<a href="https://www.apartments.com.au/new-apartments/smith-by-valli-collingwood-224-228-smith-street-collingwood-vic-3066">Smith Collingwood</a> is a new boutique apartment development bringing a refined, design-led approach to one of Melbourne’s most established inner-city neighbourhoods.

Designed by <a href="https://www.apartments.com.au/architects/pandolfini-architects">Pandolfini Architects</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/lisa-buxton-interiors">Lisa Buxton</a>, Smith by Valli sits on iconic Smith Street and comprises just 22 residences tailored toward owner-occupiers seeking a more considered style of apartment living.

[smartcode_project:default project_id=140747 project_image_fid=367540]

The design of Smith focuses on a north-facing orientation across all residences, a relatively uncommon feature in dense inner-Melbourne settings. Each apartment has been planned to maximise natural light and outlook, alongside a material palette defined by warm tones, custom joinery, and a full suite of Gaggenau appliances.

The development comprises a mix of one, two, and three-bedroom apartments, with pricing currently ranging from just under $1 million to around $4.85 million for the premium penthouse-level residences, reflecting growing demand for luxury owner-occupier product in Melbourne’s inner urban market.

Residents will also have access to a private rooftop garden designed as an elevated retreat above the city, &nbsp;featuring curated landscaping, veggie boxes, intimate seating areas and spaces for relaxed gatherings. Sustainability has also been integrated into the project through a 7-star energy rating and two secure bicycle facilities for every residence.

[smartcode_project:default project_id=140747 project_image_fid=367529]

Smith by Valli sits in the heart of one of Melbourne’s most established retail and hospitality strips, within walking distance of venues such as Falco Bakery, Carnation Canteen and Alimentari, alongside parks and everyday services. With a Walk Score of 99, the location reinforces the project’s positioning toward buyers prioritising walkability and access over car dependency.

With only a limited number of residences, Smith reflects growing demand for smaller, highly curated apartment developments that prioritise design quality, liveability, and connection to neighbourhood character.

[smartcode_project_cta:default project_id=140747]

Joel Robinson

Smith by Valli delivers design-led apartments to Melbourne’s inner north

<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]

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

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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The 0.7% fall in Melbourne dwelling values over the three months to April 2018 was the greatest fall over a three month period since February 2012, CoreLogic has noted.
 Over the 12 months to April 2018, Melbourne dwelling values increased by 3.7% which was the slowest rate of growth since March 2013. 
With the recent declines, dwelling values in Melbourne are now 1.1% beneath their November 2017 peak. It deteriorated again in May, according to the latest data, with prices down 0.5% in May.
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Looking at the quarterly value change across the 10 market segments shows values fell across the higher valued housing stock. 
Each of the 7th to 10th deciles recorded a fall in dwelling values, with the declines becoming progressively greater. 
The 6th decile recorded the largest quarterly increase, there was no change in values across the 5th decile and the four lowest value deciles continued to record modest growth.
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The 10th decile was the only market sector where values fell over the past year while only the 8th, 9th and 10th deciles recorded growth that was lower than the headline city-wide figure. 
While the 2nd decile recorded the strongest annual growth at 12.0%, each of the 1st to 3rd deciles recorded double-digit capital gains over the past twelve months. 
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The figures shows a significant difference in the housing market’s performance between the most affordable and most expensive housing stock.
Based on the annual change data, the market for housing valued in excess of $1.12 million has weakened over the year while housing stock valued below $600,000 has continued to achieve strong value growth. More recently, housing stock valued at over $800,000 has started to see value declines.
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We have a free e-book from Castran Gilbert on property investment in Melbourne.
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j.ballantyne1990-6AQqhLzZaK

Melbourne's biggest value declines across the pricier property markets: CoreLogic Decile Report 

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If you can believe the headlines, Australian property values are falling. The thing is, you can’t believe the headlines. In most of our major markets, values are not falling at all. 
The problem is the way research firms and economists like to generalise about price data, with a single number describing movements in the mythical thing they call “Australian property prices”. Like most generalised figures, this serves only to create confusion and misinformation. 
According to recent headlines, national values are falling, which means the average situation with prices is a small decline. This was an annual decrease of 0.4 percent, according to one source.
But, lurking behind this pointless and misleading single figure which apparently depicts our entire vast nation, are the following factors:
<ul class="ul1">
<li class="li1">Regional areas overall are rising.</li>
<li class="li1">Five of the eight capital cities are rising.</li>
<li class="li1">The only significant market showing annual decline is Sydney, but the size of that market is dragging down the overall average.</li>
</ul>
The truth is that Australia abounds with major cities, some capital, some regional, with growth markets. Inspired by that reality, here are my ten leading cities with growth trajectories in 2018:-
Hobart: The Tasmanian capital is currently recording double-digit growth in its house prices and is likely to continue showing growth, underpinned by a vastly improved state economy. Property is selling faster there than any other capital city, vacancies are lower there than anywhere else and there’s no sign of activity slowing down. 
Canberra: Most research sources have Canberra values rising steadily. SQM Research’s index has Canberra up 8.5 percent. This is not surprising as the ACT economy is strong, Canberra vacancies are almost as low as Hobart’s, rents are rising and land prices are high (as a result of the ACT Government controlling land releases). All things considered, Canberra should be a national leader on price growth this year.
Brisbane: Overall, Brisbane isn’t showing much growth, but values are rising. When you look behind the generalised data, there are precincts with strong price rises. I expect Brisbane growth to gradually pick up this year because the underlying economy is improving, population data is favouring South-East Queensland again and infrastructure spending is rising. The affordability comparison also favours Brisbane.
Adelaide: The SA capital is similar to Brisbane. The generalised data shows only minor price growth, but individual precincts are doing much better, especially the top end. The SA economy is stronger than most realise and its steady improvement will boost the property market. I expect price growth is pick up as the year progresses. Adelaide offers great value-for-money and much better yields than the biggest cities.
Perth: The WA capital is one of those cities where values overall are still down, but it depends on whose figures you believe. SQM records a 3 percent annual rise in its Asking Prices Index for Perth. My own research shows that most of the million-dollar suburbs have had double-digit growth in the past year. There’s no doubt the Perth downturn is over and we will see further evidence of growth as the year unfolds.
Melbourne fringes: The single-growth figure to describe an entire large city never tells the full story. Melbourne overall has passed its peak but the outer ring suburbs are still very strong. The price growth in the past year in the northern fringes around Epping, the far south-east including Cranbourne, and the south-western regions around Werribee and Wyndham Vale, has been exceptional. 
Newcastle/Hunter Region: The City of Newcastle has been one of the nation’s outstanding markets recently. Values overall have increased in double digits and many suburbs have grown their median house prices by over 20 percent. The local economy is thriving and the affordability comparison with Sydney has helped. Now the growth is rippling out to nearby areas, including the towns of the Hunter region.
Geelong and nearby regions: Geelong has been the outstanding market in Victoria in the past year or so, and continues to deliver strong sales activity and price growth. It’s part of a wider trend, in which regional centres close to Melbourne are attracting spill-over population growth and demand for homes. Locations north and south of Melbourne continue to attract extraordinary sales activity and price growth.
Ballarat: This strong regional city could be included the previous paragraph as a regional centre near the state capital, but it deserves its own exclusive mention. More and more Melbourne buyers are targeting Ballarat because it’s well-connected to the big city and offers attractive affordability and a different kind of lifestyle. This is now a very busy market and I expect prices to show solid rises this year.
Sunshine Coast: I know many who followed our advice and bought into the Sunshine Coast market 12-18 months ago: they’re happy punters. The region’s economy is transitioning to a place of greater diversity and strength – and this is driving real estate demand. It’s attracting lots of new residents. This process is still in its infancy and there’s plenty more growth to come. Noosa, which has under-achieved for 10 years, has joined the growth party.
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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terryryder-YECXbqmri2

Australia's top 10 real estate growth cities in 2018: Hotspotting's Terry Ryder

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GUEST OBSERVATION
The stars aligned over Warwick Farm, New South Wales, this week. Sharing the stage at the Aerotropolis Investor Forum, Prime Minister Malcolm Turnbull, New South Wales Premier Gladys Berejiklian and Liverpool City Mayor Wendy Waller were resolutely on the same script. For many Australians, including the prime minister himself, the fact that all levels of government are backing the Western Sydney airport project was remarkable. Yet bipartisan support is essential for such a project to succeed.
In a study released this week by the United States Studies Centre, we analysed the success factors of several US airport cities and found parallels that the Western Sydney development could draw on. We also identified policy settings that need to be resolved before the airport opens. That includes ensuring 24-hour operations, for a start.
What sort of development is this aerotropolis?
US geographic economist John D. Kasarda popularised the term aerotropolis to describe an integrated urban area around an airport – as opposed to the more usual ad hoc expansion of economic activity around airports.
<iframe src="https://www.youtube.com/embed/Oy3OSm1w-jY?wmode=transparent&amp;start=0" frameborder="0" width="440" height="260"></iframe>
Kasarda’s Aerotropolis.
The state and federal governments have adopted the term to define their aspirations for the greenfield site at Badgerys Creek. It presents, as Berejiklian told the overseas investors and infrastructure companies, a “once in a century opportunity” to go far beyond an airport as merely a runway and associated infrastructure.
The NSW government’s vision is more akin to Dallas-Fort Worth International Airport in Texas, the assembled advisers and government agencies explained. However, for every successful aerotropolis – like the Zuidas economic zone that hugs Amsterdam Schiphol airport, or the Dulles Technology Corridor along the main road linking Virginia’s Dulles Airport and Washington DC – there are many grand airport terminals struggling to remain viable.
The risk is lower in Australia, partly because of our more modest tastes in infrastructure architecture.
Even so, any new airport is at risk of being underused. This is especially true in a city where a new airport is competing against an incumbent.
However, all layers of government, but particularly the state government, are determined to avoid the Western Sydney airport becoming a white elephant, not least because the ultimate aim is to sell it to a private operator.
The American example
The most striking observation that arose from our study is that the NSW government has no power to deliberately shift air traffic to the new airport. This was de rigueur in 1970s and 1980s America.
The rise of Dallas-Fort Worth is a prime example. Dallas’s downtown airport at Love Field was closed, as was Great Southwest Airport in Fort Worth. Their traffic was amalgamated at Dallas-Fort Worth by legislative instrument (although a court challenge by low-cost carrier Southwest Airlines resurrected Love Field as its headquarters). The result is a major airport surrounded by one of the most economically productive metropolitan regions in the world.
Similarly, in Washington DC, noise complaints about Washington National Airport (later named after former US president Ronald Reagan) prompted authorities to force intercontinental jets to the new Dulles International Airport. US defence manufacturers set up offices nearby; hotels and conference centres followed. The counties around Dulles are now home to the highest concentration of defence aerospace headquarters and employees on the planet.
<img src="https://images.theconversation.com/files/221075/original/file-20180531-120499-eapx8h.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Economic impact of commercial airports in the United States. United States Studies Centre/CDM Smith and IMPLAN (July 2014)
The state of play in Australia
Most US airports are owned and operated by government, in contrast to Australia. Because Sydney Airport is a privately run enterprise with agreed (if contested) operating restrictions, imposing further restrictions would be politically and financially impossible. Shareholders would demand compensation for any loss of business.
The restrictions on Sydney Airport (including noise-sharing routes, movement caps, and an 11pm-to-6am curfew) are due to federal law, not local ordinances as in the United States. Regardless, the Commonwealth is unlikely to further restrict traffic at the airport, not least because its proximity to the CBD is attractive to corporate travellers.
Instead, the governments must work with the hand they have been dealt. The NSW government is pinning its hopes for the aerotropolis on sectors such as defence aerospace, air freight logistics, advanced health care, and food agtech.
In many of these areas, however, Australia lacks a track record. New industries can be created, but it will be a case of starting from a position of weakness, rather than strength.
Take defence aerospace: Australia is a buyer of defence materiel rather than a supplier. What defence expertise there is is divided between South Australia, Queensland and Victoria, as well as NSW. This does not rule out its development as a major employment sector, but the conditions will need to improve. The planned defence aerospace precinct will have to attract many more businesses besides the anchor tenant, Northrup Grumman.
This was the point of the investor forum. Eight ministers, state and federal, were on hand and many made themselves available for investors to ask questions. This level of access at a public forum is unusual in Australia, and underscored the governments’ serious intent.
So what more can governments do?
Some policy settings need to be resolved before the airport opens. Legislating for 24-hour operations is a straightforward, but not uncontentious, move. Unpicking some other regulations may be trickier.
Take, for example, air services agreements. These are international bilateral treaties that restrict the number of flights between two countries. Within the detail of these agreements is a description of cities as greater metropolitan entities that would, if not amended, lump Western Sydney Airport with Sydney Airport under the same cap.
For the new airport to compete for passenger traffic, every tool at its disposal needs to be used to lure airlines. Removal from the bilateral quota is one such tool the federal government can use.
Similarly, a greater ability to vary landing charges and air traffic management fees for smaller airports needs to be considered for both Western Sydney Airport and Avalon Airport in Geelong. Competitive pricing is needed to attract low-cost carriers.
More fundamentally, governments need to stick to the bipartisan path on the airport’s development that shadow infrastructure and transport minister Anthony Albanese persuaded the Labor Party to adopt in the early days of the Abbott government. As the politicians on the aerotropolis forum stage know all too well, grand projects have been scuppered in Australia by political infighting.
Justin Wastnage, Non-resident Innovation and Entrepreneurship Program Fellow, United States Studies Centre, University of Sydney
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/western-sydney-aerotropolis-wont-build-itself-a-lot-is-riding-on-what-governments-do-97462" target="_blank">original article</a>.
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Western Sydney Aerotropolis won't build itself – a lot is riding on what governments do

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GUEST OBSERVATION
This is an edited extract from Jacqui Dwyer, head of the RBA's information department, address to the Business Educators Australasia Annual Meeting.
Education in Australia is receiving a lot of attention at present. Against the background of Australia's core learning skills at school, there is much debate among educators about what we should teach, how we should teach it and how we should assess it. In terms of ‘what’ should be taught, the current debate provides a good opportunity to raise awareness of economics as a valuable field of study.
Economics is relevant to us all. Every day our lives are affected by economic decisions – ones we make personally and ones that are made by others. Economics is about how individuals and societies choose to allocate their limited resources to meet their needs and wants. It's about how we respond to incentives, make trade-offs, weigh up costs and benefits – and how we decide what is efficient and what is fair. Economics contains some powerful concepts and useful frameworks. It can help us better understand the choices involved in many personal decisions we make, and better understand the economic conditions and policies that affect our lives.
Given the relevance of economics, and the social benefits of economic literacy, how widely is it studied? Be it at high school or university, economics was once widely offered and widely chosen – but that is no longer true. This is weighing on both the size and diversity of the student population, with implications for economic literacy and the longer-term health of the economics discipline in Australia.
The High School Scene
First, I want to remind you of some of the key features of the economics landscape at Australian high schools.
Nationally, there has been a dramatic decline in Year 12 economics enrolments over the past 25 years of around 70%. Our case study of enrolments in New South Wales (for which we have the most detailed data), shows an even greater fall of 75% over the same period. This fall was concentrated in the early 1990s when economics was displaced by the introduction of business studies in 1991 – arguably a less analytically demanding and vocationally oriented subject (Graph 1).
<img src="https://www.urban.com.au/images/2018/5/29/G%201.gif" alt="">
In 1991, economics was the third most popular subject choice in New South Wales, surpassed only by English and mathematics. It was also taught in nearly all schools. These days, we find that it is taught in less than one-third of government schools and a little over half of non-government schools. Consistent with economics now being less available as a subject choice in government schools, there are sharply declining economics enrolments, especially in the comprehensive schools that the majority of students attend (Graph 2).
<img src="https://www.urban.com.au/images/2018/5/29/G%202.gif" alt="">
Another defining feature of the high school scene is the fall in the share of female students enrolled in economics. Again, in the early 1990s, there were roughly even shares of male and female students in economics classrooms, whereas these days there are roughly twice as many male students as female students (Graph 3). This gender imbalance is more pronounced than for STEM (science, technology, engineering and mathematics) and contrasts with the high and stable ratio of female to male students in the rival subject of business studies.
 
<img src="https://www.urban.com.au/images/2018/5/29/G%203.gif" alt="">
So over the course of a generation, there has been a pronounced fall in the size and diversity of the economics student population at Australian high schools. Has the same pattern been evident at universities?
The University Scene
In looking at university enrolments in economics, it is necessary to first establish what we mean by economics. At university, economics can be taken as a degree, a major or a subject within many different courses. We rely on each university's judgment about ‘how much economics’ counts as an economics enrolment when they report on this to the Department of Education and Training (DET).<a id="r2" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-05-26#fn2"> </a>
Graph 4 compares economics enrolments in Australian high schools with university enrolments. It shows that while there has been a large fall in the level of economics enrolments at high school, economics enrolments at university have been fairly constant since the early 1990s and have fallen slightly since 2001 (when we have a series break in our data because the classification structure of subjects changed).
<img src="https://www.urban.com.au/images/2018/5/29/G%204.gif" alt="">
But how does this compare with growth in other subjects and the overall student population at university? Since 2001, while economics enrolments have edged down, enrolments in rival subjects have expanded, as has the total student population. In other words, economics is also being displaced at university by business-oriented subjects (banking, finance, management and commerce) and is lagging STEM in its ability to attract students (Graph 5). While these courses teach valuable skills, and some include similar skills to those learned in economics, economics students are a declining share of the university student population.
 <img src="https://www.urban.com.au/images/2018/5/29/G%205.gif" alt="">
One question that my colleagues ask is whether the declining share of students studying economics at uni reflects declining demand for economists in the job market. We actually don't know much about the level of demand for economic skills. But we do know that fewer universities are offering economics and half of those that do are in New South Wales and the ACT (Graph 6). Institutional concentration is not necessarily a problem – those universities that continue to offer economics may have high-calibre programs and attract high-calibre students. However, such concentration will weigh on the diversity of the economics student population if these universities do not have inclusive approaches to accepting students. Furthermore, the need to relocate to study economics will be a barrier for some students who might otherwise have chosen the subject.
 <img src="https://www.urban.com.au/images/2018/5/29/G%206.gif" alt="">
 
So let's look at some explicit indicators of diversity in economics. At university, there are more than twice as many male students as female students who study economics. And while there has always been a gender gap at university (unlike at high schools where gender balance once existed), this gap has widened over the past decade and is even more pronounced than presently at high school (Graph 7).
 <img src="https://www.urban.com.au/images/2018/5/29/G%207.gif" alt="">
Another important element of diversity is socio-economic status. A striking feature of the university data is the share of students studying economics who come from high socio-economic backgrounds – currently over 55%. This share has been increasing over the past twenty years, just as it has for economics students at high school (Graph 8). Furthermore, the share of university economics students from backgrounds of high socio-economic status exceeds that for rival subjects, and it significantly exceeds that for STEM students and the student population overall (Graph 9).<a id="r4" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-05-26#fn4"> </a>
 <img src="https://www.urban.com.au/images/2018/5/29/G%208.gif" alt="">
<img src="https://www.urban.com.au/images/2018/5/29/G%209.gif" alt="">
 
What's Wrong with This Picture?
It is of concern to see the drift toward a smaller and more homogenous population of economics students – both at school and university. The number of students who study economics influences the level of economic literacy in society. And the diversity of those students ultimately influences the collective ability of the economics profession. Diversity has bearing on the economic questions that we ask, our approaches to answering them how we action solutions. Because those who study economics shape the discipline and determine economic policies, there are wider social benefits when the population of economics graduates is broadly representative of society.
The importance of diversity in the study of economics is increasingly being voiced by central bankers. The Chief Economist of the Bank of England, Andy Haldane, has been vocal about this issue. So too have researchers Amanda Bayer and David Wilcox who, in a US Federal Reserve discussion paper, identify pervasive imbalances in economics education in the United States and argue that this is a matter that warrants urgent attention.<a id="r6" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-05-26#fn6"> </a>
So what has been driving the fall in size and diversity of Australia's economics student population? A number of forces are at work. To help inform the Bank's public education program, we have done a lot of data analysis and liaison with educators, education authorities and students. There are some dominant themes.
Economics has become less prominent. In the 1980s and early 1990s, economics was the subject of national debate. There was the lived experience of recession and big economic events like the floating of the dollar and the deregulation of labour and financial markets. So prevalent was the discussion of economics that former Prime Minister Paul Keating once said ‘I guarantee if you walk into any pet shop in Australia, the resident galah will be talking about microeconomic policy’. With Australia having experienced over a quarter of a century of continuous economic expansion, there is now a less involving – and less mature – national conversation about economics.
A relatively benign economic environment appears to have reduced the curiosity of students in seeking to learn about economics. However, the single largest factor weighing on the study of economics appears to have been the emergence of business studies as a subject choice in schools, and the growing dominance of business schools at universities.
When compared with rival subjects, economics has an image problem. Too few students understand what economics is and how it is relevant to them. Consequently, in a cluttered curriculum – at both high school and university – they are less likely to choose it. And if economics is no longer a core subject in many courses, the incentives to choose it fall further.
A key consideration in making a subject choice is its employability, especially given the effort and expense involved in investing in education. Many students - and importantly their parents - consider economics to be less employable than business-oriented subjects. They value subjects and degrees with a clear pathway to a specific occupation (e.g. by studying accounting you can become an accountant). However, the data tell us that graduate starting salaries are higher for economic students than students who take business-oriented subjects and that full-time employment rates are broadly similar. In fact, the sorts of skills acquired in the study of economics – such as analytical and problem solving skills – are likely to be highly valued as the nature of work changes (as explained by the Bank's Head of Economic Analysis, Alex Heath, in her speech on <a href="https://www.rba.gov.au/speeches/2017/sp-so-2017-12-01" target="_blank">Skills for the Modern Workforce</a>). It is perhaps because economics graduates are less likely to be employed in their subject field that the misperception about employability arises.
Role models are also important, and the lack of visibility of what an economist does results in a shortage of role models. Furthermore, to the extent that economists are visible, too often they are a homogenous bunch. This can have the effect of discouraging students, particularly females and those from minority backgrounds.
The lack of diversity in the economics profession speaks to implicit biases that also manifest themselves in the presentation of economic content – ranging from the lower rates of success in publication experienced by female economists, through to lower representation of females in economic examples in textbooks. Much has been made in recent years of the fact that females (or minority groups) rarely appear in textbooks, other than in stereotypic roles. This can be discouraging to female students and others who are not represented.
But in addition to all these factors that influence the choices a student might make, there are disincentives facing schools and universities in offering economics.
At the end of the day, schools and universities need to think about the value proposition of offering subjects. At high schools, where the fall in enrolments has been dramatic, principals need to assess whether economics enrolments are at a critical mass to support classes. They also need to have teachers who are equipped to deliver these courses. Over the past 20 years there has been a decline in the number of teachers who have themselves studied economics at university. With teachers increasingly teaching economics ‘out of field’, their confidence in delivering economics courses can be low.
Teaching economics at school is difficult. The concepts are analytically challenging and the script is always changing, given the need to include current economic conditions. The requirement for teachers to be across economic developments is demanding, especially if they are teaching out of field. Business studies, on the other hand, is easier to teach and has the (incorrectly) perceived benefit of greater employability. Consequently, in many schools, teaching resources have been allocated to business studies rather than economics.
Universities are faced with similar decisions about allocating resources. Additionally, their choices are influenced by government decisions that affect teaching revenue. Most domestic undergraduate students occupy ‘Commonwealth supported places’ where fee revenue is made up of a student contribution plus a government contribution. Economics is in the unfortunate position of being in the course group (along with law, commerce, accounting and administration) that has the highest student contribution and the lowest government contribution (Graph 10).
 <img src="https://www.urban.com.au/images/2018/5/29/G%2010.gif" alt="">
 
On top of this, analysis by Deloitte Access Economics suggests that, on average, universities only roughly break even in delivering economics to domestic students. But universities gain substantial revenue from courses offered to overseas students (where fees for economics and business courses can be twice those charged to domestic students). The business-oriented courses of commerce and management in Australia now attract around one-third of total overseas student enrolments; in fact, in 2015, there were 70 overseas students enrolled in commerce and management for every overseas student enrolled in economics. Consequently, business schools have been described as the ‘cash cows’ of Australian universities with large profits that are redistributed to fund other university activities, encouraging administrators to focus on offering business courses over economics.
The decision of administrators to favour business courses over economics is reinforced by lower completion rates in economics than in rival courses and university courses overall. Economics also disappoints on other metrics considered by administrators, such as rankings in research output.
A combination of these factors has left an entire generation of students less engaged with economics, less educated about it and potentially less equipped to understand or react to changes in their economic environment.
The Bank's Response
The Bank has always been committed to supporting people who want to learn more about economics and the Australian economy. Our observations about developments in economics education encouraged the establishment of the Bank's public education program. The program is still in its infancy, and we are grateful to you for the role you have played in helping us understand the needs of educators and students as we develop our educational resources and activities. In the course of doing this, we have learned much about how inaccessible economics can be and how much needs to be done to address that.
We have developed a series of resources that are designed to support students and educators, as well as being relevant for more general audiences. You can see these on the education section of the Bank's website. Our Ambassador program is well established with a group of young Bank economists delivering talks to students and educators across the country, including going into classrooms. We are out and about more, explaining what economics is, providing insights into what we do as economists and hopefully providing some useful role models. (This includes promoting awareness of role models outside the Bank, such as prominent Australian <a href="https://www.rba.gov.au/education/resources/women-in-economics" target="_blank">women in economics</a>.)
On more formal aspects of our program, we have made a <a href="https://www.rba.gov.au/publications/submissions/education/submission-to-nesa-review-of-commerce-years-7-10-syllabus/" target="_blank">submission</a> in support of economics being included in the middle years of high school in New South Wales. And the Bank is now an accredited provider of professional development for economics teachers. In fact, we look forward to seeing some of you at our annual Teacher Immersion Event next month.
Economics is relevant to students in many ways that they may not explicitly recognise. Students have great interest in understanding their own material welfare and that of society more broadly. They are interested in the personal and collective choices that determine such welfare, now and in the future. This all relates to economics. We need to make students aware of the ways in which economics can inform and empower them.
From improved economic literacy in the community, through to improved design of public policies, economics education delivers significant social benefits. In other words, there are civic returns to studying economics. Your role in encouraging that study is very important.
Jacqui Dwyer is head of the Reserve Bank of Australia's information department.
For the original speech, <a href="https://www.rba.gov.au/speeches/2018/sp-so-2018-05-26" target="_blank">click here.</a>
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What happened to the study of economics? RBA's Jacqui Dwyer

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Pakenham Racing Club has listed the freehold investment of its popular Cardinia Club for sale with an $18 million plus price guide.
CBRE Hotels’ Scott Callow and Will Connolly have been appointed to market the well-established gaming and hospitality venue at 71 Racecourse Road, Pakenham.
It is underpinned by an initial 14-year lease, plus options, to Pakenham Racing Club.
The Club is situated on a 1.655ha landholding.
IT comprises 105 EGM’s, a popular bistro and dining facility, function rooms, sports bar and liquor licence for 425 patrons. 
Pakenham Racing Club recently sold an adjoining site for the development of a large accommodation motel which, once complete, will further generate demand for the Club facilities.
 <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/2018/5/18/PRINT_img-1750.jpg" alt="">
Mr Callow said the Club is anticipated to attract substantial interest from investors looking to capitalise on the lucrative gaming industry in Pakenham.
“The outstanding 15-year lease to the long-established Pakenham Racing Club offers the long-term prospect of strong annual growth and net returns,” Mr Callow said. 
Michael Hodge, the Chief Executive Officer of the Pakenham Racing Club, said offers close June 14 2018 at 4pm (AEST).
 
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Pakenham Racing Club lists Cardinia Club

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EXPERT OBSERVER 
Prospects for the Australian Economy; Markets; and Global Risks
As we contemplate the remainder of 2018 and 2019 there are a number of key themes that we believe will dominate economic and market developments. Our advice to customers throughout 2017 has been to expect Australia’s growth rate to likely be anchored below trend in both 2018 (2.7%) and slowing to 2.5% in 2019. That has contrasted with official forecasts (Reserve Bank and Treasury) which anticipate growth picking up to 3.25% in both 2018 and 2019.
We have recognised a solid ongoing boost to growth from non–residential construction; government investment (especially at the state level) and exports. However we are much more cautious than official forecasts on the consumer; residential construction and equipment investment.
Slowing household incomes
Signals from the December quarter national accounts are more encouraging for the official view. Household spending has been revised up from an expected 2.1% to 2.9% following the release of the December quarter national accounts. This picture of households has changed from “lacklustre” to “slightly below trend”. However this was associated with a weak savings rate of 2.7% despite a boost in nominal labour income growth to 4.8% for the year largely due to an extraordinary lift in hours worked of 3.5%. With hours worked increasing so rapidly, labour income growth should have been boosted further but was constrained by wages growth and a drift to lower paid jobs – non-farm compensation per employee remained flat in the December quarter to be up an insipid 1.8% for the year.
Labour productivity fell over the year with GDP per hours worked falling by 1% over the year and unit labour costs growth lifting to 2%. This adverse development in labour productivity is tempering the recent strong demand for labour we experienced in 2017. In the year to April the annualised employment growth rate has slowed to 1.3%. There will clearly be a slowdown in the 2017 break neck pace of growth in hours worked over the course of 2018 and into 2019. Weak wages growth and the drift to lower income jobs looks set to continue putting downward pressure on growth in labour incomes. With the savings rate now probably at its lows, another year of below trend consumer spending growth can be expected.
Business investment
New business investment lifted by 5.8% over the past year, a sharp turnaround from a 6.2% decline over 2016. Over the year, infrastructure work fell 1.2%; non-residential building advanced 12.3% and equipment investment spending increased by 8.4%.
Mining equipment investment lifted by 31% over the year, reflecting the final fit out of three major projects. It is more encouraging that non-mining equipment investment lifted by 6.2% over the year following a slowdown in 2016 partly associated with the uncertainty around the 2016 election. With another Federal Election due by May 2019 and even greater uncertainty associated with that election (conservative government was expected to win the 2016 election whereas the Labour opposition is ahead in the current opinion polls), we may start to see equipment investment run into some headwinds from that political uncertainty from the second half of 2018. A less upbeat outlook for consumer spending in 2018 and 2019 is also likely to discourage equipment investment.
Housing downturn
Dwelling investment contracted in 2017 by 5.8%. Based on the downturn in the trend in high rise approvals and a flat outlook for detached housing, we expect this downturn has further to run with the contraction accelerating into 2019. Oversupply and a marked slowdown in sales to foreigners are weighing on the outlook for residential building. House prices are now falling. On a six month annualised basis, prices are now falling in Sydney (–7.3%); Melbourne (–1.2%); Perth (–0.4%) and Brisbane (–0.1%).
The regulator’s macro prudential policies are restricting interest only loans and tighter guidelines for all new loans are slowing house prices and credit growth. In previous cycles the authorities have relied on raising interest rates to slow the highly cyclical housing market. This time, the same effect has been achieved by the regulator as banks have independently raised loan rates; foreign demand has slowed; and regulations have significantly squeezed the availability of credit. This process will continue for the foreseeable future and the supply of credit is expected to tighten markedly.
On the demand side the attractiveness of investment properties has diminished. Land taxes and lacklustre rental growth have tightened rental yields. Prospects of adverse tax changes in the event of a change of government are also impacting investor confidence. All major banks (with the exception of Westpac) are predicting rate increases out to end 2019. New lending to investors tumbled by 9% in April to be down 26% over the course of the last year.
The current fall in investor loans is comparable to the all in 2015/2016. That subsequently reversed in the aftermath of the May and August rate cuts – prospects for a repeat of rate cuts seem unlikely.
We expect an extended period of falling house prices (up to 10% over the course of the next two years) with weakness particularly centred on the Sydney and Melbourne markets. This will represent a considerable change in the “atmospherics” around housing wealth and may weigh further on prospects for consumer spending. While the wealth effect was modest in the period of rising house prices it is reasonable that there will be a more marked effect through the downswing.
Inflation below target
Inflation is also likely to remain benign holding a little below the bottom of the Reserve Bank’s 2–3% target band. In this regard we are in broad agreement with the Reserve Bank which is forecasting that underlying inflation will hold at around 2.0% in 2018 and 2019. Note that underlying inflation has held below the 2–3% target band in 2015; 2016 and 2017.
With underlying inflation likely to therefore register five consecutive years at or below the bottom of the target range it is reasonable to argue that Australia is experiencing a structural fall in inflation. Arguably, without the risk of overheating the housing market (as would have been a concern through 2016 and 2017), interest rates would have been even lower in Australia in recognition of this structural fall and the disappointing progress in restoring inflation to the target range.
Interest rate outlook
Throughout 2017 and 2018 we have been of the view that the official cash rate will remain on hold in both 2018 and 2019. With rates on hold in Australia and the US Federal Reserve continuing to raise rates, Australia’s cash rate has now fallen below the Federal funds rate. By end 2018, it is set to be 63 basis points below the Federal Funds Rate, and by end 2019, 112 basis points below the Federal Funds Rate.
Sustained period of negative Aus–US rate spreads
The US economy is operating with much less ‘slack’ in its labour market (unemployment rate of 3.9% compared to an estimated full employment rate of 4.5%) than Australia (unemployment rate of 5.6% compared to a full employment rate of 5.0%) but, to date, wage pressures have only recently emerged (six month annualised pace for the wages component of the ECI has lifted to 2.9%).
Of most concern to markets has been the planned lift in government spending ($300 billion over 18 months) and the Tax Cuts ($1.5 trillion over 10 years) in the US. These policies are likely to boost the Budget deficit by around 2% of GDP providing a solid boost to demand when the economy is already operating at full capacity in the labour market.
We expect two 25 basis point hikes in June and September from the FED. That would see the USD/AUD yield differential in the overnight market contract to minus 63 basis points – a situation we have not seen since early 2000. Two further FED hikes are expected in the first half of 2019.
AUD/USD Bond Spread
Back in July 2017 Westpac was forecasting that the RBA cash rate would end 2018 at 38 basis points below the FEDERAL FUNDS rate. Markets were priced for the RBA cash rate to be 35 basis points ABOVE the FEDERAL FUNDS rate. We expected that if our pricing proved to be right the 10 year bond spread would fall from 60 basis points to zero. Today markets are broadly in line with Westpac’s view with both expecting the RBA cash rate to be 60 basis points below the FEDERAL FUNDS rate by end 2018. However Westpac expects that marguin to increase to 112 basis points by mid-2019 whereas the market is pricing in a more cautious 80 basis points. The bond spread has already moved to minus 20 basis points and Westpac expects it to reach minus 40 basis points by mid- 2019.
Commodity Prices; China; and the Australian Dollar
Recent general euphoria around the global economic outlook has changed to caution. Uncertainty around trade; falling PMI’s in Europe; Japan and Korea and rising bond rates in the US all signal caution. Growth in the Chinese economy is expected to slow as consumption and net exports are unable to compensate for the ongoing slowdown in investment. However, the big uncertainties and risks centre around the Chinese financial system.
China realises that it must move away from its growth model based on credit fuelled exports and investment. In particular the role of the financial sector must change from channelling high savings at low cost to strategic sectors, to facilitating China’s economic transformation to a more sustainable model based on services and consumption. But the “old" model has resulted in financial assets growing from 260% of GDP in 2011 to 470% in 2016 (IMF, 2017). The excessive growth (around 30% per annum over the last 10 years) has been in the largely unregulated non–bank sector.
President Xi has nominated poverty; pollution and financial leverage as his key “challenges”. The “shadow banking sector” particularly funds property development and speculation; local governments (which explain 80% of infrastructure investment); and commodity speculators. All these users of funds expect excessive returns and can service higher loan payments . The sector is beginning to be squeezed.
We are already seeing some evidence of this squeeze on the non–bank sector. Banks are no longer allowed to guarantee wealth management products; entrusted loans (corporates borrowing to lend to other corporates with banks operating as agents) have been banned; rapid growth in short term interbank funding has been slowed; and general funding for wealth management products is being restricted. Growth in the non- bank sector is severely lagging the pace of 2017.
These forces are likely to weigh on iron ore and coking coal prices. Some lift in supply from Australian producers is also expected to lower prices. These atmospherics for commodity prices along with the widening interest rate differential; and more appetite for the USD in an uncertain world are eventually expected to weigh on the AUD. We target AUD at USD 0.74 by end 2018 and 0.70 by 2019.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
 
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jrobinson-rf4aSBido9

Expect Australia's growth to be below trend: Bill Evans 2018 and 2019 outlook

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Tenants moving into Queensland’s newest rental homes can expect to save around $275 a year on electricity, with Stoddart Group releasing Australia’s first landlord and tenant friendly solar solution, SunYield. 
The SunYield package includes a 6.5 KW solar power system, as well being battery ready.
The battery allows landlords to add batteries as they become cheaper, and increase the proportion of solar-generated power sold to the tenant.
It combines with a Stoddart Smart Board that replaces the standard meter box on a new home.
Tenants get a <a href="https://www.choicehomes.com.au/sunyield/" target="_blank">30 percent discounted rate</a> on power used generated by the panels, while landlords can generate an <a href="https://www.choicehomes.com.au/sunyield/" target="_blank">extra $25 a week of income.</a>
Stoddart Group’s general manager for energy systems Adam Taylor says tenanted properties have been ignored in the recent solar revolution.
“Renters have long missed out on the benefits of solar power simply because it was too hard or complicated for landlords to justify the cost,:" Taylor said.
“SunYield changes this by ensuring that solar on a new rental property is a good deal for the landlord, as well as the tenant.  
Taylor says the process is completely automated.
If the tenant chooses to use the solar panels, all solar and grid power is measured automatically via a smart switchboard and the tenant receives a single monthly power bill for all electricity consumed from both the solar and the grid.
The process is completely automated, with the landlord then receiving a payment for all solar generated, whether it was used by the tenant or sent to the grid.
“With this technology, the landlord owns the solar system and can either sell the power to their tenant at a discount to the market rate or export it to the grid if the tenant chooses not to buy it.” 
The Australian-first technology was designed locally and is being launched in Queensland with leading investment builders Choice Homes, Creation Homes, Brighton Homes and MetInvest, with each including SunYield as standard on their new homes.   
Choice Homes director Troy Knight says Choice are always looking for customer-focused benefits.
“We're always looking for ways to offer our customers a better investment, which made the decision to put SunYield on every home a simple one," Knight said.
“For our customers, it means an increased rental return and a home that's easier to rent. 
"For our company, it means being one of the first to offer an innovative product that is good for our customers, their tenants and the environment.
Stoddart Group will soon extend the solution to other builders and plans to install 15,000 SunYield systems over the next 3 years and Mr Taylor believes the technology will quickly become standard on all new investment properties. 
“In the next 2 -3 years, we’ll see a complete shift - from rarely seeing a rental property with solar to it being difficult to find a new one without it.” 
Mr. Taylor said they did not have plans to release the product to the established homes market due to the way the technology works.
Queensland recently showed why its the 'Sunshine State', taking out seven of the top 10 postcodes for the highest rooftop solar uptake. 
 
 
 
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Queensland's newest rental homes to save money with solar solution

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<div>EXPERT OBSERVATION</div>
<div> </div>
<div>The Foreign Investment Review Board (FIRB) released its Annual Report for the 2017 financial year, and as expected it showed that investment in new apartments from mainland Chinese investors has been annihilated by a combination of fee charges and tighter capital controls.</div>
<div> </div>
<div>
There's much more to the Annual Report than just the residential real estate investment aspect, of course, but this is a blog not an Encyclopaedia Britannica so let's crack straight into it. 
</div>
<div> </div>
<div>Although the impact on total foreign investment was played down in the report, the reality is that the number of residential approvals have been smoked, down by 67 per cent from the prior year. </div>
 
<div class="separator"><a href="https://2.bp.blogspot.com/-UMTpeaTHMM4/WwyhL22FvEI/AAAAAAAAqP0/8gaf_QtZb183rLkVwdH45jQUDJNGnkdRQCLcBGAs/s1600/FIRB1.jpg"><img src="https://2.bp.blogspot.com/-UMTpeaTHMM4/WwyhL22FvEI/AAAAAAAAqP0/8gaf_QtZb183rLkVwdH45jQUDJNGnkdRQCLcBGAs/s640/FIRB1.jpg" width="640" height="372" data-original-height="780" data-original-width="1337"></a></div>
<div>Similarly the value of residential approvals crashed 65 per cent lower from $72.4 billion to $25.2 billion. </div>
 
<div class="separator"><a href="https://2.bp.blogspot.com/-eeKkUWK9UlM/WwyhMNmDdLI/AAAAAAAAqP4/8tL55X2DYeMHxJaDttmNpm2Z3WPJ1uxcQCLcBGAs/s1600/FIRB2.jpg"><img src="https://2.bp.blogspot.com/-eeKkUWK9UlM/WwyhMNmDdLI/AAAAAAAAqP4/8tL55X2DYeMHxJaDttmNpm2Z3WPJ1uxcQCLcBGAs/s640/FIRB2.jpg" width="640" height="372" data-original-height="801" data-original-width="1376"></a></div>
 
<div>The bulk of new approvals through this unprecedented cycle have been for new dwelling exemption certificates, mainly for Chinese investors.</div>
<div> </div>
<div>Looking at these numbers it's not hard to understand how Sydney now has more apartments approved but not yet commenced than at any time in its history, as <a href="http://petewargent.blogspot.com.au/2018/04/bust-looms-for-sydneys-apartment" target="_blank">detailed here previously</a>.</div>
<div> </div>
<div>The offshore buyers have dried up, demand from domestic investors has been stymied, and the demand from owner-occupiers is insufficient to get new development project finance across the line. </div>
 
<div class="separator"><a href="https://2.bp.blogspot.com/-NB_Pr0ox8ag/WwyhMFmGT_I/AAAAAAAAqP8/QW3ddVDDvDsLNYRsM8ydj3RaFs_WdVtqQCLcBGAs/s1600/FIRB3.jpg"><img src="https://2.bp.blogspot.com/-NB_Pr0ox8ag/WwyhMFmGT_I/AAAAAAAAqP8/QW3ddVDDvDsLNYRsM8ydj3RaFs_WdVtqQCLcBGAs/s640/FIRB3.jpg" width="640" height="376" data-original-height="798" data-original-width="1354"></a></div>
 
<div>Statistically it appears to be a certainty that Sydney will experience the greatest number of failed apartment projects as these trends flow through. </div>
 
<div class="separator"><a href="https://4.bp.blogspot.com/-oB--8HHlBVI/WwyhNNBYK4I/AAAAAAAAqQA/jcgvA_iBayUyUp_smd7mvblQxlk_NFajQCLcBGAs/s1600/FIRB4.jpg"><img src="https://4.bp.blogspot.com/-oB--8HHlBVI/WwyhNNBYK4I/AAAAAAAAqQA/jcgvA_iBayUyUp_smd7mvblQxlk_NFajQCLcBGAs/s640/FIRB4.jpg" width="640" height="378" data-original-height="801" data-original-width="1355"></a></div>
 
<div>I expect to see plenty of apartment projects stalling, and increasing signs of discounting on new Sydney apartments. Perhaps this was an inevitable end-game for this cycle, where development has been too much skewed towards apartments for investors, and too little towards the types of medium-density dwellings that people want to reside in.</div>
<div> </div>
<div>The wrap</div>
<div> </div>
<div>As noted, there is much more to foreign investment than just new apartment purchases, with total investment of $168 billion only 4 per cent below the level seen in the prior year. </div>
<div> </div>
<div>And indeed, investment in manufacturing, agriculture, ports, other commercial real estate, and resources has catapulted China to become by far and away the greatest investor in Australia at $38.9 billion in FY2017, miles ahead of the United States in second place at $26.5 billion.</div>
<div> </div>
<div>Nevertheless, these figures will have some significant impacts on the new apartment sector, construction trends, and the broader economy - and especially so in Sydney.</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
</div>
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pwargent-M4siyDbqQY

Local demand insufficient to get projects across the line as offshore apartment buyers dry up: Pete Wargent

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Lendlease has provided a first look inside the world’s tallest and largest engineered timber office building, 25 King, at Brisbane Showgrounds.
25 King includes extensive use of innovative and sustainable building materials – glue laminated timber structural beams and columns and cross laminated timber (CLT) floors – as well as state-of-the-art technology to deliver a true workplace of the future. 
Six of 25 King’s nine levels were completed in less than 12 months.
It is Lendlease’s fifth engineered timber building in Australia and one of several timber projects the company currently has underway across the country.
The building’s owner, ethical investment company, Impact Investment Group (IIG), is <a href="https://www.impact-group.com.au" target="_blank">offering it as a co-investment opportunity for the building.</a>
The pre-formed engineered timber construction means no waste and an energy saving of at least 40%.
 <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/2018/5/29/LL_100518_040.jpg" alt="">
IIG are looking forward to co-investing with new clients in the unlisted IIG unit trust that will own 25 King upon completion, which is targeting an internal rate of return of 11.1% a year. 
The Trust is also targeting a 7.4% average yield post-completion, with 100% tax deferral for at least three years post-completion. 
  <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/2018/5/29/LL_100518_042.jpg" alt="">
Global engineering firm Aurecon will occupy 43.5% of the net lettable area, with IIG joining with developer Lendlease to secure new tenants for the remaining office space.
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Co-investment possibility available in world’s tallest timber tower

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EXPERT OBSERVATION
The Aerotropolis Investor Summit is a positive move to encourage private sector investment into future jobs for Western Sydney.
The focus on the 10,000 hectare economic zone around Western Sydney Airport as the location for a massive growth in Western Sydney jobs is a good example of the outcomes of the City Deal between the three levels of government.
And the establishment of the Western Sydney Development Authority under Chief Coordinator Geoff Roberts will lead to faster decision making in turning plans into reality.
The range of jobs proposed is impressive covering aerospace, defence, manufacturing, healthcare, freight, logistics, agribusiness and education.
Clearly these jobs will be closer to the people of Western Sydney and help redress the jobs exodus from the West to the East in Sydney.
The proposed North South Rail Link will help Western Sydney residents have easy access to the jobs hub.
The potential expansion of the West Metro from Parramatta announced by the Premier, Gladys Berejiklian, at the Summit would link all three cities across metropolitan Sydney.
While the Investor Summit has focussed on the issue of jobs there also needs to be more discussion about the residential components of the third city, the Parkland City.
With the Western Sydney Airport having no curfew clearly housing will be located kilometres away from the airport and the economic zone.
Most commentators on cities prefer a mixed use approach to planning where jobs and residential co-locate to ensure a lively public domain.
Future planning will need to address this issue so that the Parkland City can be as successful as the Harbour City and the River City.
CHRIS JOHNSON is chief executive officer of property development industry group Urban Taskforce and can be <a href="https://www.urbantaskforce.com.au/?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">contacted here</a>.
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