Western societies right now.
Populism is toxic to democratic societies. It preys on people’s worst fears and appeals to their darker instincts. Populism brings poor policy decisions and entrenches political dysfunction.
We are already seeing the effects that growing discontent with the major parties has on our political system. A surge of support for populist candidates and parties will magnify these problems.
Australian populism
Defining the concerns of populism is a tricky business. The most common is that economic and political elites benefit at the expense of the public, whether that be because the system is rigged against them or because those elites break social convention and even the laws to extract from the rest.
An extension of this perennial theme is that the elites, particularly in the business world, get away with it. The authorities do not pursue them and they are rarely held to account by the law.
Populism tends to be cultivated in an environment of poor economic performance and is exacerbated by growing inequality, real or perceived.
Australia’s democracy has a long history of stable centrist parties dominating the parliament and public policy. Since our Federation in 1901, the two or three major parties at the time of each federal election have averaged about 90% of the primary vote.
These moderate tendencies are regarded as a hallmark of our nation, and key to the resilience of Australia as a society. But, as the accompanying chart shows, there have been periods when voters have drifted away from the major parties with considerable enthusiasm.
<hr>
<a href="https://images.theconversation.com/files/260588/original/file-20190224-195864-iwn6wt.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/260588/original/file-20190224-195864-iwn6wt.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
<hr>
For the first 30 years of our federal parliament, minor parties and independent candidates captured just 5% of the vote on average. The peripheral candidates were just that; peripheral and insignificant. That all changed in the 1931 election with the onset of The Great Depression and lasted right through to the second world war.
We experienced another extended period of major party dominance in the 1950s and the 1960s. In the 1970s a rising share of the vote started going outside the major parties and this has continued to this day. We now are in a situation where minor party and independent support is near the levels seen at the height of the Great Depression.
There also appears to be a greater polarisation within the major parties, particularly when they are in government. Not a single prime minister elected in the past decade has survived his or her first term of office – an unattractive milestone for a relatively young democracy.
Populism is always lurking below the surface of Australian society. It rears its head from time to time, but the broader community is pretty good at resisting its urges. A strong economy and low unemployment are critical ingredients in this success.
It could be argued that Australia is less susceptible to populism than other Western democracies. Just look at the contrast between what has happened here in the past ten years and the experiences of the United States or Europe.
Sure, the minor party vote has increased and some of that has been to candidates pushing a populist agenda. But these forces have largely operated at the margins of Australia’s policy agenda.
Complacency is dangerous
The once-in-a-century commodity boom supported our economy through both the global financial crisis and its destructive aftermath. It was a luxury not afforded the US or Europe.
The end of the mining boom was greeted by a residential construction boom. That too looks like concluding. The forces of weak income growth, high debt levels and sluggish economic activity are upon us.
Income and output growth are going to be much harder to come by in Australia in the years ahead. We cannot assume that just because we have avoided a significant recession for 27 years, we will avoid another one.
The last thing the Australian economy needs in this environment is greater political discord.
The major parties’ share of the vote is already at post-war lows. A new wave of populism that takes the vote of “others” to further heights could have serious consequences for effective management of our economy.
We have an open economy heavily burdened with debt and reliant on immigration and trade to provide a healthy underpinning to future economic growth. We don’t know how our economy would cope with a reversal of these key pillars of our modern prosperity.
Curtailing populist anger is a priority
Whether we like it or not, the evidence of misconduct in the financial services industry has become a flashpoint for popular discontent within Australia.
The financial services industry most certainly is not the root of all economic evil in our society, but that is irrelevant to the public mood and those who seek to take advantage of it.
The fact that the royal commission has laid bare such widespread abuse of market power means that right now the banking industry is the prime example of elites taking advantage of everyday people. Its extraordinary revelations have left Australians in a state of shock.
The broader community wants action, not just to prevent what was uncovered happening again, but to make sure that the people responsible are held accountable for the damage done.
Real or imagined, a lack of genuine accountability will mean people lose faith in the capacity of mainstream political forces and institutions to serve the broader community.
What is to be done?
If the moderate forces that operate in our parliament and government institutions are not seen to be delivering for the broader community, people will justifiably look elsewhere.
The immediate priority is to act following the final report from the royal commission. Commissioner Kenneth Hayne has made it perfectly clear that it is the role of the regulators, specifically the Australian Securities and Investments Commission.
There is every likelihood that more dangerous economic waters lie ahead. Policymakers will need to be both decisive and agile to deal with the malaise, whatever form it takes.
We are not facing a new financial crisis, at least we hope we are not. We don’t need to throw the kitchen sink at the economy right now. But the government we elect will have to work closely with the parliament and our key economic institutions to guide the country through new and uncertain economic times.
An effective parliament will be more important than ever.
Warren Hogan, Industry Professor, University of Technology Sydney
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australias-populist-moment-has-arrived-111491" target="_blank">original article</a>.
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Australia’s populist moment has arrived: Warren Hogan

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EXPERT OBSERVATION
The Australian Bureau of Statistics (ABS) data on residential construction work done has fallen in NSW in the December 2018 quarter.
Residential construction work done in NSW in the December 2018 quarter has fallen by $356,717,000 since the June quarter of 2018.
This represents a 5 per cent fall over 6 months and it looks like the graph is falling more over future quarters as the housing construction market slows down. Many Sydney developers are finding it very difficult to attract pre commitments from investors or owner occupiers for apartments in the current market.
While the drop in residential building construction is modest it needs to be seen against a big drop in approvals for apartments across NSW of 33 per cent over the last year.
The flow on from the banking Royal Commission that has slowed lending is continuing and the negative environment towards new development created by the state election on 23 March is contributing to the slow down.
The falling prices for houses and apartments in Sydney are also leading to purchasers putting off decisions until the market bottoms in the future.
The residential construction sector supports 300,000 jobs in NSW and continuing falling home production will begin to impact on the jobs in this sector.
The non-residential sector which is around a third of the size of the residential sector is more stable with NSW expenditure at $2,524,336,000 and Victoria at $2,349,161,000 trend and seasonally adjusted over the quarter.
On a per capita basis Victoria is spending more on residential construction with $894 per person followed by NSW at $816, Queensland at $578 and Western Australia at $348.
The Urban Taskforce is concerned that residential construction and approvals are now dropping and that whoever is elected to form government in NSW on 23 March will need to reverse these trends to maintain jobs in the industry.
The graphs below are based on the Australian Bureau of Statistics data. 
<img src="https://www.urban.com.au/images/2019/2/28/CJ%201.JPG" alt="">
<img src="https://www.urban.com.au/images/2019/2/28/CJ%202.JPG" alt="">
CHRIS JOHNSON is the Urban Taskforce CEO 
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Residential construction falling in NSW: Chris Johnson

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GUEST OBSERVATION
Australia’s nearly three decades of uninterrupted economic growth won’t last forever.
Sooner or later policymakers will need to respond to a downturn that could come from any number of sources. A severe downturn in our main trading partner, China, a collapse of the local property market, global financial turmoil, or an unfortunate confluence of multiple factors are all possible triggers.
The real question is not whether or even when a recession will come, but how well positioned we will be to respond.
And, unfortunately, the answer right now is “not very”.
To understand what will be required to battle the next Australian recession it’s useful to distinguish between two broad types of economic trouble.
Two types of threat
The first is what one might call a “run-of-the-mill business cycle downturn”. Think Australia, 1990. In this scenario interest rates are raised to ward off inflation but eventually choke off business investment and private spending. Unemployment rises and GDP falls.
The central bank responds by cutting interest rates, and the federal government responds with “Keynesian” economic stimulus (extra government spending and/or tax cuts).
The second type of trouble is different, what might be called “mass financial panic”.
Think the United States in 2008. In this scenario an event (such as massive mortgage defaults) causes financial institutions to fail. If those financial institutions are connected to others then the entire financial system seizes up because everyone stops lending money to each other at once. It’s like a car going from 100km/h to 5km/h in half a second. It hurts.
The Keynesian response is completely insufficient in these circumstances. What’s needed is to get credit moving again.
And this requires people not only believing that they should lend money, but also believing that others will lend money, keeping the economy afloat and making the exercise worthwhile. Coordinating what economists refer to as “<a href="http://personal.lse.ac.uk/dasgupt2/hob_main" target="_blank">higher-order beliefs</a>” requires overwhelming financial force. It’s a kind of <a href="https://www.propertyobserver.com.au/https://www.carnegiecouncil.org/education/008/expertclips/005" target="_blank">Powell doctrine</a> in which the US went in with far more troops than it needed after Iraq’s invasion of Kuwait in the early 1990s in order to overwhelm the enemy.
It was the thinking behind then US Treasury Under Secretary Larry Summers’ <a href="https://www.newyorker.com/magazine/2009/10/12/inside-the-crisis" target="_blank">US$50 billion rescue package to head off the Mexican peso crisis in 1994</a>, and what then US Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Hank Paulson did to avoid a repeat of the Great Depression in 2008.
The Reserve Bank is less than prepared
How well is Australia prepared to respond quickly in either of these scenarios?
Scenario 1 requires the Reserve Bank to cut interest rates and the government to spend money fast. With interest rates already at an historically low 1.50% – and perhaps lower by the time trouble arises – there’s little room left to cut further.
Unorthodox measures might be necessary, like so-called “quantitative easing”. This involves large purchases of long-term bonds to flood markets with money. While there is now experience from the US and Europe about how to do this, in Australia the Reserve Bank would be breaking new ground. Getting into such a program is not simple, and getting out might be very complicated.
But of course jacking up interest rates now to give the bank room to cut later isn’t a solution. That could trigger a recession itself. The bank has to grapple with how to respond to even a standard recession in the new age <a href="http://larrysummers.com/category/secular-stagnation/" target="_blank">of permanently low real interest rates</a>.
We’ve money to spend, but not the means
The government’s fiscal response requires having the capacity to run large budget deficits, which means being able to borrow. Australia’s capacity to borrow is currently good, with <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/DebtPosition" target="_blank">net debt as a proportion of gross domestic product at around 19.2%</a>.
This is low by both international and historical standards. A former chair of President Obama’s Council of Economic Advisers, Christina Romer, and one of the world’s leading macroeconomists, David Romer, have <a href="https://eml.berkeley.edu/%7Edromer/papers/Romer&amp;RomerCrisesandPolicyRevised.pdf" target="_blank">persuasively documented</a> how vital such “fiscal capacity” is. Australia gets an A on that count.
But a cash splash needs to be spent, and fast. That means having “shovel-ready projects” lined up ahead of a recession hitting. Sending cheques to households is easy, but is often used to pay down debt or offset other expenditures rather than on spending.
We need to prepare ahead
A proposal being pursued by the <a href="http://www.grandchallenges.unsw.edu.au/" target="_blank">New Economic Equality Initiative</a> at the University of NSW is to prepare in advance of a recession a “green stimulus” plan. It would be a list of significant environmental expenditures — from tree planting to waterway cleanups, to cycle-path construction to dune repair — that would be documented and ready to implement immediately.
These would be projects that would stimulate demand but also have a high social return. To do them right would take planning ahead of time. It can’t be done well on the fly when a recession has already hit. Otherwise, well, think pink batts.
Preparing for a financial crisis as opposed to a mere recession is harder. Having the budget capacity to provide massive guarantees of bank deposits and other financial obligations is a must.
Last time, we got lucky
Equally important, though, is having regulatory agencies that can see trouble ahead and act swiftly. The Reserve Bank did an outstanding job a decade ago, but next time it won’t have then Treasury Secretary Ken Henry on the board and Kevin Rudd in the prime minister’s chair.
The Australian Securities and Investments Commission has shown itself to be functionally incompetent over an extended period, as the Hayne Royal Commission highlighted all too clearly. Capacity-building is a prerequisite for an effective response to a future crisis.
Regulators need to understand the interconnectedness of different financial institutions, the types of risk they are exposed to, where their funding is coming from and more. To some extent they need to know what they don’t know. It’s a big ask, but it is vital.
In many ways Australia got lucky in 2008. The Reserve Bank had a lot of room to slash interest rates and did it aggressively. The government had close to zero net debt and could spend fast. Ken Henry’s aphorism, “go early, go hard, go households” was heeded by an unusually intellectually curious and adept prime minister. China – our biggest trading partner – enacted an aggressive stimulus plan of its own.
The US Federal Reserve Chair just happened to be the world’s leading expert on the 1929 Great Depression, and the US Treasury Secretary was the former head of Goldman Sachs, an eminence of the banking world. Our response at home was matched by a near-perfect response abroad.
We won’t be that lucky again. Now is the time to plan how to fight the next recession.
Richard Holden, Professor of Economics, UNSW
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/now-is-the-time-to-plan-how-to-fight-the-next-recession-111497" target="_blank">original article</a>.
This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series <a href="https://theconversation.com/au/topics/advancing-australia-66135" target="_blank">here</a>.
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Now is the time to plan how to fight the next recession: Richard Holden

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Prior to the 1960s most share investors were long-term investors who bought stocks for their dividend income.
Investors then started to focus more on capital growth as bond yields rose relative to dividend yields on the back of rising inflation.
However, thanks to an increased focus on investment income as baby boomers retire, interest in dividends has returned.
This is a good thing because dividends are good for investors in more ways than just the income they provide.
Australian companies pay out a high proportion of earnings as dividends.
<img src="https://www.urban.com.au/images/2019/2/27/SHOL%201.JPG" alt="">
This is currently around 65% compared to around 45% for global shares. However, some argue that dividends don’t matter – as investors should be indifferent as to whether a company pays a dividend or retains earnings that are reinvested to drive growth.
Or worse still, some argue that high dividend pay outs are a sign of poor long-term growth prospects, that they are distraction from business investment or that they are often not sustainable. And of course, some just see dividends as boring relative to speculating on moves in share values.
My assessment is far more favourable. Seven reasons why dividends are cool First, dividends do matter in terms of returns from shares.
For the US share market, it has been found that higher dividend payouts lead to higher earnings growth.
This is illustrated in the next chart, which shows that for the period since 1946 when US companies paid out a high proportion of earnings as dividends (the horizontal axis) this has tended to be associated with higher growth in profits (after inflation) over the subsequent 10 years . And higher profit growth drives higher returns from shares.
So dividends do matter and the higher the better (within reason).
There are several reasons why this is the case: when companies retain a high proportion of earnings there is a tendency for poor hubris driven investments; high dividend payouts are indicative of corporate confidence about future earnings; and high payouts indicate earnings are real.
Second, dividends provide a stable contribution to the total return from shares, compared to the year-to-year volatility in capital gains. Of the 11.7% pa total return from Australian shares since 1900, just over half has been from dividends.
<img src="https://www.urban.com.au/images/2019/2/27/SHOL%202.JPG" alt="">
Third, the flow of dividend income from a well-diversified pool of companies is relatively smooth. As can be seen below, dividends move in line with earnings but are smoother.
Companies like to manage dividend expectations smoothly. They rarely raise the level of dividends if they think it will be unsustainable.
Sure, some companies do cut their dividends at times, but the key is to have a well-diversified portfolio of sustainable and decent dividend paying shares.
Fourth, investor demand for stocks paying decent dividends will be supported as the ranks of retirees swell.
Fifth, with the scope for capital growth from shares diminished thanks to relatively high price to earnings ratios compared to say 40 years ago, dividends will comprise a much higher proportion of total equity returns.
More than half of the total medium-term return from Australian shares is likely to come from dividends, once allowance is made for franking credits.
Sixth, dividends provide good income. Grossed up for franking credits the annual income flow from dividends on Australian shares is around 5.7%. That’s $5700 a year on a $100,000 investment in shares compared to $2150 a year in term deposits (assuming a term deposit rate of 2.15%).
Finally, while Australian shares are still 10% below their 2007 high, once reinvested dividends are allowed for (ie looking at the ASX 200 accumulation index) the market is well above it.
Another way to look at dividend income How powerful investing for dividend income can be relative to investing for income from interest is illustrated in the next chart.
It compares initial $100,000 investments in Australian shares and one-year term deposits in December 1979.
The term deposit would still be worth $100,000 and last year would have paid $2,200 in interest.
By contrast the $100,000 invested in shares would have grown to $1,111,435 as at December last year (blue line) and would have paid $47,792 in dividends last year (blue bars).
Or around $62,240 if franking credits are allowed for. Over time an investment in shares can rise but a term deposit is fixed.
<img src="https://www.urban.com.au/images/2019/2/27/SHOL%203.JPG" alt="">
But don’t dividends crimp capex?
This issue has been wheeled out repeatedly since the GFC. But it’s ridiculous.
First the rise in dividends this decade has mainly come from cashed up miners and it’s hard to argue they should invest more after the mining investment boom.
Second the dividend payout ratio is not high historically.
Third the reasons for poor business investment lie in: business sector caution after the GFC &amp; the rise in the $A above parity, which squeezed competitiveness; the fall back to more normal levels in mining investment; and the shift to a capital lite economy based around IT and services.
Don’t blame dividends for poor capex.
Why dividend imputation is so important Dividend imputation was introduced in the 1980s and allows Australians to claim a credit against their tax liability for tax already paid on their dividends in the hands of companies as profits and boosts the effective dividend yield on Australian shares by around 1.3 percentage points.
However, over the years it has been subject to claims that it creates a bias to invest in domestic equities, that it biases companies to pay dividends and not invest and that it benefits the rich.
This is all nonsensical as dividend imputation simply corrects a bias by removing the double taxation of company earnings – once in the hands of companies and again in the hands of investors.
The removal of dividend imputation would not only reintroduce a bias against equities but would also substantially cut into the retirement savings and income of Australians, discourage savings and lead to lower returns from Australian shares.
Labor’s proposal to make franking credits in excess of a taxpayer’s tax liability non-refundable could be argued to remove an anomaly in the tax system as dividend imputation was designed to prevent the double taxation of dividends, not to stop them being taxed at all.
<img src="https://www.urban.com.au/images/2019/2/27/SHOL%204.JPG" alt="">
But a problem is that many Australians have planned their retirement around receiving such refunds.
This is a subject for another note. But it is worth noting that Labor’s proposal does not affect at least 92% of taxpayers who will continue receiving franking credits as they have a sufficient income tax liability (as will pensioners who will be exempted).
If it sets off a broader wind back of franking credits, then it would be a bigger concern.
Dividends provide a great contribution to returns, a degree of protection during bear markets and a great income flow.
For investors needing income the trick is to have a well-diversified portfolio of companies paying high sustainable dividends.
 DR SHANE OLIVER Head of Investment Strategy and Chief Economist AMP Capital
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Why I still love dividends and you should too: Shane Oliver 

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Construction work done missed expectations in the fourth quarter shrinking by another 3 per cent to $51.1 billion. 
<div>That follows on from a significant contraction in Q3, so in the second half of 2018 construction work done slowed by about 7 per cent overall.</div>
<div> </div>
<div>Quite nasty on the face of it, although we were coming off a high base. </div>
<div> </div>
<div>The engineering construction work done figures took a 5 per cent hit in Q4, which sounds quite dire at first blush.</div>
<div> </div>
<div>To be fair, the ABS has never gone big on accruals accounting for one-offs like the LNG Prelude platform, and as the Gorgon and Ichthys projects drop off the headline figures will inevitably appear weak - yet the underlying figures aren't quite so bad.</div>
<div> </div>
<div>In fact mineral exploration spend has been on the rise, so investment and mine restarts will likely pick up, especially in Western Australia. </div>
<div> </div>
<div>Here are the trend figures for engineering, in chain volume measures terms (you can click to expand the charts).</div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-vHa4gkejwfc/XHXfv_tDHhI/AAAAAAAAutU/tZU6tx8YpQsd2_kiSR5ZznERJZye_7BAACLcBGAs/s1600/A1.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-vHa4gkejwfc/XHXfv_tDHhI/AAAAAAAAutU/tZU6tx8YpQsd2_kiSR5ZznERJZye_7BAACLcBGAs/s640/A1.jpg" width="640" height="374" data-original-height="803" data-original-width="1367"></a></div>
 
<div>Residential construction work dropped by about 3½ per cent in the fourth quarter, although overall activity was actually still quite high on these estimates. </div>
<div> </div>
<div>A significant driver of the squeeze was slowing Sydney and Brisbane apartment construction, and there'll be plenty more to come here in 2019. </div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-iOylhEeJli8/XHXfwEaU6iI/AAAAAAAAutc/1WlaQhkwTqYA1J_O_tsLAYo-jm3j10fEwCLcBGAs/s1600/A2.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-iOylhEeJli8/XHXfwEaU6iI/AAAAAAAAutc/1WlaQhkwTqYA1J_O_tsLAYo-jm3j10fEwCLcBGAs/s640/A2.jpg" width="640" height="376" data-original-height="815" data-original-width="1387"></a></div>
 
<div>For completeness, quarterly 'other residential' work done slowed by about 4½ per cent in H2 2018 from $8.2 billion to $7.8 billion.</div>
<div> </div>
<div>In my humble opinion there could well be another couple of billion of quarterly declines to come here in 2019 and beyond, even if Australia is moving more towards attached dwellings and medium-density living. </div>
 
<div><a href="https://4.bp.blogspot.com/-_ipAqrmh5jM/XHXfvygOfhI/AAAAAAAAutY/eBW_Qxir5zgbz2qFMTYqJOok537AOZ0wQCLcBGAs/s1600/A3.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-_ipAqrmh5jM/XHXfvygOfhI/AAAAAAAAutY/eBW_Qxir5zgbz2qFMTYqJOok537AOZ0wQCLcBGAs/s640/A3.jpg" width="640" height="392" data-original-height="834" data-original-width="1361"></a></div>
<div> </div>
<div>The wrap</div>
<div> </div>
<div>Overall, a fairly ordinary miss on expectations. </div>
<div> </div>
<div>There are still too many partials to be reported for Q4 2018 to have any level of certainty, but while a technical recession perhaps remains unlikely, in per capita terms it looks very possible.</div>
<div> </div>
<div>Banks on strike; no chance of a hike.</div>
<div> </div>
<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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pwargent-M4siyDbqQY

Construction misses in Q4: Pete Wargent

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Perth's the first major office transaction of the year, The $86 million sale of ENI House, paves the way for a billion-dollar 2019, according to CBRE.
The seven-level, A-grade office building, located at 226 Adelaide Terrace in Perth’s eastern CBD precinct, is fully leased to the Federal Government and corporate tenants.
These include Wood &amp; Grieve Engineers and ENI Australia Ltd.
CBRE’s Aaron Desange and Flint Davidson, jointly with JLL’s John Williams and Sean Flynn completed the sale to WA-based property fund manager, Primewest.
Mr Desange said “The lease expiry profile of ENI House was a major drawcard for investors, with it providing ideal timing to capitalise on improving market conditions over the next two – three years, when the office leasing market will not only be more robust, but in a strong growth phase."
Mr Williams said Western Australia would continue to be a preferred destination for offshore investment in 2019, with several Asia Pacific capital cities close to approaching their peak in the cycle.
“In Perth specifically, Asian investors have dominated the value-add space, as they are able to be more aggressive in deals with vacancy risk or capital expenditure requirements through their cheaper cost of capital. They are also attracted to our low sovereign risk and comparatively high yielding assets,” he added.
CBRE Research expect Perth to benefit from a strong spike in rental growth over the next five years – more so than any other Australian city.
Over the next three years, premium net effective rents are forecast to increase by 56.3% and A-grade rents are tipped to lift by 41.6% - largely due to a reduction in incentives.
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ENI House is Perth's first major office transaction of 2019

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EXPERT OBSERVER
More and more evidence. Inflation across Asia keeps sliding. India's dipped further in January to a touch above 2% y-o-y. In China, the PPI barely held in positive territory last month, and consumer inflation cooled again. It's easy to shrug it all off as a temporary drag from lower oil prices and well-behaved food cost. But that's not the full story: underlying price pressures are remarkably soft as well and broadly falling. As a result, real interest rates continue to climb and the region's already substantial debt load becomes harder to service. The case for further monetary easing may thus become more pressing, even if in itself this may not be enough to push up growth materially.
You will have seen the headlines. Over the past week alone, both India and China reported remarkably subdued inflation. In India, the headline CPI is running at close to half the central bank's mid-point target. True, core prices are well above this (around 5.4%), but that was down from a 6% handle. In China, PPI inflation, a good proxy for industrial profits, has essentially stalled and the headline CPI hit 1.7% (though core nudged up to 1.9%).
Elsewhere, the trend is much the same: from Indonesia to Thailand to Korea, including Japan and Australia, and everywhere in between, inflation is running short. Even in the Philippines, which saw a sharp spike last year, it's rapidly coming off the boil.
It's tempting to attribute much of this to falling oil prices. And as these are now ticking up, that drag is bound to reverse. Plus, food inflation has been remarkably subdued across the region of late (keep an eye though on the return of El Nino this year).
However, core inflation is running at a fairly tepid pace in most places, or at least showing signs of slowing substantially. From a broader perspective, in fact, it is remarkable that the synchronized global upswing in 2016-2017, followed by last year's exchange rate stumbles and, temporarily at least, soaring oil prices, didn't deliver a bigger inflation kick (see also We got an inflation problem, 10 December, 2018).
That means that the "jumping off point" for inflation as growth continues to slow is dangerously low, risking, if not outright deflation, a prolonged period of extremely subdued price pressures.
That poses two big challenges for Asia.
First, it pushes up real interest rates as low (or even lower) inflation increasingly pushes down inflation expectations. And with nominal rates already near record lows in many places, there's little that a loosening in monetary policy alone can do to correct this.
Second, and related, the debt service burden increases as inflation falls short. Even if inflation expectations, which determine the real interest rate, don't fall further, lower realized inflation makes it harder to service debt already taken out. And since the region has splurged on the stuff in recent years, falling price pressures can thus act as a powerful drag on growth.
What, then, are the policy options?
Monetary easing is the obvious one. But, as mentioned, this has started to run into "diminishing returns": with interest rates already low, further cuts will provide only a limited boost. Ideally, this should be complemented by fiscal easing. And in a few places, notably China, that's exactly what's occurring. But, more broadly across Asia, the policy room for a significant fiscal kick is limited (see How much policy room?, 28 January, 2019).
Further out, Asian central bankers will also need to think about more unorthodox policies. If rate cuts alone don't do the trick, and fiscal support isn't readily available, at least in sufficient size, the entire tool box of policies tried out in advanced economies over the past decade should be on the table: from targeted lending schemes to aggressive base money expansion.
Granted, these didn't work necessarily all too well in all instances. And emerging Asia isn't quite yet so demand deprived that it's about to fall into a deflationary trap.
Yet, given the growing risks of such a stumble, it's probably best to act pre-emptively.
Cuts anyone?
Frederic Neumann is Co-head of Asian Economics Research at HSBC.
 
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