Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

Joel Robinson

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

&nbsp;

Developer GURNER™ Group has revealed $1.65 billion in residential sales nationally across the 12 months to December 2025, driven largely by the continued momentum of its Docklands wellness-focused precinct, Elysium Fields.

The sales result was generated across seven projects in Victoria and New South Wales, headlined by Elysium Fields, GURNER™’s $2.75 billion mixed-use precinct planned for Harbour Esplanade in Docklands.

The project has recorded more than $500 million in sales across the first three towers, equating to around 580 apartments sold.

The first tower, Helios, has now sold out of its 240 private residences, with GURNER™ preparing to release a premium penthouse collection comprising 15 three-bedroom penthouses in coming weeks.

[smartcode_project:default project_id=144441 project_image_fid=370975]

Elysium Fields is being developed on the long-held 20,000 sqm Docklands site at 208-226 Harbour Esplanade, which had remained undeveloped for more than two decades prior to GURNER™ taking over the project around four years ago.

Construction has now commenced across four towers ranging between 18 and 30 storeys, with Hamilton Marino and Maxcon appointed as builders.

Once complete, the precinct is expected to comprise around 1,100 residences, alongside retail, hospitality and public realm uses integrated throughout the site.

[smartcode_project:default project_id=144441 project_image_fid=370981]

Designed by Fraser &amp; Partners in collaboration with GURNER™ Design House, the project has been positioned around the developer’s broader focus on wellness-led residential living.

“We don’t sell apartments. We create a true luxury lifestyle that simply doesn’t exist elsewhere in the market today,” Founder and Executive Chairman Tim Gurner said.

“To deliver that requires an extraordinary level of detail, coordination and discipline across multiple verticals, from design and hospitality through to wellness and service.”

“We’ve always believed that living extends far beyond the physical residence. It’s about how you feel the moment you arrive, how you live day-to-day, and the ecosystem that supports that.” 
[smartcode_project:default project_id=144441 project_image_fid=370977]

The project’s design places a heavy focus on landscaping, wellness amenities and biophilic design principles.

Plans include around 3,700 sqm of landscaped gardens and open space throughout the precinct, alongside a retail and dining offering spanning approximately 5,000 sqm.

The broader public realm strategy centres around what GURNER™ describes as the “Path of Life”, an urban forest and landscaped pedestrian environment intended to connect the various buildings and wellness spaces across the precinct.

The apartments themselves will incorporate a range of wellness-focused inclusions, including purified air and water systems, circadian lighting, antimicrobial surfaces, and optional in-home wellness upgrades.

[smartcode_project:default project_id=144441 project_image_fid=370980]

Gurner said the company’s experience through its Saint Haven wellness clubs had directly informed the residential offering now being incorporated into Elysium Fields.

“We’re seeing a clear global shift toward longevity, performance and proactive health,” Gurner said.

“Our role is to deliver that in a way that feels seamless, highly private and beautifully resolved within the environments we create.”

A large component of the wellness offering is planned through the resident amenity and health facilities proposed within the precinct.

That includes plans for bathing and recovery facilities spread throughout the towers, incorporating mineral pools, saunas, steam rooms, flotation therapy, red light therapy and wellness lounges.

The developer is also seeking approvals for what it describes as a “reverse ageing medical clinic” within the precinct.

[smartcode_project:default project_id=144441 project_image_fid=370978]

According to project information released by the group, the proposed facility would include cryotherapy, IV infusion therapy, infrared and dry saunas, PEMF beds, MRIs, DEXA scans, brain scans and blood analysis services.

Within the first tower, Helios, residents will also have access to a dedicated amenity offering known as the Sky Private Club.

The upper 15 levels of the building will include private lounges, dining spaces, rooftop amenities and optional private wellness studios integrated within residences.

The Helios tower itself comprises 260 apartments ranging between 60 sqm and 300 sqm, including a collection of penthouses.

That includes a planned two-storey penthouse spanning around 600 sqm with uninterrupted bay views.

The Elysium Fields precinct is being delivered in partnership with Digital Harbour Holdings, a consortium that includes the Liberman family, which controls the development rights across the Docklands site.

[smartcode_project:default project_id=144441 project_image_fid=370979]

The sales result comes as GURNER™ continues expanding its national development pipeline beyond Victoria.

“We have a strong pipeline across Australia and are now focused on scaling into key markets including New South Wales and Queensland, while continuing to build on our Melbourne base,” Gurner said.

“We currently have more than $3 billion in the market, growing to over $5 billion by October, and expect to materially outperform last year in the 2026 calendar year.”

The result also reflects the continued strength of the upper-end apartment market in Melbourne, particularly for owner-occupier-focused product with large-scale amenity and lifestyle offerings.

[smartcode_project_cta:default project_id=144441]

Record result anchored by the Group’s “utopian” Elysium Fields precinct – defying market headwinds in Docklands.

Elysium Fields drive Gurner to $1.65 billion in apartment sales over 2025

National Australia Bank (NAB) will fund <a href="https://www.apartments.com.au/new-apartments/palmera-residences-gold-coast-18-garfield-terrace-surfers-paradise-qld-4217">Palmera</a>, a $1 billion, 52-level luxury residential tower being developed by Central Equity in one of the Gold Coast’s most tightly held coastal locations at Northcliffe.

The project, launched recently by <a href="https://www.apartments.com.au/developers/central-equity">Central Equity</a>, one of Victoria’s largest private residential developers, comes at a time when construction funding for large residential developments has become increasingly competitive as lenders tighten exposure to the sector.

Multiplex has been appointed the builder, and construction is now underway.

[smartcode_project:default project_id=108274 project_image_fid=365784]

Since its first project, Central Equity has delivered more than 85 residential developments with a combined end value exceeding $8 billion.

Palmera reflects Central Equity’s growing focus on the Gold Coast luxury apartment market and continues a relationship between Central Equity and NAB that dates back to the late 1980s, when the bank funded one of Melbourne’s earliest inner-city residential towers at a time when high-rise apartment living in the CBD was largely unproven.

“NAB’s funding of Central Equity’s $36 million CBD development in the late 1980’s to the financing of the billion-dollar tower today highlights the long-term relationship between the two organisations in delivering major residential projects” said Central Equity Founder and Chairman Eddie Kutner.

He said NAB’s early support was instrumental in helping establish the company’s development model.

“When we commenced our first residential tower in the late 1980s the concept of funding off-the-plan apartments was still largely untested in Australia,” Kutner said.

“NAB recognised the opportunity early and supported the project when others were uncertain. That relationship has now continued for more than 37 years across many developments.”

[smartcode_project:default project_id=108274 project_image_fid=365771]

Central Equity was established in 1987 when Melbourne’s CBD and Southbank precinct were still dominated by warehouses and commercial buildings. Fewer than 100 residents lived in Southbank at the time, and large-scale residential development in the inner city was not widely considered.

Recognising changing demographics and lifestyle preferences, the company began developing high-rise residential projects designed to bring permanent residents into the city centre.

Central Equity has provided accommodation for approximately 40,000 residents across Melbourne’s CBD and Southbank, while also incorporating supporting infrastructure including essential lifestyle facilities like retail spaces, childcare facilities and neighbourhood activity centres.

Central Equity has spent many years assembling the Palmera development site on the corner of Garfield Terrace and Frederick Street in Northcliffe, creating a supersite of around 3,300 sqm.

The developer said the Palmera apartment tower reflects its long-term view of the Gold Coast as a growing and increasingly diversified economy.

[smartcode_project:default project_id=108274 project_image_fid=365768]

Supported by infrastructure including the light rail network, major road upgrades expanded education, hospital and medical facilities and continued expansion at the Gold Coast Airport with more international and domestic flights.

Positioned in the tightly held Northcliffe precinct, the 52-level tower will deliver 347 apartments, targeting buyers seeking a high-end coastal lifestyle, from downsizers to interstate investors.

Designed by Marchese Partners with interiors by DBI, Palmera has been conceived as a next-generation residential offering, featuring a collection of oversized apartments, with premium three-bedroom residences offering sweeping northern views stretching from Surfers Paradise through to Burleigh Heads.

[smartcode_project_cta:default project_id=108274]

NAB funds $1 billion Surfers Paradise apartment development, Palmera

Two years after completing one of the newest developments in North Sydney, developer <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a> is turning its attention to the rapidly evolving St Leonards apartment market.

The developer, which completed AURA by Aqualand on North Sydney's Walker Street, has lodged plans for a 5,918 sqm site at <a href="https://www.apartments.com.au/new-apartments/33-37-herbert-street-st-leonards-nsw-2065">33-37 Herbert Street, St Leonards,</a> seeking approval for a pair of residential towers rising above a shared podium opposite Royal North Shore Hospital.

The proposal forms part of the broader transformation underway across the St Leonards-Crows Nest precinct, where former industrial and commercial sites are increasingly being redeveloped into high-density mixed-use projects tied to major transport infrastructure.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="2cc428cf-fe70-4cac-9cd5-264ad53af62c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.56%E2%80%AFAM.png?VersionId=otKSnHtbjAvAddOnovyXQMgcAwE6DMe1" />

According to the planning documents, the site sits “within the St Leonards–Crows Nest Strategic Centre, identified by the NSW Government as a key area for accommodating future jobs and housing across Sydney.”

The proposal has been designed by fjcstudio, formerly FJMT Studio, and is being progressed through the State Significant Development pathway due to its scale and affordable housing provision.

The scheme would comprise 413 apartments, including 46 affordable housing units, alongside retail and commercial uses fronting Herbert Street. The project would also include communal open space, landscaping, a swimming pool, gymnasium, children’s play areas and podium-level resident amenities.

Planning documents show the development would consist of a part-13, part-39 storey tower form positioned above a four-storey podium.

“The development comprises a unified podium that activates the street interface, and two setback towers to accommodate new housing supply while maintaining an appropriate human scale at ground level,” fjcstudio noted in its Design Report.

The northern and southern towers have been shaped to respond to the surrounding skyline while also limiting overshadowing impacts to nearby public open space, particularly Talus Reserve.

The design report said the differing tower heights were intended to “contribute to a varied skyline while responding to the surrounding built form context and solar access considerations.”

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="36da62dc-ff9e-41f2-a7e3-7be38373751c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.45%E2%80%AFAM_0.png?VersionId=Mo6Rp2r.XRLTzIfg_PEEpw8NepDH8UBs" />

The site sits directly opposite Royal North Shore Hospital and within walking distance of both St Leonards Station and the new Crows Nest Metro station.

While the site itself sits just outside the formal Crows Nest Transport Oriented Development boundary, the planning documents repeatedly reference its alignment with the broader TOD objectives reshaping the Lower North Shore.

“The site is located adjacent to St Leonards Station and in close proximity to Crows Nest Metro which is within the Crows Nest Transit Orientated Development Accelerated Precinct which has been identified by the NSW Government to support housing delivery,” the Design Verification Statement noted.

According to fjcstudio, the project has been designed to respond to the broader transition occurring across St Leonards, where increasing residential density is being concentrated around transport infrastructure and employment hubs.

“The broader precinct is undergoing significant change, with a mix of existing mid-rise buildings and newer high-density developments,” the report stated.

“Recent and approved projects indicate a consistent shift toward taller built form, typically organised as tower-and-podium typologies with more active ground levels.”

The proposal includes close to 6,000 sqm of retail and commercial space across the ground floor and podium levels, designed to create a more activated street edge along Herbert Street.

Aqualand’s plans would also introduce a landscaped podium shared between the two towers, with communal open space in the form of a podium rooftop designed to support resident interaction and improve urban greening outcomes. The scheme would also introduce pocket parks at the northern and southern ends of the site, including a landscaped area at the corner of Herbert and Ella streets designed to improve pedestrian amenity and soften the streetscape.

&nbsp;

The proposal is being progressed through the NSW Government’s Housing Delivery Authority pathway, which was introduced to accelerate housing supply across the state. The application was declared State Significant Development in April 2025 following an expression of interest process.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="faf6d97d-2671-454f-b85a-fe1c6a7be608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.49%E2%80%AFAM.png?VersionId=diVd28OBVr5.YV.7prrOz.uAanwwwm7a" />

St Leonards has been particularly active with new developments in recent weeks. Developer SP Setia’s <a href="https://www.apartments.com.au/news/nsw/first-look-sp-setia-targets-st-leonards-skyline-with-40-storey-tod-tower">plans for a new 42-storey tower</a> recently went on exhibition through the same pathway, while <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">Stockland’s 52-storey tower proposal</a> was also recently unveiled.

Aside from the St Leonards project, which is expected to take around nine months to move through the approvals process ahead of a potential 2027 launch, Aqualand is also preparing to launch Boronia, a new apartment project in Roseville comprising around 111 apartments on Larkin Street.

The developer also has approvals in place for the next stage of the Barangaroo precinct, which will feature new residential, retail, hospitality and community uses, alongside a new metro entry across the five-hectare site.

More than 50 new retail destinations are planned for Central Barangaroo, alongside a 270-metre-long boulevard connecting Hickson Park to Nawi Cove. Together with Harbour Park, more than 50 per cent of the precinct will comprise public open space and parkland.

First look: Aqualand joins St Leonards apartment party

2021 Property Slowdown

<h2>EXPERT INSIGHT</h2>

Australian capital city average dwelling prices rose 1.8% in April according to CoreLogic and are up 6.4% on a year ago.

This is their seventh monthly gain in a row.

While down from the break neck pace of 2.8% seen in April, price growth is still strong and average capital city prices are now 5.4% above their September 2017 record high.

All capital cities saw prices rise solidly in April with Darwin the strongest at +2.7%, followed by Sydney at +2.4% and Adelaide at +2%. See the table below.

All capital city prices are at record levels except for Perth and Darwin which are recovering from 22% and 33% falls respectively between 2014 and 2020, which was in the aftermath of the mining investment boom.

[smartcode_project:default project_id=22057 project_image_fid=150836]

Regional dwelling prices rose 1.9% in April and are up 13% on a year ago with their relative strength over the last year reflecting lower levels of indebtedness and hence less vulnerability to the financial stresses caused by the pandemic driven economic downturn, less exposure to the slump in immigration and increased buyer interest as people seek to relocate from cities as part of a secular trend towards working from home and a greater focus on lifestyle.

Capital city house prices rose 2% in April and 8% over the last 12 months whereas unit prices lagged with a 1.2% gain in the month and a 1.8% rise on a year ago, with the relative underperformance reflecting a shift in preferences towards houses as a result of more working from home and a lifestyle choice and as weak rental conditions made worse by the slump in immigration constrained the inner city unit markets in Sydney and Melbourne. However, the Sydney and&nbsp;

Melbourne unit rental markets have shown signs of stabilisation and improvement in recent months and this appears to be helping unit prices, although they are still lagging.

The slowdown in price growth compared to March was inevitable given that the 2.8% average gain that month was the strongest since October 1988 and was always going to be hard to beat. Moreover, the moderation is also consistent with some pick up in new listings which has seen auction clearances slow a bit from March, some easing in the impact of government incentives and perhaps some of the initial boost from four year fixed mortgage rates below 2% having run its course.

However, average home gains of 1.8% a month are still very strong, housing finance commitments remain around record highs suggesting more demand to come and auction clearance rates in Sydney and Melbourne remain very high and at levels consistent with strong home price growth. While first home buyers led the initial recovery, spurred on by various incentives, housing finance data suggests that first home buyer demand may now have peaked but that investors are now jumping in to take over from first home buyers and that demand from owner occupiers generally remains very strong.

The fundamentals of still ultra-low mortgage rates, ongoing government incentives, economic recovery, the strong jobs market and an element of FOMO (buying now for fear of missing out) point to further home price increases ahead. We expect average home prices to rise another 10 to 15% out to the end of 2022, but this to mask a slowing from 15% this year(of which they have already done 7.5%) to 5% next year. 2023 could start to see another cyclical downturn in property prices as the interest rate cycle starts to move up more decisively.

There are six reasons to expect a gradual slowing in the pace of capital city dwelling gains going forwards:

First, government housing incentives are likely to be wound back a bit. The First Home Loan Deposit scheme is likely to see home price thresholds increased in the Budget, but HomeBuilder has now ended and some states may start to wind back various incentives.

Second, poor affordability is starting to become an increasing constraint again and is likely already starting to weigh on first home buyer demand going by housing finance data.

Third, the RBA and APRA are expected to reach yet again for macro prudential controls to slow housing lending sometime in the next six months. While they don&rsquo;t target house prices and are of the view that we have not yet seen a significant&nbsp;deterioration in lending standards, past experience indicates that surging house prices leads to a deterioration in lending standards and increasing financial stability risks. And the metrics APRA and the RBA look at are starting to push up in the direction of a deterioration in lending standards with record housing finance, an acceleration in housing debt (see the next chart), an increasing share of lending at high loan to valuation ratios and a rising share of interest only loans albeit from a low base. The first thing to do would be to increase interest rate buffers but limits on high loan to valuation ratio lending and high debt to income ratio lending may make sense too.

Fourth, it&rsquo;s likely that the 30 year tailwind for the property market of falling interest rates has now run its course. While variable rate hikes are probably two years away at least, four year plus fixed mortgage rates have started to move up with the rise in bond yields and shorter dated fixed mortgage rates may also start to move up over the next year. Longer term the RBA is more determined than ever to see inflation sustained in its target range which will ultimately put an end to the long term downtrend in interest rates and mean higher variable rates.

Fifth, the hit to immigration and a likely only gradual recovery in it once international borders are reopened combined with continued strong home building is likely to lead to an oversupply of property in the next few years.

Finally, the &ldquo;escape from the city&rdquo; phenomenon unleased by the pandemic and made possible by technology enabling more working from home compared to prior to the pandemic is likely to take some further pressure off capital city property prices &ndash; albeit this will drive a further catch up in regional prices.

The “escape from the city” phenomenon unleased by the pandemic and made possible by technology enabling more working from home compared to prior to the pandemic is likely to take some further pressure off capital city property prices

soliver

6 reasons to expect a gradual slowing in the pace of capital city dwelling gains: Shane Oliver

<h2>EXPERT INSIGHT</h2>

The word &lsquo;boom&rsquo; is used cautiously, principally because booms never end quietly. In other words, booms tend to be followed by busts. The case in point was the boom of the late 1980s that preceded the recession of 1991.

On Friday the Reserve Bank lifted its economic growth forecasts. The Reserve Bank now expects growth of 5.25 per cent on average over the 2021 calendar year. The growth forecast for the 2021/22 year is now 5.00 per cent, up from the 3.75 per cent forecast made in February. And growth in calendar 2022 is now tipped at 4.00 per cent, up from 3.25 per cent.

The jobless rate is now seen at 5 per cent at the end of 2021 before hitting the &ldquo;full employment&rdquo; level of 4.5 per cent at the end of 2022.

But over the next 18 months, underlying inflation is not expected to hit 2 per cent (1.75 per cent in late 2022).

[smartcode_project:default project_id=3233]

Economic nirvana? Perhaps. But it is also important to remember that growth and unemployment have bettered even the most optimistic Reserve Bank forecasts over the past year.

So it&rsquo;s worth considering the latest &lsquo;upside&rsquo; targets from the Reserve Bank. On the Reserve Bank&rsquo;s most optimistic assumptions, annual economic growth would hit 10.25 per cent in June and 6 per cent in December (admittedly from a low base). The jobless rate would hit the &ldquo;full employment&rdquo; threshold late this year but inflation still wouldn&rsquo;t exceed 1.5 per cent.

The Reserve Bank won&rsquo;t consider lifting rates until inflation is sustainably within the 2-3 per cent target band. So conceivably unemployment could hit 4.5 per cent by end year with the cash rate still locked at a record low of 10 basis points.

Too good to be true?

It&rsquo;s important to remember that these forecasts are from the Reserve Bank, one of the most cautious and conservative central banks.

But there appears a growing appreciation for the fact that inflation &ndash; not just here but across the globe &ndash; has been low for a number of years. And a key reason for that is technology &ndash; consumers can buy goods whenever they want from wherever they want. Also, organisations like Airtasker, Uber and Menulog have boosted completion and kept downward pressure on prices. In addition, businesses in white collar industries can also get work done offshore &ndash; and this is largely unaffected by Covid-19. While wage growth &ndash; a key component of inflation &ndash; hit record low levels in Australia at the end of 2020 &ndash; with the pace of pay rises easing since the height of the mining construction boom.&nbsp;

But what happened in 1988?

Cash rates had been falling ahead of the October 1987 sharemarket crash. The cash rate was around 18.8 per cent in August 1986 and had fallen to 11.3 per cent in October 1987. Rates hit lows of 10.65 per cent in February 1988.

But after the sharemarket crash, the feared economic downturn didn&rsquo;t arrive. Investors instead switched affections from shares to property, underpinned by lower interest rates. According to CoreLogic, home prices rose by 2.8 per cent in October 1987, lifting the annual rate from 5 per cent to 9 per cent. By late 1988, home prices were running at a 30-32 per cent annual rate &ndash; far higher than we are witnessing today.

To quell the &lsquo;irrational exuberance&rsquo; in housing and general &lsquo;conspicuous consumption&rsquo;, the Reserve Bank lifted cash rates over 1988 and 1989, with rates hitting highs of 18.2 per cent in November 1989.

Under the pressure of high interest rates, the economy contracted in December quarter 1989 and September quarter 1990 ahead of the recession in the first half of 1991. Interest rates were progressively cut from 1990 and didn&rsquo;t stop falling until 1994.

What are the implications for investors?

No two periods are alike. The environment in 1988 was starkly different to current times. But in all times, investors need to be aware of the risks and opportunities.

The Covid-19 pandemic shocked economies across the globe in 2020 and the response to the pandemic has varied. Those shocks are still reverberating. Australia has done well in suppressing the virus, and all levels of government and the Reserve Bank acted quickly in supporting businesses and families.

As a result, the economic recovery has been strong, but it is important not to be complacent. Risks lie to the upside and downside. For instance an extended closure of foreign borders may make it difficult for firms to fill open positions. Further, the longer that foreign borders are closed, the greater the risk that demand for homes will reduce, affecting the home building sector. Policymakers must be agile in continuing to watch for the threats to the economic recovery.

But if Australia continues on its current course, strong economic growth will boost employment and give increased security to those in work. A tighter job market should bring higher wage growth. Businesses are well placed to embrace low interest rates to lift investment. Low rates and government grants are boosting home construction and the buoyant house building should continue over 2021.

Note that the Reserve Bank won&rsquo;t be lifting interest rates until wage growth is closer to 3 per cent. At present wages are &ldquo;expected to pick up to a little under 2 per cent over 2021, before gradually increasing to around 2&frac14; per cent by mid 2023.&rdquo; Even on the &ldquo;upside&rdquo; scenario, wage growth won&rsquo;t hit 3 per cent before 2024, tempering &ldquo;boom&rdquo; expectations.

But whether you call it a &lsquo;boom&rsquo;, economic nirvana or just a strong economic recovery, the economic outlook seems bright.

The current investment environment is positive for consumer discretionary, construction, construction materials and information technology sectors of the Australian sharemarket. Financials will benefit from the expectation of firmer borrowing, but super-low interest rates will cap margins and revenue.

Based on traditional valuations, the sharemarket may seem expensive on the current share price to earnings ratio (PE ratio) of 20.97 (the long-term average is 15.5). But valuations are more difficult to make in an environment of near-zero interest rates. Continued strong economic growth would serve to boost corporate earnings and justify current share prices.

The All Ordinaries index has hit record highs on numerous occasions over the past month. The benchmark ASX 200 is also expected to make new highs in coming weeks. The ASX 200 index is tipped to end the calendar year at 7,200 points.

The Reserve Bank has lifted its 2021 calendar year economic growth forecast from 4.00 per cent to 5.25 per cent

cjames

Is Australia headed for economic boom or economic nirvana?

&nbsp;Australia&rsquo;s housing market is experiencing a peak growth rate, but experts say the current boom won&rsquo;t last forever.&nbsp;

In this month&rsquo;s Finder RBA Cash Rate Survey&trade;, 40 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.&nbsp;

While all experts surveyed predict the cash rate to hold, nearly half of those who weighed in on property prices (47%, 16/34) believe Australia&rsquo;s current house price growth is unsustainable.

Property market growth surged at its fastest rate in 33 years in March, with national dwelling values also increasing by 6.2% over the past year according to CoreLogic.&nbsp;

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Graham Cooke, head of consumer research at Finder, said that some experts are concerned a housing bubble is emerging.

&ldquo;Rock-bottom rates, government stimulus and a fear of missing out have really lit a fire under the belly of the market.&quot;

&ldquo;Listing numbers are unable to meet high buyer demand, keeping inventory levels low overall and adding to the sense of urgency among buyers. &quot;

&ldquo;We&rsquo;ve seen more borrowed for housing over the last six months than during any similar period in history &ndash; and economists have tipped us to borrow more over the next six.&quot;

&ldquo;It&rsquo;s unlikely we&#39;ll see any regulatory intervention from policymakers yet, but this might be a possibility down the track,&rdquo; Cooke said.&nbsp;

According to Mala Raghavan of the University of Tasmania, buyers may put themselves at risk by acting too hastily.&nbsp;

&ldquo;The recent uptick in buying behaviour largely appears to be due to the fear of missing out, and many buyers are rushing into the market without clear foresight of the impending risks.&quot;

&ldquo;When mortgage rates start rising, many households will risk being unable to service their loans, and could be vulnerable to foreclosures,&rdquo; she said.&nbsp;

Graham Cooke, head of consumer research at Finder, said that some experts are concerned a housing bubble is emerging

jordan_55689

1 in 2 experts say recent house price growth is “unsustainable”: Finder

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<h2>OPINION</h2>

Having failed to call the turning point in the housing market, within a matter of just a few short months the expert commentators are out in force to demand cooling measures.

It's almost as if the commentary is continually running 3-6 months behind the reality, since the peak of the buying frenzy may already have passed.

Once there was a time when you'd let supply and demand determine prices, but now there are endless calls for tinkering to constantly fine-tune housing prices and activity in the country's most expensive city. 

Over the past couple of weeks final auction clearance rates have already moved a notch lower, and housing finance figures were down a bit last month too. 

And this weekend, despite a strong preliminary result in Sydney, drizzly Melbourne's preliminary clearance rate was well under 75 per cent, as more sellers bring stock to the market. 

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Source: Domain

Something I've noticed over the years is that you'll often get a much better feel for what's going on from listening to mortgage brokers, buyer's agents, or auctioneers (and selling agents when...at least when they aren't in sales mode!), much more so than from analysts and investment bankers poring over historic data from a few months earlier. 

Straight from the auction coalface...

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Detached house building approvals have soared to all-time highs this year, so we can expect to see a corresponding uplift in new dwelling supply in H2 2021.

And with the vaccine rollout floundering, there's almost no immigration to soak it up, so this will act as a natural coolant. 

<img alt="" height="371" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/frezny_3.jpg" width="640">

Therefore it won't be a surprise to see the frenzy pass as more vendors look to cash out later in the year, which will almost certainly calm things down. 

PETE WARGENT is the co-founder of AllenWargent property buyers and a best-selling author and blogger 
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Over the past couple of weeks final auction clearance rates have already moved a notch lower, and housing finance figures were down a bit last month too. 

2021 Property Slowdown

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