Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Joel Robinson

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

A proposal to redevelop one of North Sydney's ageing commercial buildings has taken another step forward, with plans for a 38-storey mixed-use tower adding momentum to the long-awaited transformation of the Alfred Street precinct.

Now on public exhibition through the NSW Government's Housing Delivery Authority-led State Significant Development pathway, the proposal for 271-273 Alfred Street would replace an underutilised commercial building with 95 apartments, ground-floor retail, commercial space and affordable housing. The proposal was submitted by&nbsp;Tara Shore Pty Ltd, acting for the John Taylor Family Trust.

While the project will deliver much-needed housing on the southern edge of the North Sydney CBD, it also represents another piece of a broader precinct that has spent years in planning limbo.

<img alt="First look: New public domain vision underpins 95-apartment North Sydney tower on Alfred Street" data-entity-type="file" data-entity-uuid="7e1ce1b4-38df-48ab-992f-386814d86308" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Alfred%20St%20da%20podium.png?VersionId=sC_h6w.A9VEoB98qsqowPlIoz__sBZBt" />

Despite its proximity to both North Sydney Station and the Victoria Cross Metro, redevelopment of Alfred Street has progressed slowly over the past decade as broader planning controls, zoning and building heights remained unresolved. The introduction of the Housing Delivery Authority pathway has provided a new avenue for projects to progress, allowing rezoning and development assessment to occur concurrently and unlocking sites that have long been earmarked for renewal.

Designed by Office of Cortese &amp; Gilder, the proposal seeks to do more than replace an ageing office building. The architects have positioned the project as the first stage of a wider public domain vision that would improve pedestrian connectivity and create a more cohesive mixed-use precinct as neighbouring sites are redeveloped over time.

The proposal includes a widened Alfred Street setback, new street trees, landscaping and outdoor seating, along with a landscaped through-site pedestrian link connecting Alfred Street with Little Alfred Street. The connection is intended to become the first section of a future east-west pedestrian network extending across the precinct.

<img alt="First look: New public domain vision underpins 95-apartment North Sydney tower on Alfred Street" data-entity-type="file" data-entity-uuid="8ea39ac3-46ad-4562-b4a0-b862e91c2dda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Alfred%20St%20da%20site.png?VersionId=K7umCd21KpetEFuVfsPlnJKhUOsmTTdV" />

The mixed-use tower would comprise retail space at ground level, commercial uses on level two and apartments from level three upwards.

In total, the development would deliver 95 apartments, including nine one-bedroom, 28 two-bedroom, 56 three-bedroom and two four-bedroom residences. Twenty-one apartments, representing 15 per cent of the residential gross floor area, would be secured as affordable housing and managed by a registered community housing provider for at least 15 years.

Nine basement levels would provide 133 resident car spaces, seven motorcycle spaces and 111 bicycle spaces.

According to the Architecture and Urban Design Report, the public domain strategy is designed to transform what is currently an inward-facing commercial edge into a more active and connected pedestrian environment, creating a stronger relationship between the commercial core and surrounding residential neighbourhoods.

Office of Cortese &amp; Gilder has also prepared a broader public domain framework spanning neighbouring properties between 263 and 283 Alfred Street, arguing that a coordinated approach to redevelopment will deliver better public spaces, improved tower separation and a more connected streetscape as the precinct evolves.

The proposal comes at a time where North Sydney is slated for future residential growth. Commercial developer FiveX has residential plans for the neighbouring site at 275 Alfred Street. They've proposed a 39-storey mixed-use tower with 184 apartments, while Freecity was recently approved for nearly 300 apartments across a 51-storey building on Walker Street.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-freecity-gets-green-light-for-mixed-use-apartment-and-hotel-tower-in-north-sydney">First look: Freecity gets green light for mixed-use apartment and hotel tower in North Sydney</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-plans-39-storey-residential-tower-in-booming-north-sydney">First look: Fivex plans 39-storey residential tower in booming North Sydney</a>

&nbsp;

Alfred Street the latest North Sydney pocket to be transformed by residential development

Buyers considering a residence at boutique Gordon townhouse development <a href="https://www.apartments.com.au/new-townhouses/lume-gordon-43-47-dumaresq-street-gordon-nsw-2072">Lume</a>&nbsp;now have another reason to bring forward their decision.

For a limited time, purchasers of a residence at Lume will receive a BMW iX3 50 electric SUV, valued at more than $120,000, as part of their purchase. The offer is designed to add value for buyers while complementing the lifestyle envisioned for the architecturally designed Upper North Shore development.

Scott Timmins, Development Manager at <a href="https://www.apartments.com.au/developers/winim">WINIM</a>, said the partnership was created to provide buyers with a compelling reason to act.

"In today's market, buyers need a compelling reason to act now, and the BMW partnership was designed to create that catalyst. We wanted to add genuine value for our future purchasers. Choosing the all-electric BMW iX3 50 also reflects the values behind LUME, forward-thinking design, innovation and a more sustainable way of living. It's a premium incentive that complements the lifestyle our buyers aspire to and rewards those who commit early."

[smartcode_project:default project_id=7354 project_image_fid=374893]

Delivered by WINIM in partnership with Burtonwood Investment Partners, Lume comprises 14 architecturally designed two, three and four-bedroom townhomes created for families seeking the space of a freestanding house with the ease of modern, low-maintenance living.

The three-storey residences, designed by award-winning architecture practice <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, have been tailored for families and multi-generational living, featuring private internal lifts, flexible lower-level spaces, generous open-plan living and entertaining areas, media rooms, and landscaped outdoor spaces with custom outdoor kitchens.&nbsp;

Inside, engineered oak flooring, bespoke dining joinery with integrated wine fridges and backlit bars, sculptural porcelain bathrooms, Parisi freestanding baths and Astra Walker tapware create interiors that balance functionality with refined finishes.

Each townhome has been designed to combine generous internal spaces with sustainability initiatives such as EV charging infrastructure, while <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>'s landscaped communal areas, centred around a restored creek line and native planting, encourage residents to connect with nature and spend more time outdoors.

[smartcode_project:default project_id=7354 project_image_fid=269527]

Rothelowman's Gary Tsui said the architecture was conceived to respond carefully to its Upper North Shore setting.

"Our vision was to create elegant, uplifting homes that draw on and positively contribute to the local character through meticulously considered design and an interaction with the surroundings."

The communal landscape has been designed as more than an open space between homes. Arcadia's Ben Newell and Kate Phillips said the adjoining reserve provided an opportunity to create a distinctive natural retreat for residents.

"Just as waterways carve their way through Ku-ring-gai's landscape, a raised boardwalk weaves through the reserve, connecting the homes to this tranquil oasis."

[smartcode_project:default project_id=7354 project_image_fid=374892]

Located just 300 metres from <a href="https://www.apartments.com.au/developments/gordon-nsw-2072">Gordon</a> Village and Gordon railway station, Lume offers convenient access to Sydney's CBD while placing residents close to some of the North Shore's leading schools, including Ravenswood, Pymble Ladies' College and Knox Grammar. Lane Cove National Park, Gordon Golf Club and a range of cafés and restaurants further reinforce the family-focused lifestyle on offer, with the BMW iX3 50 complementing everything from local trips around Gordon to weekend drives and city commutes.

Construction is underway with completion expected in mid-2027.

[smartcode_project_cta:default project_id=7354]

Boutique Gordon townhomes now come with a BMW iX3 50

Two apartments have sold for more than $10 million at EADE Byron Bay, setting some of the highest apartment prices ever achieved in the coastal town and underlining the growing appetite for luxury beachfront apartments in Australia's most popular coastal locations.

The $210 million project by Vitale Property Group has now secured more than $70 million in sales, led by residences that changed hands for $12.75 million and $11.75 million.

The record-breaking transactions reinforce the shift occurring in Byron Bay's premium property market, where affluent downsizers and lifestyle buyers are increasingly opting for high-end apartments over large beachfront homes.

<a href="https://www.apartments.com.au/new-apartments/eade-byron-bay-29-shirley-street-byron-bay-nsw-2481">EADE Byron Bay</a> occupies a rare 6,000 sqm absolute beachfront site on the corner of Shirley and Milton Streets overlooking Main Beach and The Wreck surf break, just 350 metres from Byron Bay's town centre.

The 25-residence development is the first beachfront apartment project approved in Byron Bay in more than a decade and is currently under construction, with completion expected in May 2027.

[smartcode_project:default project_id=145590 project_image_fid=359521]

The project has attracted a mix of local Byron Shire residents downsizing from larger homes, alongside interstate buyers from Sydney, Melbourne and Brisbane seeking a permanent coastal lifestyle without compromising on space.

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a> and with interiors by <a href="https://www.apartments.com.au/interior-designers/alexander-co">Alexander &amp; Co</a>, EADE comprises&nbsp;10 garden apartments ranging from 284 sqm to 622 sqm, nine with private pools, five full-floor apartments and 10 rooftop residences with private plunge pools, expansive outdoor entertaining areas and uninterrupted ocean views.

[smartcode_project:default project_id=145590 project_image_fid=359527]

<a href="https://www.apartments.com.au/developers/vitale-property-group">Vitale Property Group</a> Managing Partner Chris Vitale said the project's combination of scale, location and limited future supply was driving buyer demand.

"There isn't another beachfront holding in Byron Bay of this size and position that could be developed again," Vitale said.

"Buyers are responding to the scarcity and the irreplaceability of a site of this calibre and to floorplans they can't find elsewhere in the market.

"We are seeing buyers place significant value on quality, space, design, resort-style amenities and the rarity of the location. The sales achieved to date demonstrate that discerning purchasers recognise the long-term significance of what is being created at EADE Byron Bay.

"Many are coming from larger homes in the Byron region, or from Sydney, Melbourne and Brisbane, and are after the space, security and convenience, without the upkeep of a house."

&nbsp;

[smartcode_project:default project_id=145590 project_image_fid=359523]

The Byron Bay project follows Vitale Property Group's delivery of the Mondrian Hotel and Private Residences at Burleigh Heads, with EADE continuing the developer's focus on luxury coastal developments.

Residents will have access to a resort-style swimming pool, gymnasium, sauna, cold plunge pool, concierge services and dedicated workspaces, while the project is targeting an 8-Star Green Star rating.

EADE Byron Bay is being exclusively marketed by Projx Australia in conjunction with WHITEFOX Projects.

WHITEFOX National Projects Director Phillip Rand said demand had been driven predominantly by owner-occupiers.

"We are seeing buyers at EADE place significant value on quality, space, design, resort-style amenities and the rarity of this location," Rand says.

"The sales achieved to date demonstrate that purchasers at this level recognise the long-term significance of what is being created at EADE Byron Bay."

Residences at EADE Byron Bay are currently priced between $4.75 million and $15.95 million.

&nbsp;

&nbsp;

&nbsp;

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[smartcode_project_cta:default project_id=145590]

Vitale breaks Byron Bay records with EADE sales flurry 

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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Anyone who has been monitoring their Twitter accounts today will sense the growing anger at the Big Four banks, which have taken more than a day to decide how much of the RBA’s 25-basis-point cash rate cut to pass on to consumers.
Borrowers by now may have given up hope that the major banks will deliver real Christmas cheer.
More than 26 hours have passed since the RBA announced it would cut the cash rate to 4.25%. The last time the Big Four took this long was in April 2009, when the major banks took almost as long to announce their interest rate cuts after the RBA cut interest rates by 0.25%.
On that occasion, NAB was the one to “move” first – it decided to pass on none (that’s right, zilch) of the 25 basis points leading to the bank taking a huge media bashing.
Of course all the other banks then followed, and though they all passed on a meagre 10 basis points, that did not cop the same level of brand damage or public outrage as NAB was subjected to.
Today, as many commentators and analysts have pointed out, none of the banks wants to go first on making an announcement because a) they will set the benchmark that the others will only have to beat by a few basis points to avoid copping most of the flak and b) whoever moves first is likely to suffer the greatest brand damage, (provided the other banks beat their rate cut of course).
As I write, behind closed doors, the banks are carefully crafting the lines they are guaranteed to spin out about increased funding costs and European jitters that will accompany eventual announcements.
(None, though, are likely to try emulate Westpac’s disastrous attempt to explain it not passing on a full rate cut in December 2009 by putting together an animated video about banana smoothies and the cost of bananas.)
Even if borrowers must swallow the explanation that funding costs have gone up, it is also undoubtedly true that the major banks are looking to protect shareholder returns (and as Age columnist Michael West pointed out, protect executive pay bonuses).
And of course there is also the little matter of the vicious mortgage discounting war they have been engaged in over the past few months, which as JP Morgan banking analyst Scott Manning has pointed out recently, has reached a stage where the discounts are impacting on their bottom line – meaning the banks need to do something to increase their margins. Their delay in making an announcement is likely to only insight more bank bashing and angry tweeting.
However, the question is: will they vote with their feet and switch lenders as Treasurer Wayne Swan has now made much easier to do?
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lschlesinger-FZcF9M3vE6

Borrowers' anger grows as Big Four banks dither on passing on rate cut

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The Australian construction industry continued to decline in November but at a more moderated pace, according the latest report by the Australian Industry Group and the Housing Industry Association.
The performance of construction index increased 4.9 points to 39.6 in November, still short of the 50-point level that distinguishes contraction from growth.
The increase represents a reduction in the rate of decline of both house building and engineering construction but commercial construction and apartment building activity declined at a steeper rate.
"The construction sector remains very uneven with the residential and commercial construction sub-sectors considerably weaker relative to the resources-project linked engineering construction sub-sector,” says Australian Industry Group director of public policy Peter Burn.
“Commercial construction continues to contract and businesses completing projects related to the fiscal stimulus package are not finding sufficient private sector work to keep fully occupied.  While still far from satisfactory, the sector overall appears to be pulling back from the accelerating pace of decline reached in August and September," Burn says.
There were reports of an improvement in workflows from resource-based projects and a rise in customer enquiries in the house building sector linked to the positive influence of the recent interest rate reduction, the report found.
New orders again declined across the industry, although the rate of contraction was the slowest in six months. Consistent with this, falls in activity, supplier deliveries and employment all moderated, the report found.
Senior economist at Housing Industry Association Andrew Harvey used the report to call for further stimulus of the construction industry.
"[The report] again highlights the current fragile state of residential building with activity continuing to contract and looking a long way from an eventual return to growth,” Harvey says.
“There’s no hiding from the fact that house building activity has contracted for 18 straight months and apartment building activity has now contracted for 19 straight months.
“When you consider this long-lived decline in residential building activity alongside recent dismal building approvals it is clear that the federal government needs to urgently turn its attention to stimulating new home building in this country.”
 
 
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awalsh-7Ub9EypybQ

Construction industry decline slowing: AIG

cjames-5S2v74qSNK

Economic and housing predictions for 2012: Craig James

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The mortgage market appears to be on the mend, with investors and first-home buyers leading the charge, according to RBA’ s December chart pack.
<img src="/images/stories/rbadec71.gif">
An “unofficial” increase in mortgage demand was noted by <a target="_blank" href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=AFG+property+observer&amp;source=web&amp;cd=1&amp;ved=0CB8QFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Fmortgages%2Fafg-mortgage-approvals-at-33-month-high-as-investors-return-to-the-market&amp;ei=oLneTuOLM4W0iQftxqC_BQ&amp;usg=AFQjCNHqGZoAoB0RZMSkO1IySPU5uZH1zA&amp;sig2=ZDBvFZY5L0q3qMPxVXaC6A">mortgage broker AFG in its November sales numbers</a>, which spiked by 18% led by investors and first home buyers.
The growing demand for home loans comes as house prices continue to fall across all markets, though Sydney prices are flattening out as this chart shows:
<img src="/images/stories/rbadec72.gif">
Alongside cheaper house prices and a growing demand for mortgages, there has also been a slight drop in the amount of money people are saving:
<img src="/images/stories/rbadec73.gif">
The poor outlook for the residential construction sector – particurlarly for detached houses – can be seen in this chart:
<img src="/images/stories/rbadec74.gif">
 
 
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RBA charts: Investors and first-home buyers returning to the market

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The appeal of 7-Eleven service stations has not diminished, with a Mount Druitt store in NSW selling for $4.04 million as part of a Burgess Rawson commercial property portfolio auction in Sydney yesterday.
The sale to a Victorian buyer was negotiated soon after the auction with the sale prices reflecting a yield of 7.8% on income of $316,000.
This is in the upper range of yields achieved for 7-Eleven service stations for 2011.
About <a href="https://www.propertyobserver.com.au/retail/sales-of-7-elevens-during-2011-secure-investors-yields-of-between-4.6-and-8.5/2011112752554">$90 million worth of refurbished 7-Eleven service stations across NSW and Victoria have changed hands this year, with yields ranging from 4.6% to 8.5%.</a>
The 2,500-square-metre Mount Druitt store, located at 2 Luxford Road, was sold by a private investor and is not part of the portfolio being sold in batches by 7-Eleven and acquired from Mobil in May 2010.
It sold with a new 15-year lease that commences in January 2012 with two renewal options of five years each. It is leased to 7-Eleven with fixed 4% annual rent increases.
Charles Gonzalez from Burgess Rawson, which marketed and auctioned the 7-Eleven, says there was strong interest in the property at what was a well- attended auction.
Other properties to sell under the hammer include three retail shops in Cabramatta in Sydney’s west.
The property was bought by one of the tenants for $1.53 million, with Gonzales noting that this was $200,000 above the reserve.
With annual income of $161,000 this reflects a yield of 10.6%.
The property is leased to a pharmacy, doctor’s surgery and mini-supermarket.
 
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High yields for 7-Elevens continue to attract investors

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Melbourne’s retail sector is struggling through its toughest period since the 1960s, according to the December Herron Todd White property market report, with retail landlords letting outside the main retail strips the most affected.
According to October ABS statistics, the national annual growth rate in retail sales is 2.8%, equating to the worst growth since 1962.  Retail sales rose 0.6% in Victoria on a seasonally adjusted basis in October, having registered no growth in September, increases of just 0.3% and 0.5% in August and July and decreases of 0.3% and 1% in June and May.
Under these tough trading conditions,  HTW reports that the Victorian Small Business Commissioner has witnessed a “substantial increase in rental dispute resolution enquiries in 2011” as an increasing number of tenants found it difficult to meet their lease obligations.
“It appears that retailers who are positioned outside the main retail strips with limited exposure are most affected when there is a downturn in retail trade levels,” says HTW.
The report warns that should consumer spending continue to weaken rents might fall, which could lead to a softening in capital values into 2012.
Among the retail strips outside Melbourne CBD hardest hit has been Bridge Road, Richmond, where the vacancy rate has risen to 10.6% by mid-2011.
“[Bridge Road] has been traditionally been known for its discount stores and now has to compete with the likes of the Direct Factory Outlets and other large-scale suburban shopping centres,” says HTW.
According to the report, the exception has been well-placed retailers located in within prominent strips within Melbourne.
“Swanston Street in the Melbourne CBD, Glenferrie Road, Hawthorn and Chapel Street, South Yarra are good examples of resilient retail destinations in 2011.”
“Despite the tough retail environment, real estate agents have reported strong transactional activity, and Melbourne’s appetite for retail property is expected to remain strong in the short term,” HTW says.
“Prime Melbourne retail is very much still in high demand whilst secondary retail is perhaps harder to lease/sell.”
Large retail sales for 2011 include a two-level, freehold retail building at 269 Swanston Street, which sold in March 2011 for $6.5 million, reflecting an investment yield of 3.12% and a 20-square-metre lot on Swanston Street that sold for $2.11 million, reflected a rate per square metre of $105,500.
Outside of the CBD, leasing activity has picked up on Chapel Street, with Mexican food retailer Salsa’s taking up space in the Jam Factory. The deal was negotiated by Max Cookes and Zelman Ainsworth from CBRE retail services.
According to Cookes, the major rejuvenation of the centre has been a key attraction for Salsa’s.
Salsa joins major international and national retailers that have secured a presence within the centre including fashion heavyweight Topshop, which secured a 1,600-square-metre space within the Jam Factory for its Australian launch and is due to open this week.
Other retailers to join the centre include Lindt, Groove Train, Steve Madden, Target Urban and Nandos.
One of the previous anchor tenants of the Jam Factory was Borders Books, whose vacated space has been taken up by Topshop.
In its report, HTW said the collapse of Borders, fellow book chain Angus and Robertson and fashion chain Colorado in 2011 might have been the result of the inability of tenants to maintain current rental levels when faced with diminishing turnover.
Photo by Anna Armstrong
 
 
 
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Return to the '60s for Melbourne retail market: HTW

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<table width="255" cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="bottom" nowrap width="69">
postcode
</td>
<td valign="bottom" nowrap width="89">
suburb
</td>
<td valign="bottom" nowrap width="97">
Median unit price
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2912
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">GUNGAHLIN</a>
</td>
<td valign="bottom" nowrap width="97">
$325,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2913
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">FRANKLIN</a>
</td>
<td valign="bottom" nowrap width="97">
$325,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2606
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">LYONS</a>
</td>
<td valign="bottom" nowrap width="97">
$326,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2606
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">CHIFLEY</a>
</td>
<td valign="bottom" nowrap width="97">
$342,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2615
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">HOLT</a>
</td>
<td valign="bottom" nowrap width="97">
$355,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2605
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">CURTIN</a>
</td>
<td valign="bottom" nowrap width="97">
$358,885
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2607
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">FARRER</a>
</td>
<td valign="bottom" nowrap width="97">
$360,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2905
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">THEODORE</a>
</td>
<td valign="bottom" nowrap width="97">
$365,000
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2615
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">DUNLOP</a>
</td>
<td valign="bottom" nowrap width="97">
$366,500
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="69">
2615
</td>
<td valign="bottom" nowrap width="89">
<a target="_blank" href="/news">LATHAM</a>
</td>
<td valign="bottom" nowrap width="97">
$370,000
</td>
</tr>
</tbody></table>
Source: RP Data
 
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The top 10 suburbs in the ACT with the cheapest unit prices: RP Data

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Yesterday, following the RBA announcing it would cut rates by 0.25% to 4.25%, Twitter was flooded with tweets awaiting news of the major banks announcing their rate cuts.
The Commonwealth Bank responded with the following message:
“We are currently reviewing our interest rates in light of the RBA decision.”
Today, borrowers are being told to brace themselves for the banks not passing on the full rate cut.
This message has been flagged for some time, most notably by former Commonwealth Bank boss Ralph Norris, as he stepped down from his position last month.
Norris says the notion of the banks “automatically following the RBA” is outdated as the cost of funds lent to consumers is driven up by the troubles on global credit markets.
Norris told The Australian Financial Review at the time there was no guarantee the banks would pass on the next RBA interest rate cut.
“Nobody can give unqualified guarantees in anything in life… At this time I would have to say it will be what the situation is at the time the RBA makes its cut,” he said at the time.
In the wake of the global financial crisis, which froze international credit markets, the major banks did not pass on full RBA interest rate cuts and also increased interest rates independently of the central bank.
Speaking at the AICC property lunch in Sydney last week, outgoing Dexus boss Victor Hoog Antink hinted at a similar approach by lenders when he said there would be “potential margin creep for the banks as they deal with capital issues emerging from Europe”.
NAB was the only lender not to pass on the full 25-basis-point cut in November to its borrowers, passing on 20 basis points with its head of personal banking, Lisa Gray, saying at the time that “volatile overseas markets and impending global banking security requirements had pushed up the costs of providing funds for lending”.
The threat of banks not passing on full rate cuts was also acknowledged by AMP Capital chief economist Shane Oliver in his regular insights piece.
“Australian banks have been warning their funding costs have been increasing. If this intensifies, then there is a risk that banks may actually increase their lending rates – both business rates and mortgage rates – independently of the RBA,” Oliver said.
In his September note on the outlook for the banking sector (before the crisis in Europe reached its current level), JP Morgan analyst Scott Manning said the discounting of mortgage products by the major banks was reaching a point of being loss making for banks to originate new mortgages.
<a target="_blank" href="/news">Bank of Queensland</a> and <a target="_blank" href="/news">ME Bank </a>have already announced they will pass on the rate cut in full.
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Borrowers wait anxiously to learn if banks will pass on rate cut

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So David Bassanese from the AFR reminded me that he called the RBA's rate cut yesterday. I don't think anyone else in media land really picked it. The market was fully pricing it – had been since the last meeting. Stephen Koukoulas (aka "Koukie") was there three or four months ago – but he was also confident about the RBA cutting 25 basis points in October and 50 basis points in November, at various times. 
Bill Evans at Westpac, Brian Redican at Macquarie, and Tim Toohey at Goldman have been brilliant at anticipating this sharp turn-around in the RBA's monetary policy stance. One question is whether they picked it for the right reasons. If you were dovish because of the domestic economy, you were right for the wrong reasons. If you were dovish because of low inflation, well, I don't know what to say. We've had two high core inflation numbers in quarter one and quarter two (after multiple revisions) and one low result in quarter three (first estimate). Nobody is much good at forecasting inflation one to two quarters ahead. Almost all economists struggle to predict core inflation the day before the release. But if you were punting on low inflation as a driver of the RBA's 180-degree turn, you surely deserve some credit. 
If, on the other hand, you were motivated by the offshore environment, and Europe and the US, in particular, well, hats off to you. Bill Evans and probably Toohey fall into this category. Koukie I suspect too. Matty Johnson at UBS is another who fingered it early, and who was quick to call a European recession. He was confident about a December cut many weeks ago. 
Bassanese's rationale derived from the "insurance" (or "put option") school of thought. That argument was an obvious one, but I was not convinced the RBA would necessarily acquiesce. I was 50:50 right up to the decision. Anyone claiming December was certain has probably got the last few months wrong. A good counterfactual is HSBC's Paul Bloxham. Blocker spent 11 years working under Stevens, Richards and Lowe in the RBA's economic analysis department. He only left there a year or so ago. Unfortunately, Paul has missed November and December. He's now switched his position and is calling a spate of cuts. 
One of the smartest and most successful rate participants I know characterised it as a coin toss a day or two ago. There was a lot of money to be made going short interest rate futures if you had conviction about the RBA keeping its finger off the trigger. Right up to 2.30pm I was trying to clear a position in my head. I could not – I had this uneasy feeling, a little like I did right before the August decision to pause. One clear thought did come into my mind: “Whatever the RBA does today we will learn more about the way board members think. And that really is the key take-away.” 
You hear a lot of baloney from media commentators and economists who talk to the RBA and tell you – even to this day – that the RBA completely controls its own board and is at one with all its decisions. Anyone who says that is trotting out the house line. Of course the RBA wants everyone to think its relationship with the board is always harmonious, and decision-making is always unanimous. But anyone who has sat on corporate boards knows that is not how they work. 
We know that some RBA board members wanted interest rates lower in the first half of 2011, and we know, again as a matter of absolute fact, that some were calling for higher rates. We obviously got neither. 
What we saw yesterday, and what we have seen in 2011, is a classic committee-based decision-making framework. I know from years of personal experience that as soon as you run a decision-making process through a committee larger than two or three people, especially within a risk-averse or bureaucratic organisation, you get lowest-common-denominator solutions. You get “easy” decisions that are straightforward to justify. 
Super funds are a classic example: do what everybody else is doing. If everyone is over-invested in equities and underweight cash and fixed-income, do the same. Pick up the pieces after the event only when everyone else is doing the same. You can never be criticised if you are one man concealed by a crowd. 
That's what we've witnessed this year. The RBA's board comprises nine relatively ordinary individuals. We have learnt that they find it, unsurprisingly, very hard to make tough decisions. Everyone who has worked with the RBA will tell you that raising rates is hard work. We saw that in the first seven months of 2011. There were at least three months when a bolder, braver and more independent decision-making framework could have hiked. Would that have been a mistake? Of course not. If you hiked once earlier in the year (e.g., in May or June when a tightening was on the table) you would be claiming credit for the low inflation print in quarter three. You would have had much more justification for easing policy in November given the disturbing developments offshore and the supposedly altered inflation outlook. 
Instead, we found the RBA could not muster the fortitude to hike. The board dithered through the first seven decisions of the year, as you would expect any nine person committee chock-a-block full of strong personalities to do. They consistently sent highly inconsistent signals to the market. 
We know that because the economists covering the RBA were saying point-blank that they were confused by its conflicting statements. The first two Statements on Monetary Policy were incredibly hawkish while the Board Statements seemed more dovish. Is that really a surprise when one is prepared by the staff and the other by a committee? Sorry guys, they are not all joined-at-the-hip. 
 
<hr class="system-pagebreak">
 
Even the media folks speaking directly to senior members of the bank, such as Terry McCrann in late July, and, this month, Alan Mitchell, were calling it wrong. After the November meeting Mitchell was telling us in column after column that only a major deepening of the crisis in Europe would force the RBA to cut in December. 
Mitchell and his Fairfax colleague, Peter Martin, confidently declared that November was a “once-off” adjustment of the cash rate back to neutral. Don't bank on any Christmas gifts from the hard-headed RBA. Don't expect the RBA to cut rates because of the mini-budget. 
Well, nothing has really changed in Europe. In fact, bond yields plummeted right before the decision yesterday with the Sarkozy-Merkel plan afoot. The domestic data flow was fine. There are some very early indications the highly interest rate sensitive housing market could be about to bounce back strongly with Australia's largest mortgage broker, AFG, reporting its single biggest month for new home loan applications in November since March 2009. The share of investors soared to record levels. 
What we got in November was an easy decision to cut. After the low third-quarter inflation, and the RBA's preceding signal of a “decision rule” that would reward a very low print, a cut was always likely. The only fly in the ointment was that the previous downward revision to quarter two data was revised right back up! The RBA's board ignored that and the first-quarter data, and decided to hang its hat on quarter three. 
Again, it was not “hard” to cut in the sense of it being a politically or socially difficult decision. Furthermore, the markets had priced it. Consumer confidence bounced back to above-average levels in November, and the RBA was showered in praise for providing those ailing sectors of the economy with much needed relief. 
Equally, it was not “hard” to cut in December. The market was fully pricing it. The politicians were calling for it. The RBA board has now given Wayne Swan and Julia Gillard a significant victory in being able to claim that the mini-budget, and weak public demand generally, have emboldened the RBA to loosen policy (assuming the banks actually play ball and pass on the cut). Making your political masters happy is easy. Every vested interest in the country was calling for "insurance" from the bank over the summer break in case things went awry. In the short term, it costs you nothing to cut rates. So a nine-person committee dominated by private sector business interests is going to have little hesitation in giving out free insurance – to their own constituencies. 
What I have learnt is that it's a mistake to listen to Phil Lowe, Glenn Stevens, or Ric Battellino, and think that their forecasts for the future, and their personal views on the distribution of risks, the dynamics impacting the local economy, and their sterilised vision of how central banking should in theory be undertaken, will prevail through a decision-making process involving a large committee of strong-willed, politically appointed business leaders and the Treasury Secretary. 
When Ian MacFarlane controlled the RBA board with an iron fist, and, in the words one of member, actively stifled debate and dissent, things might have been different. It was easy to be a benign dictator between 1996 and 2007. The economy was cruising along with unprecedented stability. Poor old Glenn Stevens was bequeathed a huge bout of high core inflation in 2007-08, followed by the GFC, higher unemployment, a massive surge in the currency that stretched the domestic economy every which way, and now a bona fide global sovereign debt crisis. 
The RBA board dynamics of today are dramatically different to those that existed in the pre-GFC period. It was easy to be a world-beating governor (and treasurer) when you had a 15-year period of global disinflation, high productivity, robust growth, monotonically declining unemployment and uninterrupted growth. Stevens' challenges have been vastly more complex. As have Wayne Swan's, frankly.
Christopher Joye is a leading financial economist and a director of Rismark International and Yellow Brick Road Funds Management. The above article is not investment advice.
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chrisjoye-JYhJsTrNRC

Don't expect the unexpected from the RBA: Christopher Joye

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While yesterday’s Reserve Bank’s decision to cut interest rates will have come as a surprise for some, I have always said the next cash rate movement was always going to be down – it was just a question of when.
More important than the 25-basis-point reduction is the fact that rates have declined for two consecutive months now, confirming they are trending in a downward direction. This trend is paramount to buyer confidence and is another factor supporting what is already a buyers’ market.
While European economic woes continue to loom overhead, those with secure employment on the lookout for property will rarely experience an environment as attractive for buying as the current market.
Prices are stable, and vendors are necessarily being more realistic when it comes to price. The emergence of a downward interest rate trend will have further positive bearing on affordability.
Of course the official cash rate is one influence, and much will depend on whether the banks, which admittedly have seen their own costs of borrowing increase, pass on the rate cut to their customers.
In the context of global uncertainty, as the impacts of the European debt crisis filter through to the domestic market, this decision should be welcomed as a safeguarding measure.
Leanne Pilkington is general manager of<a target="_blank" title="Laing + Simmons" href="https://www.laingsimmons.com.au/"> Laing + Simmons</a>
 
 
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