<a href="https://www.apartments.com.au/developments/collingwood-vic-3066">Collingwood</a>’s northern edge continues to sharpen its reputation as one of Melbourne’s most compelling cultural precincts, where established creative institutions, leading hospitality, and independent fashion converge within a tightly held inner-city neighbourhood.

Set within this evolving pocket, <a href="https://www.apartments.com.au/new-apartments/derby-street-by-milieu-collingwood-4-derby-street-collingwood-vic-3066">Derby Street by Milieu</a> draws on a location that balances proximity to some of the inner north’s most influential destinations with the quieter, tree-lined character that defines the streets edging East Melbourne. Positioned just moments from both Smith and Gertrude Streets, the address sits on the periphery of Collingwood’s cultural core, offering immediate access without the intensity of its busiest frontages.&nbsp;

[smartcode_project:default project_id=145576 project_image_fid=355945]

Gertrude Street, in particular, anchors the area’s identity as a destination for Melbourne’s leading food, art and fashion. Within a short walk, venues such as Marion, Cutler &amp; Co, IDES and the Builders Arms Hotel define a tightly curated dining scene with enduring citywide appeal, complemented by a strong fashion and retail presence including Havn, Le Labo and a selection of independent boutiques.

Nearby, institutions such as the Australian Print Workshop and Collingwood Yards sustain a constant rhythm of exhibitions, performances and creative output, embedding art and culture into the everyday fabric of the neighbourhood.

Smith Street, running parallel, extends this offering with a broader mix of hospitality and nightlife, maintaining its status as one of Melbourne’s most active inner-urban strips.

Beyond these high-energy streets, the immediate surrounds shift in tone. Derby Street and its neighbouring blocks are defined by low-rise heritage terraces, mature trees and a settled residential character. Fitzroy Gardens and Carlton Gardens are both within walking distance, alongside the Royal Exhibition Building and Melbourne Museum, bringing together green space and cultural landmarks within minutes of home.

[smartcode_project:default project_id=145576 project_image_fid=355985]

Connectivity remains a key advantage. The CBD sits within easy reach, accessible by tram along Smith Street in around 20 minutes, while also remaining close enough to walk or cycle, supported by the inner north’s established bike network.&nbsp;

<a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a>’s long-standing connection to Collingwood underpins the project’s approach. With a portfolio that includes multiple nearby developments across Bedford, Peel and Napier Streets, the developer brings a sustained understanding of the area’s character and evolution. Derby Street continues this trajectory as a collaboration with award-winning Melbourne-based <a href="https://www.apartments.com.au/architects/studio-bright">Studio Bright</a>, marking the practice’s first multi-residential project in the inner north and reflecting a shared focus on design integrity and contextual response.&nbsp;

Balancing connection to the neighbourhood with a sense of seclusion and refuge, Derby Street by Milieu embodies a level of care and craft typically reserved for single residential projects. Comprising 22 residences across six storeys, with two to four-bedroom configurations priced from $1.15 million, the project is currently under construction with completion expected in late 2027.&nbsp;

[smartcode_project_cta:default project_id=145576]

Joel Robinson

Derby Street by Milieu, at the top end of Collingwood

A rare new apartment development in the Blue Mountains is the latest in a string of State Significant Development Applications submitted through the New South Wales Government's Housing Delivery Authority.

A total of 270 apartments are being proposed for the 1.16-hectare site at <a href="https://www.apartments.com.au/new-apartments/blue-mountains-alpine-retreat-142-150-narrow-neck-road-katoomba-nsw-2780">142–150 Narrow Neck Road in Katoomba</a>, a parcel of land adjoining the former Katoomba Golf Course. The site was acquired for $3.85 million in 2021 by private developer VDM Prime.

The apartments, comprising a mix of serviced apartments, affordable housing, and traditional build-to-sell product, will be spread across eight low-rise buildings, along with a separate building for a new restaurant, arranged around a green spine that leads to a central park.

<img alt="Katoomba" data-entity-type="file" data-entity-uuid="ee9a2072-f465-44f1-9076-80c9c8ecca02" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-22%20at%209.20.21%E2%80%AFAM.png?VersionId=4bT0vQ7j_syl65wcrJmHGm3m5pTvwrY_" />

The Urban Design Report by Atlas Urban says the vision is to create a "contemporary mountain precinct that is responsive to its escarpment landscape, heritage character, and community context."

"The development responds to the current housing supply and affordability challenges identified under the NSW Housing Delivery Authority (HDA), providing a balanced mix of standard, affordable, and short-stay accommodation," the report noted.

"By introducing a variety of dwelling types and tenures, the proposal supports intergenerational living, local workforce retention, and greater housing choice within an area constrained by topography, heritage, and environmental protections."

Of the 270 units proposed, 52 will be serviced apartments. The remainder will comprise 54 studios, 121 one-bedroom units, 39 two-bedroom apartments, and four three- to four-bedroom residences.

<img alt="Katoomba" data-entity-type="file" data-entity-uuid="f704508d-1bdf-4170-955d-0256652402a7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-22%20at%209.56.49%E2%80%AFAM.png?VersionId=TzarHMO4gTOsblCqsbJQkvMqWj9nu2Au" />

The Design Report, by VDM Prime and appointed architect Antoniades Architects, noted that the design seeks to "provide a built form outcome that is highly considered, respectful and contextually fitting, whilst contributing positively to an evolving precinct."

"The site offers three frontages and the opportunity to provide a meaningful interface with the public domain environment. the design has a sympathetic response to streetscape and the green open space that surrounds the site."

The report states that the buildings are broken up to establish an appropriate bulk and scale, emphasised through height and setback strategies and defined through articulation that supports the transition of precinct granularity. It also notes that a central communal open space is established through the site to enhance the social dynamic and access to amenity, including natural ventilation and light to the apartments. The east and west frontages receive solar access during the morning and afternoon, whilst maximising views to the green open space.

The site adjoins the recently completed Yarrabee Katoomba development, comprising 24 duplexes that were completed last year and sold through McGrath Projects.

The relatively new Housing Delivery Authority pathway established by the NSW Government allows developers to submit State Significant Development Applications through a fast-tracked state process, effectively reducing reliance on local council approval pathways and aiming to accelerate housing delivery across New South Wales.

First look: Nearly 300 apartments pitched on former Katoomba golf course site

In Melbourne’s established inner east, the qualities that define a traditional house, width, height, and access to open ground, are increasingly difficult to replicate in new residential developments. Larger landholdings are scarce, and with them, the ability to create apartments that extend beyond compact, internalised layouts.&nbsp;

In <a href="https://www.apartments.com.au/developments/kew-vic-3101">Kew</a>, where the residential fabric is shaped by generous setbacks and mature tree canopies, that tension is especially visible.

<a href="https://www.apartments.com.au/developers/ricdanic-investments-pty-ltd">Ricdanic</a>&nbsp;is bringing forward a boutique collection of just 13 residences across two buildings at 9–11 Wimba Avenue, Kew. Comprising six homes at No.9 and seven at No.11, the project sits on a quiet, tree-lined street just off Cotham Road.&nbsp;

Each apartment has been planned with a level of independence more commonly associated with standalone dwellings, balancing privacy with the efficiencies of apartment living.

Architect Chris Idle, who has been practising for over two decades, says projects like this don’t come along often.

“There are very few opportunities to do these kinds of developments in leafy, established suburbs,” he explains. “To get this level of amenity, natural light, and architectural freedom in such a setting is extremely rare.”

[smartcode_project:default project_id=140755 project_image_fid=366267]

The internal planning begins with width. Living areas extend beyond five metres, allowing furniture, circulation, and glazing to sit comfortably within the same zone without compression. Ceiling heights shift from three metres through to five metres in select areas, changing the sense of scale as you move through the apartment. These proportions are paired with double-glazed windows and fully electric systems, balancing volume with performance, supported by a 7.2 NatHERS energy rating.&nbsp;

From the main living space, the apartments open directly outward. Large sliding doors connect to private gardens averaging 125 square metres, with some residences also incorporating balconies of around 60 square metres. Rather than acting as secondary outdoor zones, these areas sit flush with the internal floor level, extending the usable footprint of the home and allowing for multiple modes of use, whether for quiet daily routines or larger gatherings.&nbsp;

The landscape, led by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>, reinforces this relationship. Across the site, 23 different plant species have been introduced, including a mix of native and established varieties, arranged to maintain privacy while preserving sightlines and light access. Gardens are not treated as decorative buffers but as functional extensions of the apartments, shaped to accommodate movement, seating, and informal use over time.&nbsp;

[smartcode_project:default project_id=140755 project_image_fid=366265]

Architecturally, the project draws from Kew’s historic residential language. Handmade bricks by Krause define the exterior, grounding the buildings within the material palette of the suburb, while interior finishes, stone, timber flooring, and restrained detailing, continue this approach internally. Architect Chris Idle describes the intent as long-term rather than stylistic: “We wanted it to feel timeless.”&nbsp;

This emphasis on durability extends to how the buildings are accessed and secured. Entry is managed through keyless systems, with a double-gated basement incorporating number plate recognition for vehicle access. Each residence is paired with a private lock-up garage accommodating two to three cars, alongside storage, while all entry points are monitored continuously. These measures sit alongside EV readiness and fully electric infrastructure, aligning the project’s operational systems with its long-term design outlook.&nbsp;

The setting remains central to how the development is experienced. Located within walking distance of Kew Junction and close to established schools including Carey Grammar and Xavier College, the address benefits from existing infrastructure while maintaining a residential quietness that is increasingly difficult to find at this scale.&nbsp;

Construction is being delivered by <a href="https://www.apartments.com.au/builders/sinjen">Sinjen</a>, with a 10-year structural guarantee, with completion targeted for mid-2027.

[smartcode_project_cta:default project_id=140755]

Inside Wimba Ave, Kew’s garden-scale residences designed for space and permanence

High-end Sydney developer&nbsp;<a href="https://www.apartments.com.au/developers/abadeen-group">Abadeen</a> has secured approval for one of its latest Mosman projects, one of the first developments approved by Mosman Council under the NSW Government’s Low and Mid-Rise Housing Policy.

The approval represents an important step in delivering well-considered housing next to established village locations on Sydney’s Lower North Shore, in line with the intent of the Low and Mid-Rise zoning framework. 
&nbsp; 
There are currently 13 other sites lodged within Mosman Council under the policy, with <a href="https://www.apartments.com.au/new-apartments/27-29-heydon-street-mosman-nsw-2088">Heydon Street</a> among the first to receive development consent. 
&nbsp; 
Abadeen Founder and Executive Chairman Justin Brown said the project reflects a considered and appropriate response to its planning context. 
&nbsp; 
“This approval demonstrates how carefully considered, design-led development can align with the objectives of the Low and Mid-Rise Housing Policy," Brown said.

"The scheme has been designed to respond sensitively to its village setting, with a built form, scale and level of amenity appropriate to its local context. The determination reflects a balanced and considered planning outcome, with Council recognising the capacity for this site to accommodate additional housing within a well-located and established precinct.”

<img alt="Abadeen secures first approval under low and mid-rise housing policy for Heydon Street, Mosman" data-entity-type="file" data-entity-uuid="92811ce3-02e8-44fc-996e-c61ae039bd3e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Heydon%20Street%20Aerial.jpg?VersionId=ZHJVuWQT64QcdrFJx963pFWFzTX7lI2I" />

The Heydon Street approval followed extensive consultation with Mosman Council, with Abadeen working closely with Council throughout the assessment process.

The approved scheme comprises 27 residences, with only four per floor, creating a low-density living environment. The building will include four half-floor penthouses designed to capture views across Middle Harbour, Sydney Harbour and the surrounding district.&nbsp;

The project is expected to appeal to downsizers and owner-occupiers seeking house-like proportions, privacy and local convenience. There will be north-facing Middle Harbour views from the second level upward. It is also just a flat 100-metre walk to Bridgepoint Shopping Centre, which will appeal to owner-occupiers and in particular downsizers.

Two-bedroom residences are expected to be priced from $1.99 million when sales launch later this year. 
&nbsp; 
Joe Tack, CEO at Abadeen, said the outcome reflects both the quality of the site and the broader need for well-located housing. 
&nbsp; 
“This is a highly considered site within a highly established local setting, offering elevated views and strong connectivity. The project has been designed to respond to that context, delivering a scale and quality of housing aligned with both the planning framework and evolving market demand.” 
&nbsp; 
“This approval is particularly significant in the context of Mosman, where new housing supply has historically been limited. While it represents the first approval of this scale in Mosman to be achieved in over 50 years, it is importantly located within a well-established residential location, in close proximity to the established commercial amenity of Spit Road and Mosman Village. It reflects strong confidence in Abadeen’s approach to design, delivery and community integration, while contributing to the delivery of much-needed housing in a highly constrained market.”

Abadeen has an established track record across Sydney’s Lower North Shore, with recent completions including KOYO in Crows Nest and ENSO in Neutral Bay.

In Mosman, Abadeen recently completed The Hampden, with Mosman Residences on the corner of Spit Road and Clifford Street scheduled for completion later this year. Construction has also commenced at Burran Residences, comprising three full-floor ultra-premium homes positioned just 50 metres from Balmoral Beach, with residences expected to achieve prices in excess of $20 million. Two further projects are also progressing through planning within the local government area.

Abadeen secures first approval under low and mid-rise housing policy for Heydon Street, Mosman apartment development

Apartment developer <a href="https://www.apartments.com.au/developers/martello">Martello™</a> is one of the latest entrants to the Gold Coast development market, with its debut project set to be one of the most boutique offerings on Chevron Island in recent years.

Martello has unveiled <a href="https://www.apartments.com.au/new-apartments/aere-chevron-island-18-20-mawarra-street-chevron-island-qld-4217">Aere Chevron Island</a>, a collection of 33 large-scale two-, three-, and four-bedroom apartments across an 18-storey building on Mawarra Street.

[smartcode_project:default project_id=143932 project_image_fid=367517]

The developer has placed a strong emphasis on wellness, briefing architecture firm Raunik Design to embed this philosophy into the project. It is a direction <a href="https://www.apartments.com.au/developers/martello">Martello™</a> plans to carry through its future developments along the coast.

<a href="https://www.apartments.com.au/developers/martello">Martello™</a> has positioned Aere as a continuation of its human-centric development approach, with a focus extending beyond amenity to the fundamentals of layout, natural light, and spatial planning. Promax Construction has already been appointed to deliver the project, with construction expected to commence in the coming months as part of the group’s broader expansion into South East Queensland.

Rising above the low-rise fabric of Chevron Island, Aere’s design emphasises generous internal proportions and uninterrupted outlooks, with residences oriented to capture coastal, skyline, and waterway views. Interiors prioritise open-plan living, with large-format glazing and carefully considered transitions between indoor and outdoor spaces.

[smartcode_project:default project_id=143932 project_image_fid=367508]

The upper levels are dedicated to larger-format homes, including four-bedroom residences designed as half-floor offerings. These layouts prioritise separation between living and sleeping zones, along with increased privacy and storage, features more commonly associated with detached housing than traditional apartment product.

Aere’s private resident amenity spaces centre on wellness. A rooftop level will incorporate a heated swimming pool, sauna and spa, alongside a residents’ lounge, dining areas and barbecue spaces, while additional shared facilities throughout the building include a gym and yoga area.

The inclusion of both social and quieter retreat spaces reflects a broader shift in higher-end apartment design on the Gold Coast, where developers are increasingly responding to owner-occupier demand for buildings that support long-term living rather than short-stay use.

[smartcode_project:default project_id=143932 project_image_fid=367814]

Aere is positioned within walking distance of Chevron Island’s village centre along Thomas Drive, as well as the HOTA cultural precinct via the Green Bridge, connecting residents to parklands, galleries, and event spaces.

For <a href="https://www.apartments.com.au/developers/martello">Martello™</a>, Aere represents the first in a series of planned Gold Coast developments, with the group also exploring opportunities in other coastal precincts, including Kirra and Palm Beach.

The move north comes as sustained population growth and infrastructure investment continue to reshape South East Queensland, with developers increasingly targeting boutique, design-led projects in established lifestyle pockets. Aere’s relatively small scale and emphasis on spatial quality position it within this emerging segment of the market.

[smartcode_project_cta:default project_id=143932]

Martello™ enters Gold Coast market with wellness-led Chevron Island development Aere

Construction Work

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GUEST OBSERVER
Construction work, having trended lower in recent years, stabilised over the past half year. The drag from the mining investment downturn has diminished and public works is providing a boost.
In the March quarter 2017, construction work declined by a relatively modest 0.7 percent, following a 0.6 percent gain in the final quarter of 2016 (revised up from -0.2 percent). By comparison, over the year to September 2016, construction work declined by 10.7 percent, to be $5.6bn below a year earlier.
The March quarter 2017 result broadly met expectations, (market median -0.5 percent and Westpac -0.2 percent).
<a href="https://www.propertyobserver.com.au/images/2017/05/26/v1.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/26/v1.png" width="700" height="462">
In NSW and Qld, activity in the most recent quarter appears to have been disrupted by wet weather and flooding.
The wet weather impact is evident in the private home building segment, where work nationally on new dwellings fell by 4.8 percent and renovations were down by 6.3 percent. In NSW, total residential building activity fell by 4.9 percent in Q1, while Qld experienced a sharp 13.6 percent decline. These outcomes are weaker than suggested by earlier strength in approvals and the sizeable pipeline of work.
Home building activity is likely to rebound in the June quarter. Beyond that, there is a looming downturn in home building activity. Notably, private new dwelling approvals in Q1 2017 were 12 percent below the level of a year earlier.
The drag from the mining investment downturn has clearly diminished. Private infrastructure activity surprisingly rose in the March quarter, up 1.8 percent. We still expect some further modest downside over coming quarters.
<a href="https://www.propertyobserver.com.au/images/2017/05/26/v2.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/26/v2.png" width="700" height="462">
In the mining state of WA, where work on gas projects under construction is nearing completion, total infrastructure activity is declining at a slower rate. Over the past half year, work fell by 12 percent, down $0.7bn. For the year prior to that, work fell by 51 percent, a decline of $5.5bn.
Public works is a growth driver as governments commit to additional projects. Public works increased in each of the past seven quarters, up a cumulative 21 percent. That is the longest run of consecutive gains since 2008 to 2010, associated with the post GFC fiscal stimulus package.
Victoria is performing strongly, with construction work in Q1 up 3.4 percent/qtr, 9.2 percent/yr. Strength is evident in building activity, +12 percent/yr, both residential and non-residential.
In NSW, construction work consolidated over the past year, with a Q1 outcome of -1.7 percent/qtr, +0.8 percent/yr. While infrastructure work moved higher, +6.6 percent/yr, building work eased, -2.2 percent/yr, led lower by a pull-back in commercial work.
In Qld, construction work has stabilised, printing at -1.9 percent/qtr, -1.0 percent/yr in Q1. This follows falls of 22 percent in 2014 and 24 percent in 2015 associated with the mining investment downturn. Over the past year, infrastructure work rebounded by almost 14 percent.
In WA, construction work fell by -4.8 percent/qtr, -37.4 percent/yr in Q1.
<a href="https://www.propertyobserver.com.au/images/2017/05/26/v3.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/26/v3.png" width="700" height="462">
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.linkedin.com/in/andrew-hanlan-4302223/" target="_blank">here</a>. 
 
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jchancellor-FAypfDUnLy

Construction work stabilised over the past half year: Andrew Hanlan

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GUEST OBSERVER
Construction work, which is trending lower, stabilised in Q4, -0.2 percent, after a surprising sharp fall in Q3, -4.4 percent.
Construction work has been trending lower over recent years as mining investment falls back to more normal levels.
<a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.14.29%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.14.29%20AM.png" alt="">
Within that trend, the second half of 2016 was a volatile half year.  Q3 was particularly weak, -4.4 percent, in part due to bad weather. Q4 saw construction work stabilise at lower levels, -0.2 percent.
<a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.20.11%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.20.11%20AM.png" alt="">
The Q4 result was not greatly different to our expectations (Westpac f/c -0.8 percent and market median +0.5 percent).
The outcome does not alter our views on Q4 GDP, with our forecast at 0.4 percent/qtr, 1.5 percent/yr after a Q3 outcome of -0.5 percent/qtr, 1.8 percent/yr.
<a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.21.23%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.21.23%20AM.png" alt="">
By asset, key points are:
Private infrastructure activity fell further, -3.5 percent, with the mining investment downturn nearing its end. We had expected a sharper fall, -6 percent.  New home building activity advanced, +0.9 percent, consistent with strength in building approvals and a sizeable work pipeline. That follows a surprise 1.9 percent fall in Q3, constrained by bad weather.
<a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.22.20%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.22.20%20AM.png" alt="">
Renovation work rose 2.2 percent, more than reversing a 0.3 percent dip in Q3, consistent with rising approvals and positive fundamentals. 
Private commercial building rose 5.1 percent, after a sharp 10.8% fall in Q3, a decline that was overdue given earlier falls in approvals. More recently, approvals have lifted.
<a href="https://www.propertyobserver.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.23.36%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/23/Screen%20Shot%202017-02-23%20at%208.23.36%20AM.png" alt="">
Public works surprised to the low side, declining by 1.6 percent, whereas we had anticipated a rise of 1.6 percent. Public building work fell sharply, while public infrastructure activity consolidated in the quarter whereas a sizeable and rising work pipeline points to upside.
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.linkedin.com/in/andrew-hanlan-4302223/" target="_blank">here</a>. 
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Current renovation work reverses Q3 dip: Andrew Hanlan

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Construction activity eases: Construction work done in the December quarter fell by 3.6 percent, driven by a 9.5 percent slump in engineering work. Residential work lifted by 2.8 per cent to record highs while commercial building rose 2.5 percent.
Building inflation: Building inflation rose by 1.1 per cent in the December quarter, the biggest quarterly gain in seven years. The annual rate of construction inflation rose from 1 per cent to 1.9 percent – matching the fastest annual growth rate in four years.
Slow wage growth: The wage price index rose by 0.5 percent in the December quarter after a 0.6 percent rise in the September quarter. Annual wage growth eased from 2.3 percent to a record (18-year) low of 2.2 percent.
Industry with fastest annual wage growth: Financial and insurance services (up 2.8 percent) followed by education &amp; training (up 2.6 percent).
Industries with slowest annual wage growth: Administrative and support services (up 1.4 percent), followed by Mining (up 1.5 percent).
The data on construction work is important for builders, building material companies and developers.
What does it all mean?
The ‘baton pass’ from engineering to residential building is clear for all to see. Engineering work continues to recede while home building has hit new highs. Interestingly building (residential and commercial) has surpassed engineering in terms of total work for the first time in five years. The results are even more staggering when you consider that just two years ago engineering work surpassed total building by more than $11 billion. 
The speed of the turnaround has shown up in the patchiness across the national economy and in effect highlights the difficulties faced by policymakers in trying to shore up growth.
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<img src="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.02.12%20AM.png" alt="">
The wages data confirmed that inflation is well and truly in check. However an area to watch over the next couple of quarters is inflationary pressures in the high-flying home building sector. Inflation in the construction sector rose by the 1.1 percent in the December quarter – the fastest quarterly growth rate in seven years. The lack of inflation in the rest of the economy should ensure that for the moment the latest result doesn’t trouble the Reserve Bank.
<a href="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.05.59%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.05.59%20AM.png" alt="">
Clearly, the job market is improving because the cost of labour has become more affordable for businesses. While low wage growth is good for keeping costs down for businesses, modest real wage growth (wages less prices) makes it more difficult for consumer-focussed businesses.
Real wage growth remains positive – around 0.5 percentage points if judged against “headline” inflation (15-year average 0.7 percentage points) and around 0.2 percentage points when judged against “underlying” inflation.
Today’s data is unlikely to alter the Reserve Banks thinking when it comes to rates. While policymakers may discuss the merits of another rate cut, they are unlikely to pull the trigger on domestic conditions. Rather a rate cut would be driven by changes in the global environment.
What do the figures show?
Construction Work
Construction work done fell by 3.6 per cent in real (inflation-adjusted) terms in the December quarter after sliding by 1.8 percent in the September quarter. Work done is down by 4.3 percent on a year ago. Public sector construction work rose by 1.2 percent in the quarter while private sector activity fell by 4.6 percent.
Construction work fell in five of the states and territories in the December quarter. Leading the falls was Northern Territory (down 17.7 percent), followed by Western Australia (down 9.5 percent), Tasmania (down 4.3 percent), South Australia (down 3.1 percent), and Queensland (down 1.4 percent). Tasmania (down 1.8 percent) and ACT (down 0.6 percent). Construction rose in Victoria (up 1.1 percent), ACT (up 1 percent) and NSW (up 0.2 percent).
Engineering work fell by 9.5 percent in the December quarter and has now fallen almost 25 percent in the past three years. Engineering construction is down by 14.7 percent on a year ago.
Commercial (non-residential) building rose by 2.5 percent in the December quarter to be up 2.2 percent over the year.
Residential building rose by 2.8 percent in the December quarter and was up by 11.5 percent over the year.
Alterations &amp; additions fell by 1.2 percent in the quarter while new residential work rose by 3.3 percent.
The measure of inflation in the construction sector (deflator) rose by 1.1 percent in the December quarter, the biggest gain in 7 years. The annual rate of construction inflation rose from 1 percent to 1.9 percent – matching the fastest annual growth rate in four years. Engineering prices rose by 1.5 per cent in the quarter (up 0.8 percent over the year) while building prices rose by 0.5 percent in the quarter (2.7 percent over the year).
Wage price index
The wage price index rose by 0.5 percent in the December quarter after a 0.6 percent rise in the September.
Annual wage growth eased from 2.3 percent to a record (18-year) low of 2.2 percent.
Private sector wages rose by 0.5 percent in the quarter while  public sector wages also rose by 0.5 percent.
Annual growth of private sector wages fell from 2.1 percent in the September quarter to a record low of 2.0 percent in the December quarter. Public sector wage growth fell from 2.8 percent to 2.6 percent in the December quarter.
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<img src="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.13.15%20AM.png" alt="">
 
Including bonuses, wages rose by 0.5 percent in original terms in the December quarter to be up 2.2 percent on a year ago – a record low. Private sector wages including bonuses rose by 0.5 percent in the quarter to be up 2.1 percent on a year ago (or up 2.2 per cent at a total hourly rate).
Industries with fastest annual wage growth: Financial and insurance services (up 2.8 percent), followed by education &amp; training (up 2.6 percent) and Manufacturing and retail trade (both up 2.5 percent).
Industries with slowest annual wage growth: Administrative and support services (up 1.4 percent), followed by Mining (up 1.5 percent), Professional, scientific and technical services and Construction (both up 1.6 percent).
Annual wage growth across States &amp; Territories: NSW, 2.1 percent; Victoria, 2.4 percent; Queensland, 1.9 percent; South Australia, 2.3 percent; Western Australia, 1.8 percent; Tasmania, 2.2 percent; Northern Territory, 2.4 percent; and ACT, 1.6 percent.
What is the importance of the economic data?
The Bureau of Statistics releases quarterly estimates of  Construction work done. The estimates are based on a survey and cover around 85 percent of the construction work done in the period. Revised estimates will be released in coming months. The data is useful largely for historical purposes but the work yet to be done estimates provide an early warning signal of future activity. The residential work figures give a good early guide to the strength of residential investment in the national accounts.
The Wage Price Index has been compiled since September quarter 1997 and measures quarterly changes in wage and salary costs for employees. The index is based on a representative sample of employees, and includes measures of non-wage costs including superannuation, payroll tax, public holiday and workers compensation.
The Wage Price Index is useful in measuring wage pressures in the economy. While strong growth in wages would boost domestic spending, it could also serve to lift employer costs and prices and add to economy-wide inflationary pressures. The wage price index is a measure of hourly pay rates (excluding bonuses).
What are the implications for interest rates and investors?
There is plenty of work in the construction sector. But there are winners and losers across states and industry sectors. Construction activity in Queensland remains a concern. In the past two years, construction work has slumped by 45 percent in Queensland – the most of any state or territory. The lack of construction work in Queensland needs to be addressed by the State Government as it is robbing the economy of momentum.
In contrast to Queensland, construction activity in Victoria hit record highs in the December quarter. Builders, tradespeople and construction firms need to be mobile in the current environment.
The Reserve Bank will be pleased about current trends in construction. Overall activity is correcting as expected and adjusting to the new realities. And while inflation in the home building is higher than in the rest of construction and higher than consumer prices, that is to be expected given soaring activity.
We expect the Reserve Bank to stay on the interest rate sidelines over coming months.
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Tame wages and home building at record highs: Savanth Sebastian

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GUEST OBSERVER
Anyone questioning the health of the economy needs to be pointed in the direction of the home building sector. More homes are being built than ever before, with almost $44 billion of work currently in the pipeline.
There are signs that activity is topping out – but at high levels with a record amount of work to be completed.
Investors should display a healthy degree of caution because there is a huge amount of new housing stock to be absorbed over the next few years. Rental vacancy rates need to be watched closely.
The monthly consumer confidence data has lost relevance given that a weekly version is released with a similar sampling regime. As noted yesterday, confidence has fallen over recent weeks due to financial market volatility and a lower Australian dollar.
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What do the figures show? 
Building starts
Dwelling starts (commencements) rose by 0.5 percent in the September quarter after a 0.2 percent increase in the June quarter. Work started on a record 215,053 new dwellings over the year to September, up 13.4 percent on the previous year.
At present a record 194,252 homes are under construction.
Across Australia, starts in the September quarter rose in five states: NSW (up 2.4 percent); Victoria (down 3.8 percent); Queensland (down 1.0 percent); South Australia (up 1.2 percent); Western Australia (up 1.7 percent); Tasmania (down 20.7 percent); Northern Territory (up 17.4 percent); and the ACT (up 0.7 percent).
In the year to September, dwelling starts were higher than the decade average in all the states &amp; territories except for South Australia (down 2.9 percent). Starts were at record highs in NSW and Victoria.
Dwelling starts in NSW in the year to September were 60.7 per cent above the decade average.
The value of commercial building starts edged up from $28.88 billion to $28.95 billion in the year to September. The annual total of commercial building starts is near 9-year lows.
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Consumer sentiment:
The Westpac/Melbourne Institute index of consumer confidence fell by 3.5 percent in January after falling by 0.8 percent in December. The confidence index is up 4.3 percent on a year ago.
The current conditions index fell by 5.1 percent while the expectations index fell by 2.4 percent.
Four of the five components of the index fell in January:
<ul>
<li>The estimate of family finances compared with a year ago was down by 9.4 percent;</li>
<li>The estimate of family finances over the next year was downby 2.3 percent;</li>
<li>Economic conditions over the next 12 months was down by 5.0 percent;</li>
<li>Economic conditions over the next 5 years was up by 0.39 percent;</li>
<li>The measure on whether it was a good time to buy a major household item was down by 1.7 percent.</li>
</ul>
State sentiment levels: NSW (up 3.3 percent), Victoria (down 1.0 percent), Queensland (down 3.1 percent), Western Australia (up 3.5 percent) and South Australia (down 3.0 percent).
Job market outlook: The Westpac-Melbourne Institute Unemployment Expectations Index rose by 0.7 percent in January but was 5.3 percent below its value a year ago.
The ‘time to buy a dwelling’ index rose by 13.9 percent to the highest reading since May 2015.
What is the importance of the economic data?
Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.” Confident consumers may be more inclined to spend, especially on major items.
The Australian Bureau of Statistics releases data on dwelling commencements (starts) each quarter. The figures provide guidance on future construction activity. If construction begins on new houses or apartments, it signifies work for building trades.
What are the implications for interest rates and investors?
Strong home building activity will support the economy over the next 12-18 months. As a result, CommSec expects no change to interest rate settings in coming months.
There could be an ‘ingestion’ problem as residential projects get completed. If investors can’t find tenants, new homes may be put up for sales, depressing home prices.
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Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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