Fresh off completing Pienza Neutral Bay, developer <a href="https://www.apartments.com.au/developers/central-element">Central Element</a> is preparing its next move in the coveted Lower North Shore suburb.&nbsp;

Central Element (CE) has lodged plans for an eight-storey apartment building at <a href="https://www.apartments.com.au/new-apartments/54-64-barry-street-neutral-bay-nsw-2089">54–64 Barry Street</a>, a 1,659 sqm site just south of Military Road and the Neutral Bay town centre.

The $52 million development will involve the demolition of four detached homes across four lots to deliver 45 apartments, including eight affordable housing units to be managed by Bridge Housing. The mix will comprise six one-bedroom apartments, 24 two-beds, and 15 three-beds. The apartments will sit above three basement levels with 62 car parking spaces and 50 bicycle spaces.

<a href="https://www.apartments.com.au/architects/mhn-design-union">MHN Design Union</a> (MHNDU) has returned as architect following its work on Pienza, again shaping a mid-rise form with a clear street presence. The design features a lower four-storey podium element that responds to surrounding context, with upper levels recessed to reduce perceived bulk. Communal open space is proposed both at ground level and on the rooftop, the latter including an outdoor kitchen and swimming pool.

“The building has been designed with a lower four-storey element and with building materials commensurate with the character of the area,” Beam Planning noted in its submission to the North Sydney Council.

<img alt="Barry Street, Neutral Bay Nsw 2089" data-entity-type="file" data-entity-uuid="3a28ab3a-b8ba-4476-81cd-e4a8bb84f3a7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Barry-Street-Neutral-Bay-1327x742.png?VersionId=hlgvxszAWXIHgHtdR5HiwIKiSli2lLZV" />

Bridge Housing will manage the affordable units for a period of 15 years, as required under the Housing SEPP’s incentive provisions.

MHNDU’s design report further highlights the site's strategic location just 250 metres from key bus stops and 1.3 kilometres from North Sydney CBD, positioning it for transit-accessible housing supply. In their planning justification, the design team emphasised the site’s compatibility with emerging local character and scale.

Central Element has a solid apartment pipeline spread all over Sydney. They recently completed&nbsp;Pienza, 37 apartments just 500 metres away from the new project, and are currently building Ethos Chatswood, Ballamac House in Coogee, and Bianca on the harbour in Drummoyne.

They have plans for future projects in Mosman, Bondi Beach, Greenwich, Lavender Bay, along with a tower on the edge of Hyde Park.

Joel Robinson

First look: Central Element unveils second Neutral Bay apartment project

Real estate investment fund Wentworth Wentworth Equities is soon to launch a "Los Angeles-inspired" residential, leisure and lifestyle precinct in Brisbane’s Hamilton riverside ahead of the predicted Olympic-led population explosion for the city.

Drawing its style inspiration and name from Los Angeles’ renowned The Grove, <a href="https://www.apartments.com.au/new-apartments/hamilton-grove-19-hercules-street-hamilton-qld-4007">Hamilton Grove</a> will feature three residential towers and a vibrant street-level public precinct with curated luxury lifestyle, retail and dining offerings.

The first of the three towers, to launch in March 2026, will comprise 61 apartments, in the same building as a premium hotel.<img alt="Hamilton Grove" data-entity-type="file" data-entity-uuid="d227fe61-8392-45b7-b386-9133f29a249f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-19%20at%209.10.56%E2%80%AFAM.png?VersionId=HTCV35HZ4h84jQCmHwhsdIPN0ctO5d7Z" />

Wentworth Equities Executive Chairman Sameh Ibrahim said the precinct will be unique in its appeal to both residents and the wider community.

“Hamilton is already one of Brisbane’s most sought-after riverside suburbs and for good reason,” Ibrahim said.

“Where else in the world can you walk out of your front door and have everything you could possibly need at your fingertips? The city is just around the corner, the airport is only ten minutes away, you have the river and green spaces right there and premium retail and dining on your doorstep."

Wentworth Equities acquired the 7637 sqm Hercules St site in 2014, when Ibrahim said he had a "very clear vision" for the precinct, but ultimately it wasn't the right time to develop. He said Hamilton was still very much an "emerging precinct."

“Since then, Hamilton and surrounding suburbs like Ascot and Albion have significantly grown and matured into a precinct that aligns with our vision for Hamilton Grove. Brisbane as a whole has so much to offer in the way of lifestyle appeal, but as it stands it is so widespread – you go to Howard Smith Wharves for fine dining, you go to James Street for shopping, you go to West End to walk along the river – but what if you could go to Hamilton Grove for everything?

“Our vision is a precinct that brings together the best of Brisbane into one central space abundant with culture, class and culinary experience – a place that a lucky few will get to call home, but the rest of Brisbane still get to explore and experience at their leisure.”

<img alt="Hamilton Grove" data-entity-type="file" data-entity-uuid="46550990-8aeb-44d4-bb47-150cdca96529" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-19%20at%209.10.50%E2%80%AFAM.png?VersionId=bmCkApPKY_Bj3z02Q8vI7Kyo_caJXOnv" />

Experienced civil engineering contractor Mainland Civil has been appointed to commence early works for the project, adding Hamilton Grove to their extensive portfolio where it will join other iconic Brisbane developments including Queens Wharf, 300 George Street, Infinity Tower and 1 William Street.

Construction on Tower One is scheduled to commence in early 2026 with completion expected in late 2028.

Fast Facts 
 
• Three residential towers and a vibrant street-level public precinct with curated luxury lifestyle, retail and dining offerings. 
• Construction on Tower One is expected to commence in Quarter One 2026, with completion expected in late 2028. 
• 7,637 square metre site at 19 Hercules St, Hamilton (part of Economic Development Queensland’s 304 hectare Northshore Hamilton Priority Development Area). 
• 61 waterfront residences and skyhomes in the first tower, ranging from two to five bedrooms. 
• Hamiton Grove will be officially launched in March 2026.

"LA-inspired" Hamilton Grove to launch on Brisbane riverside

There’s a quiet patch of <a href="https://www.apartments.com.au/developments/hawthorn-vic-3122">Hawthorn</a>, between the bustle of Glenferrie Road and the curve of the Yarra, that rarely sees change, and even more rarely, new apartments. But that’s exactly where <a href="https://www.apartments.com.au/developers/pomeroy-pacific-quattro-corp">PQD</a> is planting Kooyongkoot: a deliberate, 18-residence answer to the question of what downsizers actually want.

“This is something this pocket of Hawthorn has never seen before,” says Fil Gacesa, head of sales at PQD. “<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a> will deliver just 18 large-scale apartments in the heart of Hawthorn. It is the true definition of resort-style living.”

<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/59D7VxzltmM?si=1iCzRD7FRneKryfv" title="YouTube video player" width="560"></iframe>

That scale is central to the story. It’s what allows for two dedicated lift cores, short corridors, and a generous lightcourt that draws natural ventilation and sunlight into every residence. It’s also what makes room for the sort of amenity usually confined to high-density towers: a fully equipped wellness centre with infrared and traditional saunas, yoga and pilates studio, cold therapy shower, and treatment room. There’s a golf simulator, car and dog wash stations, and extensive storage too, not bolted on, but baked in from the start.

But more than the checklist, it’s the design intent that carries weight. “This project has been many years in the making,” says Mark Pomeroy, Director of PQD. “Not just in planning, but in listening, to what our buyers and the local community are looking for”.

[smartcode_project:default project_id=102717 project_image_fid=355289]

That listening shows up in the materials, oak floors, natural stone, V-ZUG appliances, and in how space is handled. Penthouses feature private rooftop terraces with pools. Terraces and garden residences embrace outdoor connection. Inside, the layouts skew large and open, geared for hosting, not just housing.

Architecturally, <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>’s approach is grounded. There’s no reaching for spectacle here. Instead, the building offers a sculptural calm, anchored by landscaping from Eckersley Garden Architecture.&nbsp;

“We wanted to create spaces that feel expansive, serene, and meaningfully connected to daily life,” said founding partner Chris Stribley elsewhere.

[smartcode_project:default project_id=102717 project_image_fid=355304]

That sentiment, calm, connection, echoes in the location itself. Kooyongkoot sits just a short stroll from Central Gardens, Fairview Park, and the Rivoli Cinema. Tram lines and schools are close, but the street is tucked, quiet, and leaf-lined.&nbsp;

“Residents of Kooyongkoot will be a short stroll from Fairview Park, Central Gardens, and the Glenferrie Road retail strip," Gacesa notes, "but you're also cocooned in this peaceful pocket behind extensive landscaping by Eckersley Garden Architecture.”

Kooyongkoot is set for completion in late 2026.

[smartcode_project_cta:default project_id=102717]

Staff Writer

The project that said no to compromise: Inside Kooyongkoot, Hawthorn

When long-time Ivanhoe locals Graeme and Catherine, decided it was time to downsize, they weren’t necessarily in a rush.&nbsp;

Like many in their stage of life, they had started thinking about apartment living, but anticipated making the shift in two to three years.

That timeline changed when they visited <a href="https://www.urban.com.au/new-apartments/candela-ivanhoe-40-upper-heidelberg-road-ivanhoe">Candela</a>, a new boutique development by <a href="https://www.urban.com.au/developers/salter-brothers">Salter Brothers</a>. The project ticked all the boxes they were looking for: location, quality design, and long-term lifestyle benefits, which prompted them to bring their decision forward.

“It was the right place at the right time,” they said. “We knew immediately it ticked all the boxes, and we didn’t want to wait.”

[smartcode_project:default project_id=342 project_image_fid=358855]

Their decision to downsize was driven by a combination of practical needs and lifestyle considerations. Their existing home, while much loved, had become increasingly difficult to maintain. It spanned multiple levels, included extensive front and back gardens, and was starting to show the wear that comes with age.&nbsp;

They were looking for a more manageable lifestyle, one with less upkeep and more freedom. A brand-new apartment with no maintenance requirements and the ability to simply “lock up and leave” gave them peace of mind and a greater sense of control over their future.

Financially, the purchase made sense as well. The available stamp duty savings, strong price-to-value offering, and timing of the settlement suited their plans, making the transition smoother and more cost-effective. The apartment's design and inclusions further supported their choice.

[smartcode_project:default project_id=342 project_image_fid=357493]

The layout was both functional and flexible: three bedrooms, a butler’s pantry, a separate laundry, and a large open-plan living area. It gave them the freedom to host a family, accommodate guests, or set up a home office. The expansive balcony and elevated views added to the appeal, providing a sense of openness and connection to the outdoors.

“It just had a really good flow,” Catherine noted, something they found lacking in many other apartments they’d considered, particularly in the established market.

Candela’s boutique scale was another deciding factor. With a smaller number of residences and a top-floor penthouse position, the couple felt the development offered the privacy and space they were looking for, without feeling isolated.

“We liked that it wasn’t a huge development. It felt well-balanced, modern but still with a sense of community, not overwhelming,” they said.

[smartcode_project:default project_id=342 project_image_fid=357508]

Equally important was the ability to remain in Ivanhoe, a suburb they know well and have deep roots in. After 46 years in the area, proximity to local parks, shops, and familiar faces mattered just as much as the apartment itself.

“We didn’t want to give up the community we’ve known for decades. Candela allowed us to upgrade our lifestyle while staying in the place we call home.”

With a Walk Score of 90, the village location supports a convenient, connected lifestyle. <a href="https://www.apartments.com.au/developments/ivanhoe-vic-3079">Ivanhoe</a> Station is just a eight-minute walk away, and the neighbourhood offers access to parks, cafes, restaurants, and schools along Upper Heidelberg Road, all within easy reach.

Beyond the apartment, the couple also saw value in the broader vision for Candela, one that integrates residential living with public spaces and local amenities.&nbsp;

The development introduces 58 new apartments as well as a mix of commercial and social spaces that integrate contemporary architecture with the suburb’s existing character.&nbsp;

At ground level, residents will find a charming café and a lifestyle wellness centre, perfect for unwinding and rejuvenating. Meanwhile, the rooftop garden offers a stunning vantage point for residents to enjoy breathtaking sunsets, host gatherings, or enjoy barbecues with family and friends. It's not just a place to live; it's a vibrant community where every moment is an opportunity to connect and create lasting memories.

[smartcode_project_cta:default project_id=342]

Why Ivanhoe locals are choosing to downsize to Candela

Mark and Roy Makari are expanding their presence in Sydney’s South West with a second major proposal for Leppington, this time envisioning a 900-dwelling mixed-use development just 850 metres from their previously lodged tower trio on Fifth Avenue.

Project management and construction management firm Creative Vision filed the plans for the&nbsp;multi-building project at <a href="https://www.apartments.com.au/new-apartments/230-rickard-road-leppington-nsw-2179">230 Rickard Road, Leppington</a>. The proposal seeks to establish a new focal point for the precinct through a high-density, transit-oriented development supported by diverse land uses.

According to the Scoping Report prepared for the Department of Planning, the scheme includes around 900 apartments across multiple towers, including 135 dwellings designated for affordable housing. A mix of market and subsidised apartments will be supported by ground-level activation through retail and office space, a childcare centre, and a hotel, forming a comprehensive urban precinct.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="34797362-f3dc-4d84-8235-2657fc5f3bde" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Plan.png?VersionId=Uzckrz9tUpDQl5lX1_WMhjnv16bsr8wG" />

The Design Report by <a href="https://www.apartments.com.au/architects/studiosc-0">Studio SC</a> notes that the project “intends to deliver a high-quality, high-density built form that supports the vision for the Leppington Town Centre, integrating mixed-use outcomes and public domain upgrades.” The development is expected to be delivered in stages, although a precise timeline is yet to be confirmed.

The project will be assessed through a future State Significant Development Application, with the Scoping Report indicating the team will seek design excellence via a competitive process or through an expert design review panel. Early massing diagrams suggest a series of mid- to high-rise buildings framing a central landscaped spine, with emphasis on pedestrian permeability and public space.

The planning documentation flags a strong sustainability agenda, stating that the development will “respond to the urban heat island effect, incorporate water sensitive urban design, and prioritise active transport”.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="369d7b54-1279-4cde-88ec-dcb215594414" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Podium_1.png?VersionId=QArL7B2kkLt63vl5xvL0FNV_ardAlez4" />

The proposal follows in the footsteps of the Makaris’ nearby Fifth Avenue site, where they’ve submitted plans for three towers comprising nearly 500 apartments, with 10 per cent dedicated to affordable housing. That project features commercial podiums, a childcare centre, and a new public park that would occupy more than a third of the site.

Both developments are situated within walking distance of Leppington Train Station and fall under strategic precinct plans promoting higher density housing. The town centre is undergoing substantial transformation, driven by state government planning reforms aimed at fast-tracking housing delivery.

Together, the two projects represent a combined ambition of nearly 1,400 new homes across just under two kilometres of central Leppington.

First look: 900-home mixed-use precinct planned for Leppington

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.
<a href="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.02.12%20AM.png" target="_blank">Click to enlarge</a>
<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.
<a href="/images/2016/02/25/Screen%20Shot%202016-02-25%20at%209.13.15%20AM.png" target="_blank">Click to enlarge</a>
<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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<img src="/images/2016/01/21/Screen%20Shot%202016-01-21%20at%209.19.26%20AM.png" alt="">
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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<img src="/images/2016/01/21/Screen%20Shot%202016-01-21%20at%209.20.29%20AM.png" alt="">
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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<img src="/images/2016/01/21/Screen%20Shot%202016-01-21%20at%209.24.15%20AM.png" alt="">
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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