One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.

Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.

The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" />

Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.

Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.

The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.

Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.

The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.

That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.

The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.

"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" />

Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.

The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.

The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.

According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.

The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.

A significant component of the proposal is the revitalisation of Blue Street Plaza.

The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.

Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.

Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.

Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.

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fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.

Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.

The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.

Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.

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FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.

Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.

Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.

Joel Robinson

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.

The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.

The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.

The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.

<img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" />

The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;

PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.

The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.

Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.

"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.

Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.

A major focus of the design has been the public domain.

The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.

The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.

Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.

Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.

Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.

Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a>

Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.

[smartcode_project:default project_id=30959 project_image_fid=292863]

It has since quietly assembled its next wave of projects.

Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.

[smartcode_project:default project_id=152095 project_image_fid=373685]

The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.

Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a> 
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.

At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.

The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.

[smartcode_project:default project_id=152022 project_image_fid=375528]

Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.

The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.

"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.

[smartcode_project:default project_id=152022 project_image_fid=375531]

The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.

The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.

[smartcode_project:default project_id=152022 project_image_fid=375524]

Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.

Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.

[smartcode_project:default project_id=152022 project_image_fid=375530]

The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.

The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.

The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.

"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.

"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."

Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.

[smartcode_project_cta:default project_id=152022]

Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

Not all apartment amenities are immediately visible.

Swimming pools, gyms, rooftop terraces and residents' lounges have long featured on buyers' wishlists, but as the way Australians live has changed, so too have the features that make apartment living more convenient.

Increasingly, buyers are placing value on the practical aspects of day-to-day life. Fast internet, EV charging, secure bike storage, flexible workspaces and parcel management are becoming just as relevant as lifestyle amenities, reflecting changing habits and expectations.

Online shopping has been one of the biggest drivers of that shift.

Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally, making parcel deliveries a routine part of everyday life rather than an occasional convenience.

For apartment residents, however, receiving those deliveries isn't always straightforward.

Without someone home to accept a parcel, deliveries can be redirected to a nearby Post Office, left in building foyers or common areas, or require building management to temporarily store packages. As apartment living continues to grow across Australia's cities, parcel management has become an increasingly important consideration for both residents and developers.

Australia Post's Parcel Locker network is one response to that shift.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/KPZ9j5FRdsQ?si=Qztc1dNP3ZvEIUhb" title="YouTube video player" width="560"></iframe>

Rather than relying on home delivery, eligible parcels can be directed to a nominated Parcel Locker, where they're securely stored until collected. Once a parcel arrives, residents receive a notification through the AusPost app or SMS and can retrieve it using a one-time code or QR code at a time that suits them.

The network has expanded to more than 1,500 locations nationwide, with Parcel Lockers positioned at Post Offices, shopping centres, supermarkets, transport hubs and, increasingly, within or alongside residential developments.

That growing presence reflects a broader change in how apartment buildings are being planned.

Developers are increasingly considering the operational side of apartment living alongside traditional lifestyle amenities. Just as secure mailrooms, bicycle storage and EV charging have become more common inclusions, parcel management is emerging as another feature that supports everyday convenience.

It also helps preserve the arrival experience within a building. Carefully designed lobbies and communal spaces can quickly become cluttered when deliveries accumulate, while secure parcel solutions reduce the likelihood of missed deliveries or parcels being left unattended.

For buyers comparing apartments, these everyday details are becoming part of the decision-making process.

Location, floorplans and finishes remain fundamental, but the features that simplify daily life are carrying greater weight than they once did. As online shopping continues to shape consumer behaviour, secure parcel delivery is increasingly becoming another amenity worth looking for.

Parcel delivery is joining the apartment amenity checklist

Inca Property Group has lodged a State Significant Development Application (SSDA) for Dawn, a 53-apartment oceanfront development overlooking Mona Vale Beach.

The proposal, at 35-39 Darley Street East, would replace an existing 18-apartment strata building with a new owner-occupier-focused development comprising 53 two and three-bedroom apartments, including nine affordable built-to-rent residences delivered under the State's infill affordable housing scheme.

Positioned on a 2,679 sqm elevated site around 280 metres from Mona Vale Beach, the development has been designed to maximise panoramic ocean views while responding to the site's sloping topography.

<a href="https://www.apartments.com.au/developers/inca-property-group">Inca Property Group</a> Managing Director Josh Thompson said the State Significant pathway provided greater certainty for projects of this scale.

"This State Significant pathway gives the team real certainty to progress <a href="https://www.apartments.com.au/new-apartments/dawn-35-39-darley-street-east-mona-vale-nsw-2103">Dawn</a> through to completion," Thompson said.

"It allows us to acquire a one-off site, design it carefully and deliver the right offering for the suburb, assessed by the NSW Government's planning department."

The project is one of the first developments in the area to be assessed under the NSW Government's Low and Mid-Rise Housing policy, with the site sitting on the edge of the policy's designated inner area.

The proposal includes three basement levels providing 124 car spaces, alongside a range of resident amenities including a swimming pool, gym, sauna, wellness facilities and private plunge pools for selected ground-floor and penthouse apartments.

<img alt="Dawn" data-entity-type="file" data-entity-uuid="fc1a1daf-0ce4-4f12-9076-b1fa553c7a91" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-21%20at%208.42.11%E2%80%AFAM.png?VersionId=4GZ9h.gpNkTljbxyAET8Jfhv51XUamDm" />

Thompson said Dawn had been designed specifically for owner-occupiers and downsizers, a buyer profile that has driven demand across Inca's recent Upper North Shore developments.

"The majority of buyers in our recent North Shore projects have been downsizers, and we are learning exactly what this market is looking for. Beyond the location itself, we have included resort-style amenities to deliver a genuine lifestyle offering," Thompson said.

Located within walking distance of Mona Vale Beach, the town centre, Mona Vale Golf Club and the Royal Motor Yacht Club, Dawn represents Inca's first Northern Beaches project following the sell-out of Tara on Park in Waitara and Ellis Residences, currently under construction in St Ives.

Construction will be undertaken by Inca's in-house construction arm, GOP Constructions.

Dawn is the latest major apartment proposal for Mona Vale, with the suburb emerging as one of the key beneficiaries of the NSW Government's new Low and Mid-Rise Housing policy.

New developer One Living, led by industry veteran Joseph Scuderi, recently secured a site on Mona Vale Road, on the border of Mona Vale and Pymble, where it is planning around 140 apartments.

IPM is also planning its third project in Mona Vale, significantly increasing the scale of its previous developments with an 82-apartment proposal at <a href="https://www.apartments.com.au/new-apartments/159-167-darley-street-west-mona-vale-nsw-2103">159-167 Darley Street West</a>, opposite Bayview Golf Course and less than 800 metres from Mona Vale town centre.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/one-living-enters-sydneys-new-apartment-market-with-northern-beaches-site-acquisition">One Living enters Sydney's new apartment market with Northern Beaches site acquisition</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-ipm-plans-third-mona-vale-project">First look: IPM plans third Mona Vale project</a>

First look: Inca eyes Mona Vale with State Significant DA for Dawn apartments

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.
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<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.
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<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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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.
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<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.
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<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.
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<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.
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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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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.
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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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