Apartment buyers in New South Wales are set to gain a decade of insurance-backed protection against major building defects, after the NSW Parliament passed the Fair Trading and Building Legislation Amendment Bill 2026.&nbsp;

The Bill establishes decennial defect insurance, known in the market as Latent Defects Insurance (LDI), as an alternative to the existing two-year strata building bond. It cleared the Legislative Council with amendments on Tuesday evening (August 4, 2026), with the Legislative Assembly agreeing to those amendments shortly after.

Under the reform, eligible developers can satisfy their statutory bond obligation by taking out an approved decennial-style policy that gives owners 10 years of cover for major structural defects from completion, claimable directly, without first having to pursue developers or builders through costly legal action.&nbsp;

The change forms the final tranche of amendments arising from the 2021 statutory review of the Strata Schemes Management Act 2015 and related legislation.

Resilience Insurance, which originated the cover in Australia and has delivered it in NSW since 2022, welcomed the passage and credited the NSW Government for delivering it.

“This is protection apartment buyers have needed for a long time, and the credit for delivering it belongs to the NSW Government,”&nbsp;said Corey Nugent, CEO of Resilience Insurance.

“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into. Reform like this is what good, evidence-based regulation looks like.”

Resilience has delivered LDI in NSW since 2022, protecting thousands of apartments, giving the State, and now the country, real-world evidence of how decade-long, no-fault protection works in practice.

The reform also places NSW within a wider national shift.

NSW is the third jurisdiction to put decennial cover into law. The ACT legislated for it in 2024, with the scheme taking effect in late 2025, and Victoria passed its own framework on 17 June. Between them, the three cover the majority of Australia's apartment market.

The reform commences once the legislation is proclaimed, which is expected in the coming weeks. From that point, developers of Class 2 residential apartment buildings can meet their statutory obligation with an approved decennial policy in place of the bond.

Buyers who purchased into projects that took out the cover early are among the first in the country to take keys to apartments carrying decade-long structural protection.

“With the legislation passed, the focus now turns to making it work for buyers,”&nbsp;Nugent said.

“There are already thousands of apartments in NSW covered by this insurance, bought by developers who moved early. The question every buyer should be asking in a display suite is a simple one: does this building come with 10-year defect cover, and who stands behind it?&nbsp;

“We look forward to working with the Government and the Building Commission in coming weeks as the framework moves to implementation, and to sharing what we have learned over the past four years so the protection reaches owners as smoothly and quickly as possible.”

Other states are working through their own reform programs. Western Australia has indicated that decennial cover is within consideration a later stage of its reform sequence, and Queensland has been examining the settings as it looks at the development pipeline ahead of the 2032 Olympics.

Resilience Insurance acknowledges the NSW Government’s continued focus on strengthening consumer protection while supporting housing delivery across the State.

Fast Facts: What the reform means

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Proven at scale:&nbsp;Decennial cover has operated in NSW since 2022, protecting thousand of apartments.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">10 years of cover:&nbsp;Protection for major structural defects runs for a decade from completion, claimable directly and with no legal action required.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">An alternative to the bond:&nbsp;Eligible developers can meet their statutory obligation with an approved decennial-style policy in place of the 2% strata building bond.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Part of a national shift:&nbsp;The ACT has had decennial provisions in force since 2025 and Victoria passed its framework in June. NSW now joins them.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">No-fault, first resort:&nbsp;Owners corporations claim directly from the insurer without first having to establish who is liable for the defect.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost-competitive:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the 2% bond while offering broader, longer protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market position:&nbsp;Resilience originated LDI in Australia and has delivered it in NSW since 2022.</li>
</ul>

Fast Facts: What is Resilience LDI?

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Resilience Latent Defects Insurance (LDI):&nbsp;Covers major structural defects for 10 years from completion.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Consumer-first:&nbsp;Direct claim access, no need for lengthy legal action.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost advantage:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market leader:&nbsp;&nbsp;Resilience Insurance originated LDI in Australia and is the national market leader.</li>
</ul>

Joel Robinson

NSW parliament passes 10-year defect insurance laws for new apartment buyers

Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

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]

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

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

<html><body>
EXPERT OBSERVER
It's a challenging times for policymakers.
I don't know of a single obsever who believes that the unemployment rate is going to fall to below 5 per cent this year, let alone towards full employment, however low that might prove to be.
There was another soft result from SEEK's job ads series, down by 7 per cent over the year to January, and the labour force update for January was also distinctly underwhelming.
Employment increased by +13,500, as the annual growth in employment to decelerated further to +1.94 per cent.
<img src="https://1.bp.blogspot.com/-Z-pr9FnAlWM/Xk5YTURc8RI/AAAAAAAA0WE/ZbHyF76etN4mz4xvZnYBnk1g8cdbUJ3MACNcBGAsYHQ/s640/A2.jpg" width="640" height="354" data-original-height="802" data-original-width="1446">
Part-time employment growth (+2.8 per cent) has continued to outstrip the growth in full-time positions (+1.7 per cent).
Employment growth remained solid in Victoria, to be up +91,000 over the year, with Queensland next up at +67,000, but New South Wales (+43,000) has clearly come off the boil, and there's all but nothing meaningful to speak of elsewhere.
<img src="https://1.bp.blogspot.com/-kygDR0HIlSI/Xk5YUQYmqXI/AAAAAAAA0WM/nz14Z7lF1pMhBY4Fma_lhsaYOfklLGFaACNcBGAsYHQ/s640/A4.jpg" width="640" height="382" data-original-height="815" data-original-width="1361">
With the participation rate ticking back up a notch, the unemployment rate jumped from 5.09 per cent back up to 5.28 per cent in January, which was disappointing, if unsurprising. \
<img src="https://1.bp.blogspot.com/-NkUsoIMfAIQ/Xk5YTNm-O9I/AAAAAAAA0WA/Zu5CMyJdwJobSntPPkRgM23mRXrz3OArACNcBGAsYHQ/s640/A1.jpg" width="640" height="378" data-original-height="826" data-original-width="1396">
The disruption to the economy in January saw the unemployment rate in Victoria saw spike quickly to 5.4 per cent in seasonally adjusted terms, suggesting that far too much slack remains.
The smoother trend figures plotted below show only New South Wales (4½ per cent) as remotely sitting in the right postcode. 
<img src="https://1.bp.blogspot.com/-wZogq354els/Xk5YTQBPNTI/AAAAAAAA0WI/ZG9AIxfIEmQVF4jjjIFIBE17u6KVJSIXgCNcBGAsYHQ/s640/A3.jpg" width="640" height="380" data-original-height="823" data-original-width="1382">
Finally, the trend result for monthly hours worked was just +1.3 per cent higher year-on-year, which is also a lacklustre read and well below the rate of employment growth.
<img src="https://1.bp.blogspot.com/-zrshZf9Zwv4/Xk5YUePWn4I/AAAAAAAA0WQ/aLBqw0rk3gIKEf3QeyEFahyorw5Co8y0QCNcBGAsYHQ/s640/A5.jpg" width="640" height="374" data-original-height="814" data-original-width="1388">
Overall, it wasn't a terrible report, but the widely predicted increase in spare capacity does appear to be playing out, with more of the same likely to be in the post as the Chinese travel ban persists throughout February and beyond. 
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
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Employment growth remains a challenge for policy makers: Pete Wargent

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A warehouse and showroom property on the Nepean Highway, at Bentleigh in Melbourne’s south-east, has hit the market. 
It comprises a single level, solid brick, 435 square metre facility, with roller door access. 
Zoned Commercial 2, the site has a frontage of just under 11 metres, and a 46 space car park including eight spaces designated for the tenancy.
The property will be sold subject to a short term lease to Carpet Call currently returning $124,140 per annum net. 
Teska Carson’s Luke Bisset and Michael Ludski listed the asset.
"The Nepean Highway is one of Melbourne’s major arterial routes and has in recent years seen a significant rise in residential and commercial development and that is, in no uncertain terms, due to the accessibility it provides as a key transport link to the affluent bayside suburbs,’’ Mr Bisset said. 
Mr Ludski said the open plan layout provided operational flexibility to cater to a number of different uses.
The property will be auctioned March 5.  
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Carpet Call Bentleigh showroom comes onto market

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The South Sydney industrial property market is undergoing an internal makeover, as warehouses are being converted throughout the Alexandria region to higher end functional buildings.
According to Edward Washer, Director, Head of South Sydney, Industrial and Logistics at Savills Australia, given its prime location to the CBD, airport, Eastern Suburbs and Inner west, South Sydney’s typical industrial buildings/sites are being adaptively converted into commercial, retail and residential.
Mr Washer said, “recent examples include 29-31 O’Riordan Street, Alexandria – an industrial building which has undergone a full refurbishment into a retail/commercial precinct and is home to Meat Emporium, Liquor Emporium, and more uniquely, Notaras Seafood restaurant."
“It’s not often a restaurant is built inside a warehouse, but if you look at what The Grounds of Alexandria did to their fit out space, it’s no surprise this is the way of the future for city fringe industrial warehouses, he added"
Another example includes 37-41 O’Riordan Street, Alexandria (City Close) – a traditional modern industrial estate going through adaptive refurb for commercial style tenants due to the demand, with the head offices of Koala Mattresses signing a 5 year lease and Dimeo Cleaning signing a 1 year.
Hayesbury, at 5 Hayes Road, Rosebery, is a traditional older style industrial site that Goodman are refurbishing into a high-end commercial space. Under construction at the moment however no tenants yet to commit.
The first property in 2020 to hit the market for sale is 1 Gillespie Avenue, Alexandria, a circa 20 year old industrial warehouse with a portion refurbished to a creative office, done so by the current tenant and fit out company, Intermain.
According to exclusive sales agents, Edward Washer and Sam Wallace of Savills Australia, the freestanding warehouse is a rarity in this market and is likely to be snapped up by either high net worth privates, property funds or institutions.
Edward Washer, Director, Head of South Sydney, Industrial and Logistics at Savills Australia said, “this is an extremely unique, flagship property and is on trend with what we have seen over recent years; warehouse conversions to office, retail, showroom or higher and better uses/occupiers."
“The strong tenant covenant adds further depth to the property’s appeal, given the reputation of Intermain and quality of the fit out” he said.
The holding, 1 Gillespie Avenue, Alexandria, is for sale via expressions of interest closing April 1 2019.
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South Sydney warehouse conversions perform strongly: Savills

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EXPERT OBSERVER
I think there were 2 pronounced developments during Q4 2019i, the first being there was a broad acceptance that an improvement in the market is here to stay in terms of price growth.
In terms of economic indicators, we’ve seen an improvement in the labour market over the past month or 2 which is a real positive compared to mid2019 when unemployment was trending higher.
The challenge is will there be enough job creation over the next few months given the headwinds around the bushfires and Coronavirus.
ANZ Research is anticipating the economy will not create enough additional jobs to drive unemployment lower and wages higher, which is expected to result in 2 more interest rate cuts towards the middle of the year.
The RBA has emphasised its belief that rate cuts are having the desired impact, but that it does take time.
The implications for the economy and property markets will continue to be felt through 2020.
In terms of property indicators, we’ve seen some tentatively positive numbers coming through in building approvals. This is important given they were at very low levels throughout 2019 for both apartments and detached houses.
Of course apartments were hit harder which reflected concerns over build quality and cladding issues which were more prominent in Sydney but still had an impact in Melbourne.
That said, it’s worth highlighting the large lead and lag times before getting product onto the market. Even if building approvals start to pick up today, there will still be a housing shortage in the short term.
What are your predictions for 2020?
Broadly it will be a good year from a housing standpoint. Anticipated rate cuts will further entrench growth in prices for existing and new dwellings across both detached housing and apartments. Prices are already above the previous peak for units and apartments in Melbourne.
We’ll continue to see a pretty solid presence of first home buyers in the market. But it gets complicated because price growth doesn’t help affordability which is already challenging. While the new home loan deposit scheme will help 10,000 first home buyers a year, it won’t affect a material change.
The demand and supply dynamic will put upward pressure on prices initially, but building approvals and construction should start to accelerate in the second half of the year. That’s the key challenge; supply can take 12-18 months to come through, and the delay could put further pressure on both housing prices and rents.
Vacancy rates are already low and if we’re not building enough for the remainder of the year it’s likely the vacancy rate will continue to fall and result in continued rent increases.
Auction results have been strong and there are greater levels of stock on the market and rising transactions.
It’s not just a short term sugar hit which people might have been expecting, and the realisation that a stronger market is here to stay is why we’re seeing more people in the market keen to purchase.
Secondly, the supply-demand imbalance continues. Over the final quarter last year we finally started to see some positive signs regarding the construction pipeline, which has been a long time coming. We’re not talking about a sharp rebound, rather some green shoots emerging by way of building approvals starting to stabilise rather than continuing to fall.
Building approvals fell more than 25% from the peak, and have now recovered just 3%. Housing finance also picked up for construction of new dwellings for both owner occupiers and investors, which is usually a good indicator of where building approvals will go. So we have reason to be more optimistic about the construction cycle than we were 3 months ago.
What are the key economic and property indicators telling us?
It’s a little mixed.
On the economic front, the recent bushfires and Coronavirus present some challenges. For people directly by the bushfires it’s catastrophic, but the impact on the broader economy is likely to be temporary.
There will be some rebuilding stimulus which the federal government has already announced that will go directly to these communities. Coronavirus will have a larger impact.
A recent ANZ Research note forecast the bushfires to take 0.2% off GDP, while Coronavirus will shave off 0.5% due to the impact on tourism and foreign students. And, unlike the bushfires, there won’t be any stimulus measures.
If you compare it to the SARS outbreak in 2002-2003 when Chinese tourist arrivals fell by more than 80%, the share of Chinese tourism is now 5-times larger.
But it’s not just about the number of visitors; they also spend the most per person, which significantly magnifies the impact.
DANIEL GRADWELL is the <a href="https://bluenotes.anz.com/authors/a-e/Daniel-Gradwell" target="_blank">Associate Director of Property at ANZ</a>
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Property market strong but supply demand imbalance continues: ANZ's Daniel Gradwell 

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The Brisbane heritage-listed Princess Theatre in Woolloongabba is up for sale through Knight Frank. 
Built in 1888, the <a href="https://www.propertyobserver.com.au/https://www.knightfrank.co.uk/properties/commercial/for-sale/8-annerley-road-woolloongabba-qld-4102/5301470" target="_blank">Annerley Road property</a>, which was originally built for prominent Brisbane solicitor Phillip Hardgrave, consists of a large two-storey theatre and three retail tenancies on a 1103 sqm block.
The <a href="https://www.brisbanetimes.com.au/national/queensland/heritage-listed-brisbane-theatre-up-for-sale-20200224-p543md" target="_blank">132-year-old property</a> has been owned by Lifecity Church for the past 13 years, and has hosted other events, including wedding ceremonies, live music, school productions, private and corporate functions, theatre productions, trivia nights and fundraisers. The Princess Theatre has also recently been extensively refurbished, it has undergone recarpeting, repainting, floor polishing, and a new lighting and sound system. 
With Lifecity Church relocating to a more suitable location, the property is being taken to the market by Adam Willmore and Christian Sandstrom of Knight Frank. The expressions of interest campaign for this property closes March 19, 2020. 
The 500-person theatre was last sold in 2003 for $950,000, and $451,000 in 1992.
Mr Willmore said the Princess Theatre, which has 20 metres of street frontage to the busy street, "will generate significant buyer interest due to the scarcity factor and its stellar location, situated in the heart of Woolloongabba close to the Mater Hospital and less than two kilometres from the CBD.
"Woolloongabba is benefiting from investments in both public and private sector. The recent urban renewal and new development occurring within the suburb is redefining the suburb as a key southern 'gateway' into the city.
"The property adjoins retail amenity with plenty of parking and is occupied by two retail tenancies on the ground floor including a barber and café, along with a small office space." 
The theatre was first named the South Brisbane Public Hall and was designed to provide the rapidly expanding surrounding population with a communal venue that would become the perfect location for theatre, lectures, balls, musical performances and other public gatherings.
Over the years, the site has experiences a number of different incarnations, including being used as a clothing factory, a movie house, and the main site which hosted the rehearsals and administration for the US Entertainment Unit during World War II.
Lifecity Church director and venue manager, Frances Koops said she hoped the theatre would be purchased by someone who would make it available for enjoyment of the community for many years to come.
"The theatre is such a valuable piece of history, with so many drawn in by its old world charm and beauty," she said. 
 
 
 
 
 
 
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Brisbane's heritage-listed Princess Theatre up for sale

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EXPERT OBSERVER
Here’s a one-step guide for identifying a charlatan in the real estate commentary space. Those who claim markets are rising because we have record low interest rates have just identified themselves as pretenders.
With that simple process, we’ve eliminated all the chattering economists in the land and a large chunk of the electronic media glitterati who don’t allow a lack of knowledge get in the way of strong opinions.
They’re the same people who talk about Australian real estate as a single market – e.g. “Australian property prices will rise 5% this year”. This is a red flashing light that the talking head is an idiot. Even discussing one city as a single market is foolhardy (refer last week’s column about Sydney, which highlighted the different scenarios currently in play).
Here’s what passes for analysis with most of these counterfeit commentators: if Event A coincided with Event B, then Event A must have caused Event B – obviously. It’s the first and last refuge of people who know little about real estate dynamics and want to pretend they have something to say.
The problem is that Events A and B also coincided with Events C, D, E, F and G.
The thing about interest rates is that they’ve been at record lows for years. The only recent change is that they’ve gone even lower. They were super low when Sydney and Melbourne were having their big boom, so naturally that must have been the cause, according to those who subscribe to the Event A/Event B theory.
But those super low interest rates failed to cause booms in Brisbane, Adelaide or Canberra, nor in Perth or Darwin which both were going backwards steadily while the Big 2 were surging. Most of regional Australia also failed to boom, although Hobart and regional Tasmania eventually got on board with what I regard as a mini-boom.
So clearly some other forces must have been in play. That’s where Events C, D, E, F and G become relevant. More on that later.
The other thing about the interest rates theory is that it contradicts the lessons of the past. Those who think that “low interest rates = real estate boom” and “rising interest rates = real estate bust” haven’t been students of history.
Genuine nationwide property booms are extremely rare in Australia. ABS data on annual house price growth in Australia’s biggest cities show that, since 1970, there have been only four years in which all the major markets boomed at the same time. Only four years out of the last 50 – two years late in the 1980s and two years in the early part of this century.
During the other 46 years different scenarios have been playing out in different locations, all dictated by local conditions, oblivious to the level of interest rates and other big picture items.
During those two periods when we had national property booms, the late 1980s and the early 2000s, we had high interest rates – much higher than they are today. They kept going higher and the booms kept rolling on. Mortgage rates got as high as 17% before the profligate Eighties finally collapsed.
And it all makes perfect sense. The economy was raging, consumers were confident and spending big, and rates were rising to try to dampen things down. That’s when people are most likely to splurge on real estate.
Interest rates are low now because the national economy is generally rather beige and consumers aren’t that bullish. The exceptions have been Sydney and Melbourne, where the local economies have outperformed the national scenario, boosted by strong population growth and big infrastructure spending.
In trying to understand why markets do what they do, you have to consider both the macro and the micro factors, but paying particular attention to the micro ones.
Here are the macro factors that rolled out one by one to change the general situation from negative 12 months ago to positive now:
1. The Federal Election was decided.
2. The week following the Election, APRA announced relaxations of its lending guidelines.
3. The re-elected Federal Government announced tax cuts.
4. The RBA brought on a series of reductions to the official interest rates.
5. Mainstream media stopped obsessing on negatives and became significantly more upbeat.
6. Consumer sentiment towards real estate started to rise.
7. Buyers started to become active, but supply remained low.
8. Auction clearance rates started to improve.
9. Prices started to react in the big cities.
10. Forecasters published upbeat predictions for 2020 outcomes.
11. The ABS published loans data that showed improvement.
12. Consumer sentiment towards real estate improved further.
13. The federal scheme to boost FHBs clicked in.
14. Etc etc etc.
That’s the big picture. The national climate underpinning real estate improved, with interest rate cuts just one small factor- and overall not that consequential. Labor losing the un-losable Federal Election was probably the biggest one.
But the reality is that the things that matter the most happen at a micro level. Real estate markets are highly individual and arise out of local economies. That explains why Perth and Darwin have been going backwards while Sydney and Melbourne have been booming (and then busting and then recovering), amid stagnation in Brisbane, Canberra, Adelaide and elsewhere.
Local economic events are paramount. Look at Regional Victoria. While Melbourne was descending in 2018 and the first half of 2019, many regional centres in Victoria were experiencing double-digit annual growth in their house prices. Geelong, Ballarat, Bendigo, Warragul, Pakenham, Echuca, Mildura, Benalla and many others experienced strong markets with prices rising.
Regional Victoria is one of the national leaders on important factors like economic performance, population growth, low unemployment and infrastructure spending. Each individual regional centre has its own local dynamics, which provide reasons why local markets will rise or fall.
All of this is good news for property investors, because it means that there are always growth markets to be found, somewhere in Australia.
When people ask “Is this a good time to buy real estate?”, they’re asking the wrong question. A much smarter question would be “Where is it a good time to buy real estate?”
Because in this large and diverse nation, it’s always a good time to buy – somewhere.
Terry Ryder is the founder of hotspotting.com.au ryder@hotspotting.com.au twitter.com/hotspotting
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Housing markets aren't just rising because of record low interest rates:  Hotspotting's Terry Ryder

Insights into RBA thinking February 2020: RBA Minutes

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EXPERT OBSERVER
Six months ago it was hard to find any suburbs across the Greater Sydney Area with rising buyer demand, but now there are many. It’s been a sharp turnaround – but an uneven one.
Overall, this is the strongest Sydney market I’ve recorded in the five years that I’ve been conducting quarterly surveys of sales activity and price trends. 
Our Winter 2019 survey pinpointed the bottom of the Sydney trough and our latest survey, now under way, provides strong evidence of the market revival, showing just how much has changed since the middle of last year. 
Locations with rising markets, as measured by sales activity, can be found in 22 municipalities across the Sydney metro area, but the revival is not evenly distributed. The greatest uplift is being felt at the upper end of the market and many suburbs have not yet experienced significant improvement.
The number of suburbs classified as declining markets has dropped a lot but there are still 12 suburbs with deteriorating demand – and another 12 that have that characteristic as well as high vacancies and weak prices, which we therefore classify as danger markets.
There danger markets are all locations where apartments predominate. Seven of them are in the Parramatta LGA, where high levels of new apartments have been built in recent years and vacancies remain in the 5% to 8% range in several cases.
The leading market in the Greater Sydney Area is the Northern Beaches LGA. It has nine suburbs with rising sales activity, plus six others with steady buyer demand. 
Quarterly sales in Newport have been 28-36-53-64, while Freshwater and Frenchs Forest are stand-outs for maintaining highly consistently sales levels throughout the post-boom correction phase and now in the recovery.
The Inner West LGA is also performing well, with six growth suburbs and nine others with consistent buyer demand. Quarterly sales in Annandale have been 17-32-36-45-64, while Leichardt has been 59-68-77-105, patterns that will likely drive prices higher.
The Sydney City LGA has growth suburbs, but also shows the importance of not generalizing when discussing real estate in a major city. The central city LGA has five suburbs with growing sales activity, 11 with steady markets, three where demand continues to decline and one suburb which we classify as a danger market. All that diversity exists in one municipality. 
Blacktown is the strongest of the outer-ring markets, with five growth suburbs and 11 with steady sales activity. Schofields continues to stand out with rising sales activity – quarterly sales over the past two years have been 64-82-99-105-120-150-196-162.
Other LGAs with three or four growth suburbs include the Hills Shire, Ku-ring-gai, North Sydney and Sutherland municipalities.
This new survey also shows the recovery in the Canterbury-Bankstown area. Six months ago, 12 suburbs in this LGA were rated as declining markets, with sales levels dropping markedly. But now most of these suburbs have been re-classified as plateau markets, as sales levels start to improve. And four suburbs of the Canterbury-Bankstown LGA have shown sufficient revival to be classified as rising markets.
Across Greater Sydney, prices are reacting to the uplift in demand that is generally occurring in many locations, but most suburbs still have median prices below the levels of 12 months ago. This applies to 92% of suburbs for houses and 85% of suburbs for apartments.
But many suburbs have shown increases in the latest quarter. Examples include Mona Vale (median house price down 8% annually but up 2.3% in the latest quarter); Collaroy (down 15% in annual terms but up 9.5% quarter-to-quarter); Bronte (down 9% year-on-year but up 2.6% in the latest quarter); and Killara (down 15% annually but up 3% quarter-to-quarter). 
This is a pattern I expect to see becoming increasingly prevalent as the uplift being led by the more expensive areas spreads more widely across the metro area.
Terry Ryder is the founder of hotspotting.com.au <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">ryder@hotspotting.com.au </a>twitter.com/hotspotting
PICTURE SOURCE: <a class="external text" href="https://www.flickr.com/photos/34120957@N04" target="_blank" rel="nofollow">Alex Proimos</a>
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Northern Beaches rising buyer demand drives Greater Sydney to strongest Sydney market: Hotspotting's Terry Ryder

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Residential land sales have increased by 45.9 per cent from their record low in the March 2019 quarter, according to the February 2020 edition of the HIA-CoreLogic Residential Land Report.
HIA Economist, Angela Lillicrap said, "the first half of 2019 was particularly rough for the residential building industry, with falling house prices, uncertainty surrounding the election and the credit squeeze all weighing on confidence."
“Leading indicators in the final months of 2019 show that the housing market has improved and the increased demand for residential land is further proof of this."
“A shortage of land is one of the factors that has driven home prices to increase over the past decade. With demand for land picking up, it is important that an adequate supply is maintained each year to avoid undue pressure on housing affordability,” concluded Ms Lillicrap.
According to Eliza Owen, CoreLogic’s Head of Residential Research, “Demand for land and dwellings has rebounded strongly from June last year, which is also reflected in a 6.7% rebound in national dwelling values over the past 7 months."
"The strength of the rebound comes from a halved cash rate between June and October last year, the re-election of the Coalition Government providing certainty around negative gearing and capital gains concessions, and ongoing demand for owner-occupier dwellings as the millennial cohort moves through the first home buyer age bracket of 25-34."
"Prices for land and housing are likely to rise further over 2020, though this may be slightly mitigated by higher listing levels coming to market, as sellers take advantage of price increases,” she concluded.
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Demand for residential land is on the rise: HIA

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EXPERT OBSERVER
Coronavirus continued to make headlines this week; but for the economy, sentiment was the focus.
While Australian consumer sentiment firmed in February according to our <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/February/er20200212BullConsumerSentiment.pdf" target="_blank">Westpac–MI survey</a>, at 95.5 the index remains well below its long-run average, suggesting consumers remain pessimistic. This downbeat mood has been in place since mid-2019 and has coincided with a pronounced deterioration in consumer spending momentum.
Economic conditions ‘next 12 months’ and ‘next 5 years’ both bounced back in February but remain below the level of November 2019 and are only in line with their respective long-run averages. This is despite continued strength in employment growth as well as the considerable policy easing undertaken by both the RBA and Federal Government in 2019.
Given this policy context, more concerning still is that ‘family finances versus a year ago’ fell again in February to be back near its recent low and well below average. ‘Finances, next 12 months’ is almost 11% below the average of first-half 2019, and also materially below its long-run average. Unsurprisingly, the ‘time to buy a major household item’ index is depressed, 8 percentage points below average.
Interestingly, ‘time to buy a dwelling’ reversed January’s gain to be back near its recent low in February. On a longer view, at its current level of 112, this index is well below 2019’s peak of 127 but still materially above 2017’s low of 90. At play here is arguably a reduced belief amongst households that further interest rate cuts will be seen in 2020 as well the impact of housing affordability.
House price growth expectations remain strong nonetheless, having surged 70% over the nine months to January 2020. The <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42085" target="_blank">December housing finance</a> data points to strengthening demand amongst owner occupiers, the value of loans up 23% since May and back near 2017–18’s peak. Investors are more circumspect. While 16% above the May low, the value of loans is still comparatively low – in line with the 2012 experience.
Turning to the business sector, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/February/er20200211BullAustralianBusinessConditions2020Jan.pdf" target="_blank">the NAB business survey</a> indicates confidence remained absent and conditions weak in late January. There are clearly a number of global and domestic headwinds for confidence. However, the greater concern is conditions. Profitability is weak, while trading conditions and forward orders are poor. The employment index has also lost momentum to now point to job gains circa 16k per month compared to 25k in mid-2019. Assuming flat participation, this would see the unemployment rate grind higher in 2020 – the opposite of what the RBA needs to see to have confidence that wages, growth and consequently inflation will firm as set out in their February Statement on Monetary Policy and Governor Lowe’s appearances last week (summarised in our <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42109" target="_blank">February Market Outlook</a>).   
Following the RBA last week, the latest MPS from the RBNZ set out their view of the outlook. On the assumption of a very mild coronavirus impact, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2020/February_2020/MPS_Review_February_2020_-_Westpac_NZ.pdf" target="_blank">the RBNZ are sanguine on the outlook</a> and expect to keep the stance of policy unchanged hence. This is as our New Zealand economics team anticipated, but more optimistic than markets were positioned for. Both the labour market and inflation views support this adjustment, but the most prominent rationale for the change of stance is the Government’s plan to increase spending. A cash rate cut is still expected in August by Westpac New Zealand, but this will principally be as a result of a weaker global backdrop which will put sentiment and growth at risk. A stronger New Zealand dollar, which we expect, would also weigh on inflation.
Moving to the rest of the world, our latest Market Outlook expands on t<a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42083" target="_blank">he key economic effects of coronavirus</a> and encapsulates all of the changes seen in the global and domestic economies since our last edition back in December. Succinctly for Australia: we anticipate our economy will be materially weaker in 2020 than the RBA currently anticipates; importantly, this is only partly attributable to summer’s bushfires and the coronavirus outbreak. Further, for the global economy, risks are clearly skewed to the downside.
Developments in <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42131" target="_blank">global commodity markets</a> highlight both the immediate loss from coronavirus as well as the risks to global production. <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42113" target="_blank">Global FX markets</a> however view this uncertainty as being contained in Asia, arguably because central banks elsewhere are seen as both willing and able to act. This is particularly the case for the US which has received a solid bid as a safe-haven. While <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42132" target="_blank">the Australian dollar</a> has taken a tumble in line with commodities, it will likely find a base and could strengthen in late-2020 if the RBA does not counteract the US rate cuts we forecast with concerted monetary easing here. Absent this step, Australia’s competitiveness and corporate profitability could become impaired, reducing the probability of the lift back to trend GDP growth we currently anticipate in 2021.
ELLIOT CLARKE is a senior economist at Westpac 
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