<a href="https://www.urban.com.au/developers/far-east-consortium">Far East Consortium</a>’s 640 Bourke Street stands as a testament to&nbsp;<a href="https://www.urban.com.au/developments/melbourne-vic-3000">Melbourne</a>’s ability to bridge its storied past with a bold vision for the future.&nbsp;

Rising above the heritage-listed Eliza Tinsley building, the development reflects a broader shift toward adaptive reuse in the city, where historical assets are retained and reinterpreted as part of new residential development.

Designed by <a href="https://www.urban.com.au/architects/rothelowman">Rothelowman</a>, <a href="https://www.apartments.com.au/new-apartments/640-bourke-street-melbourne-640-bourke-street-melbourne-vic-3000">640 Bourke Street</a> incorporates the Eliza Tinsley building as its foundation, housing a grand gallery and lobby space that serve as both a functional and symbolic centrepiece. The heritage façade informs the tower’s design, creating a connection between Melbourne’s past and its contemporary skyline.

"It's a significant asset and wants to be celebrated and experienced by all residents every single time they go in and out of the building," Rothelowman Principal Stuart Marsland said.

[smartcode_project:default project_id=509 project_image_fid=365684]

Above this historic base, the 68-storey tower will deliver just over 600 residences, a notable reduction from earlier schemes, reflecting a deliberate move toward larger-format apartments and a stronger owner-occupier focus.

Unlike traditional CBD developments that prioritised investor stock, 640 Bourke Street has been repositioned to respond to changing buyer expectations.

"The discussion was all around making 640 Bourke Street the best residence to live in, to be much more focused on the people in the building rather than people looking at the building," Marsland explained.&nbsp;

This shift is evident in the development’s interiors, which emphasise practical luxury with spacious layouts, high ceilings, and floor-to-ceiling windows framing sweeping views of Melbourne and Port Phillip Bay.&nbsp;

“What it's meant for 640 Bourke is we've actually reduced the number of apartments. We've increased the overall size of the apartments. We don't have any studios in here, and what that does for a project is it elevates it," Lauren Sheldon, Far East Consortium’s Director of Sales and Marketing, said.&nbsp;

[smartcode_project:default project_id=509 project_image_fid=365687]

Rothelowman Associate Jun Chang added, "We were given the opportunity to be more generous. The apartments became bigger and squarer than any other apartments which had been designed in the CBD before that."&nbsp;

Amenities spanning more than 3,000 sqm across multiple levels further reinforce this focus on resident experience. These include a pool, gym, co-working areas, and a range of hospitality-inspired spaces such as a whisky lounge, library, and private dining rooms, many drawing reference from traditional bathhouses and Melbourne’s laneway culture.

"We wanted to make both the pool and the gym area to be absolutely destinational, and when you traverse across to these spaces, there is a gentle familiarity to the beautiful notions of the hammams and the Roman baths, a gentle nod to history," Chang noted.

At street level, the project contributes to the ongoing transformation of the western CBD, with upgrades to Langs Lane and the introduction of retail, hospitality, and gallery spaces designed to activate the precinct and strengthen its connection to the surrounding city fabric.

[smartcode_project:default project_id=509 project_image_fid=365689]

The location places residents within walking distance of Southern Cross Station, Flagstaff Gardens, Queen Victoria Market, and the Docklands waterfront, positioning the development within a rapidly evolving inner-city neighbourhood.

"We believe it's the best site left in the city of Melbourne," Craig Williams, Executive Director at Far East Consortium, said.&nbsp;

640 Bourke Street is Far East Consortium’s 14th building in Melbourne’s western CBD.

"A very elegant designed building. It's going to be a Melbourne statement for many, many years to come."

One-bedroom apartments are priced from around $640,000, with 640 Bourke Street targeting completion in 2029.

Renders shown are Artist's Impressions correct as of May 2026.

[smartcode_project_cta:default project_id=509]

Joel Robinson

Heritage-led design anchors Far East Consortium’s 640 Bourke St, Melbourne

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD Group</a> has set a new residential price record in Queensland with the $30 million sale of the penthouse at its <a href="https://www.apartments.com.au/new-apartments/one-burleigh-88-the-esplanade-burleigh-heads-qld-4220">ONE Burleigh</a> development in Burleigh Heads.

The sale equates to around $37,500 per sqm.

The two-level, 800 sqm penthouse, featuring five bedrooms, five bathrooms, five car spaces, and a private infinity pool overlooking the Pacific Ocean, was acquired by a Gold Coast-based entrepreneur, highlighting continued demand for ultra-premium beachfront product.

Selling agent Freddie Tehle of PRD Burleigh Heads said the result reflects tightening supply of high-quality, large-format apartments in Burleigh.

“There’s very limited opportunity to secure this level of scale and absolute beachfront position in <a href="https://www.apartments.com.au/developments/burleigh-heads-qld-4220">Burleigh Heads</a>,” Tehle said.

“Buyers are increasingly seeking apartments that genuinely replace a standalone home, and this penthouse delivers that with its size, privacy, and direct ocean frontage.”

[smartcode_project:default project_id=146358 project_image_fid=323057]

The sale comes as construction progresses on ONE Burleigh, a boutique development of 17 full-floor residences at 88 The Esplanade, scheduled for completion in early 2027.

Developed by MAYD Group and designed by <a href="https://www.apartments.com.au/architects/mas-architecture-studio">MAS Architecture</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/sici-design">Sici Design</a>, the project has been positioned as a collection of house-sized beachfront apartments, each occupying an entire floor with around 381 sqm of internal and external living space.

When construction commenced, MAYD director Todd Mould pointed to the long-term resilience of premium coastal real estate as a key driver behind the project.

“Real estate, particularly at the premium end, remains one of the most resilient and proven long-term investment avenues,” Mould said.

“Our ambition is that anyone who buys a MAYD-built product can genuinely feel the care, craftsmanship and commitment we bring to every detail.”

[smartcode_project:default project_id=146358 project_image_fid=323055]

Each residence has been configured with four bedrooms, multiple living zones, a private office, and expansive ocean-facing terraces. Interiors draw on a restrained material palette, including travertine stone, timber joinery, and integrated premium appliances.

Interior designer Sici Design said the approach was to reflect the project’s coastal setting through both materiality and spatial planning.

“ONE Burleigh is our vision of luxury living, designed to bring the essence of Burleigh Heads' vibrant coastal beauty into an unparalleled residential experience.”

Residents will have access to a suite of wellness-focused amenities, including pools, sauna facilities, and dedicated relaxation spaces, reflecting a broader shift toward lifestyle-driven apartment design on the Gold Coast.

[smartcode_project:default project_id=146358 project_image_fid=323052]

The project occupies a southern Esplanade site with uninterrupted beachfront frontage, an increasingly rare offering in Burleigh Heads, free from the Norfolk Pines that line much of the coastline and often limit direct ocean outlook.

Mould said the design intent was to balance that outlook with a sense of retreat.

“Living at ONE Burleigh is about how your day naturally unfolds, morning light across the ocean, coffee on the balcony, and being in Burleigh but elevated above the noise.”

The result further reinforces Burleigh Heads’ emergence as one of the Gold Coast’s most tightly held and supply-constrained beachfront markets, where boutique, owner-occupier-focused developments are increasingly setting new price benchmarks.

[smartcode_project_cta:default project_id=146358]

MAYD Group sets Queensland record with $30 million penthouse sale at ONE Burleigh in Burleigh Heads

Apartment developers in the Gold Coast are finding new, creative ways to differentiate themselves from competing projects, as new supply starts to flow through up and down the Coast.

Developer BIG Projects brought in the renowned Sydney-based design studio YSG Studio to craft the interiors for The Frederick, BIG Projects' new Mermaid Beach project and YSG Studio's first move into the multi-residential development space.

[smartcode_project:default project_id=110588 project_image_fid=5346]

It was a strategic move for BIG Projects to bring in a Sydney eye to the development.

“Our role is to give our design partners the space and freedom to explore,” says Matt Barrett, Director of BIG Projects.

“We wanted YSG Studio to capture the essence of Nobby’s, to design a building that embraces life, light and connection, while creating a genuine sense of place.”

There are only 39 apartments in The Frederick, including a striking beach house, just 100 metres from the booming Nobby Beach precinct.&nbsp;

[smartcode_project:default project_id=110588 project_image_fid=5347]

Yasmine Ghoniem, Director of YSG Studio, says their vision&nbsp;for The Frederick "reinvents coastal living."

“Nobby’s has such an iconic energy, it’s one of those rare pockets of the Gold Coast where the community, the beach, and the streets all feel connected,” Ghoniem says.

"Responding to the neighbouring coastline, soothing curves add a relaxing regional overlay, while unique detailing really sets it apart. It’s a place that feels lived in from the moment you step inside.”

A standout feature of The Frederick is its rooftop terrace, an uncommon inclusion for a boutique, low-rise building, where amenity is typically concentrated at ground level.

[smartcode_project:default project_id=110588 project_image_fid=5360]

Positioned to capture panoramic views from the hinterland to the ocean, the rooftop has been designed as a series of intimate zones. It includes a pool, sauna, sun decks, workspaces and dedicated entertaining areas.

“The rooftop was conceived as a collection of spaces where residents can unwind and connect, an extension of the Nobby’s lifestyle,” Barrett says.

Architecture for the project was led by Plus Studio, with landscape design by LDG Landscape Architecture.

SRQ Projects Director Nick Clydsdale, who is handling sales at The Frederick, says the majority of enquiry is coming from South East QLD and Victorian buyers who have been actively searching between Broadbeach and Mermaid Beach for some time.

"They’ve reviewed a number of projects, however this one has stood out for its unique detailing and compelling design,"&nbsp;Clydsdale says.

Site demolition is slated for this month, with construction commencing soon after. BIG Projects is targeting a late 2027 completion.

[smartcode_project_cta:default project_id=110588]

Sydney’s YSG Studio makes Gold Coast multi-residential debut with BIG Projects at The Frederick

Melbourne-based property developer ALTA Property has this week achieved planning approval for the adaptive re-use of a former commercial tower into a $200 million, 169-apartment project at 10 Queens Road, one of the last developable sites along the Albert Park Lake-fronting boulevard.&nbsp;

Set within one of Melbourne’s most sought-after precincts and designed by <a href="https://www.apartments.com.au/architects/fraser-partners-0">Fraser and Partners</a>, the illustrious building will offer unparalleled views across Albert Park Lake, Port Phillip Bay and Melbourne CBD.&nbsp;

The mix of 1, 2 and 3-bedroom residences will be complemented by a ground-floor amenity featuring private dining, a lounge bar, gym and wellness spaces, co-working, outdoor communal gardens, and retail.&nbsp;

The 17-storey building is a masterclass in adaptive re-use, with the existing commercial building’s façade, shell and internal structure to be retained, before high-end residences are built from the ground up in a newly built Albert Park facing addition to the building.&nbsp;

Sitting atop the building will be two 320+sqm penthouses with private rooftop terraces, which are expected to be priced between $9 - $11 million.&nbsp;

<img alt="ALTA Property achieves permit approval for $200 million Queens Road tower" data-entity-type="file" data-entity-uuid="aa11211b-5581-43f9-940c-fc84d30a0e61" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/C_04.png?VersionId=Yhf5p_1EgGDu_zOIMFgvA8Ug8j3sTFQs" />

Architecturally, the building will feature a curved, geometric façade that celebrates and elevates the existing structure, with warm, muted tones which were selected to extend the materiality of the existing building rather than contrast it.&nbsp;

Interiors will bring together three metre high ceilings with waffle concrete in some spaces, natural timber, granite and Australian materials, culminating in crafted, generous and considered spaces that are defined by authenticity.&nbsp;

The adaptive re-use means that the Queens Road project will be a sustainability led, high-quality finished product, with a 62% saving in carbon emissions by re-using the existing structure rather than knocking it down and rebuilding.&nbsp;

ALTA Property was launched by Nigel Givoni in 2023, bringing over 25 years of experience in multi level residential delivery.&nbsp;

Melbourne’s property market growth is currently led by apartments. According to RPM VIC Apartments &amp; Townhomes Market Report (April 2026), units are outpacing houses, especially in the middle ring suburbs where median prices hit $757,500 – a four-year high that represents 2.9 percent growth quarter-on-quarter.&nbsp;

<img alt="ALTA Property achieves permit approval for $200 million Queens Road tower" data-entity-type="file" data-entity-uuid="647e13d7-b4bc-433a-9bc9-fe3c3dd4f2ec" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/V_06.png?VersionId=ou4NUCWUgA3NAy.6CQJlEdKX50j3dOk6" />

For ALTA Property Founder Nigel Givoni, this performance speaks to the confidence he has in the Melbourne market.&nbsp;

“Queens Road represents a rare opportunity to continue to shape our presence in the Melbourne market.,"&nbsp;Givoni says.

"With a considered project team and a premier site along one of the city’s most sought-after boulevards, we look forward to contributing to the fabric of this established address.

“Other Australian markets are getting a lot of attention, but I believe the depth of value in Melbourne is being overlooked. The fundamentals are strong, population growth is steady and, based on our preliminary conversations with a leading builder, construction costs are beginning to normalise, creating further opportunity."

Givoni says the project is a&nbsp;highly considered example of adaptive re-use, delivering quality, high-end residences, premium hotel-inspired amenities and an architecturally striking façade, all achieved without the need to remove the existing structure.

"We are really looking forward to the market’s response,” he said.&nbsp;

ALTA Property to deliver $200 million Queens Road apartment tower

Construction is set to begin at <a href="https://www.apartments.com.au/new-townhouses/orchard-mews-glen-iris-18-scott-grove-glen-iris-vic-3146">Orchard Mews</a> in Glen Iris, with&nbsp;PC Whitehall &amp; Sons&nbsp;now appointed as the townhome development moves into its next phase.

The development by&nbsp;<a href="https://www.apartments.com.au/developers/montcoeur">MontCoeur</a>,&nbsp;located at 18 Scott Grove, is now around 30 per cent sold, with completion targeted for late-2027.

Orchard Mews comprises a curated collection of three- and four-bedroom customisable townhomes, positioned within one of <a href="https://www.apartments.com.au/developments/glen-iris-vic-3146">Glen Iris</a>’ more tightly held residential streets. The low-density project has been designed by <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>, with landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/jack-merlo">Jack Merlo</a>, bringing together a team known for high-end residential projects across Melbourne.

[smartcode_project:default project_id=150128 project_image_fid=366285]

The development is defined by its focus on flexible living and long-term usability. Each residence includes multiple living zones and a customisable multipurpose room, allowing buyers to tailor spaces to suit changing needs, whether as a home office, additional bedroom, wellness area or entertainment space.

Architecturally, the townhomes emphasise natural light and spatial volume, with dual-aspect layouts and double-height living areas incorporated into the design. Interiors feature natural stone benchtops, premium appliances, and a neutral material palette intended to support everyday functionality rather than statement-driven finishes.

All residences are all-electric and include private lifts and secure double garages, reflecting a broader shift toward sustainability and future-focused housing in Melbourne’s established suburbs.

[smartcode_project:default project_id=150128 project_image_fid=366277]

Outdoor connections are also central to the offering, with a mix of private courtyards and terraces extending internal living spaces and integrating with the landscaped surrounds.

The Scott Grove address places Orchard Mews within close proximity to some of Melbourne’s key lifestyle and education amenities, including Scotch College, Sacré Cœur, Cabrini Hospital and the retail hub of Chadstone. Public transport access is also nearby, with trams and Gardiner Station providing connectivity to the CBD and surrounding suburbs.

[smartcode_project_cta:default project_id=150128]

Construction to commence at luxury Glen Iris townhome project, Orchard Mews

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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A new global inner city metropolitan housing trend has arrived in Australia with full force which may assist to solve some of Sydney's housing shortages and affordability constraints.
Compact co-living dominated by young professional residents often from the start-up, creative, financial or professional sectors has become an emerging property sector, reports recent Savills Australia research.
Many occupants earn above the national average income, making them ideal prospective tenants for housing that mixes high quality rental rooms with communal lifestyle spaces.
Tertiary students have long sought co-living most recently in pod-style micro-apartments.
But the purpose built graduate, young professional city dweller accommodation is seen as a new rung, a step up from high quality purpose built student accommodation.
With the latest offering in a Paddington terrace house, there is no one size fits all approach in creating spaces for these community inspired, experience orientated young renters.  
The research shows that co-living is on the rise, emerging in key cities such as San Francisco, New York, London, Hong Kong, Tokyo and Singapore.
The top five co-living hotspots in Sydney, according to the Savills report, are Waterloo-Beaconsfield, Parramatta-Rosehill, Potts Point-Woolloomooloo, Redfern-Chippendale, Sydney-Haymarket-The Rocks.
These are followed by Newtown-Camperdown-Darlington, Pyrmont-Ultimo, Surry Hills, Bondi Beach-North Bondi, and Erskineville-Alexandria.  
Leading the way are UKO, Hmlet, Zuu. 
One runs everything from movie nights, yoga in the courtyard, to gin making workshops!
They have been reporting full $500 a week occupancy, highlighting demand for their product that comes with bicycle parking, roof top terraces, outdoor cinema screens, shared laundries, barbeques, pools and kitchens.
The properties often fall under the next-generation boarding house code, so occupants typically sign a membership agreement instead of a lease.
“What’s interesting is that there is no one size fits all approach in creating spaces, as experienced in the student accommodation sector,” according to direct of student accommodation at Savills Australia, Conal Newland.
Sydney and Melbourne dominate emergence of the sector at scale in Australia as analysis shows that 88 of the top 100 regions for investment and development are located across these two global gateway cities with strong international student prescence.
In Melbourne, the top co-living hotspots are the Melbourne CBD, Richmond, Southbank, South Yarra East, St. Kilda, Prahran-Windsor, Brunswick, North Melbourne, Nawthorn, and Carlton.  
"As development costs and relative housing unaffordability continues its upward trend in Australia's capital cities, co-living options will only mature and success," said Newland.
"Co-living is a viable need, and it's going to become more and more of a necessity over time," said Mr Newland.
Some co-living operators are looking to be leaseholders with others fully developing and owning the real estate and operations.
The high-quality rental rooms on short-to long-term leases generally operate under the boarding house regulations. 
Across Australia, 1.46 million 25 to 35 year olds rent, reports Savills. 
Nationally, over 250,000 25 to 34 year olds live on their own.
For this demographic in particular, co-living offers social interactions, wellbeing and experience, alongside privacy in your living space and beautiful, sophisticated building designs, said Paul Savitz at Savills Australia.  
He said government policy is pivotal in attracting ongoing investment.
"Australian lawmakers should be mindful of passing legislation that may reduce the attractiveness of investments into new housing typologies which are more suited to generations with different preferences," Mr Savitz notes.
This article first appeared in The Daily Telegraph.
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jchancellor-FAypfDUnLy

Co-living emerging as new global property trend

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Melbourne-based property developer Charles Lloyd Property Group has added three new studio home developments to its portfolio, following high demand for its initial three co-living projects.
The developer said its first three projects, each comprising nine 25 to 30 sqm fully self-contained spaces, were generating consistent returns of around 14 per cent. 
Funded by the Group’s own capital, the “Studio Homes” concept was launched in 2018, one of the first entrants into the ‘co-living’ arena  having identified a gap in the market created by lack of housing affordability and increasing rental demand. 
The spaces are priced at 300 to $350 a week rental fee which included utilities and internet. Each unit has a private balcony or courtyard, ensuite and kitchenette, while full kitchen and laundry facilities are communal. 
Designed as an affordable alternative in the space between serviced apartments and hotels, they are targeted at singles, young professionals and students.
<img src="https://www.urban.com.au/images/2020/2/24/11_CLPG.jpeg" alt="">
Managing Director Franco Bevacqua said that the first three developments – in Berwick, Bundoora and Frankston – had fully let within weeks of going to market and another three were in development – St Albans, Epping and Hoppers Crossing. 
“A lack of affordability is pricing too many people out of the property market, and so we created the Studio Homes concept as a cost effective and efficient solution for the consumer,” Mr Bevacqua said 
“Most importantly they are proving to be a very attractive income-generating asset from an investment perspective, with average returns of around 14 per cent at this point. 
“I expect that these developments will become a more popular investment option in the build-to-rent sector than some of the higher density developments we are seeing come to market. 
“Build to rent has been slower to take off in the Australian market, mainly through the length of time it takes to see any decent return. We don’t have those challenges with the Studio Home concept. 
“There is no planning permission required so therefore no planning risk (under the building classification), while the build cost is generally lower than commercial rates, with an average eight to 12-month build duration.
“High volume, high density developments are the norm in this market, and so it seems that build to rent is only viewed through that lens, which is not a very innovative way to look at it. It’s a completely different investment proposition.” 
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j.ballantyne1990-6AQqhLzZaK

Charles Lloyd Property launch three more Melbourne co-living projects

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EXPERT OBSERVATION
Headline GDP rose by 0.5 per cent in Q4 to be 2.2 per cent higher over the year, a moderate result ahead of an expected virus-driven fall in output in Q1.
 Notwithstanding a significant contribution from the recovery in housing turnover and small improvement in consumer spending, private domestic demand remains weak with falling residential construction and business investment subtracting 0.3ppt from growth. Net exports and stocks helped offset this weakness. 
While the focus of policy-makers has turned to the impact of the coronavirus on both the global and domestic economies, today’s outcome confirms a below trend pace of growth as a starting point even with the strong recovery in housing turnover, with a turnaround unlikely for some time given residential investment has yet to trough, consumer spending is constrained by weak wage growth and businesses outside of mining remain reluctant to invest.
 Factoring in an initial hit from the virus outbreak, this leads us to forecast growth to remain below trend over the next year or so, before seeing a small improvement. There is significant uncertainty about the extent and duration of the shock from the outbreak, but this outlook points to rising unemployment over 2020 and likely further action from the RBA beyond our expected rate cut in April. 
We will update our forecasts for growth, the labour market and the policy outlook next week.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/5/2_GDP%20Components.jpg" alt="" width="713" height="517">
In Q4, weak private demand growth was driven by a fall in dwelling investment which is now down 9.7 per cent over the year, and a decline business investment. While consumption growth improved, it also continues to track well below its long- run average, reinforcing our long-held view that tax rebates have failed to provide a significant boost to household spending.
 Indeed, part of the increase in consumption reflects extreme price discounting. Public-sector spending made no contribution following the solid outcome in Q3. Offsetting some of this weakness was a 0.1 contribution from exports - though this is a little weaker than recent quarters. A significant (though likely) temporary boost to the expenditure side came from the recovery in housing turnover which saw a boost to real estate margins. 
Both the production and income measures of GDP were slightly stronger than the expenditure measure in the quarter.
Looking forward, the magnitude of the bushfires and especially the coronavirus impact on the March quarter will be a focus, as will the ongoing impacts of the latter in subsequent quarters. For now, we have factored in a decline in March quarter GDP, but for a small recovery in quarterly growth thereafter on the assumption that the virus is quickly contained. 
As a result, we see year-average growth of 1.2 per cent in 2020 before an improvement in 2021 to around 2.7 per cent. Should the impact of the virus become more protracted this will necessarily see a down grade to our forecasts for growth. 
Notwithstanding the impact of the virus, our read is that the sluggish pace of underlying growth already warrants further policy action, with below-trend growth over the next 18 months likely to see a deterioration in the labour market with further downside risk as a result of ongoing impacts from the coronavirus.
 Indeed, we see the RBA cutting rates for a second time in 2020 at the April meeting and a significant risk of unconventional policy going forward depending on the severity of the uptick in the unemployment rate as well as the magnitude and impact of any response from fiscal policy.
Household consumption growth improved slightly in Q4, rising 0.4 per cent q/q but remains weak at 1.2 per cent y/y – the weakest pace since the GFC. The drivers of consumption growth in the quarter were increases in discretionary categories including clothing &amp; footwear, household goods and recreation and culture – possibly reflecting some impact from the earlier tax cuts.
Nonetheless, spending on discretionary items has remained weak over the year, with spending on essentials having driven the bulk of consumption growth. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/3/5/4_Household.jpg" alt="" width="657" height="487">
Underlying business investment declined by -0.8 per cent q/q, similar to Q3 (-1.1 per cent q/q). Unlike Q3, however, weakness in business investment was driven by non-mining investment which fell 3.6 per cent, while mining investment increased by 5.0 per cent q/q.
Mining investment in Q4 was 3.2 per cent higher than the same time a year ago – the first time annual growth has been positive since 2013 other than one-off gain posted in Q3 2017. The turnaround in mining was not unexpected, but the decline in commodity prices that started towards the end of last year, now reinforced by the coronavirus shock to the world economy, casts doubt on whether this will be sustained. At the same time, weak business conditions remain a headwind for non-mining sector investment.
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 Dwelling investment fell 3.4 per cent in the quarter driven by a fall in investment in construction (-4.1 per cent) and a fall in alterations &amp; additions (-2.2 per cent). Over the year dwelling investment has fallen 9.7 per cent. This result is unsurprising given the weakness in work done, and the ongoing weakness in dwelling approvals. These data also confirm the downturn in construction is not over. The decline was driven by a fall in NSW and QLD, though construction also declined in WA and Tas. Vic saw a small improvement in the quarter.</div>
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 Government demand growth slowed considerably from Q3. Underlying public demand grew by 0.1 per cent q/q, well down from 2.0 per cent in Q3. However, growth over the last year was a still solid 5.1 per cent y/y. Government consumption growth was 0.7 per cent q/q – the lowest growth since Q2 2018 due to a fall in defence spending (a volatile component) and another quarter of very modest state/local government consumption growth. In contrast, Federal non-defence spending grew by 2.4 per cent q/q (10 per cent y/y), likely reflecting disability and aged care spending.</div>
<div class="column"> </div>
<div class="column">Underlying public investment declined 2.3 per cent q/q, but this followed a 6 per cent increase in Q3, and it was 4.2 per cent higher than a year ago. Overall, the roll-out of the NDIS and large infrastructure programs still appear to be supporting the economy – and a fiscal package expected in the next week or so, will also provide additional support to Q2 data.</div>
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 Net exports made a 0.1ppts contribution to quarterly GDP growth even with export volumes basically unchanged in the quarter, as imports declined (-0.5 per cent q/q). Exports and imports of non-monetary gold declined substantially masking growth, overall, in other trade flows.</div>
<div class="column"> </div>
<div class="column">On the export side, there was a large increase in manufacturing exports (7.6 per cent q/q), with smaller increases in commodity exports – both rural and non-rural. Capital and intermediate goods imports increased, but services imports fell (driven by travel, which has declined in each of the last four quarters), and there was a small decline in consumption goods imports.</div>
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<div class="column">Over the last year, total imports have declined by 1.5 per cent, consistent with the weakness in domestic demand. Travel exports and imports will decline sharply in Q1.</div>
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 Compensation of employees rose by 1.0 per cent in the quarter (5.1 per cent y/y). While employment continued to rise, average COE per employee also increased by a moderate 0.5 per cent in the quarter. COE per hour continued to track above the WPI but saw a moderation in year-ended growth in the quarter. The boost to household income growth from tax cuts in Q3 faded in the quarter which also saw the household savings rate tick down.</div>
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 By industry, real estate services saw the strongest quarterly growth (up 2.7 per cent on a quarterly basis), likely reflecting the improvement in housing sales. Manufacturing (notably in food products), transport, healthcare and social assistance and mining also grew strongly, as did mining. Construction contracted 2.3 per cent on a quarterly basis, with building construction, engineering and construction services all hit down. Mining, manufacturing, transport, real estate services, public administration and health care each contributed 0.1 per cent to GDP growth in the December quarter, while construction detracted 0.2 per cent from growth.</div>
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 By state, the ACT experienced the fastest growth in state final demand (+0.8 per cent q/q), followed by NSW (+0.5 per cent), with the latter result largely reflecting growth in public consumption and investment spending. NT SFD rose by 0.3 per cent, its first increase since Q3 2017, reflecting a big boost in public investment and to a lesser extent petroleum exploration (perhaps driven by the end of the NT’s fracking ban). Queensland recorded growth of 0.2 per cent q/q, while Victoria saw a fall of 0.1 per cent, largely reflecting a slowdown in major road construction. SA and WA both contracted 0.2 per cent, driven by falls in private and public investment. Tasmania fell 1.0 per cent on lower public and private investment; non-dwelling construction fell 18.6 per cent on reduced energy and accommodation project spending.</div>
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 The slide in farm GDP was arrested in Q4 on a quarterly basis, up 0.4 per cent, although it remains lower on an annual basis (down 3.0 per cent). While the drought continued to wreak havoc in New South and Queensland in Q4, this led to higher cattle and sheep slaughter and therefore higher meat production. 2020 has brought a deluge to many Australian agricultural regions, which is very welcome relief indeed. However, this may be slow to show up in 2020 GDP as graziers rebuild herds and flocks – reducing meat production. It remains too early to say how the 2020-21 winter cropping season will perform.</div>
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ALAN OSTER is the Chief Economist at NAB Group
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Coronavirus to slow Australian GDP significantly: NAB's Alan Oster

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Despite economists forecasting a decline, the Australian economy grew 0.5 per cent in seasonally adjusted chain volume terms in the December quarter 2019, according to figures released by the ABS.
It takes the economic growth to 2.2 per cent through the year.
“The economy has continued to grow and picked up through the year, however the rate of growth remains below the long run average", ABS chief economist Bruce Hockman said.
Domestic demand remained subdued with 0.1 per cent growth in the December quarter. 
A pick up in household discretionary spending and continued increases in the provision of government services was dampened by falls in dwelling and private business investment.
IFM economist Alex Joiner says the narrative is still unchanged.
"Private sector demand is extremely soft it's public spending, inventories and net exports keeping growth afloat, monetary easing hasn't been effective on the real economy as yet", Joiner tweeted.
Dwelling investment continued to fall, retracting a further 3.4 per cent, the sixth consecutive fall. 
It was consistent with the decline in the construction industry value added which fell 2.3 per cent.
There was a large rise in ownership transfer costs due to the resurgence of the housing market. During the December quarter transfer costs were up 12.3 per cent to be 6.5 per cent up through the year.
 
 
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wdavis-8cCN98p7xp

Economy grows 0.5 per cent in December quarter 2019, but growth still below long run average

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EXPERT OBSERVER
While property markets across Australia, particularly in Sydney and Melbourne, are recovering well, the recent bushfires have had a material impact on a large number of areas and the likelihood of the reintroduction of macroprudential measures is increasing.
In addition, the implications of the fires and the coronavirus on the economy are yet to be fully determined.
RiskWise Property Research CEO Doron Peleg said unemployment, under-employment and spare capacity in the labour market also noticeably increased in January 2020 and was unlikely to substantially improve in the near future, leading to further speculation the RBA will undertake another interest rate cut before July.
“The recent bushfires will have a major short-term impact on property prices in affected areas and this will increase the risk in many regional areas given the possibility of future occurrences,” Mr Peleg said.
“This impact will depend on the actual effect of the fires as well as the normal projected demand for residential property before they occurred and their location in relation to employment hubs.
“It must also be noted that economic growth has been poor, and this is further compounded by the recent bushfires and the coronavirus disease (COVID-19) although their significant impact is still to be fully determined.
“So, while the market is improving, especially in Sydney and Melbourne, material growth in asset prices and the amplified risk to the financial system increase the likelihood APRA will reintroduce macroprudential measures.”
He said improved buyer sentiment and auction clearance rates well above 70 per cent in those two cities would have a negative impact on housing affordability especially given the undersupply of family-suitable properties relative to demand driven by population increases - the biggest (recurrent) issue in the Australian property market since mid-last decade.
On the other hand, he said there was still a high level of supply of rental properties in some areas and these imbalances had ‘a very material impact’ on changes to dwelling prices of family-suitable properties versus properties unsuitable for families, particularly in high supply areas.
“Obviously, low out-of-pocket expenses for property investors are well connected with a noticeable increase in their activity. Consequently, it is expected that investor activity will further increase with a direct impact on auction clearance rates and dwelling prices,” he said.
“The recovery of the Sydney and Melbourne markets will also mitigate the risk of negative equity for properties purchased during the downturn, as dwelling prices will reach a new peak. However, properties that were settled following an off-the-plan contract with LVR of 90 per cent or more, still carry a high level of risk of negative equity. Increased levels of unemployment and under-employment increase the default risk in some markets.
“Units, particularly off-the-plan, still carry a high level of risk of significant price reductions. Areas with high unit oversupply carry a very high risk and this is still a major issue in some property markets. In addition, the reputational damage and impact of the recent construction defects of high rises increases the risk that demand for both new and existing high-rise properties will fall as their main buyers, investors, look elsewhere e.g. low-rise buildings or freestanding houses.”
STATE-BY-STATE
NSW:
Strong recovery, low interest rates and an improved job market are driving dwelling prices. However, bushfire-impacted areas carry higher risk depending on the strength of their property markets prior to the fires. The Sydney market has completely shifted from a buyers’ market to a sellers’ one. Consequently, at this stage it is likely that it will deliver double digit price increases and is likely to reach a new peak within the next six months. Housing affordability is, therefore, further deteriorating as wage growth is far lower than the expected price increases. Further, systematic undersupply of family-suitable properties is again the biggest (recurrent) issue in the Sydney property market, particularly in high-demand areas. In addition, housing finance has further improved in NSW, as expected, with increased demand from both owner-occupiers and investors. On the other hand, there is still a high level of supply of rental properties in many areas of Sydney with a noticeable impact on the demand for high-rise buildings due to the reputational damage associated with the high-profile construction defects.
Victoria:
While the labour market is deteriorating with a sharp increase in the unemployment rate in January 2020, population growth and strong sentiment continue to drive the property market. As with NSW, the property market in Melbourne is recovering well. Buyer confidence and auction clearance rates have increased significantly (77.1 per cent as at 29 February) and are well correlated with strong price increases making it a strong sellers' market. Consequently, Melbourne is one of the top two performing markets in Australia, well ahead of any others, and is likely to reach a new peak within the next six months. However, the flow-on effect is that housing affordability is highly likely to materially deteriorate given the low wage growth. This also means the undersupply of family-suitable properties will continue to be a major issue, relative to demand driven by population increases. This is exacerbated by Melbourne’s population growth which is the highest in the country at 2.1 per cent. Such population growth is a major driver for demand of dwellings. It should be noted that while investor activity is only 26.7 per cent, well below its peak, it is highly likely this will materially increase. Melbourne faces the same major imbalances, between undersupply of family-suitable properties and high level of supply of investment properties, as Sydney. The recent bushfires also had a major material impact on the demand for residential properties in Victoria's affected areas. The short-term impact on property prices will depend on the actual effect of the bushfires as well as the demand for residential property in the area before the bushfires. Repeatable events might also have a long-term effect on prices.
Queensland:
Southeast Queensland and regional areas present completely different pictures due to a two-speed economy. While buyer confidence has increased in Southeast Queensland, particularly Brisbane, regional areas carry a higher level of risk. The Queensland market greatly varies between its high and low-performing areas, and special attention should be given to the different job markets across the state, particularly since the unemployment rate has gone up from 5.7 per cent in December 2019 to 6.3 per cent in January 2020. Regional areas with a weak labour market carry a higher level of risk. The risk associated with the Queensland market should be monitored closely at the SA4 level, as deteriorating employment conditions are likely to have a significant negative impact on dwelling prices.
South Australia:
A soft labour market, with a reduction in actual employment, has meant slow growth for dwelling prices. Buyer confidence has increased, particularly in Adelaide, and this has seen an improvement in auction clearance rates and, consequently, it appears dwelling prices have reached the bottom. Popular areas continue to show evidence of recovery, particularly those with steady recent price growth rates. The labour market is a key factor in South Australia’s price growth projections and while it has improved in the past couple of years, it is still weak. The recent reduction (in January 2020) in the unemployment rate is attributed to fewer people seeking work in the state. Overall, the number of total jobs in the state has actually reduced. While serviceability measures have improved due to the RBA’s interest rate cuts, the soft labour market and the relatively high unemployment rate increases the risk of credit defaults. In addition, the demand for units among owner-occupiers in South Australia is, generally, low and some suburbs are subject to voluntary lending restrictions by the major lenders. The recent bushfires also had a major material impact on the demand for residential properties in some of South Australia's affected areas. The short-term impact on property prices will depend on the actual effect of the bushfires as well as the demand for residential property in the area before the bushfires. Repeatable events might also have a long-term effect on prices.
Western Australia:
A weak labour market and a sharp increase in the unemployment rate in January present a recurring problem for price growth. While buyer confidence has improved, particularly in Perth and housing finance has been showing signs of improvement, overall, economic activity remains well below the 10-year average and the effective unemployment is still significantly above the 10-year benchmark. Due to the weakness of the labour market, Western Australia’s annual population growth of 1 per cent is the third lowest nationally. As a result, the housing market, particularly units, has experienced continued weakness in recent years. The state government tax on overseas investors further decreases the demand for new units as investment properties. The relatively weak employment market also increases the risk of credit defaults. High-risk borrowers, combined with properties that suffer from low demand, require special attention in relation to credit provisioning.
Tasmania:
Affordability issues and a material increase in unemployment during January, with preferred alternative investments in Melbourne, have made the Apple Isle less resilient and the property market continues to experience decelerated price growth despite low supply of dwellings, low median prices, a tighter rental market and strong rental returns. A key reason for this is that the state remains less affordable than five of the states and territories (in price-to-income ratio) and the labour market is relatively weak. The attractiveness of the Melbourne market provides a preferred investment alternative in comparison to the relatively expensive properties in the popular areas of Hobart. Units carry a higher level of risk due to the relatively high number in the pipeline compared to population growth.
Northern Territory:
Continued weakness and poor population growth are having a sustained impact on dwelling prices. The poor economy continues to play a part in its subdued property market with 19.8 per cent price reductions for houses in the past five years and 35.4 per cent for units. Much of this negative capital growth in recent years is due to population issues. It was the only state/territory in Australia that experienced population loss in 2017-18. While dwelling supply in relation to population growth is low and dwellings are very affordable, the low demand for housing makes the Northern Territory a risky area especially given the low level of private investment that is significantly below the growth levels during the mining boom. Combined with a relatively large supply of units, the end of the mining boom signalled significant price reductions for units and, to a lesser extent, houses.
Australian Capital Territory:
An extremely strong job market, with only 3 per cent unemployment rate, has ensured demand for dwelling is solid. Houses in the ACT are solid performers, but new units present higher risk. The ACT market has benefited from recent developments in relation to the housing market and showed moderate price increases and a good medium to long-term outlook. The ACT has consistently delivered strong economic growth at 4 per cent which eclipses the rest of the country and provides a strong indication of its future. This is supported by healthy levels of both private capital expenditure and government expenditure.
DORON PELEG is the CEO of Riskwise
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Examining the risks and opportunities across the Australian property market: RiskWise's Doron Peleg

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EXPERT OBSERVER
The Brisbane market is showing meaningful improvement and appears ready for a long overdue boom. Every statistic that matters depicts uplift in the Brisbane market and prices are expected to rise in 2020.
Many commentators have forecast a Brisbane boom in recent years, though many were simply assuming that the Queensland capital would follow the lead of Melbourne and Sydney. Brisbane, however, has lacked the core growth drivers that boosted markets in the two biggest cities.
But, increasingly, growth parameters are lining up for Brisbane. Population data is favourable, the affordability comparison is helpful, surveyed investors say they are targeting Brisbane – and the major piece of the puzzle previously missing, infrastructure spending, is starting to happen.
I have commented in the past: “Brisbane is like a car where the engine is revving but it can’t move forward because the handbrake is on.” Perhaps the handbrake has been released - a growing number of analysts are tipping good price growth in Brisbane this year (including Domain, BIS Shrapnel and Westpac) and I tend to agree.
My Autumn 2020 survey of sales activity reveals 37 suburbs with rising buyer demand, the second best result for Brisbane in the past three years – and almost double the number six months earlier. There has also been a marked decline in the number of problem locations (those classified as declining or danger markets).
Vacancy rates continue to improve, though there are still areas of weakness, and 43% of Brisbane suburbs have delivered annual growth in their median house prices, including double-digit uplift in the strongest areas.
There is particular strength in the northern suburbs of Brisbane – the Brisbane North precinct and the Moreton Bay LGA jointly account for 21 of the 37 suburbs ranked as rising markets. The southside has many of the struggling markets and Brisbane’s inner-city, while improving, still has its problems.
The Brisbane North precinct and its neighbour Moreton Bay Region are the standouts, as they have been in our surveys in the past.
Brisbane North has 13 suburbs classified as rising markets, another 24 suburbs with steady sales activity and none ranked as declining or danger markets.
The uplift in sales activity is producing solid price growth in many of these suburbs, well above the average for the Brisbane metro area. Kedron has recorded annual rises in its median prices for both houses (up 6%) and apartments (up 11%), while Windsor is up 22% for houses and 6% for apartments.
Newmarket’s median house price is up 16%, Northgate has risen 14%, while Stafford, Nudgee and Geebung have all increased between 6% and 8%.
The Moreton Bay Region LGA has regularly been the best-performing Brisbane market, boosted by affordability, good infrastructure and proximity to employment nodes. It’s been overtaken by Brisbane North in the latest survey, but remains a significant market.
The February 2020 opening of a new university campus will boost demand in nearby suburbs like Petrie and Lawnton (Petrie is already rated a rising market and is likely to get stronger as the campus effect clicks in).
Other precincts have some growth markets: Brisbane-east, Brisbane-south and Brisbane-inner each has four suburbs with rising sales activity. Currently these are out-numbered by plateau markets, but I expect that to change as the year rolls on.
The Brisbane-inner precinct is a confusion of suburbs with contrasting rankings: the 22 ranked suburbs in my Autumn 2020 survey include 4 rising, 7 plateau, 1 consistency, 7 declining and 3 danger. The danger markets (Albion, Fortitude Valley and Kelvin Grove) are those where sales activity has dropped markedly, prices are down and vacancy rates remain high. This, however, is an improvement – 18 months ago the Brisbane-inner precinct had 12 suburbs classified as danger markets.
It’s noteworthy that many of the Brisbane locations with solid median price growth in the past year are situated towards the upper end of the market. They include Hamilton ($1,560,000, up 11%), Balmoral ($1,050,000, up 7%), Indooroopilly ($950,000, up 12%), Newmarket ($950,000, up 16%), Rochedale ($1,035,000, up 7%), Sherwood ($935,000, up 7%), Toowong ($890,000, up 10%) and Windsor ($940,000, up 22%).
Inner-city Highgate Hill stands out with good median price both for houses (up 8%) and apartments (up 10%).
Usually, up-cycles in capital city property markets begin at the top end and ripple out from there.
TERRY RYDER is the founder of hotspotting.com.au ryder@hotspotting.com.au twitter.com/hotspotting
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terryryder-YECXbqmri2

Brisbane property market looks set for long overdue boom: Hotspotting's Terry Ryder

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EXPERT OBSERVER
The Australian property market – particularly Melbourne and Sydney – has gone from boom and FOMO in 2017 to slump and FONGO into mid last year only to rebound again with a degree of FOMO returning! (FOMO = fear of missing out, FONGO = fear of not getting out.)
The boost from the election result, RBA rate cuts, the relaxation of the 7% mortgage rate serviceability test along with a greater willingness to lend by banks are continuing to drive home prices higher as demand that was pent up over the period of falling prices between September 2017 and June last year has been unleashed.
 The strength in demand continues to be evident in strong auction clearance rates in Sydney and Melbourne.
While this initially came on very low volumes, listings have now picked up following the normal pattern that sees clearances lead volumes. As a result sales at auctions are now running around double depressed year ago levels.
The high level of auction clearance rates points to a continuing strength in home prices in Sydney and Melbourne in the months ahead and this is likely to be aided by further interest rate cuts and strong population growth.
 However, the pace of growth is likely to slow with home price gains more constrained than what we saw through the 2012-17 property price boom because: 
Household debt to income ratios are very high, bank lending standards are much tighter than in the last boom, APRA may move to tighten lending standards again if housing credit growth accelerates; there are still more units to hit the Sydney and Melbourne property markets and unemployment is likely to drift up as overall economic growth remains weak. 
For 2020 as a whole average capital city property prices are expected to rise by around 10%, with continuing strong gains in the first quarter giving way to a more constrained pace from around April-June.
We also anticipate a broadening out of the property price gains beyond Sydney and Melbourne as Brisbane and Adelaide our relatively cheap and Perth looks to have bottomed and will be helped by a recovery in mining projects.
However, a big and rising risk to the property market outlook is now posed by the global coronavirus outbreak. 
At this stage apart from the possible absence of some Chinese buyers I doubt coronavirus is having much impact on the property market.
 However, if the situation badly worsens globally and the virus takes hold in Australia then it could become a big short term negative as the economy slows even further potentially into recession, the loss of share market wealth drags on property demand and if people put off buying property along with other activities for fear of catching the virus.
 More RBA rate cuts could partially help in the other direction and help boost buying once the virus fear comes under control though, but in the interim it could drive renewed falls in property prices. 
This is not our base case but given all the unknowns around Covid-19 it is worth monitoring as the risk is rising.
SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital 
<a name="_Hlk7176352" style="margin: 0px; padding: 0px; border: 0px; font: inherit; vertical-align: baseline;" href=""></a>The Australian property market – particularly Melbourne and Sydney – has gone from boom and FOMO in 2017 to slump and FONGO into mid last year only to rebound again with a degree of FOMO returning! (FOMO = fear of missing out, FONGO = fear of not getting out.)
The boost from the election result, RBA rate cuts, the relaxation of the 7% mortgage rate serviceability test along with a greater willingness to lend by banks are continuing to drive home prices higher as demand that was pent up over the period of falling prices between September 2017 and June last year has been unleashed. The strength in demand continues to be evident in strong auction clearance rates in Sydney and Melbourne. See the next two charts.
 
<table style="font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 15px; line-height: inherit; font-family: 'Segoe UI', 'Segoe UI Web (West European)', 'Segoe UI', -apple-system, BlinkMacSystemFont, Roboto, 'Helvetica Neue', sans-serif; color: #323130; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0"><tbody><tr>
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<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 364.79pt; height: 221.4pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAKCx7jCjebxJntP04tMxgUM%3D" data-outlook-trace="F:1|T:1">
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<td style="width: 233.75pt; padding: 0px 5.4pt; border-width: 1pt; border-style: solid solid solid none; border-color: windowtext;" valign="top">
<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 365.4pt; height: 221.99pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAJqCdDsOBpVDkmUCWbIwRTY%3D" data-outlook-trace="F:1|T:1">
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</tr></tbody></table>
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;">Source: Domain, CoreLogic, AMP Capital
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;"> 
While this initially came on very low volumes, listings have now picked up following the normal pattern that sees clearances lead volumes. As a result sales at auctions are now running around double depressed year ago levels.
<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 353.99pt; height: 215.39pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAL7iZEfT4%2FpKhNddj9J8F%2BI%3D" data-outlook-trace="F:1|T:1">
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;">Source: Domain, AMP Capital
The high level of auction clearance rates points to a continuing strength in home prices in Sydney and Melbourne in the months ahead and this is likely to be aided by further interest rate cuts and strong population growth. However, the pace of growth is likely to slow with home price gains more constrained than what we saw through the 2012-17 property price boom because: household debt to income ratios are very high, bank lending standards are much tighter than in the last boom, APRA may move to tighten lending standards again if housing credit growth accelerates; there are still more units to hit the Sydney and Melbourne property markets and unemployment is likely to drift up as overall economic growth remains weak. For 2020 as a whole average capital city property prices are expected to rise by around 10%, with continuing strong gains in the first quarter giving way to a more constrained pace from around April-June.
We also anticipate a broadening out of the property price gains beyond Sydney and Melbourne as Brisbane and Adelaide our relatively cheap and Perth looks to have bottomed and will be helped by a recovery in mining projects.
However, a big and rising risk to the property market outlook is now posed by the global coronavirus outbreak. At this stage apart from the possible absence of some Chinese buyers I doubt coronavirus is having much impact on the property market. However, if the situation badly worsens globally and the virus takes hold in Australia then it could become a big short term negative as the economy slows even further potentially into recession, the loss of share market wealth drags on property demand and if people put off buying property along with other activities for fear of catching the virus. More RBA rate cuts could partially help in the other direction and help boost buying once the virus fear comes under control though, but in the interim it could drive renewed falls in property prices. This is not our base case but given all the unknowns around Covid-19 it is worth monitoring as the risk is rising.
Please feel free to call if you wish to discuss.
 
Regards
Shane
 
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #0070c0;">Shane Oliver<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #0070c0;"> <span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #212d69;">| Head of Investment Strategy and Chief Economist | AMP Capital 
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Capital city home prices up however Coronavirus risk is low but growing: Shane Oliver

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A warehouse – marketed as being suitable for owner-occupation, investment or development – has come onto the market in the Melbourne suburb of Cremorne. 
Located at 132-134 Dover Street, the 501 square metre site has a 23 meter street frontage.
It comprises a 473 square metre single level warehouse building, with an office component and roller shutter door access.
Zoned Commercial 2 under the City of Yarra Planning Scheme, the property is approximately two kilometres from the Melbourne CBD.
Matthew Feld and Michael Taylor, from Teska Carson, listed the property.
It will be sold by expressions of interest, closing March 19.
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Cremorne warehouse suitable for private living hits market 

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The Melbourne headquarters of US-based home products company Tupperware have hit the market, after nearly 60 years of company ownership.
Located at 19-21 Brenock Park Drive, the property comprises 23,500 square metres of corporate office and warehouse space.
It was purpose-built for Tupperware as a manufacturing facility in 1961.
The 59,300 square metre corner site, zoned Industrial 1 and Special Use, has more than 520 metres of street frontage.
Located in the foothills of the Dandenong Ranges, the site is 29 kilometres east of the Melbourne CBD.
According to Dawkins Occhiuto Director, Chris Jones, who is marketing the property with Andrew Dawkins and Walter Occhiuto, the property represents one of the last remaining large-scale industrial redevelopment opportunities in the local region.
“The property provides an exceptional work-life setting, and, having functioned as a corporate headquarters for decades, it is perfectly suited for continued corporate occupation", Jones said.
"It also offers exceptional potential as an immediate redevelopment prospect.
"The possibilities are almost endless including full or partial owner-occupation, passive investment, subdivision of existing improvements, or business park development."
The expressions of interest campaign closes March 19.
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Tupperware company's Melbourne headquarters listed for sale 

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The former home of the Port Melbourne Building Society, built in 1887, is set to go to auction in early March.
Constructed in the Victorian Free Classical style, the vacant 508 square metre two-level building is on a triple-fronted site of 254 square metres, with a 10-metre frontage to busy Bay Street.
The Port Melbourne Building Society originated in 1884, and a provisional committee of more than 100 members was formed.
The Society’s success in Port Melbourne, South Melbourne and the surrounding suburbs prompted expansion within 18 months, and Allotment 20 of Section 20 was purchased due to its central location.
The building was converted to a maisonette by a Dr. Potter in 1942. It has been home to Meeco (Australian Medical &amp; Scientific Systems Ltd), and, earlier this century, travel agents Port Travel.
It will go to auction March 4, with interest is expected in the early to mid-$3 million range.
James Lockwood and David Bourke, from Fitzroys, listed the property.
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